Continuing
track record
of delivery
Annual Report
for the year ended
30 April 2023
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Forward thinking
Straight talking
Why do we do what we do
Our purpose is to deliver results that
delight our clients, inspire our people
and support our communities.
How do we do this
We do this by:
being forward thinking about the services that we deliver to our
clients and the working environment we provide for our people;
being straight talking about what matters, inside and outside of
our business; and
thinking differently about what we do and how we do it.
What do we do
We deliver professional services which enable
our clients to solve the challenges that they are
facing or to maximise the opportunities they
are pursuing, without ever losing sight of
what makes us Gateley: our Gateley Team
Spirit values.
Business overview
Strategic report
Corporate governance
Our financials
“
By showcasing the diversity of our
Platform offering and how our legal
and complementary service lines can
support our clients’ businesses, we are
presented with a huge opportunity
and one that sets us apart from
others in our space.”
Contents
Business overview
Highlights for the year
At a glance
Our story
Business overview
Platforms for growth
Inspiring our people
Responsible Gateley
Five key reasons to invest
Strategic report
Chairman’s statement
Chief Executive Officer’s review
Chief Executive Officer’s Q&A
Chief Financial Officer’s review
Principal activity objectives, strategy and outlook
Principal risks and uncertainties
Section 172(1) statement
Task Force on Climate Related Financial Disclosures
Environmental actions statement
Social matters
Corporate governance
Board of Directors
Statement on remuneration: voluntary disclosure
Directors’ report
Our financials
Independent auditors’ report to the members
of Gateley (Holdings) plc
Consolidated statement of profit and loss and other
comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Parent company statement of financial position
Parent company statement of changes in equity
Parent company cash flow statement
Parent company notes to the financial statements
Notice of annual general meeting
Company information
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Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Continuing track record of delivery
Gateley (AIM: GTLY), the professional services group, announces its audited results for
the year ended 30 April 2023 (“FY23” or the “Period”), which continue its unbroken
record of year-on-year revenue and underlying profit growth.
The Group delivered a strong financial performance in FY23, through its diversified and
resilient business model, benefitting from a full year’s contribution from the prior year’s
acquisitions, Adamson Jones Limited and Gateley Smithers Purslow Limited.
The Group achieved organic revenue growth of 6.2%, despite macro-economic
headwinds, which created challenging market conditions in the second half of the year.
The balance sheet remains strong and the Group has significant headroom in its
banking facilities to enable investment in organic and acquisitive growth opportunities,
to further the board’s diversification strategy.
GROUP REVENUE
GROUP UNDERLYING PROFIT BEFORE TAX
DIVIDEND PER SHARE
18.6% 16.2%
In FY23 our Group revenue was £162.7m
up by 18.6% compared to £137.2m in FY22
In FY23 our Group underlying profit before tax was
£25.1m, up by 16.2% compared to £21.6m in FY22
11.8%
In FY23 our Dividend per share was 9.5p,
up by 11.8% compared to 8.5p in FY22
“
Rod Waldie, Chief Executive Officer
of Gateley, said:
“I am very pleased to report another year of growth for Gateley. This is a strong
performance, set against a challenging macro-economic backdrop throughout the
second half. It is the result of the hard work and dedication of our people allied to
a long-term commitment and adherence to the successful execution of our growth
through our diversification strategy, building in resilience through design.
“During the year under review, both our legal services teams and consultancy teams
performed strongly and we have made further progress in adding breadth and strength
to our Group, expanding the patent and trade mark attorney offer on our Business
Services Platform through the acquisition of Symbiosis. Post-Period end, we have
added legal services lateral hires to strategically broaden our Business Services Platform
dispute resolution teams and have further enhanced our Property Platform with the
acquisition of RJA Consultants. Our M&A pipeline for FY24 is encouraging and we will
seek to strengthen our Platforms further as opportunities arise.
“Looking forward, we are mindful of ongoing macro-uncertainty and it is difficult to
predict market conditions for the rest of FY24. However, our diverse and resilient
business model, combined with our proven and consistent track record of delivering
strong growth across all economic cycles, means that we have entered FY24 with a
positive mindset and cautious optimism.”
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Highlights for the year
We present below our financial performance for the Period both on an underlying and statutory basis. Underlying results are before the
adjustments resulting from changes in acquisition accounting treatment of consideration now adopted, which has no cash impact and is
explained in the Chief Financial Officer’s Review.
Underlying
Group revenue
Group underlying operating profit1
Group underlying profit before tax1
Underlying adjusted fully diluted EPS2
Dividend per share
Net assets
Net cash3
Reported
Group profit before tax
Group profit after tax
Basic earnings per share ('BEPS')
FY23
£162.7m
£25.0m
£25.1m
16.28p
9.5p
£78.1m
£4.3m
FY23
£16.2m
£12.2m
9.77p
FY22
Restated
£137.2m
£22.5m
£21.6m
14.54p
8.5p
£75.1m
£10.4m
FY22
Restated
£26.8m
£23.0m
19.35p
Change
18.6%
11.1%
16.2%
12.0%
11.8%
4.0%
(58.7)%
Change
(39.6)%
(47.0)%
(49.5)%
For full details on the impact of the change in accounting treatment see note 33 to this announcement
Financial highlights
Strategic and post-Period highlights
Current trading and outlook
• FY24 has started in line with the board’s
expectations, with a good pipeline of work
• Integration of recently acquired businesses
progressing to plan and in line with
Platform strategy
• Encouraging pipeline of M&A opportunities
• The Group continues to deliver against
the clear strategy set out at IPO,
achieving growth and resilience through
diversification, and strong returns for its
stakeholders
• Strong performance as a result of
diversification strategy in action:
– Group organic revenue growth of 6.2%,
comprising 4.9% in legal services and
18.4% in consultancy services
– Consultancy services comprise £41.8m
or 25.7% of total Group revenue (FY22:
£21.3m or 15.5%) - an increase of
96.4%
• Underlying operating profit margin held
up well at 15.4% (FY22: 16.4%), despite
inflationary pressures throughout the
Period
• Net assets increased by 4.0% to £78.1m
(FY22: £75.1m)
• Proposed final dividend of 6.2p (FY22:
5.5p), taking total dividends for the Period
to 9.5p per share (FY22: 8.5p)
• Business Services Platform expanded and
further scale established in patent and
trade mark attorney services with the
acquisition of Symbiosis
• Total headcount at 30 April 2023 of
1,455 (FY22: 1,368), with increase in
professional staff of 6.0% from 948 to
1,005
• Internal appointment of Victoria Garrad
as Chief Operating Officer from previous
position of Group HR Director
• Wider expansion of internal share
ownership with FY23 result satisfying
three-year performance criteria set out in
the Group’s first LTIP awards scheme
• Post-Period end acquisition of RJA
Consultants, further expanding the Group’s
chartered surveying services and bringing
further breadth to the Property Platform
• Post-Period appointment of Colin Jones as
non-executive director who succeeds Suki
Thompson as Chair of the Remuneration
Committee
1
2
Underlying operating profit and underlying profit before tax excludes remuneration for post-combination services, gain on bargain purchase, share-based payment charges,
acquisition related amortisation and exceptional items
Adjusted fully diluted EPS excludes remuneration for post-combination services, gain on bargain purchase, share-based payment charges, acquisition related amortisation and
exceptional items. It also adjusts for the future weighted average number of expected unissued shares from granted but unexercised share options in issue based on a share
price at the end of the financial year
3 Net cash excludes IFRS 16 liabilities
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Gateley (Holdings) PlcAnnual report and financial statements How we support clients
At a glance
Business overview
Strategic report
Corporate governance
Our financials
Property
Platform
People
Platform
Corporate
Platform
Business
Services Platform
V I N D E N
Delighting our clients
Gateley’s client focus is really good. Everyone we have
worked with has taken the time to get to know and
understand our motivations, how our business works,
what the business model is and what the internal
workings are like. That has really stood out for me.”
Where you need us to be
With offices in 20 UK locations, and another in Dubai, we
have the regional network to provide our clients with the
advice they need on their doorstep. Often face to face
meetings are the quickest way to overcome difficulties
and resolve misunderstandings, and we will always travel
to get the job done.
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What makes us
forward thinking?
The first UK commercial law firm to list on the London
Stock Exchange enabling is to develop our service
offering to clients through acquisition
A professional services group which combines legal
advice with consultancy expertise through our market
facing Business Services, Corporate, People and
Property Platforms
A responsible business committed to levelling up the
world in which we work
Being straight talking about what matters, inside
and outside of our business: supporting diversity
and inclusion, encouraging potential and ensuring a
sustainable future
Delivering results without ever losing sight of our
Gateley Team Spirit values
Working together
Proud that 45% of colleagues participate in our
Sharesave scheme vs. 25% UK average and 65% of all
colleagues participate in at least one or more of our
share schemes
Investors in People accredited
The only UK legal business to be ranked in the
Glassdoor top 25 best companies for senior leadership
Trusted to do
FY23 key client account management programme:
450 new client relationships were nurtured
Over 2,000 hours of client investment time recorded
Over 90 Stellar Talks completed
Rated 5 star/excellent on independent legal review
platform, Review Solicitors
Excellent
181 reviews on
Room to breathe
Stonewall Diversity Champions and recognised as
a top 150 national employer in the 2023 Stonewall
Workplace Equality Index. Achieved the Law Society
Gold Standard for our Diversity & Inclusion Charter
Active wellbeing programme and proud to be a
signatory to the Mindful Business Charter
Engaged staff networks to support diversity and
inclusion including Women in Leadership and Working
Parents programmes
A Halo Code workplace
Disability Confident employer
Ambitious for success
A strong and resilient
business
2023
£162.7m
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Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Gateley: the professional services group
Our story
Our story starts in Victorian Birmingham – the then
workshop of the world. Solicitors Stephen Gateley & Sons
was founded to help forward thinking Victorians prosper.
Two centuries later, and our approach is still about thinking
ahead. Looking to the future to ensure the success of our
clients, our business and our people.
2015
We enter a new chapter with a UK law
firm first: we put aside the traditional
equity partnership model and go Plc.
2016
We acquire our first complementary businesses:
tax incentive specialists Capitus Ltd and property
consultants Hamer Associates, forming Gateley
Capitus and Gateley Hamer.
2018
We acquire three more businesses; GCL Solicitors,
specialists in legal advice on residential developments;
business psychologists, Kiddy & Partners and inward
investment and international expansion experts, International
Investment Services, since renamed Gateley Global.
2019
We’re UK Law Firm of the Year at the British Legal Awards; we
acquire land referencing experts, Persona Associates and leadership
development specialists, t-three.
We rank number 1 in the UK for M&A activity by deal volume. We acquire
brand and reputation management experts Tweed Law, and built environment
consultancy, The Vinden Partnership.
2020
2021
In July 2021 we acquire Tozer Gallagher, a leading practice of chartered quantity
surveyors and construction consultants. Tozer Gallagher now sits within Gateley Vinden.
Our decades of growth are recognised at the Birmingham Post Business Awards where
we are named Professional Services Firm of the Year.
2022
We make three new professional services acquisitions throughout the year. Patent Trade Mark
and Attorney practices, Adamson Jones and Symbiosis IP join our Business Services Platform.
Both companies enhance the development of complementary business services with an IP and
brands focus. We further strengthen our established Property Platform with the acquisition
of Gateley Smithers Purslow, a multi-disciplinary practice of building and quantity surveyors,
principally in the insurance industry.
2023
Our CEO, Rod Waldie is selected for The Lawyer’s Hot 100 2023, featuring the crème de la crème of the
legal world. Rod is recognised as leading the way for listed law firms, commended for his leadership and
the business’s successful cross-selling of both legal and consultancy services. In July we announce our latest
acquisition with Gateley RJA joining our Property Platform. The company is aligned with the expertise of
Gateley Smithers Purslow and Gateley Vinden, offering quantity surveying and project management services to
the construction market but specifically to the affordable housing sector and property insurance market.
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Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Business
overview
Our advisers deliver professional services
to incredible clients every day to enable
them to compete in an ever-changing and
competitive business environment, helping
them to face tough challenges, to seize
opportunities and to create profitable,
resilient and purpose-led businesses.
How we operate
Business Model
Our business model creates a platform for scalable and
sustainable growth. Our strong market reputation and the
culture and Gateley Team Spirit that sits at the heart of
our business enables the delivery of integrated legal and
complementary business services across our four market facing
Platforms.
Business Services
Our Business Services experts advise on how to maximise
opportunities within a business, identifying the best ways to
avoid or mitigate risk in growth and change projects. When
disputes arise, we advise on how to respond to that risk,
recover from it in the best possible way and how to implement
the solutions to mitigate future risk factors arising.
The Platform combines the considerable commercial expertise
of our IP and dispute resolution lawyers with that of Patent and
Trade Mark Attorneys within Adamson Jones and Symbiosis IP.
Corporate
Brings together the skills of corporate and banking and finance,
tax and restructuring lawyers in Gateley Legal with the inward
investment experience of consultants within Gateley Global.
The experts within our Corporate Platform advise businesses
at every stage of their corporate lifecycle from start-up to exit,
dealing with all aspects of growing a business, managing the
financial and governance responsibilities along the way.
Our purpose
To deliver results that delight our clients, inspire
our people and support our communities.
Strategic ambitions
To diversify, differentiate and incentivise by being
forward thinking about the services we deliver to
our clients, the working environment we provide
for our people and by being straight talking about
what matters, inside and out of the business.
People
Connecting the advisory skills of our leadership and development
consultancies t-three and Kiddy & Partners with the expertise of
our employment and pensions lawyers within Gateley Legal and
the independent pension trustees within Entrust.
The People Platform also includes a strong Private Client team with
experts in private wealth matters for individuals based in England
and internationally, private wealth disputes and family issues.
With a team of people development consultants, pensions
advisers and lawyers, we help employers fix the people issues
that arise within organisations in everyday operations and change
projects. We enable businesses to become fitter for the future,
flexing the implemented solutions in response to changing
economic and social contexts.
Property
Within this Platform, Gateley Legal lawyers advise on
construction, planning, residential development, real estate
finance, development and disputes and investment. Our
property tax specialists within Gateley Capitus combine with the
built environment consultants in Gateley Vinden (incorporating
Tozer Gallagher) and Gateley Hamer to offer a one stop shop
for all real estate needs. Our Property Platform is further
complemented by Gateley Smithers Purslow and Gateley RJA,
specialist providers of surveying services, principally to the
insurance industry and the affordable housing market.
Our team of surveyors, property tax consultants and lawyers work
with property investors, owners, occupiers and developers at every
stage of the property lifecycle, from opportunity identification
through to the use and commercialisation of property assets.
Growth drivers
Delivering results for
long term success
Organically
Enhanced opportunity to grow Gateley organically, including
lateral hires of individuals or teams.
Our clients
Delivering results that delight our clients by being forward
thinking, straight talking, working in collaboration and being
ambitious for their success.
Diversification
Making selective acquisitions including (i) other legal firms
which offer geographical expansion or additional specialist
services (ii) professional consultancy service businesses
offering complementary services.
Our colleagues
Inspiring our people, incentivising their hard work and providing
a diverse and inclusive working environment that gives them
room to breathe and opportunity to develop.
Our communities
Supporting the communities in which we work and measuring
our social impact so we can provide the right support and make
progress in the future.
Platforms
Building out the Group’s four Platforms which comprise clusters
of complementary Group services presenting a broader and
more compelling offering to our clients.
Our investors
Delivering excellent returns and demonstrating that our
shareholders’ investments are in safe hands.
Incentivisation
Alignment through share participation of the interests of
shareholders (including employee shareholders) with those
of the business, aiding retention of staff and widening our
recruitment appeal.
Our suppliers
Building mutually beneficial relationships and long-term,
sustainable partnerships.
Our environment
Taking ownership for the things we can do as a business and
individuals to protect and repair our planet now and for future
generations.
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Platforms for growth
We have a highly focused market proposition and
differentiate ourselves by making selective investments
in, and growing, quality legal and consultancy services on
each of our four Platforms, aimed at our core markets of
Business Services, Corporate, People, and Property.
Delivering results that delight our clients has helped us to grow our client relationships
organically and attract new clients to the Group. Ensuring we are trusted advisers is essential
but we must also work hard to demonstrate what differentiates our business.
By showcasing the diversity of our Platform offering and how our legal and complementary
service lines can support our clients’ businesses, we are presented with a huge opportunity
and one that sets us apart from others in our space.
As the Group continues to expand, we have more choice in how to deploy our
investments in the legal and wider professional services markets. In the meantime, our
mix of services remains unique and enhances our resilience, as evidenced in our FY23
results, showing £41.8m of consultancy businesses revenue (FY22: £23.1m). Our
diversification strategy is clear and proven.
In line with our differentiation strategy, we have also developed our internal
messaging around the power of our Platforms in delivering commercial, joined-
up solutions for our clients. This has involved a re-fresh to our website, aligning
all services and insights according to the Platforms; the publication of four
bi-annual Platform magazines which share perspectives on the hot topics
facing organisations such as equality, diversity and inclusion, innovation and
maximising infrastructure efficiencies; and the sharing of case studies and
client stories which share how the Platforms collaborate to deliver cost-
effective solutions.
Our four Platform magazines are now produced in
June and January every year.
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Business overview
Strategic report
Corporate governance
Our financials
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Gateley (Holdings) PlcAnnual report and financial statements Platforms for growth
continued
Business overview
Strategic report
Corporate governance
Our financials
Richard Healey
Partner and Business
Services Platform Head
Charles Glaskie
Partner and Corporate
Platform Head
Andrew Macmillan
Partner and People
Platform Head
Callum Nuttall
Partner and Property
Platform Head
Business Services Platform
Corporate Platform
People Platform
Property Platform
Our Business Services Platform supports clients in dealing with
their commercial agreements, managing risks, protecting assets and
resolving disputes.
Our Corporate Platform focuses on the corporate, financial services
and restructuring markets in both transaction and business support
services.
In the last financial year our Business Services Platform revenue grew by
21.1% to £21.8m, buoyed in the first half of the year by transactional activity
and in the latter part of the year by an increase in ongoing work across the
legal services dispute resolution teams. This was underpinned by a good
performance from the Platform’s consultancy businesses.
In legal services, our dispute resolution specialists saw an increase in demand
from both UK and overseas clients. This trend is continuing. Mandates from
UK clients are representative of current economic circumstances and include
an increase in instructions from financial services clients as interest rates rise
and lending tightens, which often results in default or lays-bare fraudulent
activity. Projects from overseas clients include a return of some activity in
Central Europe.
We continue to make strategic investment in new dispute service lines,
predominantly in competition litigation, collective actions and international
arbitration where, in all cases, we see huge opportunity and have very
recently recruited highly regarded senior expertise, including from within
magic circle law firms.
In consultancy services, activity in our growing patent and trade mark
attorney business was consistent throughout the year. It was enhanced by the
acquisition of Symbiosis, specialising in the life sciences industry and adding
to Adamson Jones’ expertise in engineering, medical devices, pharmaceuticals
and biotechnology. Both businesses are working well together with related
legal services across the Group and on shared opportunities. We will continue
to build critical mass in these services where typical projects are long-dated
and our expertise is highly valued by clients whose businesses are founded
upon ideas and inventions that need to be protected to preserve value. More
UK and international client opportunities exist here and will be realised as we
progress our strategy to grow a market relevant business in this space.
In aggregate, consultancy revenue now represents 23.4% of Business Services
Platform revenue.
Currently, this Platform is dominated by legal services, some of which
encountered more challenging conditions in the second half of the
financial year. Despite this, Platform revenue grew by 1.8% to £38.8m
and delivered a strong contribution margin. It is likely that the Corporate
Platform will always be legal services dominated. This is because our
transactional Corporate teams draw support from consultancy services
which are particular to each transaction, whilst in day-to-day terms
those consultancies find their more natural, “core” home on one of our
other Platforms.
Corporate transactional activity was strong in the first half of the year,
particularly with our private equity clients and in wider M&A. The Corporate
team generated a deal book in that period comprising an impressive
list of complex, high value transactions across a wide range of sectors,
which utilised additional legal and consultancy services across the Group.
Ultimately, the team had another strong year and the Corporate unit
remains our biggest internal referrer of business, with most of our teams
benefitting in some way. Transactional activity was more constrained in
the second half of the year. However, the deal volume and pipeline are
reasonable and are expected to further improve. This pattern is reflected
in our banking team, having had a strong first half of the financial year but
seeing a drop-off in support to corporate transactions and a reduction in
bank lending during the second half. Despite this, the team is now seeing an
increase in loan covenant reset and refinancing work.
Our restructuring and recovery teams are a natural counterweight to
transactional activity and following a sustained period of quiet trading
conditions activity levels rose by 24% during the financial year, as government
pandemic support for companies unwound and inflationary pressures and
interest rate increases impacted UK businesses. Activity remains strong in
these teams. Mandates have been generated both in-market and internally,
including working alongside experts in Gateley Vinden and our legal services
construction unit in delivery of market-leading services to insurers who have
bonded construction projects that have become distressed.
In consultancy services, our team at Gateley Global had a strong year in
continuing to help public and private sector clients realise their international
expansion plans, inward and outward of the UK. Revenue increased by
47.4% to £1.1m (FY22: £0.74m). In addition, the team is a consistent
cross-referrer of revenue to other parts of the Group as clients require
mixed services to implement expansion.
12
Our People Platform supports clients in dealing with and developing
people and in administering individuals’ personal affairs. The team
help employers fix the people issues that arise within organisations in
everyday operations and change projects.
A good spread of activity across both legal and consultancy services grew the
People Platform revenue by 6.3% to £20.4m. In legal services, our pensions
team had a strong year and performance in our employment team was
good as clients’ HR teams returned to more business-as-usual activity post-
pandemic. Our private client team remains focused on high-net-worth clients
and related opportunities.
In consultancy services, our pension trustee business Entrust, continues
to deliver growing, recurring revenue. The team is seeing an increase in
the number of pension schemes looking to complete full liability buy-
outs, with Entrust at the helm. In addition, more businesses are looking
to out-source management of their pension schemes, which is generating
greater opportunity for Entrust to grow both organically and via potential
acquisitions.
t-three and Kiddy & Partners, our talent assessment, development and
cultural change businesses, are now combined for management purposes.
The team won 67 new clients during the financial year and increased, by 45%,
the number of clients buying both t-three and Kiddy services, with particular
focus on scalable products to high growth clients. The pipeline remains strong
as most organisations are looking to develop their people and/or transform in
some way.
In aggregate, consultancy revenue now represents 32.7% of People
Platform revenue.
Our Property Platform is currently our most diverse and mature
Platform. It is focused on clients’ activities in real estate development and
investment and in the built environment in the widest sense.
The Platform grew its revenue by 33.3% to £81.7m during FY23, significantly
assisted by strong activity across the Platform’s consultancy businesses.
In legal services our real estate development team remains a market-leader in the
warehousing and logistics sector, delivering cross-Platform services to complex
acquisition and development projects. Whilst activity in the wider commercial
property market eased in the second half of the financial year, we saw and
continue to see an increase in non-transactional advisory and dispute resolution
services. This includes helping our wide range of residential development clients
navigate regulation under the high-profile Building Safety Act (post-Grenfell) and
advising on related remediation projects. This is long-dated, specialist work in
which we continue to invest, including by long term redeployment of appropriate
resource from within the Group to our construction team, which had a record
year and continues to be very busy. Elsewhere, current economic conditions
have resulted in an increase in work helping or opposing organisations seeking to
escape commercially onerous contracts.
In our market-leading house-builder team, we continue to act for all of the top
developers, many of whom have significantly reduced their panel of advisors
in favour of larger providers who cover all bases, which describes us both
geographically and in service lines. This should result in more work for the team.
Despite the fact that developers are currently finding the retail housing market
slow, we continue to handle over 50 large strategic residential-led schemes,
with over 1,000 new homes each. Our clients need to continue to build and
sell and have other outlets for which they require our services. This includes an
increase in advising on shared ownership framework agreements and in bulk
sales to housing associations and build to rent investors. In addition, housing-
led urban regeneration work continues to attract public and private funding. We
act for all of the leading developers in this space and remain busy with schemes
where our unique combination of legal and consultancy services is relevant to
the whole life-cycle of the project.
In consultancy services, we saw the first full year of Gateley Smithers Purslow
following our deliberate diversification into specialist services to the property
insurance complex claims market. Gateley Smithers Purslow contributed
revenue of £13.8m (FY22: £0.6m), representing annualised growth for that
business of 26.1%. We also saw strong revenue growth of 25.6% from Gateley
Vinden’s broad range of specialist services and growth of 19.9% from Gateley
Hamer, which is carrying a strong pipeline of work in regeneration, energy and
telecoms projects.
Our recently announced acquisition of Richard Julian and Associates Limited
(“RJA”) surveyors, extends our reach to organisations that deliver affordable
housing, a resilient sector underpinned by high levels of grant to support
delivery of the Government’s housing targets. The team also has specialists in
major loss property claims, which will enhance related expertise in both Gateley
Smithers Purslow and Gateley Vinden.
We maintain our view that the range of expertise now housed on our Property
Platform puts us in a position to compete with well-established, multi-
disciplinary property consultancies in the wider market.
13
Gateley (Holdings) PlcAnnual report and financial statements Inspiring our people
Business overview
Strategic report
Corporate governance
Our financials
Gateley is a business full of incredible
people who are passionate about what
they do and how they do it for their
clients. They are the driving force for our
continued growth.
We are proud of our culture and place
great importance on maintaining that as
we continue to grow. This is fundamental
in being able to continue to support and
develop our talent as well as attract new
people into our business.
Inspiring through leadership
At Gateley we lead by example and key to that is ensuring that those
we influence and impact every day are inspired by the leaders around
them, as being well as mentored and guided in the right way. This
has to come from the top and in January our CEO, Rod Waldie was
recognised for his leadership in The Lawyer’s Hot 100 2023 list.
The coveted annual list features the crème de la crème of the legal
world. Rod was commended for leading the way for listed law firms
as well as his leadership of the Group and the business’s successful
cross-selling of both legal and consultancy services.
In June 2022 we were the only legal business in the UK to rank in the
Glassdoor UK Top 25 Companies for Senior Leadership. Glassdoor is
the worldwide leader on insights about jobs and companies and the
list was determined solely based on feedback from employees.
Recognising commitment and
celebrating achievement
Supporting our people with their ambitions, trusting them to
perform to the best of their abilities and allowing them the freedom
to be themselves at work are some of the areas that underpin what
we call our Gateley Team Spirit.
During the Autumn we celebrated more than 150 people from
across the business who were nominated by their colleagues in our
annual Gateley Team Spirit Awards. A number of finalists were then
selected by a judging panel to attend the annual award ceremony
where winners were presented with their trophies and a prize as
acknowledgment of their achievements under our Gateley Team
Spirit values. These values are covering working together, being
ambitious for success, giving colleagues room to breathe, being
forward thinking and being trusted to do. This year’s ceremony
is coming up this Autumn and we have added in a number of
new categories this year to recognise excellent leadership and
also colleagues who are delivering stellar results across our four
Platforms.
Growing emerging talent
Growing our own is an important part of our people strategy and
our success. We are committed to mentoring and investing in
the development of our emerging talent and bringing on the next
generation of Gateley senior managers and leaders.
Our offering remains differentiated and our broad range of
career opportunities is attractive. We continue to evolve our
people strategies to drive a stimulating, purposeful and rewarding
environment in which our people can progress their careers. This
year we have promoted 126 colleagues across the Group.
We also launched two new community groups for employees who
are at different stages of their Gateley careers. Influence is for
senior managers across the Group, encouraging conversation and
discussion to influence upwards and downwards. Ignite is open to
those at the earlier stages of their career within Gateley, whatever
their role.
Both groups help our people to build connections, improve
collaboration across teams and create more cross-selling
opportunities with colleagues at a similar level of seniority.
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Gateley (Holdings) PlcAnnual report and financial statements Inspiring our people
continued
Business overview
Strategic report
Corporate governance
Our financials
Responsible Gateley
Our Responsible Business approach is at the heart of our
organisation. It’s embedded right from the top and is
threaded into our culture and the way we operate.
Our Responsible Business actions focus on the wellbeing of our employees, on being a force
for good in society and within the communities in which we operate and by playing our part
in protecting and repairing our planet. Measuring the value and the impact we are having
in all these areas is as important as taking action because it enables us to evaluate where
we are effecting change and how we can improve and progress over time.
In our third Responsible Business report, we will outline the 15 key objectives that
we set ourselves for the financial year ended 30 April 2023 which are all linked to
our Purpose in delivering results that delight our clients, inspire our people and
support our communities. We are delighted to have achieved all of the targets set.
Inspiring for growth
Our annual internal conferences are a key component in arming our
senior leaders and managers with the tools needed to develop and
help our business to grow while ensuring they are supporting their
teams to do the same.
This year’s conference theme was ‘Platforms for growth’. We
concentrated on how we can work together within our teams
and across our Platforms to achieve sustainable growth and the
importance of developing a growth mindset in order to be able to
achieve our ambitions.
Linking into our purpose, we focused on key themes around
developing and accelerating growth with our clients as well as
learning how companies can achieve growth over market. We
discussed what our barriers to growth might be, both as individuals
and teams and considered how we might overcome them and where
possible, turn them into opportunities.
Incentivising our people
We believe the ability for all of our people to participate in share
ownership is a great motivator and incentive and also represents
a recruitment differentiator. Our employee share scheme gives
everyone in the Group, at every level, the opportunity to participate
in the future success of the business.
In addition, the FY23 result satisfied the three-year performance
criteria set in the first LTIP awards scheme granted in FY20 and also
underpins the performance criteria applicable to our in-flight LTIP
schemes. Alongside this, our wider CSOP and SAYE schemes will
mature during FY24 resulting in the release of circa 3.4m shares to
scheme participants. All of this is in line with our strategy of creating
wider equity participation for more of our people. Currently around
65 per cent of our people either hold shares or participate in share
schemes.
Delivering with purpose is central to the Group’s
continued success and aligns with our Responsible
Business strategy. We of course acknowledge that
there is more to be done, but I’m really proud of the
steps we are taking to fulfil our promise to be a
force for good and provide positive and lasting
impact in society.”
Rod Waldie, Chief Executive Officer
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Our 2022/23 report will be
published soon and will outline
a new set of objectives for the
current year to help us to continue
to evolve and make good progress
towards our ESG goals.
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Gateley (Holdings) PlcAnnual report and financial statements Responsible Gateley
continued
22/23 review of set objectives
Review and refresh our environmental policy, considering
sustainability in more detail.
We have refreshed our environmental policy and will be
sharing it across the Group this year.
Draft a sustainable procurement policy.
Explore carbon net zero at the Strategic Board.
Draft a carbon reduction plan.
Implement new printers into the business and measure
the impact that these improved machines have in terms of
volume of print.
A sustainable procurement policy has been drafted and
approved by all parties concerned.
This has been explored and we have a dedicated task force in
place to drive forward carbon net zero initiatives.
The plan addresses the reduction of scope 1, 2 and 3
emissions.
New printers have been implemented across all offices and
we are continuing to monitor the volume of print.
Introduce data monitoring to support TCFD reporting.
Data monitoring has been implemented.
Deliver TCFD reporting for the financial year ending 30
April 2023.
We will use this data to measure our sustainability progress
on an annual basis.
Increase employee engagement on the Social Impact
Dashboard with a 20% increase in registered users and a
10% increase in recorded activities.
We reached our target of a 20% increase in registered users
and exceeded our 10% target in recorded activities by 50%.
Explore potential for introducing Alzheimer’s UK as a new
charity partner for 2023/2024.
We launched a new charity partnership with Alzheimer’s
Research UK.
Increase the level of Gateley Gives local charitable activity
across all offices during the year with a measurable increase
in fundraising alongside more opportunities to share insight
and raise awareness.
Introduce the language diversity guide.
All offices now have Gateley Gives committees and have all
completed fundraising activities within the year.
We published inclusive language guidance through our
internal communication channels and promoted resources
that included up to date, detailed information about
inclusive language and terminology.
Increase the number of stories of different routes into our
business that colleagues have followed and share these on
our website.
As part of our Employee Value Proposition project, we
shared feedback from some of our apprentices and the
support they received from our people.
Embed our fifth network group, Ability, within the business,
raising awareness and encouraging participation in events.
We launched our first wheelchair basketball event.
Avoid single use plastics wherever possible within the office
e.g., catering/ promotional items.
We have been more conscious when using single use
plastics.
Refresh our volunteering policy and launch to the business,
sharing opportunities for volunteering as identified through
our charity partners.
We launched our volunteering policy signposting
opportunities through some of our charity partners such as
The Fifth Day, Inspiring the Futures, Make Good Grow and
the NSPCC.
Business overview
Strategic report
Corporate governance
Our financials
Delighting our clients
We work with an incredibly diverse range of clients. Businesses of all different sizes, in diverse sectors, with differing challenges and
ambitions. Over the last year we have connected with them to share good practices and create opportunities to listen and learn from
one another.
By working together with our clients, we can inspire each other to work towards a common goal and continue to deliver great results.
As we look to the future, we will continue to support our clients by collaborating with them in meaningful activities that help
our communities through our newly launched volunteering policy.
Being a force for good
We understand that we have a responsibility to our clients, people and planet to take steps in the right direction to reduce
our carbon footprint. We have worked hard to improve our environmental credentials by having open discussions with
clients to share and implement best practice across our business. We have set ourselves an attainment of net zero
emissions by 2040 with interim targets for 2030 and have set up a sustainability task force and drafted a sustainability
action plan to support the achievement of these targets. We are also looking to secure a new partnership with an
environmental charity to drive progress forward in taking positive climate action.
Continuing to inspire our teams
Building on our inclusive culture is something we continually invest time and energy in at Gateley and to
ensure we always create a sense of belonging for all of our colleagues. Our five network groups create
a place of debate where people can learn from each other, educate each other and celebrate our
differences.
belong...
ability
Supporting employees with disabilities and
raising awareness around neurodiversity
inspire
Nurturing our talent and supporting
their careers
pride
Supporting our LGBTQ+ community,
raising awareness across our business and
collaborating with related external charities,
groups and networks.
thrive
Taking care of the health and wellbeing
of all our employees
unity
Recognising, celebrating and supporting
people from different cultures, religions
and backgrounds
Forward thinking
Straight talking
All you need
to know about
Ramadan
Ramadan is a significant month for Muslims
as it is a time for increased spirituality
and God consciousness. Muslims will aim
to deepen their spiritual connection with
God by performing prayers, reading the
Qur’an, fasting, increasing their Islamic
knowledge as well as spending time
with family and helping.
Forward thinking
Straight talking
All you need
to know about
Passover
Passover, also known as “Pesach”, is an important
Jewish festival lasting 7 to 8 days. It generally
coincides with Easter and is one of the most widely
celebrated for those of the Jewish faith. Passover
honours the Biblical story of the Exodus where
the Israelites/ Hebrews escaped from slavery in
ancient Egypt after approximately 400 years.
In today’s modern world, 3,000 years later,
those who follow Passover attend a large
family meal known as a “Seder” at which
the Exodus story is commemorated
through the reading of the “Haggadah”.
Ultimately, Passover is a time for
reflection, gratefulness, and joy, as
well as a reminder of the ongoing
struggle for freedom and justice
in the world.
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Strategic report
Corporate governance
Our financials
Five key reasons to invest
Our professional services group creates a platform for scalable and sustainable growth.
1
2
3
4
5
18.6%
revenue growth in FY23 with net assets of
£78.1m
103.9%
adjusted cash conversion since IPO*
9.4%
compound annual growth in adjusted profit
before tax since IPO
16.3p
adjusted fully diluted EPS FY23
11.8%
growth in FY23 dividend to 9.5p
•
•
•
•
•
•
•
Gateley’s experienced management team has delivered
an unbroken track record of revenue and profit growth
through multiple economic cycles
The market in UK legal services provides a strong
foundation on which to base a strategy for growing a
wider professional services group, further increasing
the Group’s resilience
Our strategic position creates strong organic growth
opportunities and a platform upon which we can
diversify through acquisition
Gateley has a strong balance sheet, with net cash and
committed acquisition finance facilities placing us in an
excellent position to invest for further growth
Gateley has established and resilient revenue streams
with a high conversion of profit into cash
Gateley provides an attractive income stream with
up to 70% of adjusted post-tax profits earmarked for
dividends. Since IPO in 2015 (at 95p) we have returned
52p to shareholders
Gateley has significant internal share ownership and
a strong people culture with purpose-led responsible
business objectives
*
Cash conversion is net cash flows from adjusted operating activities as a
percentage of adjusted profit for the year after tax
Responsible Gateley
continued
Supporting our communities
An important part of our purpose is supporting the communities
in which we operate and measuring our social impact so we can
provide the right support and make progress in the future. Where
we’re based and the people that we work with are a vital part of
conducting our business. Across our organisation, we have many
different connections, whether this is through our national charity
partners or the links with educational institutions and community
groups which we have developed to support and encourage
potential.
Following feedback from colleagues who are caring for family
members with dementia, we have launched a new charitable
partnership with Alzheimer’s Research UK. The partnership will see
us fund a research project to join them in their mission of finding a
cure for dementia.
We have fostered excellent relationships with schools and
educational partners in the past year and we will strengthen these
relationships further by getting more of our people involved to
inspire and motivate the next generation to the world of work.
We also look forward to continuing our existing charity partnerships
with SportsAid and University Academy 92 to support young people
through funding or enrichment opportunities.
We acknowledge that there is more to be done, but we’re proud of
the steps we are already taking to fulfil our promise to be a force
for good and provide positive and lasting impact in society. We look
forward to working towards the achievement of the new targets
we have set ourselves for this year which continue to be built
around our clients, our people, sustainability and supporting the
communities in which we operate.
Social Impact Dashboard
Over the last 12 months, colleagues from across our Group have recorded all the good work they
have been involved in, within and outside of Gateley, to support our communities.
Highlights include:
Over
£100,000
fundraised. This includes the fundraising efforts put
together by our Gateley Gives teams
Supported a total of
82good causes
Over
1, 500
volunteering hours completed
“Gateley, our patron, have been early adopters
of the Social Impact Dashboard, and provide
strategic support, mirror our values and believe
in our purpose unwaveringly!”
Nigel Shanahan, Founder of Make Good Grow
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Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Strategic
report
In this section
Chairman’s statement
Chief Executive Officer’s review
Chief Executive Officer’s Q&A
Chief Financial Officer’s review
Principal activity, objectives, strategy and outlook
Principal risks and uncertainties
Section 172 (1) statement
Task Force on Climate Related Financial Disclosures
Environmental actions statement
Social matters
24
28
34
36
42
46
50
51
55
56
This report has been prepared by the Directors in
accordance with the requirements of Section 414
of the Companies Act 2006.
The Chairman’s Statement, Chief Executive
Officer’s Review and Chief Financial Officer’s
Review, as set out on pages 24 to 42, form an
integral part of the Strategic report.
22
23
Gateley (Holdings) Plc
Annual report and financial statements
Chairman’s
statement
Summary of the year
I am delighted to present Gateley’s
audited final results for the year
ended 30 April 2023, another
successful year for the business.
Nigel Payne
Chairman
Business overview
Strategic report
Corporate governance
Our financials
With revenue increasing by 18.6% to £162.7m
and underlying profit before tax increasing
by 16.2% to £25.1m, Gateley has again
demonstrated the strength of its business
model and the resilience from its diversification
strategy. These strong results led to a 4.0%
increase in Group net assets to £78.1m (FY22:
£75.1m), and an increase of 12.0% in adjusted
fully diluted earnings per share to 16.28p per
share (FY22: 14.54p).
I am particularly proud that this year’s strong
performance was delivered despite challenging
circumstances. With the economic recovery
from COVID-19 somewhat compromised by
inflationary pressures, with uncertainty as a
consequence of the terrible events in Ukraine
and the onset of higher than usual wage inflation
within the legal and indeed other sectors, Gateley
has navigated the year well and I am pleased with
the resulting benefits for all of our stakeholders.
Strategic delivery
As I enter my ninth, and last, year as Chairman of
Gateley, this feels like a good moment to reflect
on the progress the Group has made since it
became the first legal services group in the UK
to undertake an IPO. There are two points that
stand out to me and, I believe, are a testament to
the quality of the Group and the people within it.
Firstly, consistency. Since IPO Gateley has
delivered an unbroken track record of revenue
and underlying profit growth. Above and beyond
the absolute progression, Gateley has also
outgrown the UK professional services market,
which continues to benefit from a number of
structural growth drivers. Gateley’s growth has
been accelerated by acquisitions but underpinning
our growth has been the strength of our legal
services foundation. Outperformance does not
come automatically but is hard earned through a
consistency of client delivery and execution across
all levels of the Group.
Secondly, commitment. Since IPO, our strategy
has been clear; to build a professional services
group of scale and breadth. From our legal
foundations, we have sought to bring in new
business lines, and business models, that
complement and add to the suite of services that
we offer to our increasingly diverse clients.
By sticking to the discipline of our Platform strategy, we have been
able to focus our organic, and inorganic, investment where it has
mattered the most. Clearly, part of the motivation behind the IPO
was to facilitate this growth strategy and that motivation remains
undimmed. In the eight years since IPO, much has happened in the
stock market and the wider world that has been out of our control.
Yet despite these challenges, Gateley’s strategic commitment has
not wavered. Our Group is now more diverse and resilient than at
any point in the last nine years.
Results overview
During the year we delivered on our strategic intent to further
diversify the business, placing the Group in a stronger position to
deliver further profitable growth in the coming years. In doing so,
we also expanded the breadth and depth of our offering on the
Business Services Platform with the acquisition of patent and trade
mark attorney business, Symbiosis.
To support our acquisition strategy, we committed to a three-year
revolving credit facility of up to £30m to assist with acquisitions.
This combined with our strong balance sheet places us in a good
position to acquire further businesses in the future.
Within our consultancy businesses, overall headcount increased
by 23.0% to 358 (FY22: 291) and fee-earner staff by 27.4% to
279 (FY22: 219). Revenues from this part of the Group were
over £41.8m, demonstrating the further diversification of service
offering and the deepening of our relationships with our clients.
Our staff have also shown great adaptability to the constant
changes throughout the past few years and their dedication
towards the business, their colleagues and clients has been first
class in what was a challenging year across a wide range of fronts.
As we continue to grow and strengthen our business, the board
remains committed to providing its people with the opportunity
to own shares in the Company. We believe that employee share
ownership secures a strong alignment with the Group’s external
shareholders, incentivises employees and is reflective of Gateley’s
long-established culture. At least 65% of current staff are existing
share or option holders in the Company.
Responsible Business
The board has made the further development of Gateley’s
Responsible Business commitment a key strategic priority this year.
We achieved this by working together with The Purpose Coalition,
an independent ESG consultancy who helped us develop our own
set of levelling up goals.
In December 2022, we published our second edition, 2022
Responsible Business report, for which we again received significant
positive feedback. We have introduced 15 new responsible business
objectives for FY 24 and confirmed our intention to reduce our
CO2 emissions by 50% by 2030 and to become net zero by 2040.
Our Responsible Business actions focus on the wellbeing of our
employees, on being a force for good in society and within the
communities in which we operate, and by playing our part in
protecting and repairing our planet. Measuring the value and the
impact we are having in all these areas is as important as acting
because it enables us to evaluate where we are effecting change
and how we can continue to improve over time.
I am delighted with the progress we have made and how this important
initiative has been embraced across the Group. We are committed
to ensuring diversity, equality and inclusion and our goal is to foster
a positive work ethic, whilst remaining results and client focused,
and demonstrating our commitment to doing the right thing for our
people, our planet and developing potential wherever we can.
Board changes
The UK Corporate Governance Code determines that the
recommended tenure for the chair of publicly listed companies is
nine years. There is no recommended tenure for non-executive
directors, though after nine years they are generally no longer
considered to be independent, and this tends to act as a ‘de facto’
ceiling on tenure. The assessment of the independence of non-
executive directors holding office after nine years is a matter of
board judgement, thereby allowing boards some room to extend
the tenure beyond nine years, where appropriate.
Gateley was admitted to AIM in June 2015, becoming the first
commercial law firm to list on the London Stock Exchange. The
current financial year ending 30 April 2024 will therefore be the ninth
year that Gateley has been on AIM and in line with the above best
practice, the following changes to the board will be introduced.
With regards to my own role, as the current year ending 30 April
2024 is my ninth year as Chairman, it will therefore be my last and I
will stand down at the Group’s AGM in 2024. The board has already
begun a process to appoint a new Chairman and an announcement
will be made in due course.
With regard to the Chair of the Audit and Risk Committee, the
financial year ending 30 April 2024 will be Joanne Lake’s ninth year in
the role and would therefore ordinarily be her last. Given, however,
the planned change to my own role and the unforeseen retirement
of Suki Thompson, should Joanne also stand down in 2024 then all
of the Group’s non-executives would leave within the same financial
year. I have therefore agreed with the board and with the Group’s
largest five institutional shareholders that it is in the best interests
of all stakeholders for there to be a degree of continuity on the
board and that Joanne will serve one more year as Audit and Risk
Committee Chair and will stand down at the AGM in 2025.
With regard to the Chair of the Remuneration Committee, Colin
Jones, who was appointed to the board today, as non-executive
director, succeeds Joanne Lake, who has been temporarily chairing
the committee, following Suki Thompson’s retirement.
24
25
Business overview
Strategic report
Corporate governance
Our financials
Gateley (Holdings) Plc
Annual report and financial statements
Chairman’s statement
continued
With regard to executive board positions, Victoria Garrad, Group
HR Director, was appointed to the board on 1 May 2023, in line
with succession planning outlined in the Group’s Half Year Results
announcement issued on 12 January 2022. Victoria replaced Peter
Davies, Chief Operating Officer, who stepped down from the board
on 30 April 2023. Victoria joined Gateley in 1996 and has been the
Group HR director, a non-plc board role, since 1 May 2017. Prior to
this, she was a Partner in the legal services employment team and
has been a member of the Operations Board since 2011 and the
Strategic Board since 2017.
Upon standing down as Chief Executive on 30 April 2020, Mike
Ward agreed to stay on as an executive director of the Group for a
period to lend his experience to Roderick Waldie, who took over the
role on 1 May 2020. Having now been in position for three years,
Mike will stand down from the board at the 2023 AGM. On behalf of
the board and all of the staff in the Group, I would like to extend my
thanks to Mike for his insights whilst in office.
Dividends
An interim dividend of 3.3p per share (FY22: 3.0p) was paid on
31 March 2023 to shareholders on the register at the close of
business on 24 February 2023. The board is pleased to propose a
final dividend of 6.2p per share (FY22: 5.5p), giving a total dividend
for the year of 9.5p per share (FY22: 8.5p), subject to approval
at the forthcoming Annual General Meeting, which will be held on
17 October 2023. If approved, this final dividend will be paid in
October to shareholders on the register at the close of business
on 29 September 2023. The shares will go ex-dividend on 28
September 2023.
The board’s dividend policy remains to distribute up to 70% of
specifically adjusted profit after tax to shareholders, whereby the
adjustment relates to the remuneration for post-combination
services and gains on bargain purchase. The dividend is typically
split one third following the Company’s half year results and two
thirds after the full year results.
Summary and outlook
This year has been another strong one for Gateley. Our people have
excelled in client delivery, they have continued to overcome every
challenge presented to them, and have delivered further strategic
progress for the business, combining to generate an excellent set of
results.
As we focus on service line enhancing opportunities that meet our
clients’ needs and fulfil our strategy to build a broader professional
services group, our acquisition pipeline remains strong, trading in
the current year is in line with the board’s expectations and we look
forward to the immediate future with cautious optimism.
Nigel Payne
Chairman
5 September 2023
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Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Chief Executive
Officer’s review
Rod Waldie
Chief Executive Officer
Introduction
I am pleased with the Group’s strong performance in FY23,
delivered by the highly skilled and dedicated people across our
business. These results maintain the Group’s unbroken record
of year-on-year revenue and underlying profit growth. We are
proud of this and of the consistent progress made against our
key metrics since our admission to AIM in June 2015.
Throughout the Period a combination of global
and UK-specific events created a challenging
macro-economic backdrop. This was particularly
pronounced during H2 23 and macro-uncertainty
remains the dominant characteristic in the market.
Despite this, the Group once again demonstrated
its resilience and ability to adapt to shifting
market conditions. These characteristics are
not the product of chance; they result from the
implementation, since 2015, of our strategy to
operate and grow a diverse professional services
business with legal services as its foundation. We
have been consistent in our adherence to this
proven strategy, which informs all that we do. Since
acquiring our first consultancy business in 2016 our
disciplined approach to M&A has grown non-legal
revenue to £41.8m (FY22: £21.3m), being 25.7% of
the Group’s revenue.
We have a highly focused market proposition
and differentiate ourselves by making selective
investments in, and growing, quality legal and
consultancy services on each of our four Platforms,
focused on our core markets of Business Services,
Corporate, People, and Property. As the Group
continues to expand, we have more choice in how
to deploy our investments in the legal and wider
professional services markets. In the meantime,
our mix of services remains unique and clearly
enhances our resilience, as evidenced in our
FY23 results, during a more challenging period
for transactional legal services overall. Our
diversification strategy is clear and proven.
Whilst continuing to appraise new acquisition
opportunities from our encouraging pipeline, our
current operational focus is firmly on the basics
in the business; from fee rate increases, cost
management and, of course, consistent delivery
of excellent service, to maximising cross-selling
opportunities on and across each Platform.
On responsible business, as reported at the end
of H1 23, with the publication of our second
Responsible Business Strategy we achieved all 15
of the initial targets set for FY23. In doing so we
reinforced our belief that an integrated Responsible
Business Strategy develops solutions that positively
impact people, the planet and profit. Our work
here is ongoing in line with our Purpose to deliver
results that delight our clients, inspire our people
and support our communities. We are revising our
annual Responsible Business reporting to coincide
as closely as possible with the release of our annual
results and I therefore look forward to publication
of our next report very soon.
28
29
Chief Executive Officer’s review
continued
Finally, we are delighted to propose a progressive final dividend of
6.2p per share at the Group’s AGM on 17 October 2023, taking the
total dividend for the Period to 9.5p (FY22: 8.5p), an increase of
11.8% on the prior year.
Results overview
The Group performed well during FY23, building on the progress
reported at the half year and delivering growth in revenue and
profit. Revenue grew by 18.6% to £162.7m (FY22: £137.2m) and
underlying profit before tax increased by 16.2% to £25.1m (FY22:
£21.6m). Profit before tax decreased by 39.6% to £16.2m (FY22
restated: £26.8m) as a result of the IFRS 3 related acquisition
accounting treatments, further details of which are set out in the
Chief Financial Officer’s Review. Profit after tax decreased by 47.0%
to £12.2m (FY22 restated: £23.0m).
Salary cost inflation has been and continues to be a post-pandemic
characteristic across all professional services businesses. In
addition, FY23 saw the return of more discretionary costs (e.g.
travel, marketing and entertaining). Planned one-off costs in the
Period included significant investment in a new, market-leading
business management system and associated integration costs.
Despite all of this and general cost inflation, our FY23 results
delivered another year of growth.
Our outturn for the Period was underpinned by the quality and
breadth of the increasing range of legal and consultancy services
offered through our Platforms. Transactional activity was strong
in H1 23 but, as reported at the half year, we were beginning
to see transactional activity levels reduce from the previous
unprecedented highs. During H2 23 the Group started to pivot
towards greater activity in the more counter-cyclical service lines
that are deliberately designed within each Platform. Although not
immune from the effects of challenging market conditions, these
services helped our second half performance and continue to
perform strongly.
Platform performance
Business Services Platform
This Platform supports clients in dealing with their commercial
agreements, managing risks, protecting assets and resolving disputes.
Revenue on this Platform grew by 21.1% to £21.8m, buoyed in
H1 23 by transactional activity and in H2 23 by an increase in
ongoing work across the legal services dispute resolution teams,
underpinned by a good performance throughout the whole Period
from the Platform’s consultancy businesses.
In legal services, the dispute resolution specialists saw an increase
in demand from both UK and overseas clients. This trend is
continuing. Mandates from UK clients are representative of current
economic circumstances and include an increase in instructions
from financial services clients as interest rates rise and lending
tightens, which often results in default or lays-bare fraudulent
activity. Projects from overseas clients include a return of some
activity in Central Europe.
30
We continue to make strategic investment in new dispute service
lines, predominantly in competition litigation, class actions
and international arbitration where, in all cases, we see huge
opportunity and have very recently recruited highly regarded senior
expertise, including from within magic circle law firm.
In consultancy services, activity in our growing patent and trade
mark attorney business was consistent throughout the Period. It
was enhanced by the acquisition of Symbiosis, specialising in the
life sciences industry and adding to Adamson Jones’ expertise in
engineering, medical devices, pharmaceuticals and biotechnology.
Both businesses are working well together with related legal
services across the Group and on shared opportunities. We will
continue to build critical mass in these services where typical
projects are long-dated and our expertise is highly valued by clients
whose businesses are founded upon ideas and inventions that need
to be protected to preserve value. More UK and international client
opportunities exist here and will be realised as we progress our
strategy to grow our business in this space.
In aggregate, consultancy revenue now represents 23.4% of
Business Services Platform revenue.
Corporate Platform
This Platform is focused on the corporate, financial services and
restructuring markets in both transaction and business support
services.
Currently, this Platform is dominated by legal services, some of
which encountered more challenging conditions in H2 23. Despite
this, Platform revenue grew by 1.8% to £38.8m and delivered a
strong contribution margin. It is likely that the Corporate Platform
will always be legal services dominated. This is because our
transactional Corporate teams draw support from consultancy
services which are particular to each transaction, whilst in day-to-
day terms those consultancies find their more natural, “core” home
on one of our other Platforms.
Corporate transactional activity was strong in H1 23, particularly
with our private equity clients and in wider M&A. The corporate
team generated a deal book in that period comprising an
impressive list of complex, high value transactions across a wide
range of sectors, which utilised additional legal and consultancy
services across the Group. Ultimately, the team had another strong
year and the corporate unit remains our biggest internal referrer
of business, with most, if not all, other teams benefitting in some
way. H2 23 transactional activity was more constrained and remains
so. However, the pipeline is reasonable, with anticipated further
improvement in activity in H2 24. This pattern is also reflected in
our banking team, which had a strong H1 23 but saw a drop-off in
support to corporate transactions and a reduction in bank lending
during H2 23. However, the team is now seeing an increase in
loan covenant reset and refinancing work, this being an excellent
example of pro and counter-cyclical revenue opportunities which
exist in almost all of our legal service lines.
Business overview
Strategic report
Corporate governance
Our financials
Our restructuring and recovery teams are a natural counterweight
to transactional activity and following, a sustained period of
quiet trading conditions, activity levels rose by 24% in FY23,
as government pandemic support for companies unwound
and inflationary pressures and interest rate increases impacted
UK businesses. Activity remains strong in these teams and our
restructuring team won the Institute for Turnaround’s Legal Advisor
of the Year Award in 2022, one of the sector’s most significant
awards. Mandates have been generated both in-market and
internally, including working alongside experts in Gateley Vinden
and our legal services construction unit in delivery of market-
leading services to insurers who have bonded construction projects
that have become distressed.
In consultancy services, the team at Gateley Global had a strong
year in continuing to help public and private sector global clients
realise their international expansion plans, inward and outward of
the UK. Revenue increased by 47.4% to £1.1m (FY22: £0.74m). In
addition, the team is a consistent cross-referrer of revenue to other
parts of the Group as clients require mixed services to implement
expansion.
People Platform
This Platform supports clients in dealing with and developing
people and in administering individuals’ personal affairs.
Good activity in both legal and consultancy services grew Platform
revenue by 6.3% to £20.4m. In legal services, our pensions team
had a strong year and performance in our employment team was
good as clients’ HR teams returned to more business-as-usual
activity post-pandemic. Our private client team remains focused on
high-net-worth clients and related opportunities.
In consultancy services, our pension trustee business Entrust,
continues to deliver growing, recurring revenue. The team is seeing
an increase in the number of pension schemes looking to complete
full liability buy-outs, with Entrust at the helm. In addition, more
businesses are looking to out-source management of their pension
schemes, which is generating greater opportunity for Entrust to
grow both organically and via potential acquisitions.
t-three and Kiddy & Partners, our talent assessment, development
and cultural change businesses, are now combined for
management purposes. The team won 67 new clients during FY23
and increased, by 45%, the number of clients buying both t-three
and Kiddy services, with particular focus on scalable products to
high growth clients. Combined revenue grew to £6.7m (FY22:
£6.3m). The pipeline remains strong as most organisations are
looking to develop their people and/or transform in some way.
In aggregate, consultancy revenue now represents 32.7% of People
Platform revenue.
Property Platform
This Platform is focused on clients’ activities in real estate
development and investment and in the built environment in the
widest sense.
Currently, this is our most diverse and mature Platform. It grew
revenue by 33.1% to £81.7m during FY23, significantly assisted by
strong activity across the Platform’s consultancy businesses.
In legal services our real estate development team remains a
market-leader in the warehousing and logistics sector, delivering
cross-Platform services to complex acquisition and development
projects. Whilst activity in the wider commercial property market
eased in H2 23 (and continues to be more subdued), we saw
and continue to see an increase in non-transactional advisory and
dispute resolution services. This includes helping our wide range
of residential development clients navigate regulation under the
high-profile Building Safety Act (post-Grenfell) and advising on
related remediation projects. This is long-dated, specialist work in
which we continue to invest, including by long-term redeployment
of appropriate resource from within the Group to our construction
team, which had a record year and continues to be very busy.
Elsewhere, current economic conditions have resulted in an
increase in work helping or opposing organisations seeking to exit
commercially onerous contracts.
In our market-leading house-builder team, we continue to act for
all of the top developers, many of whom have significantly reduced
their panel of advisors in favour of larger providers who cover all
bases, which describes us both geographically and in service lines.
This should result in more work for the team. Despite the fact that
developers are currently finding the retail housing market slow, we
continue to handle over 50 large strategic residential-led schemes,
with over 1,000 new homes each. Our clients need to continue
to build and sell and have other areas for which they require our
services. This includes an increase in advising on shared ownership
framework agreements and in bulk sales to housing associations and
build-to-rent investors. In addition, housing-led urban regeneration
work continues to attract public and private funding. We act for all of
the leading developers in this space and remain busy with schemes
where our unique combination of legal and consultancy services is
relevant to the whole life cycle of the project.
In consultancy services, FY23 was the first full year of Gateley
Smithers Purslow following our diversification into specialist
services to the property insurance complex claims market. Gateley
Smithers Purslow contributed revenue of £13.8m (FY22: £0.6m),
representing annualised growth for that business of 26.1%. We also
saw strong revenue growth of 25.6% from Gateley Vinden’s broad
range of specialist services and growth of 19.9% from Gateley
Hamer, which is carrying a strong pipeline of work in regeneration,
energy and telecoms projects.
31
Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Chief Executive Officer’s review
continued
Our recently announced post-Period acquisition of surveyors
Richard Julian and Associates Limited (“RJA”), extends our reach
to organisations that deliver affordable housing, a resilient sector
underpinned by high levels of grant to support delivery of the
Government’s housing targets. The team also has specialists in
major loss property claims, which will enhance related expertise in
both Gateley Smithers Purslow and Gateley Vinden.
We maintain our view that the range of expertise now housed on
our Property Platform puts us in position to compete with well-
established, multi-disciplinary property consultancies in the wider
market given that FY23 consultancy revenue represented 35.3%
of Property Platform revenue, which will be enhanced by RJA’s
contribution in FY24.
Operational review
During the year, we invested in and delivered the phase one
implementation of a new, market leading business management,
productivity and financial system, 3E. This caused some short-term
disruption to parts of the business during Q1 23, however, phased
adoption enables system adaptation based on learnt experience.
We are delighted with the system and its functionality and are now
looking forward to integrating the remainder of the Group during
the remaining phases. This investment was essential for integration
of our growing Group. The ability to drive increasing scale through
a single system should help us to improve our margin over the
longer term.
We also made sensible investments in our office facilities to
continue to improve and adapt them to agile working. This is an
ongoing exercise, in parallel with the consolidation of offices in
our network and the gradual release of vacated space. We have
identified further synergies and savings in this regard. Whilst these
will take time to realise, our objective is to reduce our office cost in
the medium term.
In line with our differentiation strategy, we have focused our
internal messaging on the power of our Platforms in delivering
commercial, joined-up solutions for our clients. In-Period, this
involved a refresh of our website, aligning all services and insights
according to the Platforms; the publication of four Platform
magazines which share perspectives on the hot topics facing
organisations such as equality, diversity and inclusion, innovation
and maximising infrastructure efficiencies; and the sharing of case
studies and client stories, which demonstrate how the Platforms
collaborate to deliver cost-effective solutions.
People and Culture
Attracting, developing and motivating talent, at all levels across
the Group, is a key objective every year. In FY23, overall headcount
in the Group increased by 6.4% to 1,455 (FY22: 1,368). Legal
services headcount growth was 1.9% to 1,097 employees (FY22:
1,077), following growth of 1.7% and 9.0% respectively in FY21
and FY22. Consultancy headcount increased by 23.0% to 358
(FY22: 291), primarily as a result of acquisitions.
The Gateley offering remains differentiated and our broad range
of career opportunities is attractive. We continue to evolve our
people strategies to drive a stimulating, purposeful and rewarding
environment in which our people can progress their careers.
We recently announced a total of 126 internal promotions and
celebrated these across the Group.
The ability for all of our people to participate in share ownership is
attractive and represents a recruitment differentiator. I am pleased
for all of our option holders that our FY23 result satisfied the
three-year performance criteria set in the first LTIP awards scheme
granted in FY20 and also underpins the performance criteria
applicable to our in-flight LTIP schemes. Alongside this, our wider
CSOP and SAYE schemes will mature during FY24 resulting in the
release of circa 3.4m shares to scheme participants. All of this is
in line with our strategy of creating wider equity participation for
more of our people. Currently circa 65% of our people either hold
shares or participate in share schemes.
Once again, we owe the success of our business to the quality and
dedication of our people at all levels. Clients come to us for our
broad specialist knowledge and experience and our determination
to deliver results for them. As we extend our range of services, our
strong client relationships enable more cross-selling opportunities,
which remains a key focus for us in generating further organic
growth.
Responsible Business
Being a responsible business is now an integral part of our purpose
and there has been good momentum in our responsible business
strategy since we published our second annual report in December
2022. We have introduced 15 new objectives for FY 24 and
confirmed our intention to reduce our CO2 emissions by 50% by
2030 and to become net zero by 2040.
The release of our third responsible business report is imminent
and will contain a detailed review of our progress during FY23.
Current trading and outlook
Looking forward, like all companies, we are mindful of ongoing
macro-uncertainty. It seems that inflation and interest rates will be
in the economic headlines for the immediately foreseeable future.
Our expectation is that transactional activity in H1 24 is likely to
be more constrained than the comparative strong H1 23, but with
better trading conditions anticipated in H2 24. In the meantime,
non-transactional and consultancy business activity and the pipeline
across our increasingly resilient Group remains good.
The professional services industry in the UK has demonstrated
steady growth through multiple cycles over the last twenty years.
Since our IPO, Gateley has outperformed this already strong
backdrop through a combination of organic growth and carefully
selected acquisitions. Our strategy has been to build a diversified
group of complementary and additive businesses, based on a legal
services foundation, that can continue to deliver growth through
the cycle. As the Group continues to expand, we have more
choice in how to deploy our investments in the wider legal and
professional services market. In the meantime, notwithstanding
more challenging shorter-term trading conditions for some of
our business lines, we remain confident in our vision and ability to
deliver.
The Group enters FY24 with a positive mindset and cautious
optimism.
Roderick Waldie
Chief Executive Officer
5 September 2023
As the Group continues to expand, we have more
choice in how to deploy our investments in the legal
and wider professional services markets. In the
meantime, our mix of services remains unique and
clearly enhances our resilience, as evidenced in our
FY23 results, during a more challenging period for
transactional legal services overall. Our diversification
strategy is clear and proven.”
Rod Waldie, Chief Executive Officer
32
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Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Chief Executive Officer’s Q&A
Chief Executive Officer, Rod Waldie, talks here about how the year has gone and priorities
for the future.
What is your appraisal of market
conditions during the last 12 months
and how are things shaping up for
professional services businesses
into 2024?
The speed of effects is an incredible thing in the modern
world. An already fragile UK plc discovered this in the wake
of the political chaos last autumn which closely followed the
unrest in Central Europe.
We know that macro-economic conditions have made it
difficult for many advisory businesses to absorb the high costs
of the post-pandemic rebound at the same time as seeing a
dip in demand. That said, Gateley’s foundations remain strong.
We have a sound strategy to continue to build a diverse and
resilient professional services group. This strategy is supported
by a strong balance sheet and net cash at bank.
Looking forward, like all companies, we are mindful of
ongoing macro-uncertainty. It seems that inflation and
interest rates will be in the economic headlines for the
immediately foreseeable future. Our expectation is that
transactional activity in the first half of this year is likely to
be more constrained than the comparative strong period in
the first half of the last financial year, but with better trading
conditions anticipated in the second half of the year. In
the meantime, non-transactional and consultancy business
activity and the pipeline across our increasingly resilient
Group remains good.
The professional services industry in the UK has demonstrated
steady growth through multiple cycles over the last twenty
years. Since our IPO, Gateley has outperformed this already
strong backdrop through a combination of organic growth
and carefully selected acquisitions. As the Group continues to
expand, we have more choice in how to deploy our investments
in the wider legal and professional services market. In the
meantime, notwithstanding more challenging shorter-term
trading conditions for some of our business lines, we remain
confident in our vision and ability to deliver.
What are your growth ambitions
for the Group and where do the
biggest opportunities lie?
We spent some time with our leadership teams and
senior management at our ‘Platform for Growth’ themed
annual conferences this year, talking about growth
and considering the importance of growth mindset in
achieving it. There is no doubt that growth mindset
crafted Gateley. You only have to look at our history and
track record to see that.
Ideas from within continue to fuel our growth and
enhance our Platforms. We continue to invest in
opportunities to enhance the quality and diversity of
revenue. This includes deliberately investing in businesses
and workstreams that should be agnostic as to the
economic climate. As well as generating quality revenue
they enhance our resilience. I think that it’s important to
emphasise this as being part of our strategy given current
macro-economic challenges.
In uncertain and challenging times there always comes
opportunity. Opportunities to work together in new ways
and to tap into new markets. Opportunities to develop
our people and our emerging talent. And opportunities
to accelerate our growth and build on our successes to
ensure we can continue to grow in a sustainable way.
How do you plan to further develop
your Platform strategy and what
have been the highlights this year?
We have a highly focused market proposition and
differentiate ourselves by making selective investments
in, and growing, quality legal and consultancy services on
each of our four Platforms, focused on our core markets
of Business Services, Corporate, People, and Property.
Key to the successful development of our Platform
strategy is ensuring it is communicated and understood
internally, right across the Group. This year we have
worked hard to focus our internal messaging on the
power of our Platforms in delivering commercial, joined-
up solutions for our clients. This has involved a refresh of
our website, aligning all services and insights according
to the Platforms; the publication of four bi-annual
Platform magazines which share perspectives on the hot
topics facing organisations such as equality, diversity
and inclusion, innovation and maximising infrastructure
efficiencies; and the sharing of case studies and client
stories, which demonstrate how the Platforms collaborate
to deliver cost-effective solutions.
How much of a priority is your
responsible business strategy and
what are your objectives for the next
12 months?
An absolute priority. It’s led from the top and is threaded
throughout our organisation, being intrinsically linked to
our Purpose. You can see more details on this outlined in
the Responsible Gateley section of this report on page 17.
We are publishing our third annual Responsible Business
report shortly which outlines activity for the year ended
30 April 2023. We achieved all 15 of the targets that we set
ourselves for that year and in doing so reinforced the belief
that an integrated Responsible Business strategy develops
solutions that positively impact our people, the planet and
profit. Our work here is ongoing in line with our Purpose to
deliver results that delight our clients, inspire our people
and support our communities.
We have set ourselves a new set of 15 objectives for the
current financial year and are already making progress on
many of these.
These objectives include, amongst other things, delivering
on our sustainability action plan including securing a new
partnership with an environmental charity to support
this ambition and exploring the achievement of carbon
neutral certification for the Group; collaborating on more
community projects with clients and enabling our people
to be more widely involved in that through our recently
launched volunteering policy; launching a new Responsible
Business podcast, The Purpose Pod; partnering with
more schools through our outreach programme aligned
to our offices with the aim of encouraging more diversity
of candidates applying for roles in law in the future and
continuing to build on our commitment to the Workplace
Menopause Pledge through our recently launched
menopause policy, support group and menopause cafés.
Gateley Smithers Purslow (GSP) is a good example of
how our Platform businesses have worked together
this year. The business houses some service lines that
complement what our excellent Gateley Vinden business
does but in parallel with some experts in Gateley Vinden,
at its core, GSP is a provider of specialist services to
the UK property insurance market. This is a market that
generates work no matter what the economic climate
is. Add further to that the recent strategic acquisition
in July of Gateley RJA, a fast-growing business that
complements the existing market leading expertise within
Gateley Legal’s residential development and construction
teams as well as GSP and Gateley Vinden. Its core market,
which is affordable housing, is a buoyant sector and the
deeper reach into that market adds further resilience to
the Group’s Property Platform.
There are also some highlights in our legal services
business. On the Business Services Platform, we’ve
recently invested in a complex class actions practice.
This includes complex claims where liability has already
been established and the core arguments are around the
quantum of loss. The types of clients in the class that we
are representing are corporate and financial institutions
of a type that we want to act for in other parts of our
Group. There are potential opportunities across other
Platforms here. In addition, we have two experienced
litigators who have recently joined us from a Magic Circle
firm to create an International Arbitration workstream.
This is an excellent field of work and accessing it with
this established expertise will be a real breakthrough for
us. Again, the type of client typically involved here is the
type that we want to be acting for more widely. All of
these areas of work are quality and sit well alongside the
existing complex litigation and recoveries work that we
do elsewhere on the Platform.
A particular highlight for me has been how well our two
patent attorney acquisitions onto the Business Services
Platform have started to collaborate and in tandem with
the IP teams within our legal business.
The acquisition of Symbiosis in October 2022, which
specialises in the life sciences industry has added
weight to Adamson Jones (acquired in January 2022)
whose expertise lies predominantly in engineering,
medical devices, pharmaceuticals and biotechnology.
Both businesses are working really well together with
related legal services across the Group and on shared
opportunities. We will continue to build critical mass in
these services where typical projects are long-dated and
our expertise is highly valued by clients whose businesses
are founded upon ideas and inventions that need to be
protected to preserve value. More UK and international
client opportunities exist here and will be realised as we
progress our strategy to grow our business in this space.
34
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Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Chief Financial
Officer’s review
The year continued our long track
record of underlying profitable
growth through a blend of
organic expansion and
acquisition which consistently
delivers attractive returns
for all stakeholders.”
Neil Smith
Chief Financial
Officer
Financial overview
The Group has grown strongly, despite the challenging economic
backdrop of FY23, through a combination of organic and acquired
growth, with revenue up 18.6% to £162.7m. Organic revenue
growth from legal services was 4.9%, with exceptional organic
growth of 18.4% from consultancy service lines, demonstrating our
strategy to build and diversify into a broader professional services
group, augmented by our acquisition strategy, which continues to
enhance our offering to clients and sets us apart from our listed
and unlisted peers.
We saw strong activity levels at the start and the end of the
financial year, and despite the September 2022 to December
2022 impact of the mini-budget, the Group overall delivered fee
earner utilisation levels at 89% on average across the year. This
mid-year pause also caused a delay in the completion of a number
of assignments which pushed the billing point, and revenue
recognition, into FY24.
FY23 included a full year of costs for Gateley Smithers Purslow and
Adamson Jones, and six months of costs following the acquisition
of Symbiosis in October 2022. Despite this, the Group’s strong cost
control and adherence to its important cost to revenue metrics,
during a period of significant inflationary pressure, has remained
a key focus and assisted significantly in the growth in underlying
profit before tax of 16.2% to £25.1m. Underlying operating profit
margin remained above the 15% group-wide target at 15.4%,
compared to 16.4% in FY22, whilst staff costs remained at c.60% of
fees. Whilst delivering market expectations, due to the challenging
economic back drop, our audited result was below the threshold
triggering discretionary staff bonus payments.
Our EPS performance will generate meaningful rewards post year-
end to our LTIP, CSOP and SAYE option holders and our dividend
per share remains strong, even in an environment of higher interest
rates, for all shareholders.
Our revolving credit facility has significant headroom and with
a closing net cash position of £4.3 million we are well-placed
to capitalise on current market conditions, as we have done
previously, to enable further expansion and growth.
Post period end, on 19 July 2023, we were pleased to announce the
acquisition of Richard Julian and Associates Limited, trading as RJA
Consultants (“RJA”), a fast-growing business that complements
the existing market leading expertise within Gateley Legal’s
residential development and construction teams. Its core market,
which is affordable housing, is a buoyant sector and the deeper
reach into that market adds further resilience to the Group’s
Property Platform. Total consideration is up to £6m including,
subject to certain revenue targets being achieved, an incremental
profitability-based earn-out, in respect of each twelve-month
period expiring 31 March 2024 and 31 March 2025. The acquisition
is expected to generate operational synergies and be immediately
earnings enhancing.
Revenue and margin by platform
Group total revenue grew by 18.6% (FY22: 13.0%) to £162.7m (FY22: £137.2m). Revenue from core legal service lines grew organically by
4.9% (FY22: 8.7%). In addition, total revenue from consultancy businesses grew by 96.4% to £41.8m which now represents 25.7% of total
revenues (FY22: £21.3m or 15.5%), highlighting the ongoing success of our Platforms’ diversification strategy.
Despite the Group continuing its important investment in people, it has lowered its percentage of personnel costs to revenue in FY23 to
59.5% (FY22: 63.0%) and we will continue to sensibly manage this key metric as market conditions improve. The full effect of staff wage
inflation over the last two years has now been absorbed into our personnel cost base causing our Group and Platform margins to decrease
from pre-pandemic levels. We do, however, expect to see an improvement in FY24 as the lagged effect of price increases continues to work
through the assignments we work on. Price increases in some aspects of professional services with fixed term pricing arrangements that
span multiple years typically lag behind more immediately adjustable pricing structures elsewhere in our Group.
Contentious work types continue to increase in nature and volume as down-cycle trends are starting to materialise in our work streams
across all of our Platforms. The sluggish nature of the UK economy continues to extend and pause a number of transactional activities,
especially those needing debt support.
The table below represents Platform performance over the last two reported years along with each Platform’s direct contribution towards
our one profit view of the Group’s performance.
FY23
Revenue
Segmental contribution
Contribution margin
FY22
Revenue
Segmental contributions
Contribution margin
Revenue movement (%)
Contribution margin change (%)
Business
Services
£m
21.8
5.3
24.4%
18.0
5.7
31.7%
21.1%
(7.3)ppts
Corporate
£m
38.8
13.9
36.0%
38.1
15.4
40.4%
1.8%
(4.4)ppts
People
£m
20.4
6.0
29.3%
19.2
6.9
35.9%
6.3%
(6.6)ppts
Property
£m
81.7
31.1
38.1%
61.3
23.0
37.5%
33.3%
0.6ppts
Total
£m
162.7
56.3
34.6%
136.6
51.0
37.3%
19.1%
(2.7)ppts
Underlying operating profit before tax
The Group has recorded strong underlying operating profit before tax of £25.0m, up by 11.1% from £22.5m in FY22. Whilst we have
continued to invest across the business in our legal and consultancy teams, a particular focus has been on headcount investment in Gateley
Smithers Purslow since its acquisition in April 2022.
Continuing and robust demand for UK legal services, which led to continued wage inflation pressure in the UK professional services
recruitment market, has alleviated in our business following our extensive pay review processes of the last two financial years. Whilst our
underlying trading margins have decreased slightly to 15.4% (FY22: 16.4%) we expect operating overheads to level out in FY24 and wage
inflation to return to more normalised levels, compared to double digit increases seen across each of the FY22 and FY23 financial years.
Underlying operating profit before tax excludes amortisation of acquisition related intangibles, all share-based charges and exceptional
acquisition related items, including the acquisition accounting treatment of consideration payments on acquisitions being reclassified
as employment costs in the income statement, as well as gains on bargain purchases arising from the related restatement of acquisition
accounting, as further described below. Underlying operating profit before tax has been calculated as an alternative performance measure
in order to provide a more meaningful measure and year-on-year comparison of the profitability of the underlying business.
36
37
Chief Financial Officer’s review
continued
Extract of UK statement of comprehensive income
Revenue
Operating profit
Operating profit margin (%)
2023
£’000
162,683
16,122
9.91
Restated
2022
£’000
137,249
27,723
20.20
Reconciliation to alternative performance measure: underlying operating profit before tax
Operating profit
16,122
27,723
Non-underlying items
Amortisation of intangible assets
Share based payment charge – Gateley Plc
Share based payment charge – Gateley Smithers Purslow Limited
Contingent consideration treated as remuneration
Gain on bargain purchase
Acquisitions costs
One off remuneration charge – Gateley Smithers Purslow Limited
Underlying operating profit before tax
Adjusted underlying operating profit margin (%)
2,073
1,984
-
6,190
(1,389)
-
-
24,980
15.36
1,581
1,100
113
3,509
(12,380)
373
497
22,516
16.41
Personnel costs and operating expenses
Our total personnel costs increased by 11.9% (FY22: 11.7%) to £96.8m, as average numbers of legal and professional staff rose by 25.0%
(FY22: 3.9%) to 1,000 (FY22: 800), whilst support staff numbers rose by 25.4% to 439 (FY22: 350). This was due to the impact of staff
introduced to the business via acquisitions at the end of FY23 and during the year, predominately in consultancy services. However, as a
result of the decisions and impact of external factors referred to earlier in this note, personnel costs as a percentage of fees decreased to
59.4% of revenue from 63.0% in FY22, excluding share-based payment charges.
Operating expenses have increased by £12.5m or 53.0% to £36.1m (FY22: £23.6m) due mainly to the investment in new systems and the
full year impact following the acquisitions of Gateley Smithers Purslow and Adamson Jones. Like-for-like overheads in specific areas such as
travel, marketing and premises have increased as we have seen a greater return to office usage and client interaction during FY23 than in the
previous two financial years. On top of this we have not been immune to the effects of current UK-wide inflation impacting ongoing running
costs. Overall, operating overheads have increased as a percentage of revenue from 17.2% in FY22 to 22.2% in FY23 but are expected to
normalise at this level during FY24 as we continue to work on operational efficiencies across all aspects of the Group.
Restatement of acquisition accounting
During my tenure as Chief Financial Officer of the Group I have always believed it important to keep the accounting treatment as simple as
possible and to aid understanding of the Group’s financial statements. I have avoided using alternative performance measures where they were
not necessary to improve the understanding of the underlying trading performance of the Group. We have accounted sensibly for the substance
of all acquisitions as capital in nature and classified them as investing, activities so that cash generated from trading is separately visible from cash
used for investment purposes. The accounting profession’s view has been constantly evolving on the application and interpretation of various
accounting standards and as a result of recent changes to the application of IFRS 3 (Business Combinations) many companies have been required
to reassess and restate their accounts where there are earn outs relating to acquisitions. Payments for contingent consideration are now required,
in many relevant circumstances to be treated as remuneration for post-combination services causing a charge to the income statement rather than
treating those payments as capital in nature whereby consideration is recognised on a company’s balance sheet as goodwill.
We have been cognisant of this judgemental area and the interpretation of this standard which is why in assessing it in the previous year’s
financial statements we disclosed fully the rationale for continuing to class all consideration as capital in nature. After discussions with the
Financial Reporting Council, and in the best interests of reaching a sensible conclusion to those discussions, we have decided this year to
change our accounting treatment on past acquisitions, from FY23 with the prior year, FY22, being restated to reflect this change. This
judgement and accounting treatment will be applied to future periods where applicable.
Business overview
Strategic report
Corporate governance
Our financials
Whilst not affecting the underlying performance of the Group in any way, the Group’s reported performance now reflects the above
change, bringing statutory results in line with prevailing applicable financial reporting standards. Therefore, this year we have restated the
statement of profit and loss and other comprehensive income, Group statement of financial position and Group cash flow statement in
respect of a change of IFRS 3 accounting treatment for consideration paid on all relevant historical acquisitions. These changes have no
impact on Group cash, however they do now classify all previously disclosed investing activities for applicable acquisitions as operating in
nature. A restatement of such entries has also been made.
The net impact of these changes on the statement of profit and loss and other comprehensive income is to typically increase reported
profits after tax as a result of recognising profit from bargain purchase gain accounting immediately upon acquisition, followed by decreases
in profit after tax in subsequent reporting years as a result of releasing the paid and expected to be paid total consideration as a non-
underlying expense as remuneration for post-combination services is released over the relevant period. The impact on the balance sheet is
to treat initial consideration as a prepayment and to reduce the goodwill previously created in the Group. Any contingent consideration is
accrued over time building a liability to be paid or not when measurement is possible.
Note 33 in this report discloses in full the judgements applied resulting in this change.
Earnings Per Share (EPS)
Basic EPS decreased by 49.5% to 9.77p (restated FY22: 73.1% to 19.35p). Basic EPS before non-underlying and exceptional items
increased by 12.1% to 16.71p (FY22: 10.6% to 14.90p). Diluted EPS decreased by 49.6% to 9.52p (restated FY22: increased by 70.2% to
18.89p). Diluted EPS before non-underlying and exceptional items increased by 12.0% to 16.28p (FY22: 10.4% to 14.54p).
Share option schemes
Over 65% of our people are existing share or option holders in the Group. The board remains committed to providing its people with the
opportunity to own shares in the Company, as further evidenced by the continued issuance of restricted shares awards (RSAs) across
senior leaders within the Group during the year. Such share ownership promotes strong alignment with the Group’s external shareholders,
incentivises employees and is reflective of Gateley’s long-established culture of long-term ownership. The RSAs, which vest on receipt, are
made on a discretionary basis when an individual is promoted to partner or an equivalent position and also for lateral hires performing in
line with their expected business plan. Awards are subject to a five-year non-dealing restriction and are forfeited should employment cease
within that period. 1,175,000 RSAs (FY22: 1,267,560) shares were awarded on 23 February 2023.
The board also announced in February 2023, a third vintage of LTIP awards to certain Executive Directors and Senior Management over up
to 1,360,000 Ordinary Shares of 10 pence each in the Company (“Ordinary Shares”). Awards under the LTIP vest at the end of a three-year
period, dependent upon the achievement of profit-related performance conditions and continuous employment.
Profits used to calculate underlying EPS each year are disclosed below:
Reported profit after tax
Adjustments for non-underlying and exceptional items:
– Amortisation of acquired intangible assets
– Share-based payment adjustments
– Contingent consideration treated as remuneration
– Gain on bargain purchase
– Impairment of software development costs
– Acquisition-related costs
– Tax impact of above
Underlying profit after tax
2023
£’000
12,240
2,073
1,984
6,190
(1,389)
-
-
(168)
20,930
2022
£’000
23,023
1,581
1,213
3,509
(12,380)
-
870
(94)
17,722
2021
£’000
13,157
2,073
956
-
-
-
-
-
16,186
2020
£’000
11,723
1,375
1,355
-
-
463
107
(20)
15,003
Weighted average number of ordinary shares for calculating diluted
earnings per share
128,527,341
121,893,238
118,508,833
115,599,727
Underlying adjusted fully diluted EPS
16.28p
14.54p
13.66p
12.98p
38
39
Gateley (Holdings) PlcAnnual report and financial statements Chief Financial Officer’s review
continued
Taxation
The Group’s tax charge for the Period was £4.0m (FY22: £3.8m) which comprised a corporation tax charge of £5.0m (FY22: £4.0m) and a
deferred tax credit of £1.0m (FY22: credit of £0.2m).
The deferred tax charge arises due to a combination of credits in respect of the share schemes that have vested in past years and the
release of deferred tax on brands. The total effective rate of tax is 22.6% (FY22: 21.2%) based on reported profits before tax. The increase
in the effective rate of tax is as a result of the change in treatment of earn-out related consideration on acquisition now being disclosed as a
remuneration charge. Such charges are not allowable for corporation tax purposes.
The net deferred taxation liability decreased to £2.1m (FY22: £2.5m) as a result of the increased deferred tax asset recognised on share-
based payment schemes yet to vest.
Dividend
The Group paid an interim dividend of 3.3p per share on 31 March 2023 and proposes a final dividend at the Company’s Annual General
Meeting on 17 October 2023 of 6.2p (FY22: 5.5p) per share, which if approved, will be paid in October to shareholders on the register at
the close of business on 29 September 2023. The shares will go ex-dividend on 28 September 2023. The board’s dividend policy remains to
distribute up to 70% of specifically adjusted profit after tax to shareholders, whereby the adjustment relates to the remuneration for post-
combination services and gains on bargain purchase, typically one third following its half year results and two thirds after the full year results
are known. Despite the changes arising from acquisition accounting on FY23 profit after tax, the board has decided to propose the same
value of dividend as would have resulted from paying 70% of profit after tax.
Balance sheet
The Group’s net asset position has increased by £3.0m (FY22: £22.3m) to £78.1m (FY22: restated £75.1m), due to the following movements:
There was a £2.2m increase in total current assets, resulting from £1.7m additional trade and other receivables through acquired businesses
and the strong organic growth of the Group. Contract assets (“unbilled revenue”) increased by £3.1m and cash at bank decreased by £5.0m as
excess cash was redeployed into acquisitions and to support working capital required for continued growth.
Non-current assets increased by £2.4m, resulting predominantly from an increase of £2.5m from a change in property use and right of use
asset values as a new lease was entered into in our London office.
The board has carefully considered the impact of macro-economic uncertainties, on the future forecasts used in assessing the value in use
of the cash generating units to which the goodwill and intangibles relate and determined that, despite short term reductions, such forecasts
are more than sufficient to justify the carrying value of goodwill. Therefore, as at 30 April 2023, the board concluded that the goodwill and
intangible assets do not require impairment.
Total liabilities decreased by £0.8m, due to the reduction in accrued bonus offset by the increase in lease liabilities and draw down of loans to
fund the acquisition of Symbiosis Limited.
Cash flow
During the year, the Group increased its usage of its revolving credit facility from £5.7m to £6.8m. The facility provides total committed
funding of £30m until April 2025, split equally between Bank of Scotland and HSBC UK, that is specifically earmarked to fund growth and
expansion via acquisition. Interest is payable on the loan at a margin of 1.95% above the SONIA reference rate.
The Group also has in place a litigation funding facility for an initial £20m of funding towards significant litigation cases, which has the ability
to increase to £50m if required. To date the Group has not yet utilised this facility but has a number of large assignments currently being
assessed for consideration in FY24.
Cash generation was once again good with net cash inflows from operating activities of £9.7m (restated FY22: £5.3m) representing 79.6%
(restated FY22: 23.1%) of profit after tax. The Group ended the year with net cash of £4.3m (FY22: £10.4m), the result of continued
strong trading and also management’s sustained focus on cost efficiencies and costs management.
Adjusted free cashflow during the year from operations after adjusting for IFRS 16 and IFRS 3 specific items noted in the table below) was
£6.0m (FY22: £7.4m), which represents an increase to 48.8% (FY22: 32.0%) of reported profit after taxation (“PAT”). Adjusted free
cashflows therefore represent a decrease to 28.3% (FY22: 41.4%) of underlying PAT as the Group saw a decrease in margin this year and in
continuation of its investment in capital expenditure, mainly through its new finance system. These movements were partially offset by an
increase in interest received.
Business overview
Strategic report
Corporate governance
Our financials
Net cash generated from operations
Tax paid
Net interest paid
Cash outflow from IFRS 16 leases (rental payments excluded from operating cash flows under IFRS 16)
Cash outflow paid on acquisitions
Purchase of property, plant and equipment
Purchase of other intangible assets
Free cash flow
Underlying profit after tax
Free cash flow (%)
Adjusted free cash flow
Profit after tax
Non-underlying operating items
Exceptional items
Underlying profit after tax
Free cash flow
2023
£’000
14,065
(4,320)
1,393
(4,579)
1,518
(1,312)
(787)
5,978
12,240
48.8%
12,240
8,858
-
21,098
28.3%
Restated
2022
£’000
9,805
(4,497)
1
(3,870)
7,033
(775)
(319)
7,378
23,023
32.0%
23,023
(6,077)
870
17,816
41.4%
Overall, working capital levels remained in line with the previous year, as unbilled revenue represented 53 days in line with last year, of Pro-
forma net revenue and Group debtor days have remained at 113 days of Pro-forma net revenue which includes revenue from acquisitions on
a full year pro-forma basis. As the Group continues to grow strongly, our volume of debtors has grown proportionately. We have made a good
start to collections in FY24. Unbilled revenue recognised in the Group’s statutory accounts, from time recorded on non-contingent work,
totalled £20.4m or 12.5% of revenue recognised over the year (FY22: £17.2m or 12.5%).
Summary
FY23 continued our long track record of underlying profitable growth through a blend of organic expansion and acquisition which consistently
delivers attractive returns for all stakeholders. Results for FY23 reflect another strong year for the Group. They include good organic growth
across our legal foundations in a tough market and strong organic growth from consultancy service lines, aided significantly by the full year
impact of prior year acquisitions. We have maintained rigid control of costs despite both market specific and macro-economic challenges,
and we have a strong balance sheet with significant facility headroom to further expand the Group both organically and through acquisition.
Share ownership rewards for our staff continue to play a significant part in our vision of wider, long-term connectivity across the Group and will
deliver a significant opportunity to all staff in FY24 and beyond.
Neil Smith
Chief Financial Officer
5 September 2023
40
4141
Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Principal activity, objectives,
strategy and outlook
The principal activity of the Group during the year was the provision of
commercial legal services together with complementary professional consultancy
services. The Group sells its services through 25 business lines, grouped into four
operating segments, known as Platforms. Dependent on a client’s requirements,
any given instruction or assignment can involve more than one business line with
fee earning staff being provided across one or more geographical office location.
The Group’s services are tailored to those required by local,
regional and national clients and are provided from twenty offices
across the UK, as well as an office in Dubai. Gateley also maintains
informal, non-exclusive, relationships with a number of law firms
(30+) around the world, enabling it to provide clients access to a
global legal solution.
Gateley became an Alternative Business Structure (“ABS”) with
effect from 1 January 2014. Non-lawyers are permitted to own
and invest in ABS law firms. The board believes a combination
of the ABS structure and admission to trading on AIM provides
a platform for the continued profitable growth and future
diversified development of the business. It enables the business
to differentiate itself from its competition through an enhanced
service-offering and unique career opportunity, to diversify
its revenue streams through the acquisition of additional
complementary legal and professional consultancy service
businesses and finally to incentivise its people offering wider and
earlier ownership to staff of a more modern, dynamic business.
The Group’s current areas of focus are:
Enhanced opportunities to grow Gateley
organically – including lateral hires of individuals
or teams
Making selective acquisitions, including (i)
other legal firms which offer geographical
expansion or additional specialist services and
(ii) professional consultancy service businesses
offering complementary services
Building out the Group’s Platforms which
comprise clusters of complementary Group
services presenting a broader and more
compelling offering
Alignment through share participation, of the
interests of shareholders (including employee
shareholders) with those of the business, aiding
retention of staff and enhancing Gateley’s
recruitment appeal.
Organic growth strategy
The UK legal services market continues to exhibit growth and clear
opportunities exist for Gateley to continue to differentiate its
service offering and grow organically, in particular from:
Incentivisation
Gateley operates a range of employee share schemes that ensure
all staff can acquire shares and participate in the financial success
of our business.
The retention of existing employees, working together to
deliver 100% client satisfaction by looking after our clients’
businesses as if they were our own
The aim of encouraging earlier and widespread equity ownership in
the business is to attract, retain and motivate talent and to ensure
all employees can benefit from the Group’s longer-term success.
•
•
•
•
•
•
•
Attracting new talent wishing to be a part of a pioneering
professional services group
We will continue to provide enhanced cross-selling
opportunities through collaborative working via our Group
wide Platforms
Continued strengthening of our national network, offering a
quality, value-for-money legal service to mid-market clients at
home, in the markets in which they trade
Continue to build upon our straight-talking mid-market
corporate service offering
Maintaining and building upon Gateley’s bank panel
representation and “own account” work for banks
Extending Gateley’s relationships with the UK’s leading house
builders and in particular in those divisions and regions where
Gateley does not currently act
Acquisitive growth
Gateley believes that it can strengthen its business by broadening
its service offering through the acquisition of complementary
legal and consultancy service businesses. A broader set of
services create additional channels to market, increase cross-
sales potential, facilitate a more flexible sales model and enhance
client retention. To owners of target complementary professional
services businesses Gateley offers a platform for their continued
growth, drawing upon Gateley’s established national office network
and supporting back-office infrastructure and access, via Gateley’s
existing “sales force” of partners and other lawyers, to Gateley’s
existing client-base. Gateley will expand by:
•
•
•
being well positioned, as a result of its more flexible corporate
structure, to take advantage of anticipated consolidation within
the UK legal services industry
acquiring legal teams or firms offering new niche services,
sector specialism, or an opportunity to enter new geographic
markets deemed strategic
acquiring complementary professional services businesses
(facilitated by the Group’s alternative business structure)
Overview for the year
See Chief Financial Officer’s report on pages 36 to 41 for a
summary of key financial highlights during the year.
Management uses a number of financial and non-GAAP alternative
performance measures to assess the performance of the Group
which are detailed below.
Financial Measures:
•
Revenue up 18.6% (2022: 13.0%) to £162.7m (2022:
£137.2m)
•
•
•
•
Underlying profit before tax up 16.2% (2022: 11.9%) to
£25.1m (2022: £21.6m)
Profit after tax down 47.0% (2022: up 74.2%) to £12.2m
(2022: £23.0m)
Operating profit margin 9.9% (2022: 20.2%) – Operating profit
as a percentage of revenue
Basic Earnings per share (EPS) down 49.5% (2022: up 73.1%)
to 9.77p (2022: 19.35p)
•
Total dividend declared up 11.8% to 9.5p (2022: 8.5p)
Alternative Performance Measures (APMs):
•
Operating profit before non-underlying charges up 11.1%
to £25.0m (2022: £22.5m). Operating profit before non-
underlying charges excludes income or expenses that relate to
acquisition related amortisation, share based payment charges
and non-underlying and exceptional items, see reconciliation on
page 38. This measure is used as it removes the impact of non-
cash items charged to the income statement, giving a more
representative view of the Group’s performance for the year.
•
•
Operating profit margin before non-underlying and exceptional
charges 15.4% (2022: 16.4%) – Operating profit before non-
underlying and exceptional charges as a percentage of revenue.
Revenue per pound of salary cost £1.68 (2022: £1.59):
Employees are the driving force behind revenue earned and
also the largest operating expense within the Group. Therefore
this measure is vital in monitoring the ratio between the two.
42
43
Principal activity, objectives,
strategy and outlook
continued
Business overview
Strategic report
Corporate governance
Our financials
Revenue days 113 (2022: 113): This measure expresses year
end trade receivables (excluding unbilled disbursements and
expenses) as the number of preceding days’ gross revenue. The
measure is used to monitor the cash generation and working
capital cycles of the business with the view to minimise the
average days taken to collect revenue once it is billed.
The Group continues to work closely with its supportive banks,
utilising the three-year revolving credit facility, of which £7m was
drawn down at 30 April 2023, with committed funding of £30m
until April 2025. As at 30 April 2023 the Group has net cash of
£4.3m and continues to sensibly manage its cash position within
permitted covenants relating to its facility.
This process included a reverse ‘stress test’ used to inform
downside testing which identified the break point in the Group’s
liquidity. Whilst the sensitivities applied do show an expected
downside impact on the Group’s financial performance in future
periods, in all scenarios modelled the board have identified the
appropriate mitigating actions in order for the Group to maintain a
robust balance sheet and liquidity position. In addition, the board
have also considered mitigating actions such as lower capital
expenditure, reductions in personnel and overhead expenditure
and other short-term cash management activities within the
Group’s control as part of their assessment of going concern.
The Group expects to be able to operate within the Group’s
existing financing facilities for the foreseeable future and currently
demonstrates significant debt capacity headroom based on its
strong financial performance. Accordingly, the Directors have a
reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the
foreseeable future and they have adopted the going concern basis
of accounting in preparing the annual Group financial statements.
•
•
•
•
Utilisation 89% (2022: 83%): Utilisation represents an average
of the total hours billed as a percentage of total available hours
for each employee. The measure is used by management
to ensure efficient people management across the various
segments and an early indication of Group activity levels.
Gearing ratio 9.2% (2022: 8.2%): This ratio shows the
proportion of total debt to total equity within the business.
The business monitors this ratio to ensure that the liquidity and
funding of the business continues to fall in line with its overall
strategy to maintain a low level of gearing.
Net cash £4.3m (2022: £10.4m): Net cash or debt is calculated
by subtracting the cash balance from the amount of other
interest-bearing loans and borrowings. The measure is used to
monitor the level of debt within the Group and ensure that this
remains in line with the adopted business strategy.
Earnings per share (EPS)
Basic EPS was 9.77p (2022: 19.35p). Diluted EPS was 9.52p (2022:
18.89p). Adjusted, fully diluted EPS was 16.28p (2022: 14.54p).
Cash flow generated and net debt position
Net cash generated from operating activities was £9.7m (restated
2022: £5.3m).
The Group’s net cash position as at 30 April 2023 was £4.3m
(2022: £10.4m).
Going concern
The Group’s business activities, together with the factors likely
to affect its future development, performance and position, are
set out in the Chief Financial Officer’s review, together with the
financial position of the Group, its cash flows, liquidity position and
borrowings. Financial projections have been prepared to October
2024 which show positive earnings and cash flow generation.
The COVID-19 situation during the previous two financial years
created an unprecedented and constantly changing challenge to
all businesses. Management successfully navigated the business
through the impact of the pandemic on the Group’s financial
performance. The Group typically applies sensitivities (informed by
the past experiences of the Group since the onset of the pandemic,
including the Group’s time recording activity, fee generation and
cash collections) to any current financial projections based on
various downside scenarios to illustrate the potential impact from a
downturn in client activity or any increases in costs.
44
45
Gateley (Holdings) PlcAnnual report and financial statements Principal risks and uncertainties
The board monitors both existing and emerging risks. The operational Risk Committee identifies risks facing the business, recording these in
the risk register and regularly assesses the status of these risks. Many of the risks faced by the Group are similar to those risks faced by any
business but those considered to be key risks for the Group are detailed below. Due to the nature of the business and the markets in which
it operates, many of the risks it faces are ongoing, proving relevant to more than one single year.
Details of Risk
Mitigating Factors
Macro-economic headwinds and inflationary pressures
There is a risk that external macro-economic factors impact the
ability of the Group to deliver on its strategic objectives.
Our people and clients are impacted by the cost of living crisis and
wider economic uncertainty.
Liquidity risk
• Elements of any potential future disruption could impact the
Group’s ability to convert unbilled time into fees as client activity
is affected by the macro-economic uncertainty which could slow
down collection of cash as forecast.
M Chance: Medium
M Impact: Medium
+ Change in risk: New risk
Reputation
The Group has proven that it is well positioned to withstand the effects
of the economic headwinds, as it navigated successfully through the
pandemic. This is due to the broad-based nature of the Group’s activities;
comprising legal and non-legal services delivered to a diverse and well
spread client base. The balance between transactional services and
litigation services effectively hedges the position of the business.
The Group has demonstrated that it is prepared to take steps to preserve
the liquidity of the business including cancelling dividends, cancelling
bonuses, freezing pay and reducing non-essential expenditure. The
Company remains confident that other mitigating actions are available
alongside alternative sources of funding should further action be needed.
The Group continues to realise operational efficiencies, to mitigate the
impacts of wage inflation.
The Group continues to maintain a strong balance sheet to be able to
absorb the impact of short-term economic instability.
The success of the Group’s business depends on the maintenance
of good client relationships and its reputation for providing high-
quality professional services. If a client’s expectations are not met,
or if the business is involved in litigation or claims relating to its
performance in a particular matter, the Group’s reputation could
be significantly damaged.
The Group constantly endeavours to maintain its reputation as a
provider of client focused commercial advice and has adopted internal
management processes and training programmes to support this. Its
legal services are Lexcel accredited (the SRA’s quality standard). These
standards are applied across the non-legal parts of the business where
applicable.
The Group’s reputation could also be damaged through Gateley’s
involvement (as an adviser or as a litigant) in high-profile or
unpopular legal proceedings. The Group may incur significant
reputational and financial harm if such litigation is successful or if
there is negative press coverage.
The Group regards its brand names, trademarks, domain names,
trade secrets and similar intellectual property as important to
its success. Its businesses have been developed with a strong
emphasis on branding. Should the brand name of Gateley be
damaged in any way or lose market appeal, the Group’s businesses
could be adversely impacted.
New clients and matters go through an internal acceptance process that
includes a comprehensive risk assessment. This includes consideration
of potential impact of each engagement on the Group’s integrity and
reputation.
While the Group will use all reasonable endeavours to protect its
intellectual property rights should this be required, it may not be
able to prevent any unauthorised use or disclosure of its intellectual
property having an adverse effect on operating, marketing and financial
performance of the Group.
M Chance: Medium
H Impact: High
= Change in risk: No change
Business overview
Strategic report
Corporate governance
Our financials
Details of Risk
Operational and IT risk
Mitigating Factors
The Group places significant reliance on its IT systems, any loss of
these facilities or provisions would have a serious impact on the
Group’s operations. Due to the nature of this risk no assurances
can be given that all such risks will be adequately covered by its
existing systems.
M Chance: Medium
H Impact: High
= Change in risk: No change
Cyber Risk
Due to the nature of the Group’s business and its reliance on IT
platforms, the Group is at risk of cyber attack. The risk of cyber
attack continues to increase not just within the legal and other
professional services sectors but for all businesses operating
via the internet across the world. The risk to the Group relates
primarily to the risk of malicious hacking of the Group’s systems
with consequent risk to client data or of ransom attacks.
H Chance: High
H Impact: High
= Change in risk: No change
Professional liability and uninsured risks
The Group provides professional services, predominantly legal
advice. Like all providers of professional services, it is susceptible
to potential liability from negligence, breach of client contract and
other claims by clients. The professional indemnity insurance held
by the Group may not be adequate to indemnify the Group for
all liability that may be incurred (or loss which may be suffered).
Any liability or legal defence expenses that are not covered by
insurance or are in excess of the insurance coverage could have
a materially adverse effect on the Group’s business and financial
condition.
L Chance: Low
M Impact: Medium
= Change in risk: No change
The Group monitors the resilience of its information systems and other
facilities on an ongoing basis, working with external partners to support
the delivery of its internal and client facing IT provision.
The Group has in place a business continuity plan and an IT disaster
recovery plan that are reviewed as appropriate.
The Group, and external partners assisting in the development and
implementation of the new system have undertaken risk assessment and
have concluded that adequate safeguards are in place to minimise the
risk of loss or disruption to the business.
The Group and the Risk Committee are aware of the increasing cyber
risk. The risk cannot be avoided as IT systems are fundamental to the
delivery of the Group’s services. Accordingly the Group has an ongoing
programme based on the adoption and continual improvement of IT
security controls and business procedures to mitigate this risk.
The Group regularly reviews and tests its security arrangements, for
example implementing regular third party penetration tests, in order
to identify and subsequently address possible weaknesses within the
current systems.
In June 2021 the Group experienced a cyber attack. Fortunately the
attack was identified quickly, and significant disruption was avoided. A full
review of the incident was carried out and enhancements to the Group’s
IT security arrangements are being and will continue to be implemented as
part of the Group’s ongoing programme to mitigate this risk.
The Group is advised by market leading insurance brokers and the
Directors believe that it holds comprehensive professional liability
insurance. Any claims are defended strongly by senior members of the
business at all stages and external advice is sought where appropriate.
The Group works hard to ensure its employees provide excellent advice
and services to its clients, underpinned by quality processes and bespoke
training programmes. In the opinion of the Directors the Group has a
good claims history.
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Gateley (Holdings) PlcAnnual report and financial statements Principal risks and uncertainties
continued
Details of Risk
Employees
Mitigating Factors
Details of Risk
Regulatory Compliance
Mitigating Factors
Business overview
Strategic report
Corporate governance
Our financials
Well trained and experienced employees are essential for the
delivery of excellent professional services. The market for such
employees remains competitive and the loss of or failure to
recruit and retain such employees could impact on the Group’s
ability to deliver professional services and financial performance.
A failure to implement effective succession planning throughout
the business could also adversely affect financial performance.
The geographical spread of management and the development
of new offices and operations could compromise effective
communication and responsiveness impacting the Group’s
strategic goals.
L Chance: Medium
M Impact: High
= Change in risk: No change
Recruitment is led by senior members of the business with all
professional staff being interviewed by partners and senior managers.
Remuneration arrangements include a range of benefits and are
considered to be highly competitive.
Employee contracts include appropriate provisions to protect the business
where possible. A comprehensive training programme is in place for all
staff providing management, leadership, technical and skills training.
The board and the boards of the Group companies are responsible for
the implementation of succession plans for each of the businesses and
investment continues to be made in the recruitment of appropriate staff
where required.
Use of internal communications systems is continuously reviewed and
developed to meet staff needs.
The Group has a vision statement which sets out the core values and
behaviours expected of staff.
The Directors are in a dialogue with the SRA to minimise such risk and as
far as they are able, ensure that this particular regulation is made known
to shareholders.
Staff are trained and reminded of these duties and file management
processes are in place to mitigate this risk, but it cannot be removed
in full.
The Group, like all businesses, is subject to a range of regulations,
for example, AIM Rules and the Solicitors Regulation Authority’s
(“SRA”) Code of Conduct for Firms. Failure to comply with these
could have significant implications for the business ranging from
reputational damage to criminal prosecution and sentencing. The
Group operates in a regulated market which imposes additional
regulation, including restrictions on holdings of 10% or more
under the Legal Services Act 2007. This Act dictates that the
acquisition by any non-deemed approved lawyer of a restricted
interest (a shareholding of 10% or more) in Gateley Plc, (which
is an SRA Licenced Body) without the prior consent of the SRA
would be treated as a criminal offence. The SRA also has the
power to force the divestment of any shareholding that breaches
the rule or revoke the Licenced Body status of Gateley Plc which
would have a serious effect on the Group.
The SRA also regulates the use and disclosure of client
information. The Group is exposed to the risk of employees
engaging in misconduct, including the improper use or disclosure
of confidential client information. Employee misconduct could
result in considerable harm to the Group’s reputation, as well as
regulatory sanctions and financial damage.
L Chance: Low
M Impact: Medium
= Change in risk: No change
Acquisition risk
The Group‘s strategy is for growth, both organically and by
acquisition. Acquisitions may not always realise the benefits
expected at the time of completion.
The Group will consider complementary and earnings enhancing
acquisitions as part of its overall growth strategy. Acquisitions may not
always realise the benefits expected at the time of completion.
A failure to successfully integrate acquisitions may impact on
Group profitability.
Integration plans are formulated as part of the acquisition process and
executed in anticipation of and following acquisition as appropriate.
The availability of viable acquisition opportunities may decrease.
L Chance: Low
M Impact: Medium
= Change in risk: No change
The board considers that the recent consolidation within the
professional services market will continue and that as a result there will
be continuing availability of businesses for acquisition.
Management have considered the principal risks and uncertainties faced by the Group for the year and not felt the need to add any risks to
those disclosed last year. Management have removed the risk associated with the impact of ‘Covid-19’ due to the broad-based nature of the
Group’s activities; comprising legal and non-legal services delivered to a diverse and well spread client base.
48
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Pictured:
Gateley’s Risk &
Compliance team
Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Section 172(1) statement
Task Force on Climate Related
Financial Disclosures
The Directors consider that they have acted in the way most likely
to promote the success of the Group for the benefit of its members.
Being a purpose-led business, we are committed to minimising the impact
that we have on the environment and operating in a sustainable manner.
In doing so the Directors have paid regards to key stakeholders and
other matters set out in s172(1) of the Act when making decisions
in the year, including:
•
•
•
•
•
likely consequences of any decisions in the long term;
interests of the Group’s employees;
need to foster the Group’s business relationships with clients,
suppliers, and others;
impact of the Group’s operations on the community and
environment;
Group’s reputation for high standards of business conduct;
and
•
need to act fairly as between members of the Group.
The disclosures set out below are some examples of how the
Directors have had regard to the matters set out in Section 172(1)
(a) to (f) when discharging their section 172 duties and the effect
of that on certain decisions taken by them. More detail on how our
board operates can be found in the Corporate Governance Report
at www.gateleyplc.com/investors/investor-relations/aim-rule-26/.
Illustrations of how section 172 factors have been applied by the
board can be found throughout the Strategic Report. For example,
details of how we have considered the impact of the Company’s
operations on the environment are set out below.
Board decision made in the year
Application of s.172
Strategy:
Acquisition of businesses
during the year
The Group has made one acquisition in the year. During the board’s consideration of the acquisition
management presented its due diligence findings. The board considered how the acquisition would fit
in with the culture of the business and the long-term value creation strategy of the wider Group. The
acquired business demonstrated its alignment with the Gateley ethos and strong potential for growth.
Strategy:
Dividend
Governance:
Board effectiveness
Finance:
Approval of 2023/24 budget
The board has declared an interim dividend of 3.3p per share and proposes a final dividend of 6.2p
per share. In reaching this decision the board considered all key stakeholders including shareholders,
employees and creditors. The board determined closing cash reserves to be sufficient to ensure the
continued ability to meet future employee and creditor liabilities based on the results of FY23.
The Group evaluates the performance and effectiveness of the board, its Directors and Chair each year
to ensure the right balance of skills, experience and knowledge is maintained in order for each to perform
their duties effectively and deliver strong continued growth.
The Group’s business plan is to drive sustainable growth in the long term, which is in the interest of all
stakeholders. The board has paid close consideration to this objective in establishing and approving the
FY24 year -end budget. In the current economic climate this has involved close monitoring of the impact
of economic headwinds on each sector in which the Group operates, ensuring no over reliance on a single
market or client; ensuring the Group is well placed to continue to deliver a high standard of client service
through new ways of working; and increasing focus on minimising our environmental impact.
This is the first year that the Group has reported under the TCFD
framework, as an AIM listed business with greater than 500 employees.
We have made progress during the last 12 months in considering the
climate-related risks within our operation and will continue to focus
over the coming years as we recognise that there is work still to be
delivered by the Group, and all businesses, if the world is to achieve the
Paris Agreement’s goal of being net zero by 2050.
Our disclosures are summarised below against each of the 11 TCFD
disclosure recommendations.
Governance
Describe the Board’s oversight of climate-related risks and
opportunities
The board has oversight of climate-related risks and opportunities.
On a monthly basis the Sustainability Task Force reports to the
board identifying risks, opportunities and progress made. These
climate-focused updates are discussed at each monthly board
meeting. Partner and Strategic Board member Peter Davies leads on
sustainability, ensuring that climate-related risks are managed in line
with our Group-wide risk management framework.
Describe management’s role in assessing and managing
climate-related risks and opportunities
The board considers climate-related risks and opportunities with
management responsibilities integrated into the relevant functional
areas including Facilities; IT; Risk; Finance; HR and Marketing. During
2023, operational team members have received training in respect of
Carbon Literacy, obtaining certification.
Our Responsible Business team meets on a 6-weekly basis to consider
all aspects of ESG, including climate-related risks and opportunities.
Our Sustainability Task Force, led by Peter Davies, meets monthly to
ensure momentum is maintained on climate-related initiatives which
are captured in a Sustainability Action Plan (“SAP”). The Sustainability
Task Force regularly reports to the board on progress against our ESG
ambitions, climate strategy and related commitments.
Risk management
Describe the organisation’s processes for identifying and
assessing climate-related risks.
As outlined previously, our board report on the climate-related risks
that are most likely to impact the business, and these are aligned to
our risk management framework when determining the materiality of
the Group’s exposure to climate-related risks.
On an annual basis, as part of our business continuity training and
assessments, our Operations Board consider emergency scenarios
which may impact the Group, including climate-related emergencies.
Describe the organisation’s processes for managing
climate-related risks.
We consider climate-related risks in categories aligned to
our purpose: clients; people; communities. Alongside this we
also consider the climate-related risks which may impact our
infrastructure, including our IT systems. Our approach to managing
climate-related risk is developing as our understanding, and the
information that is available more widely, is developing.
Describe how processes for identifying, assessing and
managing climate-related risks are integrated into the
organisation’s overall risk management.
Our approach to climate risk management is aligned to our Group-
wide risk management framework. The board monitors both existing
and emerging risks. The operational Risk Committee identifies risks
facing the business, recording these in the risk register and regularly
assesses the status of these risks. Many of the risks faced by the
Group are similar to those risks faced by any business and, due to the
nature of the business and the markets in which it operates, many of
the risks it faces including climate-related risks are ongoing, proving
relevant to more than one single year. We tailor our underlying
policies and controls to manage the different risks and exposures.
Strategy
Describe the climate-related risks and opportunities the
organisation has identified over the short, medium and long term.
We have outlined the climate-related risks and opportunities in
the table that follows in line with our purpose: clients; people;
communities; and have also included infrastructure.
We consider short term to be less than one-year, medium term to be
by 2030 and long term to be by 2050. We aim to be net zero in our
operations and supply chain by 2040.
Describe the impact of climate-related risks and opportunities
on the organisation’s business strategy and financial planning.
We have considered the impact of climate-related issues on our
business strategy, and financial planning within the table. We
recognise that our assessment will continue to evolve over time and
that more work needs to be done as our collective understanding of
climate related risks and opportunities grows.
Describe the resilience of the business model and strategy,
taking into consideration of different climate-related
scenarios, including a 2 degrees or lower scenario.
We have considered two climate-related scenarios: 1.5 degrees
above pre-industrial levels and a ‘Hothouse Earth’ scenario with 4
degrees of warming above the pre-industrial age, which would create
a global climate emergency.
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Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Task Force on Climate Related Financial Disclosures
continued
1.5 degrees above pre-industrial levels
Risk/ opportunity
Timeframe
Business impact
Business response
Risk/ opportunity
Timeframe
Business impact
Business response
Clients
Property loss/
damage due to
climate-related
change events.
Short/
medium term
The increase in climate-related weather events (such
as floods) has and will continue to cause property
damage and loss for our clients.
Transition to a
net zero carbon
economy.
Short/
medium
Clients / People
Reputation
Medium and
long term
There is an opportunity for the Group to offer
relevant services to support our clients negatively
impacted by such weather events.
There is an opportunity to review the products
and services that we offer our clients to help them
to achieve their own net zero carbon objectives
throughout their supply chain.
Risk exists that we could lose our trusted adviser
position if we are unable to provide the advisory
support which our clients require, and they look to
another provider for that and associated advice.
Being linked to clients or suppliers that are not
operating in a sustainable manner would be
detrimental to our responsible business ethos,
damaging our reputation both inside and outside of
the business, which could result in clients deciding to
no longer instruct us.
We have invested in the capabilities of qualified and
experienced loss adjusters through the acquisition
of Gateley Smithers Purslow. The team provides
specialist insurance loss services to clients impacted
by climate-related events to ensure that our clients
can respond to and recover from the risk presented
through premises damage and the inability to occupy.
Through our annual business planning process and
regular client listening, we are actively engaging
with our clients to understand their sustainability
challenges and concerns within their operations
and where we can provide legal advice and advisory
services to help them to address these challenges.
Such opportunities are reviewed on a quarterly
through each of our four Platforms and discussed
within our Strategic Board.
We review the clients that we engage with to assess
their ESG commitments, including their sustainability
protocols, and would escalate any decisions on
whether to act of a client which did not operate in an
ethical manner to our board.
Gateley is well-placed to influence the energy agenda
as we work for 18 of the UK’s top 20 housebuilders
and are involved in many significant infrastructure
projects. We are able – through the professional
advice that we give – to support our clients in
delivering place strategies which make a positive
impact in terms of CO2 reduction including new
public transport connections, walking and cycling
routes and green infrastructure.
Strategic procurement projects are reviewed from a
sustainability perspective to ensure that all aspects
of our supply chain are as sustainable as they can
be, recognising that many businesses, like us, are on
a journey towards net zero and are evolving their
products and working practices.
People
Talent retention
Short,
medium, long
term
We are a people business and attracting and retaining
the best people is essential to the future success of
our business. Ensuring that our people understand
and buy-in to our sustainability commitment,
recognising our activities as credible and authentic,
is central to delivering our purpose as a responsible
business.
Infrastructure
Business
occupancy
Short,
medium term
The increased use of agile working, both within
our own operations and that of our clients, has
significantly changed the number of people who
routinely commute into our office network daily.
This creates a risk that property-related cost is
being incurred that is not required. There is also an
opportunity to consider the use of our office space
and identify opportunities to reshape the space that
we use, potentially generating additional revenue for
the Group.
We engage with our colleagues to provide
opportunities for them to support our transition
to net zero through changes in the way that they
work (for example using Teams technology to avoid
excessive travel or the ongoing commitment to
paperlite working practices) or the way that they
commute to our offices (through the introduction of
an electric/ hybrid car scheme or the ability to work
on an agile/ hybrid basis).
We actively review our property portfolio to consider
whether the space can be used in a different way which
would reduce cost or generate additional revenue.
During the year this has resulted in us consolidating our
occupied office space in a number of offices including
Manchester, Birmingham, Leicester, Guildford and
Leeds and this process will continue with assessments
in other offices such as London.
We have also identified opportunities to bring
businesses together into shared locations and during
the year have relocated colleagues from newly
acquired patent attorneys Adamson Jones into our
existing offices in Nottingham, colleagues from Gateley
Smithers Purslow into our Reading office and Gateley
Vinden colleagues in to our Manchester office. This
assessment forms part of our post-integration activities
after we have acquired a business into the Group
and the reviews will continue over the years ahead as
building lease arrangements are up for renewal.
Communities
Reducing carbon
with our supply
chain
Short,
medium,
long term
Although our supply chain is not as carbon intensive
as other sectors, we remain reliant on the actions of
the suppliers within our supply chain to meet their
low carbon/ net zero targets. The risk is that suppliers
are unable to meet their low carbon targets in the
timeframe that would enable us to meet our own.
Our procurement strategy continues to focus on
working with suppliers that share our commitment to
ESG principles across all aspects of their operations.
Sustainability assessments form part of each strategic
procurement decision.
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Gateley (Holdings) PlcAnnual report and financial statements Task Force on Climate Related Financial Disclosures
Task Force on Climate Related Financial Disclosures
continued
continued
Environmental actions statement
Business overview
Strategic report
Corporate governance
Our financials
4 degrees above pre-industrial levels
Risk/ opportunity
Timeframe
Business impact
Business response
Clients
Impact of extreme
weather events.
Medium/ long
term
Clients are exposed to the impact of extreme weather
and the ability to operate in locations where extreme
weather events, such as wildfires or flooding has taken
place.
We are a resilient and diversified business which
ensures that we are able to provide support to a
diverse client base and are not over-reliant on a sector
or geography.
Our property developers and housebuilders may not
be able to find opportunities to acquire suitable land
or to develop the land that they already have as a
result of the unsuitability of certain locations due to
climate-related events. This could lead to a reduction
in instructions for Gateley.
The diversified offering, with the combination of
legal and advisory services, means that we are well
placed to help our clients to implement strategies and
solutions to mitigate the risk to their businesses or to
recover post-incident.
People
Impact of extreme
weather events.
Short,
medium and
long term
Like our clients, extreme weather events could make
it difficult for our colleagues to work in certain office
environments, but it does depend on the type and
location of the extreme weather event.
The shift to hybrid working has ensured that are able to
deliver excellent client service regardless of office location.
With continued use agile working practices combined with
technology, we would be able to service our clients in spite
of the impact of extreme weather events.
Infrastructure
IT infrastructure
Medium and
long term
Extreme weather events could damage our IT
infrastructure, for example due to fire, flood or
overheating. Our ability to deliver our services
would be significantly impacted by the loss of our IT
environment.
Through our business continuity planning and training,
we regularly review, update and test the protocols
which would ensure that we could continue to operate
should one of our technology hubs was out of action.
We use fail over technology to ensure that we could
move our operations on to servers operated out of
technology hubs not impacted by this weather event.
Metrics and targets
Describe the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk
management processes.
We are committed to achieving net zero ahead of the UK Government’s target of 2050 to achieve the goals of the Paris Agreement. Reported
energy and GHG emissions data is compliant with SECR requirements and has been calculated in accordance with the GHG Protocol and SECR
guidelines. Energy and GHG emissions are reported from buildings and transport where operational control is held – this includes electricity,
natural gas, and business travel in company-owned or grey-fleet vehicles. Energy and GHG emissions have been calculated using previously set
guidance from an independent third party consultancy.
Disclose Scope 1, 2 and 3 greenhouse gas (GHG) emissions, and the related risks.
We report scope 1, 2 and part of scope 3 greenhouse gas emissions resulting from the energy used in our buildings and employees’ business
travel. These are included in our Environmental Actions Statement on page 55.
Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets.
Having reviewed what other legal and professional services firms are doing in relation to setting net zero targets (recognising that the
Government’s Net Zero Strategy has set a target date of 2050 for the UK to achieve net zero), Gateley has committed to:
•
•
The attainment of net zero emissions by 2040.
setting interim targets for 2030 to reduce CO2 emissions by 50% compared to 2019 levels.
This will ensure that we can meet the demands of our clients, our people, and our investors.
UK energy consumption and Greenhouse Gas disclosure
The Companies Act 2006 (Strategic Report and Directors’ Report) Regulation 2018 requires Gateley (Holdings) Plc to disclose annual UK
energy consumption and Greenhouse Gas (GHG) emissions from SECR regulated sources. Energy and GHG emissions have been calculated
using previously set guidance from an independent third-party consultancy.
The data reported is for Gateley Plc. The parent company consumes less than 40MWh of energy per year and is, therefore, exempt from
providing full disclosure in this report.
Reported energy and GHG emissions data is compliant with SECR requirements and has been calculated in accordance with the GHG Protocol
and SECR guidelines. Energy and GHG emissions are reported from buildings and transport where operational control is held – this includes
electricity, natural gas and business travel in company-owned or grey-fleet vehicles. The table below details the regulated SECR energy and GHG
emissions sources for the current reporting period 1 May 2022 to 30 April 2023.
Energy (thousand kWh)
Natural Gas
Electricity
Transport
Total energy (thousand kWh)
Emissions (tCO2e)
Natural Gas
Electricity
Transport
Total SECR emissions
Intensity metrics
£m turnover
tCO2e per £m of turnover
Average headcount
tCO2e per employee
Square footage (thousand sq.ft)
tCO2e per square foot
2023
1,304
2,530
292
4,125
304
590
69
963
163
5.9
1,439
0.7
126
7.6
2022
1,290
2,555
149
3,994
301
596
35
932
137
6.8
1,150
0.8
125
7.5
Change
1%
(1%)
96%
3%
1%
(1%)
96%
3%
19%
(13%)
25%
(16%)
1%
2%
Data records and methodology
Metered kWh consumption taken from supplier or landlord invoices is reported where possible.
Scope 1,2 and 3 consumption and CO2e emission data has been calculated in line with the 2019 UK Government environmental reporting
guidance. The following Emission Factor Databases consistent with the 2019 UK Government environmental reporting guidance have been
used, utilising the current published kWh gross calorific value (CV) and kgCO2e emissions factors relevant for reporting years ending
30 April 2023 and 30 April 2022:
•
Database 2021, Version 1.0
Transport emissions have been calculated based on mileage expense claim records, applying the average UK split between petrol and diesel
vehicles to estimate relative fuel usage. Mileage per fuel type was converted into equivalent GHGemissions using the most recent emissions
factors published by BEIS in 2021, and then divided by the gross Calorific Value to deduce kWh consumption.
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Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Social matters
Business overview
Strategic report
Corporate governance
Our financials
We believe that running a profitable and growing business, which creates
jobs and contributes to the economic success of the areas in which it
operates, is a platform for good corporate social responsibility.
We have a long-standing commitment to support our staff in
engaging with their local communities and charities. This social
awareness is present throughout the business, from our employees
to our clients, our professional connections and the suppliers we
work with. Our ongoing contribution through the commitment of
our people to their local community continues to improve lives and
build these communities.
Diversity and inclusion
We are an equal opportunities employer and it is our policy to
ensure that all job applicants and employees are treated fairly and
on merit regardless of race, sex, marital/civil partnership status,
age, disability, religious belief, pregnancy, maternity, paternity,
gender identity or sexual orientation. We have five staff network
groups providing support to staff.
Unity – Unity recognises, celebrates and supports employees
from all different cultures, religions, and backgrounds. Our
Unity network group highlights and celebrates events across
all our offices to ensure we have an environment where all
employees have room to breathe and feel comfortable bringing
their full selves to work.
Thrive – Our Thrive network group supports the health
and wellbeing of all employees to promote high levels of
performance both physically and mentally across the Group.
The Thrive committee runs a series of events and training
programmes throughout the year to raise awareness and to
inspire our people to take care of themselves and those around
them.
Inspire – Our Inspire network group has been set up to
nurture, develop and provide support to all of our talent with a
particular focus on career milestones and enabling our people
to carve the careers they want successfully.
Pride – The Gateley Pride network group provides a
welcoming, supportive, safe and confidential space for staff
affected by sexual orientation and gender identity issues to
share experiences, ideas or concern.
Ability – Ability is our most recent network group set up
to provide a focus on, and raise awareness of, disabilities
to ensure that we are providing a welcoming, supportive
and confidential space for colleagues across the Group to
discuss issues of disability and to ensure enhanced awareness
is reflected in a positive, inclusive and fulfilling working
environment.
Sustainability
To deliver strong, sustainable shareholder returns over the long-
term the operation of a profitable business is a priority and that
means investing for growth. To achieve this, the Group recognises
that it needs to operate in a sustainable manner and therefore has
adopted core principles to its business operations which provide a
framework for both managing risk and maintaining its position as a
good ‘corporate citizen’.
Charities and communities
We have a high level of engagement within our local communities.
Each year, we sponsor business, sports and community awards.
Our business has benefited greatly from winning numerous awards
and we feel it’s right to help other businesses reap the rewards of
such accolades. In addition, we sponsor a variety of local clubs,
business and sports related events across the country. We believe
this brings many benefits to the local community and beyond. Our
staff vote annually to choose a national and local office charity to
support throughout the year with fund raising activities engaging
staff, clients and communities in a number of enjoyable events.
Developing our people
The Group continues to create opportunities for staff at all levels of
the Group. We have a strong track record as an employer of choice
in the provision of legal graduate traineeships and apprenticeship
schemes highlighting our motivation to ‘grow our own’. Trainees
work alongside qualified professionals in completing a period of
recognised training (often known as a training contract) giving
individuals supervised experience in legal practice. This is the final
stage of the process of qualification as a solicitor where they refine
and develop their professional skills.
For our non-lawyer employees we offer both internal and external
routes to qualifications and accreditations within their chosen
sector and area of expertise.
In order to oversee our people development we have a dedicated
internal training team on hand with soft skills and professional
course guidance to enhance staff careers and upskill our staff at all
levels throughout the year.
56
Modern slavery
We are committed to preventing acts of modern slavery and
human trafficking from occurring within our business and supply
chain, and expect our suppliers to adopt the same high standards.
As part of our commitment to combating modern slavery, the
Directors have approved the adoption and implementation of a
specific modern slavery policy. We expect all of our suppliers to
adhere to our Anti-Slavery Policy and will not tolerate slavery and
human trafficking within our supply chains.
Our slavery and human trafficking statement, made in accordance
with section 54(1) of the Modern Slavery Act 2015 can be found
on our website, www.gateleyplc.com.
Anti-bribery policy
We value our reputation for ethical behaviour and upholding
the utmost integrity and we comply with the FCA’s clients’ best
interests rule. We recognise that in addition to the criminality of
bribery and corruption, any such crime would also have an adverse
effect on our reputation and integrity and we do not tolerate
bribery and corruption in our business. We limit our exposure to
bribery and corruption, we ensure all our employees are adequately
trained and our suppliers are aware of our position, by:
•
•
•
•
Setting out clear anti-bribery and corruption policies;
Providing mandatory training to all employees;
Encouraging our employees to be vigilant and report any
suspected cases of bribery in accordance with the specified
procedures; and
Escalating and investigating instances of suspected bribery
and assisting the police or other appropriate authorities in
their investigations.
Gender pay reporting
The Equality Act 2010 (Gender Pay Gap Information) Regulations
2017 requires all employers with 250 or more employees in the
UK to publish details of their gender pay gap. Its aim is to achieve
greater transparency about gender pay difference. The analysis is
based on data as at 5 April of each year and shows the differences
in the average pay between men and women. The Group has
submitted its data on gender pay to the Government and published
these details on our website.
Disabled employees
Applications for employment by disabled persons are always
fully considered, bearing in mind the aptitudes of the applicant
concerned. In the event of members of staff becoming disabled,
every effort is made to ensure that their employment within the
Group continues and that appropriate training is arranged and
support provided. It is the policy of the Group that the training,
career development and promotion of disabled persons should, as
far as possible, be identical to that of other employees.
Employee consultation
The Group places considerable value on the involvement of its
employees and has continued to keep them informed regularly on
matters directly affecting them and Group wide developments. This
is achieved through informal discussions between management
and other employees at a local level after board meetings which
are held across our office network, in annual briefing presentations
to each office location and through the formation of committees
and boards at different levels across the Group together with
an active social events calendar. The Group further encourages
employee involvement in the performance of the business through
participation in share schemes, including the SAYE and CSOPs
schemes. Our internal digital communication platform, is a hub of
activity and communication across the Group and used extensively
for social interaction as well as internal training, policy updates,
cross selling activity and recognition of recent successes from
around the Group.
Political donations
The Group made no political donations in the year (2022:
£nil).
Approval
The strategic report contains certain forward-looking statements,
which are made by the Directors in good faith based on the
information available to them at the time of their approval of
this annual report. Statements contained within the strategic
report should be treated with some caution due to the inherent
uncertainties (including but not limited to those arising from
economic, regulatory and business risk factors) underlying any
such forward-looking statements. The strategic report has been
prepared by Gateley (Holdings) Plc to provide information to its
shareholders and should not be relied upon for any other purpose.
Pages 22 to 57 constitute the strategic report, which has been
approved by the Board of Directors and signed on its behalf by:
Neil Smith
Chief Financial Officer
5 September 2023
57
Gateley (Holdings) Plc
Annual report and financial statements
Corporate
governance
In this section
Board of Directors
Report on remuneration: voluntary disclosure
Directors’ report
60
62
69
58
59
Board of Directors
Details of the Directors, their roles and their backgrounds are as follows:
Business overview
Strategic report
Corporate governance
Our financials
Nigel Payne
Non-Executive Chairman
Roderick Waldie
Chief Executive Officer
aged 63
aged 55
Victoria Garrad
Chief Operating Officer
(appointed 1 May 2022)
aged 49
Neil Smith
Chief Financial Officer and
Company Secretary
aged 47
Michael Ward
Executive Director
aged 64
Joanne Lake
Non-Executive Director
aged 59
Board changes
Nigel has extensive experience of
listing companies, fund raising on the
public markets and acting as either
Chairman or Non-Executive Director
of public and private companies. In
addition to his Gateley responsibilities
as Chairman, Nigel is also presently
the Non-Executive Chairman of Main
Market quoted Braemar Shipping
Services Plc, a Non-Executive Director
of AIM quoted GetBusy Plc, as well as
being the Non-Executive Chairman of
Green Man Gaming (Holdings) Plc,
a Non-Executive Director of Ascot
Racecourse Betting and Gaming
Limited, Non-Executive Director of
Kwalee Limited and Non-Executive
Director of BlueBet Plc.
Previously Nigel was the CEO of
Sportingbet Plc, one of the world’s
largest internet gaming companies.
Nigel has also previously been the
Non-Executive Chairman of AIM quoted
EG Solutions Plc, the Non-Executive
Chairman of AIM quoted Stride Gaming
Plc, the Non-Executive Chairman of
AIM quoted Hangar8 Plc, the Non-
Executive Chairman of AIM quoted
ECSC Plc and a Non-Executive Director
of AIM quoted Gama Aviation Plc.
Roderick was appointed to the
position of Chief Executive Officer
on 1 May 2021. He has been a key
member of the Group’s Strategic
Board since joining the business via
the acquisition of the Manchester
office of Halliwells LLP in 2010. Prior
to his appointment as CEO, Roderick
was the Senior Office Partner of
the Manchester office and led the
Group’s national property services
team. He has been involved in the
successful integration of a number
of Gateley’s post IPO acquisitions.
Roderick has over 25 years’
experience as a real estate lawyer.
He has considerable experience in
real estate investment acquisitions,
and disposals, estate management,
development and landlord and
tenant. Clients include off-shore
investors, on-shore real estate
companies and developers,
real estate asset management
companies, high net-worth
individuals, retail and leisure
operators and specialist providers of
supported living accommodation.
Victoria was appointed to the board
as COO elect on 1 May 2022 and
formally took up post as COO on 1
May 2023. She is an award winning
employment lawyer with over 24
years’ experience undertaking a mix
of contentious and non-contentious
work. Having joined the business in
1996 as a trainee solicitor, Victoria
was promoted to partner in the
legal services employment team in
2005. She has been a member of
the Operations Board since 2011
and was appointed to the Strategic
Board on 1 May 2017 to undertake
the Group HRD role.
Neil has more than 25 years’
experience working in the
accountancy profession where he
specialised in the professional services
industry. Initially Neil spent 14 years
at a major accounting practice where
he gained considerable experience
of auditing and advising a wide range
of privately owned and publicly listed
businesses across many sectors.
He joined Gateley LLP in 2008, was
appointed as Finance Director in 2011
and became the first non-lawyer to be
appointed as Partner within Gateley
LLP following its successful application
to become an Alternative Business
Structure in January 2014. Neil
was a member of the Management
team on Gateley LLP’s acquisition of
the commercial law business from
Halliwells LLP in 2010 and, following
his involvement in Gateley (Holdings)
Plc’s admission to AIM, was appointed
to the Plc Board in 2015. As well as
Company Secretary he is also the
Group’s compliance officer for finance
and administration (“COFA”) and a
fellow of the Association of Certified
Chartered Accountants.
Mike has over 30 years’ experience as
a corporate lawyer, advising private
and public companies, management
teams and private investors. He
joined Gateley in 1987 and has been
instrumental in the development
of Gateley. He was Senior Partner
from 2001 to 2015 when he became
CEO. Mike is a former President and
Treasurer of the Birmingham Law
Society and a former President of
the Greater Birmingham Chamber of
Commerce.
Joanne has over 30 years’ experience
in financial and professional
services; in investment banking
with firms including Panmure
Gordon, Evolution Securities and
Williams de Broe and in audit and
business advisory services with Price
Waterhouse. Joanne is also Non-
Executive Chairman of AIM-quoted
digital services group, Made Tech
Group Plc, Non-Executive Deputy
Chairman of Main Market-listed land
promotion, property development
and construction group, Henry Boot
Plc and Honeycomb Investment Trust
Plc. Joanne is also Non-Executive
Director of Main Market quoted
Braemar Shipping Services Plc.
Joanne is a Fellow of the Chartered
Institute for Securities & Investment
and of the ICAEW, and is a member
of the ICAEW’s corporate finance
faculty.
Suzanne (Suki) Thompson was a Non-Executive Director
and Remuneration Committee Chair during the year ended
30 April 2023. Suki resigned from the board on 27 June 2023
due to ill health with Joanne Lake being appointed interim
Remuneration Committee Chair post that announcement.
Joanne has provided the Remuneration Committee statement
for this report on page 62.
Colin Jones, aged 63, will become Non-Executive Director
and Chair of the Remuneration Committee, succeeding
Joanne Lake, who has been temporarily chairing the
committee, following Suki Thompson’s retirement.
Colin is currently Non-Executive Chair of Centaur Media Plc,
the premium-listed provider of business intelligence to the
marketing and legal professions, and an independent Non-
Executive Director and Audit Committee Chair at AIM-listed
M&C Saatchi Plc. He is also a Non-Executive Director of
The City Literary Institute, London’s leading adult education
college, where he chairs its Finance and Commercial
Committee. He is a member of the Remuneration Committee
at all three of these businesses.
During his executive career, Colin was CFO of Euromoney
Institutional Investor Plc, the B2B data and research group,
where he worked in leadership roles in the UK and US for 22
years. He is also a Chartered Accountant.
Committees & Boards: N
R
A
H
Committees & Boards: N
H
S
Committees & Boards: H
S
O
Committees & Boards: H
S
O
Committees & Boards: H
Committees & Boards: A
N
R
H
Committee Key: N
Nomination R
Remuneration A
Audit & Risk Board Key: H
Gateley (Plc) Holdings S
Strategic O
Operations
60
61
Gateley (Holdings) PlcAnnual report and financial statements
Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Report on remuneration:
voluntary disclosure
Dear shareholders,
I am pleased to introduce the
Directors’ Remuneration Report
for the financial year ended 30 April
2023. This letter introduces the
report, outlines the major decisions
on Directors’ remuneration during
the year and importantly explains the
context in which these decisions have
been taken.
Gateley (Holdings) Plc is committed to high standards of
corporate governance and our policy and disclosures on
Directors’ remuneration are intended to reflect this approach.
We welcome shareholder feedback on these matters and this
Directors’ Remuneration report will be put to an advisory vote at
the coming 2023 AGM.
On 27 June 2023 Suki Thompson resigned as Non-Executive
Director and Chair of the Remuneration Committee with
immediate effect due to ill health. I would like to take the
opportunity to express thanks to Suki for her support and
wise counsel as a member of the board and as Chair of the
Remuneration Committee since she joined the Company in 2017.
Key reward principles
Remuneration at Gateley for executives and the wider workforce
is guided by the following principles:
•
•
•
Support an effective pay for performance culture which
enables the Group to attract, retain and motivate the very
best talent, without paying excessively.
Support the delivery of the business strategy and promote
long term sustainable performance, whilst ensuring that
performance related pay does not encourage individuals to
operate outside of the Group’s risk appetite.
Reward outcomes should fairly reflect Group and personal
performance and take into account the experience of
shareholders.
Executive Director remuneration
As set out in previous reports, the committee has been
implementing a strategy of gradually aligning the remuneration for
the Group’s Executive Directors to market rates. Whilst progress
has been made, it is acknowledged that the remuneration for
the Executive Directors remains broadly below market rate for
similar roles in similar sized AIM listed businesses. After careful
reflection, the committee considered that the current year was
not the time to implement any material increases, as a result of
the geo-political and macro-economic factors. The committee
continues to focus on Executive Directors remuneration with a
view to ensure that with effect from FY25 it is aligned with market
rates and the incentive arrangements in place continue to support
our core reward principles, in order to retain the right skill set
and experience within our leadership team to deliver the Group’s
strategic objectives.
I hope that you find the remainder of this report helpful and
informative and I look forward to receiving feedback from you
on the information presented.
Joanne Lake
Remuneration Committee Chair
Bonus outcome for FY23
The Group continued to perform well throughout FY23.
The Group’s resilient business model delivered growth in revenue
and underlying PBT in line with consensus market expectations
despite the impact of macro-economic and geo-political factors in
the second half of the year.
Despite the continued record of revenue and underlying profit
growth we must recognise that as a result of the macro-economic
and geo-political factors we fell short of our internal fees target
that would have created a self-funded bonus pot. As such, we have
taken the difficult decision to make no bonus awards across both
the Executives and wider workforce.
Share Plans
During FY23 the Group continued to focus on the growth,
attraction, incentivisation and retention of talent.
As part of this focus, the Restricted Share Award Plan (“RSA”)
introduced in FY22 was further embedded across the Group to
support long term share ownership for employees promoted to
partner or partner equivalent roles and to foster stewardship
amongst this cohort.
Executive Directors currently participate in the Group’s
performance based LTIP and are not eligible to participate in the
RSA. N Smith and V Garrad were both granted LTIP awards on
23 February 2023 and details are set out on page 67.
More generally, the board remains committed to providing its
people with the opportunity to own shares in the Company and
continues to grant awards under the Save As You Earn scheme and
the Company Share Option Plan. At least 65% of current staff are
existing share or option holders in the Group.
Joanne Lake
Remuneration Committee Chair
62
62
63
Report on remuneration: voluntary disclosure
continued
This report is for the year ended 30 April 2023. It sets out the detailed remuneration
for the Executive and Non-Executive Directors of the Company. As an AIM-quoted
company, the information is disclosed to fulfil the requirements of AIM Rule 19.
Gateley (Holdings) Plc is not required to comply with the Large
and Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013, however the board believes this
disclosure is key to the readers understanding of the business.
The information is unaudited except where stated.
This report sets out:
a description of how the Committee operates.
Other members of the Board of Directors are invited to attend
meetings when appropriate, but no Director is present when his or
her remuneration is discussed.
Deloitte LLP continues to act as advisors to the Committee.
Deloitte LLP is a founding member of the Remuneration
Consultants Group and voluntarily operates under the Code of
Conduct in relation to executive remuneration consulting in the UK.
a summary of the Directors’ remuneration policy – setting out
the parameters within which the remuneration arrangements
for Directors operate; and
Activities during the year
The main activities undertaken by the committee during
the year included: -
•
•
•
•
•
•
•
Determining incentive outcomes for the Executive Directors
for FY23;
Determining salary increases for the Executive Directors for
FY24;
Further embedding the RSA by granting awards under the
RSA to senior talent to support long term share ownership for
this cohort.
Granting awards under the Long Term Incentive Plan to
certain Executive Directors and senior leaders.
details of the remuneration paid to the Directors for the year
under review.
The Committee
The Committee is appointed by the Board and is formed entirely of
Non-Executive Directors. The Committee was chaired throughout
FY23 by Suzanne (Suki) Thompson. Suki resigned from the Board
with immediate effect due to ill- health on 27 June 2023 and
therefore Joanne Lake is currently Chair of the Committee until a
new Non-Executive Director is appointed. The other member of
the Committee is Nigel Payne.
The Committee meets formally at least twice a year and
has responsibility for setting the Group’s general policy on
remuneration and also specific packages for individual Directors
including those that comprise the Strategic Board. The Committee
is also responsible for structuring Non-Executive Director pay,
which is subject to approval of all independent Directors and
oversight from the Plc Board including the Executive Directors.
The Committee receives internal advice from Executive Directors
and external advice from remuneration consultants where
necessary. The Committee also makes recommendations to the
board concerning the allocation of long term incentive awards
to senior management. The Committee’s terms of reference are
available for public inspection on request.
Business overview
Strategic report
Corporate governance
Our financials
Remuneration policy
The remuneration policy is designed to support an effective pay-for-performance culture which enables the Group to attract, retain and motivate
Executive Directors and senior management with the necessary experience and expertise to deliver the Group’s objectives and strategy.
The table below summarises the key elements of the Executive Directors’ remuneration package.
Element, purpose and operation
Opportunity and performance measures
Base salary
Reviewed on an annual basis with any increases normally becoming
effective from the start of the financial year.
It is proposed that appropriate salary increases will be awarded to
provide alignment with the market over time and so that levels reflect the
responsibilities of the role and the skills and experience of the individual.
Bonus
Designed to align participants’ interests with shareholders and to
incentivise participants to perform at the highest levels.
The bonus comprises a merit pool and a performance pool.
All Executive Directors participate in the merit pool. NA Smith and V
Garrad also participate in the performance pool.
Merit pool
Each year, a pre-agreed percentage of pre-tax profits is allocated to the
merit pool, subject to a minimum threshold of profit to ensure the bonus
scheme is self-funding. The merit pool is distributed to participants
based on their individual performance during the year.
Performance pool
A fixed sum is allocated to the performance pool based on the Group
achieving budgeted performance. To the extent that budgeted
performance is not achieved, the size of the pool is scaled back. The
pool is capped at a predetermined amount at the start of each year. The
pool is distributed to participants based on their role, responsibility and
contribution to the long-term business strategy.
Long Term Incentive Plan (LTIP)
Designed to incentivise participants to perform at the highest levels,
and to deliver genuine performance related pay, with clear line of sight
and direct alignment with shareholder interests.
Awards will normally be granted annually to participants. Each year,
the Committee will agree the number of shares under option for each
participant.
Executive Directors and selected senior employees will participate in the LTIP
as determined by the Strategic Board and approved by the Committee.
Performance measures are selected that reflect underlying business
performance.
Awards will be granted in the form of nil-cost or nominal-cost share
options. Vesting of awards is dependent on the achievement of
performance measures set by the Committee, normally over a three
year performance period.
Awards will vest following the end of the performance period once the
Committee has ratified the outcome of the performance measures and
will be exercisable for six months following the vesting date.
The Committee has the right to apply malus provisions to reduce,
cancel or impose further conditions on unvested awards in specified
circumstances.
Pension and benefits
The Executive Directors have chosen not to participate in a company funded pension scheme nor receive a cash allowance in lieu thereof.
The Executive Directors do not receive any form of taxable benefits other than private health scheme benefits.
64
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Gateley (Holdings) PlcAnnual report and financial statements Report on remuneration: voluntary disclosure
continued
Orderly market agreement
The Group operates a five-year orderly market agreement (the
“Agreement”) with its Partners (the “Locked-in Shareholders”)
which, inter alia, places certain restrictions on the sale of ordinary
shares in the Company (“Ordinary Shares”).
The Agreement became effective on 8 June 2021 following the
expiry of the previous lock-in arrangements, which were put in
place at the time of the Company’s admission to AIM in June 2015
(the “Admission”).
Pursuant to the Agreement, each Locked-in Shareholder and
his/her associates, which include their spouse and children under
the age of 18 to whom any Ordinary Shares have been transferred
(“Associates”), that held Ordinary Shares as at Admission are
restricted to selling a maximum of 10% per annum of the aggregate
number of the Ordinary Shares that they held on Admission for
a period of five years from 8 June 2021.
Policy for the remuneration of employees
more generally
The key principles of the remuneration policy for Executive
Directors also apply to employees more generally. In particular,
senior employees may participate in the merit bonus pool,
performance bonus pool and LTIP, depending on their role and
responsibilities and contribution to the business.
The Company also supports and encourages share ownership
for all employees through the all employee Save As You Earn
(SAYE) scheme and the Company Share Option Plan (CSOP).
In owning shares, employees are directly aligned with the interests
of shareholders and are able to participate in the dividend income
that share ownership provides. 45% of the Group’s issued share
capital was held by employees as at 30 April 2023.
Non-Executive Directors’ fees
The Chairman of the Board and the other Non-Executive Directors
receive an annual fee for their services, reflective of their level
of responsibility, relevant experience and specialist knowledge.
Non-Executive Directors are also reimbursed for appropriate travel
expenses to and from board meetings.
Together with the Executive, the Committee also examines the time
that the Non-Executive Directors commit to the business ensuring
that each Non-Executive has sufficient time to carry out their
duties in light of their other business commitments. This exercise
concluded that all of the Non-Executives have available and apply
sufficient time to discharge their duties.
Executive Directors’ service agreements and
Non-Executive Directors’ letters of appointment
The Executive Directors entered into service agreements on
1 June 2015. The service agreements provide that their employment
with the Company is on a rolling basis, subject to written notice
being served by either party of not less than six months. The service
agreements contain provisions for early termination in the event of a
breach of a material term of the service agreement by the Executive
Director or where the Executive Director ceases to be a Director of
the Company for any reason. The service agreements also contain
restrictive covenants for a period of 12 months following termination
of employment. No bonus is payable to the Executive Director if
their employment terminates for any reason or they are under notice
of termination (whether given by the Company or the Executive
Director) at or prior to the date when the bonus is paid. All bonuses
are payable within six months of the financial year end.
The Non-Executive Directors serve under letters of appointment.
Nigel Payne and Joanne Lake were originally appointed for an initial
three year term on 8 June 2015 and both were reappointed for
a third three year term which commenced on 1 October 2021.
Suzanne Thompson resigned from the Board with immediate
effect on 27 June 2023 due to ill-health and a process is underway
to appoint a new Non-Executive Director. The notice period
required in the letters of appointment for either party to terminate
the appointment is at least three months. Each agreement also
contains provisions for early termination in the event of a serious
or repeated breach of the agreement by the Non-Executive
Director or where the Non-Executive Director ceases to be a
Director of the Company for any reason.
Business overview
Strategic report
Corporate governance
Our financials
Summary of Directors’ remuneration for the year
The following table represents the Directors’ remuneration for the years ended 30 April 2023 and 30 April 2022:
Nigel Terrence Payne
Joanne Carolyn Lake
Suzanne Frances Allison Thompson
Roderick Richard Waldie
Michael James Ward
Peter Gareth Davies
Victoria Louise Garrad
Neil Andrew Smith
Salaries
and fees
£’000
72
48
48
323
152
-
225
240
1,108
Bonus
£’000
-
-
-
-
-
-
-
-
-
Share
options
£’000
-
-
-
-
-
-
-
-
-
Total
2023
£’000
72
48
48
323
152
-
225
240
1,108
Salaries
and fees
£’000
56
42
42
300
144
180
-
225
989
Bonus
£’000
-
-
-
212
45
112
-
112
481
Share
options
£’000
-
-
-
-
-
-
-
-
-
Total
2022
£’000
56
42
42
512
189
292
-
337
1,470
Please refer to explanation set out below under the heading Salaries and fees
Salary and fee increases for FY24
Details of FY23 salary and fee increases are set out in the FY22
report on remuneration.
Long term incentives granted during the year
Awards were granted to certain Executive Directors and selected
senior employees under the LTIP on 23 February 2023.
The Committee agreed to increase RR Waldie’s salary and NA Smith’s
salary by 5% with effect from 1 May 2023 to £338,625 and £252,000
respectively. V Garrad was appointed as Chief Operating Officer on
1 May 2023 having shadowed the former COO, Peter Gareth Davies
for 12 months leading up to her appointment. The Committee agreed
to increase her salary to £252,000 to reflect her new role. MJ Ward’s
salary has remained in line with the prior year. The Committee took
into consideration salary increases for the wider workforce when
determining the Executive Director’s salary increases; the average
increase for the wider workforce exceeded 5%.
With regard to Non-Executive Directors, NT Payne’s annual fee
increased to £75,600 with effect from 1 May 2023 and JC Lake’s
annual fees increased to £50,400. These fee increases were
considered appropriate reflecting the time commitment required in
order for the Non-Executives to effectively carry out their duties.
Bonus outcome for the year
Despite the continued record of revenue and underlying profit
growth we must recognise that as a result of the macro-economic
and geo-political factors we fell short of our internal fees target
that would have created a self-funded bonus pot. As such, we have
taken the difficult decision to make no bonus awards across both
the Executive’s and wider workforce.
The awards are subject to an adjusted fully diluted earnings per
share performance measure as described in the table below.
The targets are considered appropriately stretching taking into
account internal forecasts and the current economic environment.
Adjusted, fully diluted earnings per Share Compound Annual
Growth Rate (CAGR) over the three year period ending
30 April 2026
Below 5%
5%
Between 5% and 10%
Above 10%
Amount Vesting %
0%
25%
Straight line vesting
100%
Adjusted fully diluted earnings per share is calculated based on
Profit of the Group for the relevant financial year before interest
and tax adjusted to exclude the effect of:
•
•
cost of amortisation and any impairment review of intangible
assets and goodwill
cost of IFRS 2 share-based payment charges relating to all
share schemes
• cost and/or income from exceptional items
•
the tax impact of adjustments above
LTIP awards of 40,000 each were granted on 23 February 2023
to NA Smith and V Garrad. No awards were granted to MJ Ward
or RR Waldie as they are deemed to be sufficiently incentivised by
their existing shareholding.
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Gateley (Holdings) PlcAnnual report and financial statements Report on remuneration: voluntary disclosure
continued
Directors’ report
Business overview
Strategic report
Corporate governance
Our financials
Directors’ Interests
Directors’ shareholdings at the year end were as follows:
Nigel Terrence Payne
Joanne Carolyn Lake
Suzanne Francis Alison Thompson
Roderick Richard Waldie
Michael James Ward
Victoria Louise Garrad
Peter Gareth Davies
Neil Andrew Smith
At 30 April 2023
10p ordinary shares
At 30 April 2022
10p ordinary shares
Number of shares Percentage Holding
Number of shares Percentage Holding
70,942
26,300
12,272
1,275,670
1,990,000
569,478
-
362,537
0.06%
0.02%
0.01%
1.01%
1.57%
0.45%
-
0.29%
70,942
26,300
10,000
1,275,670
1,990,000
-
1,983,357
362,537
0.06%
0.02%
0.01%
1.04%
1.62%
-
1.61%
0.29%
The following Directors held share options under the LTIP Scheme as at 30 April 2023:
Neil Andrew Smith
Neil Andrew Smith
Neil Andrew Smith
Victoria Louise Garrad
Victoria Louise Garrad
Victoria Louise Garrad
Number of shares at
30 April 2023
Date of grant
Exercise price
Earliest exercise date
15,974
25,000
40,000
15,974
25,000
40,000
22 July 2020
27 April 2022
23 February 2023
22 July 2020
27 April 2022
23 February 2023
£nil
£nil
£nil
£nil
£nil
£nil
22 July 2023
1 May 2025
1 May 2026
22 July 2023
1 May 2025
1 May 2026
68
The Directors present their annual report and the audited financial
statements for the year ended 30 April 2023.
Principal activities
The principal activities of the Group during the year were the
provision of commercial legal services together with complementary
consultancy services including acting as independent trustees to
pension schemes, the provision of specialist tax incentive advice,
the supply of specialist property consultancy services and the supply
of specialist human capital management.
Business review
The results of Gateley (Holdings) Plc for the year are set out in the
consolidated statement of profit and loss and other comprehensive
income on page 82.
A review of the business, results and dividends, and likely future
developments of the company are contained in the Chief Executive
Officer’s review on pages 28 to 35 and the Chief Financial Officer’s
review on pages 36 to 41. The Group’s key performance indicators
(KPIs) are set out on page 43. The strategic report, which includes a
description of the principal risks and uncertainties facing the Group,
is set out on pages 22 to 57.
Employee share trust
The Gateley Employee Benefit Trust (EBT) was established to
facilitate the issue of the equity shares of Gateley (Holdings) Plc to
Group employees under share based payment arrangements.
During the year ended 30 April 2023 the EBT purchased 281,702
shares in the company (2022: 187,033) at a cost of £435,791
(2022: £75,854).
Dividends
The Directors propose to recommend a final dividend of
6.2p (2022: 5.5p) per share, be paid, giving a total dividend for the
year of 9.5p (2022: 8.5p). The final dividend has not been included
within creditors as it was not approved before the year end.
During the period the board became aware of a technical issue in
respect of a number of historic dividends paid by the Company.
Details are included in Note 12 to the consolidated financial
statements. A circular will be sent to shareholders shortly and will
be available on the Company’s website at www.gateleyplc.com/
investors/investor-relations.
The Directors and their interests in the shares of the parent company
Nigel Terrence Payne
Joanne Carolyn Lake
Suzanne Frances Allison Thompson
Roderick Richard Waldie
Victoria Louise Garrad
Michael James Ward
Peter Gareth Davies
Neil Andrew Smith
10p ordinary shares
10p ordinary shares
Number of
shares
2023
Percentage
Holding
2023
Number of
shares
2022
Percentage
Holding
2022
70,942
26,300
12,272
1,275,670
569,478
1,990,000
-
362,537
0.06%
0.02%
0.01%
1.01%
0.45%
1.57%
-
0.29%
70,942
26,300
10,000
1,275,670
-
1,990,000
1,983,357
362,537
0.06%
0.02%
0.01%
1.04%
-
1.62%
1.61%
0.29%
Substantial shareholdings
The Company was notified that the following were interested in 3% or more of the issued share capital of the Company as at 21 July 2023:
Name
Liontrust Asset Management
Octopus Investments
Columbia Threadneedle Investments
Number of
ordinary shares
% of issued
share capital
12,993,544
9,643,847
8,456,378
10.25%
7.61%
6.67%
69
Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Auditor
In accordance with section 489 of the Companies Act 2006,
a resolution for the re-appointment of MHA MacIntyre Hudson
as auditor of the Company is to be proposed at the forthcoming
Annual General Meeting.
By order of the board
Roderick Waldie
Chief Executive Officer
5 September 2023
One Eleven Edmund Street
Birmingham
West Midlands
B3 2HJ
The board adopted the Quoted Companies Alliance (‘QCA’)
Code. The Group’s application of this code is detailed in the
Corporate Governance Statement as detailed on the Group’s
website at www.gateleyplc.com/investors/investor-relations/aim-
rule-26/. As required under AIM Rule 26, the information in this
statement is updated annually.
Future developments
The board plans to continue to drive growth within the existing
business and through acquisitions within both the legal and
non-legal sectors, supporting this with further investment in
technology and recruitment of quality personnel.
Subsequent events
On 19 July 2023, Gateley (Holdings) Plc completed the acquisition
of the entire issued share capital of Richard Julian and Associates
Limited (‘RJA’) for a maximum consideration of £6,000,000.
The initial consideration payable on completion was £3,931,000,
split as £2,027,000 paid in cash and £1,904,000 through the
issuance of 1,192,163 new ordinary shares of 10 pence each in
Gateley (‘Ordinary Shares’. The cash consideration is being funded
by the existing revolving credit facility. RJA is a chartered surveying
practice, providing quantity surveying and project management
services across a variety of construction sectors. It specialises in the
provision of these services to organisations that deliver affordable
housing, a resilient sector which is underpinned by high levels of
grants to support delivery of the Government’s housing targets.
At the time when the financial statements were authorised for
issue, the determination of the fair values of the assets and
liabilities acquired had not been finalised because the individual
valuations had not been concluded. It was not possible to provide
detailed information about each class of acquired receivables and
any contingent liabilities of the acquired entity.
Directors’ report
continued
Financial risk management objectives and policies
The Group uses various financial instruments including cash,
trade debtors and trade creditors. It is the Group’s policy not to
enter into complex financial instruments. Such instruments give rise
to liquidity risk, interest rate risk, credit risk and foreign exchange
risk. More detail on financial instruments is given in note 27 to
the financial statements.
Directors’ professional indemnity insurance
All Directors and Officers of the Company have the benefit of
the indemnity provision contained in the Company’s Articles
of Association. The provision, which is a qualifying third party
indemnity provision, was in force throughout the last two financial
years and is currently still in force. The Group also purchased and
maintained throughout the financial period Directors’ and Officers’
liability insurance in respect of itself and its Directors and Officers,
although no cover exists in the event Directors or Officers are
found to have acted fraudulently or dishonestly.
Directors’ responsibilities statement
The Directors are responsible for preparing the Strategic Report
and Directors’ Report and the financial statements in accordance
with applicable law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have to
prepare the financial statements in accordance with UK-adopted
international accounting standards. Under company law the
Directors must not approve the financial statements unless they
are satisfied that they give a true and fair view of the state of affairs
and profit or loss of the Company and Group for that period. In
preparing these financial statements, the Directors are required to:
•
•
•
•
select suitable accounting policies and then apply them
consistently;
make judgements and accounting estimates that are reasonable
and prudent;
state whether applicable UK-adopted international accounting
standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
Disclosure of information to auditor
The Directors confirm that:
•
•
so far as each Director is aware, there is no relevant audit
information of which the Company’s auditor is unaware; and
the Directors have taken all the steps that they ought to have
taken as Directors in order to make themselves aware of any
relevant audit information and to establish that the Company’s
auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of
the corporate and financial information included on the Company’s
website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Employees
Details of how the Group’s policy and approaches to employee
engagement, diversity and inclusion and disabled employees can be
found in the Strategic Report.
Engaging with stakeholders
The Directors have identified the key stakeholders of the business,
and documented their engagement with these groups throughout
the year along with how they have been considered in the making
of key decisions within the year.
The Group conducts regular client surveys to better understand
and improve the clients’ experience and service received.
We seek to build strong, long term relationships with our suppliers
working alongside them as business partners for the benefit of all.
The Group works closely with its advisors to ensure it operates in
accordance with the market regulations.
The CEO and CFO, have regular meetings with the Group’s
Relationship Manager at the Solicitors Regulatory Authority
(SRA), the organisation that oversees the regulation of the
legal services sector.
Streamlined Energy & Carbon Reporting
Under The Companies Act 2006 (Strategic Report and Director’s
Report) Regulation 2018, Gateley (Holdings) Plc have disclosed
their annual UK energy consumption within the Strategic Report.
Corporate Governance Statement
Since September 2018 all AIM companies have been required to
set out details of a recognised corporate governance code that the
Board of Directors has chosen to apply, how they comply with that
code, and where it departs from its chosen corporate governance
code an explanation for doing so.
70
71
Gateley (Holdings) PlcAnnual report and financial statements Gateley (Holdings) Plc
Annual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Financial
statements
In this section
Independent auditors’ report to the members
of Gateley (Holdings) plc
Consolidated statement of profit and loss and other
comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Parent company statement of financial position
Parent company statement of changes in equity
Parent company cash flow statement
Parent company notes to the financial statements
Notice of Annual General Meeting
Company information
74
82
83
85
87
88
128
129
130
131
144
155
72
72
73
73
Gateley (Holdings) PlcAnnual report and financial statements Independent auditors’ report
to the members of Gateley (Holdings) plc
For the purpose of this report, the terms “we” and “our” denote MHA MacIntyre Hudson in relation to UK legal, professional and
regulatory responsibilities and reporting obligations to the members of Gateley (Holdings) plc. For the purposes of the table on
pages 75 to 77 that sets out the key audit matters and how our audit addressed the key audit matters, the terms “we” and “our” refer
to MHA. The Group financial statements, as defined below, consolidate the accounts of Gateley (Holdings) plc and its subsidiaries (the
“Group”). The “Parent Company” is defined as Gateley (Holdings) plc, as an individual entity. The relevant legislation governing the
Company is the United Kingdom Companies Act 2006 (“Companies Act 2006”).
Opinion
We have audited the financial statements of Gateley (Holdings) plc for the year ended 30 April 2023.
The financial statements that we have audited comprise:
•
•
•
•
•
•
•
•
•
the consolidated statement of profit and loss and other comprehensive income
the consolidated statement of financial position
the consolidated statement of changes in equity
the consolidated cash flow statement
Notes 1 to 33 to the consolidated financial statements, including significant accounting policies
the parent company statement of financial position
the parent company statement of changes in equity
The parent company cash flow statement and
Notes 1 to 15 to the Company financial statements, including significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group and Parent Company’s financial statements is
applicable law and UK adopted International Accounting Standards.
In our opinion the financial statements:
•
•
•
give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 30 April 2023 and of the Group’s profit
for the year then ended;
have been properly prepared in accordance with UK adopted international accounting standards; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in
the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our ethical responsibilities in accordance with
those requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Business overview
Strategic report
Corporate governance
Our financials
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the financial statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going concern basis
of accounting included:
•
•
•
•
•
The consideration of inherent risks to the Group’s and the Parent Company’s operations and specifically their business model.
The evaluation of how those risks might impact on the available financial resources.
An examination of budgets and forecasts and their basis of preparation.
Liquidity considerations including examination of cash flow projections at Group and Parent Company level.
Consideration of the funding facilities available to the Group and the market attitude to lending in the legal sector.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or
collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a going concern for a period of at least
twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Overview of our audit approach
Scope
Our audit was scoped by obtaining an understanding of the Group, including the Parent
Company, and its environment, including the Group’s system of internal control, and
assessing the risks of material misstatement in the financial statements. We also addressed
the risk of management override of internal controls, including assessing whether
there was evidence of bias by the directors that may have represented a risk of material
misstatement.
Materiality
Group
2023
£810k
Parent Company
£405k
Key audit matters
Group (recurring KAMS)
Group (first year KAM)
2022
£950k
£460k
•
•
•
5% (2022: 5%) of profit before tax
1% (2022: 1%) of net assets
Accrued income - valuation
Revenue recognition - existence/cut off of billed revenue
Historical acquisitions
74
75
Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Key audit matter description
How the scope of our audit responded to the key audit matter
Risk of fraud in revenue recognition – revenue recognition – existence
Bills raised in the year may be fictitious/erroneous or raised before
time has been worked by the fee earners and the business may
therefore not be entitled to the income. Bills may also be raised
when work in progress should be written off as irrecoverable.
Historical acquisitions
During the year, the Financial Reporting Council (FRC) performed
a review of the audited Gateley (Holdings) plc accounts for the
year ended 30 April 2022, including the accounting treatment of
contingent consideration relating to an acquisition made during
that year. Management had accounted for this as part of the
cost of investment, based on the factors detailed in IFRS 3 and
consistent with previous acquisitions. The FRC’s view was that it
should be accounted for as remuneration and therefore expensed
to profit or loss, and that the same applied to all historical
acquisitions that contained the same clauses.
As explained in note 33, management have therefore adjusted
the contingent consideration element on all relevant historical
acquisitions.
The significance of the adjustment has led us to treat historical
acquisitions as a Key Audit Matter.
We reviewed a sample of sales invoices issued during the year to
ensure that the service had been provided pre year end, confirming
that entitlement to record the invoice as revenue had been reached.
The evidence of services being provided included, but was not limited
to, time records maintained by fee earners and client contracts.
We reviewed the level of post year end credit notes being raised to
identify significant credit notes being raised indicating erroneous
recognition of revenue in the current year.
Key observations communicated to the Group’s Audit Committee
We concluded that revenue had been recorded appropriately. We did
not identify any material errors in relation to existence or cut-off.
We reviewed FRC correspondence and management’s previous
treatment to understand the reasons for the adjustments.
We reviewed management’s calculations to ensure that the
adjustments have been correctly understood and processed.
We reviewed the disclosure of the reasons for the adjustments.
Key observations communicated to the Group’s Audit
Committee
We concluded that historical acquisitions have been recorded and
disclosed in line with the new accounting treatment.
Independent auditors’ report
continued
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those matters which had the greatest effect on: the overall audit strategy; the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter description
How the scope of our audit responded to the key audit matter
Risk of fraud in revenue recognition – Accrued income - valuation
Revenue (in respect of client matters) is recognised in
accordance with IFRS 15 ‘Revenue from Contracts with
Customers’.
There is judgement in the calculation of accrued income in
terms of the recoverability of the time recorded. Management
changed their provision calculation process in FY23. Historically,
the unbilled revenue provision was calculated on a 3 year average
recovery rate, however, in the current period, fee earners have
reviewed unbilled revenue for each matter on a line by line
basis and an enhanced ECL calculation has also been applied.
There is a risk that this methodology change will have a material
impact on the current year provision. There is also a risk that the
methodology will not be consistently applied in future periods.
Management have continued to apply guidance under IFRS 9,
utilising the simplified approach for contract assets and therefore
this is not a change of estimate and does not need to be applied
retrospectively.
Contingent work in progress may be included in the year-end
valuation of accrued revenue when the contingent event has
not occurred and therefore the revenue has not been earned in
accordance with the requirements of IFRS 15.
We evaluated the Group’s accounting policies for recognition of
revenue for appropriateness in accordance with requirements
of the financial reporting framework, including IFRS 15 ‘Revenue
from Contracts with Customers’, and checked this has been
appropriately applied.
We agreed, on a sample basis, client engagement terms to ensure
client matters are classified correctly between contingent and
non-contingent and also to support the existence of revenue
recognised in the period.
We evaluated management’s assessment, in accordance with the
requirements of IFRS 15, that it is not probable that client matters
classified as contingent at the year end, and valued at nil, will result
in revenue being incorrectly recognised, including, but not limited
to, testing billings post year end.
For unbilled revenue recognised in the year we tested on a
sample basis that entitlement to revenue had been obtained
through proof of service being carried out and that time had been
recorded pre year end confirming that the matter is live, and that
unbilled revenue is recoverable.
We sent out a questionnaire to fee earners on a sample basis to
obtain an understanding of their rationale behind the line by line
review and application of provisions against unbilled revenue.
We also reviewed post year-end billing to balances at year end to
review recoverability.
We assessed the adequacy of provisions against irrecoverable
unbilled revenue by review of aged work in progress reports. We
also applied prior year recovery rates to the year end unbilled
revenue to ascertain whether this would have a material impact
on the year end valuation. We then deducted provisions already
applied for ECL and contingent fees.
Key observations communicated to the Group’s Audit
Committee
We concluded that there was no material misstatement in the
valuation of unbilled revenue, and that unbilled revenue has been
recorded in accordance with IFRS15.
76
77
Gateley (Holdings) PlcAnnual report and financial statements Independent auditors’ report
continued
Our application of materiality
Our definition of materiality considers the value of error or omission on the financial statements that, individually or in aggregate, would
change or influence the economic decision of a reasonably knowledgeable user of those financial statements. Misstatements below these
levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular
circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Materiality is used in planning the
scope of our work, executing that work and evaluating the results.
Materiality in respect of the Group was set at £810k (2022: £950k) which was determined on the basis of 5% (2022: 5%) of the Group’s
profit before tax. Materiality in respect of the Parent Company was set at £405k (2022: £460k), determined on the basis of 1% (2022: 1%)
of the Parent Company’s net assets. Profit before tax was deemed to be the appropriate benchmark for the calculation of Group materiality
as this is a key area of the financial statements because this is the metric by which the performance and risk exposure of the Group and
Parent Company is principally assessed. In our opinion this is therefore the benchmark with which the users of the financial statements are
principally concerned.
Performance materiality is the application of materiality at the individual account or balance level, set at an amount to reduce, to an
appropriately low level, the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole Performance materiality for the Group was set at £567k (2022: £665k) and at £283.5k (2022: £322k) for
the Parent Company which represents 70% (2022: 70%) of the above materiality levels.
The determination of performance materiality reflects our assessment of the risk of undetected errors existing, the nature of the systems
and controls and the level of misstatements arising in previous audits.
We agreed to report any corrected or uncorrected adjustments exceeding £40.5k and £20.25k in respect of the Group and Parent Company
respectively to the Audit Committee as well as differences below this threshold that in our view warranted reporting on qualitative grounds.
Overview of the Scope of the Group and Parent Company audits
Our assessment of audit risk, evaluation of materiality and our determination of performance materiality sets our audit scope for each
Company within the Group. Taken together, this enables us to form an opinion on the consolidated financial statements. This assessment
takes into account the size, risk profile, organisation / distribution and effectiveness of Group-wide controls, changes in the business
environment and other factors such as recent internal audit results when assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the consolidated financial statements, and to ensure we had adequate quantitative
and qualitative coverage of significant accounts in the consolidated financial statements, of the 21 reporting components of the Group,
we identified 20 components in the UK and mainland Europe which represent the principal business units within the Group.
The Group comprises of a Parent Company which does not trade, a main trading Subsidiary, and several smaller trading Subsidiaries.
The Group engagement team carried out audits of the complete financial information of the following significant components of the Group:
•
•
The Parent Company, Gateley (Holdings) plc
Gateley plc
A desktop analytical review was performed on the other components that were not considered to be individually financially significant, and
specific targeted procedures performed on material subsidiaries based on an assessment of the risk to the Group audit results.
The coverage achieved by our audit procedures was:
Number of
components
2
19
21
Revenue
72%
28%
100%
Net assets/
(liabilities)
Profit
before tax
116%
(16%)
100%
73%
27%
100%
Full scope audit
Analytical review and specific targeted procedures
Total
78
Business overview
Strategic report
Corporate governance
Our financials
The control environment
We evaluated the design and implementation of those internal
controls of the Group, including the Parent Company, which
are relevant to our audit, such as those relating to the financial
reporting cycle. We also tested operating effectiveness but did not
place reliance on the controls.
Strategic Report and Directors report
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the course of the
audit:
We deployed our internal IT audit specialists to obtain an
understanding of the general IT environment. Two low priority
findings were raised with management. No evidence was identified
which suggests the environment is not operating effectively.
They have also concluded that the data migration into the new
accounting system 3E, was successful during the year.
•
•
the information given in the strategic report and the directors’
report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been
prepared in accordance with applicable legal requirements.
Climate-related risk
In planning our audit and gaining an understanding of the Group
and Parent Company, we considered the potential impact of
climate-related risks on the business and its financial statements.
We obtained management’s climate-related risk assessment, along
with relevant documentation and reports relating to management’s
assessment and held discussions with management to understand
their process for identifying and assessing those risks.
We then engaged internal specialists to assess, amongst other factors,
the benchmarks used by management, the nature of the Group’s
business activities, its processes and the geographic distribution of its
activities. We have agreed with managements’ assessment that climate-
related risks are not material to these financial statements.
Reporting on other information
The other information comprises the information included in
the annual report other than the financial statements and our
auditor’s report thereon. The directors are responsible for the
other information contained within the annual report. Our opinion
on the financial statements does not cover the other information
and, except to the extent otherwise explicitly stated in our report,
we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this
gives rise to a material misstatement in the financial statements
themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
In the light of the knowledge and understanding of the Group and
the Parent Company and their environment obtained in the course
of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
Matters on which we are required to report by
exception
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report to
you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept by the
Parent Company, or returns adequate for our audit have not
been received by branches not visited by us; or
the Parent Company financial statements are not in
agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law
are not made; or
we have not received all the information and explanations we
require for our audit.
Responsibilities of Directors
As explained more fully in the directors’ responsibilities statement,
the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair
view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible
for assessing the Group’s and the Parent Company’s ability to
continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the Group
or Parent Company or to cease operations, or have no realistic
alternative but to do so.
79
Gateley (Holdings) PlcAnnual report and financial statements Independent auditors’ report
continued
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered
material if, individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the
basis of these financial statements.
A further description of our responsibilities for the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part
of our auditor’s report.
Extent to which the audit was considered capable
of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in
respect of irregularities, including fraud.
•
These audit procedures were designed to provide reasonable
assurance that the financial statements were free from fraud or
error. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from
error and detecting irregularities that result from fraud is inherently
more difficult than detecting those that result from error, as
fraud may involve collusion, deliberate concealment, forgery
or intentional misrepresentations. Also, the further removed
non-compliance with laws and regulations is from events and
transactions reflected in the financial statements, the less likely
we would become aware of it.
Identifying and assessing potential risks arising
from irregularities, including fraud
The extent of the procedures undertaken to identify and assess the
risks of material misstatement in respect of irregularities, including
fraud, included the following:
We considered the nature of the industry and sector, the
control environment, business performance including
remuneration policies and the Group’s, including the
Parent Company’s, own risk assessment that irregularities
might occur as a result of fraud or error. From our sector
experience and through discussion with the directors,
•
80
we obtained an understanding of the legal and regulatory
frameworks applicable to the Group focusing on laws and
regulations that could reasonably be expected to have a direct
material effect on the financial statements, such as provisions
of the Companies Act 2006, UK tax legislation or those that
had a fundamental effect on the operations of the Group.
•
We enquired of the directors and management concerning
the Group’s and the Parent Company’s policies and
procedures relating to:
–
–
–
identifying, evaluating and complying with the laws
and regulations and whether they were aware of any
instances of non-compliance;
detecting and responding to the risks of fraud and
whether they had any knowledge of actual or suspected
fraud; and
the internal controls established to mitigate risks related
to fraud or non-compliance with laws and regulations.
We assessed the susceptibility of the financial statements
to material misstatement, including how fraud might occur
by evaluating management’s incentives and opportunities
for manipulation of the financial statements. This included
utilising the spectrum of inherent risk and an evaluation of
the risk of management override of controls. We determined
that the principal risks were related to posting inappropriate
journal entries to increase revenue and management bias in
accounting estimates particularly in determining expected
credit losses and provisions against unbilled revenue.
Audit response to risks identified In respect of the above
procedures:
•
•
we corroborated the results of our enquiries through
our review of the minutes of the Group’s and the Parent
Company’s audit committee meetings.
audit procedures performed by the engagement team in
connection with the risks identified included:
–
–
–
reviewing financial statement disclosures and testing to
supporting documentation to assess compliance with
applicable laws and regulations expected to have a direct
impact on the financial statements.
testing journal entries, including those processed late
for financial statements preparation, those posted by
infrequent or unexpected users, those posted to unusual
account combinations;
evaluating the business rationale of significant
transactions outside the normal course of business, and
reviewing accounting estimates for bias;
Business overview
Strategic report
Corporate governance
Our financials
–
–
enquiry of management around actual and potential
litigation and claims.
challenging the assumptions and judgements made by
management in its significant accounting estimates.
•
we communicated relevant laws and regulations and
potential fraud risks to all engagement team members,
including experts, and remained alert to any indications
of fraud or non-compliance with laws and regulations
throughout the audit.
Use of our report
This report is made solely to the Parent Company’s members, as
a body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we might
state to the Parent Company’s members those matters we are
required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Parent Company
and the Parent Company’s members as a body, for our audit work,
for this report, or for the opinions we have formed.
Andrew Moyser FCA FCCA
(Senior Statutory Auditor)
for and on behalf of MHA,
Statutory Auditor
London, United Kingdom
5 September 2023
81
Gateley (Holdings) PlcAnnual report and financial statements
Business overview
Strategic report
Corporate governance
Our financials
Consolidated statement of profit and loss
and other comprehensive income
for the year ended 30 April 2023
Consolidated statement of financial position
at 30 April 2023
Revenue
Other operating income
Personnel costs, excluding IFRS 2 charge
Depreciation – Property, plant and equipment
Depreciation – Right-of-use asset
Impairment of trade receivables and contract assets
Other operating expenses, excluding non-underlying and exceptional items
Operating profit before non-underlying and exceptional items
Non-underlying operating items
Exceptional items
Operating profit
Financial income
Financial expense
Profit before tax
Taxation
Profit for the year after tax attributable to equity holders of the parent
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
- Revaluation of other investments
- Exchange differences on foreign branch
Profit for the financial year and total comprehensive income all attributable to equity
holders of the parent
Statutory Earnings per share
Basic
Diluted
Note
4
5
7
13
13
19/20
6
6
6
6
9
9
10
2023
£’000
162,683
49
(96,765)
(936)
(3,976)
(1,334)
(34,741)
24,980
(8,858)
-
(8,858)
16,122
1,735
(1,645)
16,212
(3,972)
12,240
Restated
2022
£’000
137,249
-
(86,517)
(851)
(3,783)
(866)
(22,716)
22,516
6,077
(870)
5,207
27,723
194
(1,141)
26,776
(3,753)
23,023
(26)
(49)
(190)
58
12,165
22,891
11
11
9.77p
9.52p
19.35p
18.89p
The results for the periods presented above are derived from continuing operations.
The accompanying notes on pages 88 to 127 form an integral part of these financial statements.
Non-current assets
Property, plant and equipment
Right of use asset
Investment property
Deferred tax asset
Intangible assets and goodwill
Other intangible assets
Other investments
Total non-current assets
Current assets
Contract assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Other interest-bearing loans and borrowings
Lease liability
Other payables
Deferred tax liability
Provisions
Total non-current liabilities
Current liabilities
Trade and other payables
Lease liability
Provisions
Current tax liabilities
Total current liabilities
Total liabilities
NET ASSETS
Note
13
13
14
23
15
17
18
19
20
25
21
29
22
23
24
22
29
24
2023
£’000
1,628
27,098
164
830
12,929
1,090
147
43,886
20,388
73,272
11,105
104,765
148,651
(6,813)
(28,716)
-
(2,941)
(1,290)
(39,760)
(25,933)
(3,257)
(107)
(1,482)
(30,779)
(70,539)
78,112
Restated
2022
£’000
Restated
2021
£’000
1,334
24,627
164
638
14,002
564
173
41,502
17,239
71,587
16,105
104,931
146,433
(5,715)
(25,207)
(40)
(3,089)
(863)
1,323
27,007
164
138
5,617
282
363
34,894
13,900
46,587
19,605
80,092
114,986
-
(27,702)
(120)
(772)
(763)
(34,914)
(29,357)
(31,719)
(3,719)
(101)
(842)
(36,381)
(71,295)
75,138
(28,897)
(2,743)
(176)
(1,066)
(32,882)
(62,239)
52,747
82
83
Gateley (Holdings) PlcAnnual report and financial statements Consolidated statement of financial position
continued
Consolidated statement of changes in equity
Business overview
Strategic report
Corporate governance
Our financials
EQUITY
Share capital
Share premium
Merger reserve
Other reserve
Treasury reserve
Translation reserve
Retained earnings
TOTAL EQUITY
Note
26
2023
£’000
12,664
11,846
(9,950)
15,413
(677)
(51)
48,867
78,112
Restated
2022
£’000
Restated
2021
£’000
12,456
11,342
(9,950)
14,465
(261)
(2)
47,088
75,138
11,792
9,421
(9,950)
6,815
(312)
(60)
35,041
52,747
At 1 May 2021
Impact of restatement (note 33)
At 1 May 2021 (restated)
Comprehensive income:
Profit for the year
Revaluation of other investments
Exchange rate differences
Total comprehensive income
These financial statements were approved by the directors on 5 September 2023 and were signed and authorised for issue on their behalf by:
Transactions with owners recognised directly in
equity:
Issue of share capital
664
1,921
Roderick Waldie
Chief Executive Officer
Neil A Smith
Chief Financial Officer
Company registered number: 09310078
The accompanying notes on pages 88 to 127 form an integral part of these financial statements.
Purchase of own shares at nominal value
Sale of treasury shares
Purchase of treasury shares
Recognition of tax benefit on gain from equity settled
share options
Dividend paid
Share based payment transactions
Total equity at 30 April 2022 (restated)
At 1 May 2022, as previously presented
Impact of restatement (note 33)
At 1 May 2022 (restated)
Comprehensive income:
Profit for the year
Revaluation of other investments
Exchange rate differences
Total comprehensive income
Share
premium
£’000
Merger
reserve
£’000
Other
reserve
£’000
Treasury
reserve
£’000
Retained
earnings
£’000
Foreign
currency
translation
reserve
£’000
Total
Equity
£’000
9,421
(9,950)
6,815
(312)
41,560
(60)
59,266
-
-
-
-
(6,519)
-
(6,519)
Share
capital
£’000
11,792
-
11,792
9,421
(9,950)
6,815
(312)
35,041
(60)
52,747
12,456
12,456
-
11,342
11,342
-
(9,950)
14,465
(261)
47,088
(9,950)
14,465
(261)
44,863
-
-
-
2,225
12,456
11,342
(9,950)
14,465
(261)
47,088
(2)
75,138
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,650
-
-
-
-
-
-
-
-
-
-
-
127
(76)
-
-
-
23,023
(190)
-
22,833
-
(132)
-
-
563
(12,430)
1,213
-
-
58
58
23,023
(190)
58
22,891
-
-
-
-
-
-
-
(2)
(2)
-
10,235
(132)
127
(76)
563
(12,430)
1,213
75,138
72,913
2,225
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
948
-
-
-
-
-
-
-
-
-
-
-
-
20
(436)
-
-
-
12,240
(26)
-
12,214
-
(133)
-
-
(398)
(11,004)
1,100
-
-
(49)
(49)
12,240
(26)
(49)
12,165
-
-
-
-
-
-
-
1,660
(133)
20
(436)
(398)
(11,004)
1,100
Transactions with owners recognised directly in
equity:
Issue of share capital
208
504
Purchase of own shares at nominal value
Sale of treasury shares
Purchase of treasury shares
Recognition of tax benefit on gain from equity settled
share options
Dividend paid
Share based payment transactions
-
-
-
-
-
-
-
-
-
-
-
-
84
85
Total equity at 30 April 2023
12,664
11,846
(9,950)
15,413
(677)
48,867
(51)
78,112
Gateley (Holdings) PlcAnnual report and financial statements
Consolidated statement of changes in equity
continued
Consolidated cash flow statement
for year ended 30 April 2023
Business overview
Strategic report
Corporate governance
Our financials
The following describes the nature and purpose of each reserve within equity:
Share premium – Amount subscribed for share capital in excess of nominal value together with gains on the sale of own shares and the
difference between actual and nominal value of shares issued by the Company in the acquisition of trade and assets.
Merger reserve – Represents the difference between the nominal value of shares acquired by the Company in the share for share exchange
with the former Gateley Heritage LLP members and the nominal value of shares issued to acquire them.
Other reserve – Represents the difference between the actual and nominal value of shares issued by the Company in the acquisition of
subsidiaries.
Treasury reserve – Represents the repurchase of shares for future distribution by Group’s Employee Benefit Trust.
Retained earnings – All other net gains and losses and transactions with owners not recognised anywhere else.
Foreign currency translation reserve – Represents the movement in exchange rates back to the Group’s functional currency of profits and
losses generated in foreign currencies.
The accompanying notes on pages 88 to 127 form an integral part of these financial statements.
Cash flows from operating activities
Profit for the year after tax
Adjustments for:
Depreciation and amortisation
Financial income
Financial expense
Interest charge on capitalised leases
Equity settled share-based payments
Gain on bargain purchase
Acquisition related earn-out remuneration charge
Earn-out consideration paid - acquisition of subsidiary
Initial consideration paid on acquisitions
Loss on disposal of property, plant and equipment
Tax expense
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in provisions
Cash generated from operations
Tax paid
Net cash flows from operating activities
Investing activities
Acquisition of property, plant and equipment
Acquisition of other intangible assets
Cash acquired on business combinations
Interest received
Net cash flows from investing activities
Financing activities
Interest and other financial income paid
Lease repayments
Receipt of new revolving credit facility, net of refinancing costs
Proceeds from sale of own shares
Acquisition of own shares by Employee Benefit Trust
Cash received for shares issued on exercise of SAYE/CSOP options
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
86
The accompanying notes on pages 88 to 127 form an integral part of these financial statements.
Note
2023
£’000
Restated
2022
£’000
12,240
23,023
13/15/17
9
9
9
7
16
6
6
10
24
13
17
9
9
21
12
25
7,246
(1,735)
495
1,150
1,100
(1,389)
6,190
(50)
(1,468)
82
3,972
27,833
(6,942)
(7,259)
433
14,065
(4,320)
9,745
(1,312)
(787)
483
1,735
119
(371)
(4,550)
1,000
-
(416)
477
(11,004)
(14,864)
(5,000)
16,105
11,105
6,215
(194)
193
948
1,213
(12,380)
3,509
-
(7,033)
16
3,753
19,263
(10,299)
816
25
9,805
(4,497)
5,308
(775)
(319)
1,051
194
151
(193)
(3,870)
5,715
90
(39)
1,768
(12,430)
(8,959)
(3,500)
19,605
16,105
87
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
(forming part of the financial statements)
1. Basis of preparation and significant
accounting policies
variations in trading performance, mitigating actions available to
management the Group expects to be able to operate within the
Group’s financing facilities.
Gateley (Holdings) Plc is a Company incorporated and domiciled in
the United Kingdom. The Parent Company’s acquisition of Gateley
Plc and its acquisition of Gateley LLP have been assessed as being
business combinations under common control which are scoped
out of IFRS 3 ‘Business Combinations’. In accordance with the
requirements of IAS 8 the Directors have selected an appropriate
accounting policy to reflect the substance of this transaction. The
Directors have chosen to apply merger accounting as outlined in
UKGAAP (FRS102). This required the Group to be consolidated
at the date of the business combinations as though the Group
structure had always been in place. No goodwill was recognised on
this transaction.
The Group financial statements consolidate those of the Company
and its subsidiaries (together referred to as the “Group”). The
parent company financial statements present information about
the Company as a separate entity and not about its Group.
The financial statements of Gateley (Holdings) Plc have been
prepared in accordance with UK-adopted International Accounting
Standards and with the requirements of the Companies Act 2006
as applicable to companies reporting under those standards. The
accounting policies set out below have, unless otherwise stated,
been applied consistently to all periods presented in these Group
financial statements.
Judgements made by the Directors, in the application of these
accounting policies that have significant effect on the financial
statements and estimates with a significant risk of material
adjustment in the next year are discussed in note 3.
The individual financial statements of each Group company are
presented in the currency of the primary economic environment
in which it operates (its functional currency). For the purposes
of the consolidated financial statements, the results and financial
position of each Group company are expressed in GBP, which is
the functional currency of the Company, and the presentational
currency for the Group.
1.1 Measurement convention
The financial statements are prepared on the historical cost basis
except where adopted IFRSs require an alternative treatment. The
principal variations relate to investment properties and financial
instruments which are carried at fair value.
1.2 Going concern
See full explanation on page 44 of the Strategic Report.
Having reviewed the Group’s forecasts, which includes an analysis
of both short term cash flow forecasts and longer term cash flow
forecasts, the risk and uncertainties surrounding the current and
future demand for legal services, and other reasonably possible
88
Sensitivity analysis has been performed in respect of specific
scenarios which could negatively impact our future performance
such as lower levels of revenue growth, lower than forecast
receipts of cash, and reduced levels of gross margin expansion.
In addition, the Directors have also considered further mitigating
actions such as lower capital expenditure and other short-term
cash management activities within the Group’s control. On this
basis, the Directors have a reasonable basis to conclude that the
Group is forecast to continue to trade in line with existing financing
facilities for the foreseeable future.
Accordingly, the Directors continue to adopt the going concern
basis of accounting in preparing the financial statements.
1.3 Basis of consolidation
On 29 May 2015, the Company acquired 100 per cent of the issued
share capital of Gateley Plc which had, on the same day, acquired
the business assets and liabilities of Gateley Heritage LLP, formerly
the partnership of Gateley LLP. Following this Group reorganisation
the financial statements for the year ended 30 April 2016 were
prepared on a merger accounting basis as though this Group
structure had always been in place.
Although the share for share exchange resulted in a change of
legal ownership, in substance these financial statements reflect the
continuation of the pre-existing Group, headed by Gateley LLP.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. In assessing
control, the Group’s primary consideration is voting rights that are
currently exercisable. The acquisition date is the date on which
control is transferred to the acquirer. The financial statements of
subsidiaries are included in the consolidated financial statements
from the date that control commences until the date that control
ceases.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated.
Unrealised gains arising from transactions with equity-accounted
investees are eliminated against the investment to the extent of the
Group’s interest in the investee. Unrealised losses are eliminated in
the same way as unrealised gains, but only to the extent that there
is no evidence of impairment.
Where necessary, adjustments are made to the financial
information of subsidiaries to bring the accounting policies used
into line with those used by the Group.
Business overview
Strategic report
Corporate governance
Our financials
Audit exemption of subsidiaries
The following subsidiaries are exempt from the requirements of the
UK Companies Act 2006 relating to the audit of individual accounts
by virtue of s479A of the Act.
Name
Gateley UK LLP
Gateley EBT Limited
Gateley Capitus Limited
Gateley Hamer Limited
Gateley Omega Limited
Kiddy & Partners Limited
Gateley Global Limited
T-Three Consulting Limited
T-Three Group Limited
T-Three Holdings Limited
Gateley Vinden Limited
Matsa Holdings Limited
Thomas Alexander Holdings Limited
TVP Holdings Limited
SP 2018 Limited
Byrom Clark Roberts Limited
Gateley Smithers Purslow Limited
Smithers Purslow Group Limited
Ainsley Stokes Limited
Adamson Jones Holdings Limited
Adamson Jones IP Limited
Symbiosis IP Limited
GEG Services Limited
Registered number
OC315778
09576648
03324995
03948095
13367322
11379755
08597472
03959623
06495180
04579021
03830233
08293396
02280956
06548795
11344448
02390547
01402539
05508205
03219786
10698979
07188937
06658551
12374579
The outstanding liabilities at 30 April 2023 of the above named
subsidiaries have been guaranteed by the Company pursuant to
s479A to s479C of the Act. In the opinion of the Directors, the
possibility of the guarantee being called upon is remote.
1.4 Foreign currency
Transactions in foreign currencies are translated to the functional
currency at the foreign exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional
currency at the foreign exchange rate ruling at that date. Foreign
exchange differences arising on translation are recognised in the
consolidated statement of profit and loss. Non-monetary assets
and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date
of the transaction.
The assets and liabilities of foreign operations, including goodwill
and fair value adjustments arising on consolidation, are translated
to the Group’s presentational currency, sterling, at foreign
exchange rates ruling at the reporting date. The revenues and
expenses of foreign operations are translated at an average rate for
the year where this rate approximates to the foreign exchange rates
ruling at the dates of the transactions.
Exchange differences arising from the translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the foreign currency reserve.
1.5 Classification of financial instruments issued
by the Group
IFRS 9 ‘Financial Instruments’ specifies how an entity should classify
and measure financial assets including some hybrid contracts.
Financial assets are to be classified on principle-based requirements
dependent on the assets contractual cash flow characteristics and
the Group business model for managing those assets.
The standard also introduced an impairment model that is to
be applied to debt instruments measured at amortised cost or
fair value through other comprehensive income, as well as trade
receivables and contract assets. Under the model, expected credit
losses are to be recognised against financial assets. Expected
credit losses have been calculated in relation to debt securities and
over the life time of trade and other receivables in line with the
approach provided within the standard. The Group have based the
assessment of the expected credit losses on a number of factors
including the credit risk of the asset upon initial recognition as well
as observed actual losses against classes of financial assets and
specific client and industry knowledge held by fee earners.
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group
to deliver cash or other financial assets or to exchange
financial assets or financial liabilities with another party under
conditions that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company’s
own equity instruments, it is either a non-derivative that
includes no obligation to deliver a variable number of the
Company’s own equity instruments or is a derivative that will
be settled by the company’s exchanging a fixed amount of
cash or other financial assets for a fixed number of its own
equity instruments.
To the extent that this definition is not met, the financial
instruments (including members’ capital of subsidiary LLPs) are
classified as a financial liability. Profit distributions relating to equity
instruments are debited direct to equity.
89
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
1.6 Non derivative financial instruments
Financial assets
The Group’s financial assets include cash and cash equivalents and
trade and other receivables. All financial assets are recognised
when the Group becomes party to the contractual provisions of the
instrument.
i) Investments
Other investments in equity securities held by the Group that were
previously classified as being available-for-sale and are stated at fair
value, have been classified as equity investments measured at fair
value through other comprehensive income under IFRS 9.
ii) Trade and other receivables
Trade and other receivables (except unbilled amounts for client
work) are initially recognised at their transaction price and carried
at amortised cost under IFRS 9.
In line with IFRS 9, the Group recognises as disclosed in note 19
and 20 any expected credit loss against trade receivables in order
to recognise the inherent risk that the Group may not be able
to collect all amounts due according to the original terms of
the receivable. The amount of the provision recorded is based
on a broad range of information including past events, current
conditions and forecasts of the future cash flows of the asset and
is recognised in the statement of profit and loss in other operating
expenses.
iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with banks. For the purpose of the consolidated cash flow
statement, cash and cash equivalents includes bank overdrafts in
addition to the definition above.
iv) Treasury shares
The Group operates an Employee Benefit Trust (“EBT”) under
which ordinary shares have been issued and are held by the EBT.
These are treated as treasury shares under IAS 32 and are added to
the Treasury Share Reserve.
Financial Liabilities
Financial liabilities and equity instruments are classified according
to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest
in the assets of the Group after deducting all its liabilities.
The Group’s financial liabilities comprise trade and other payables,
borrowings, contingent consideration, members’ capital and
amounts due to members. All financial liabilities are recognised
initially at their fair value and subsequently measured at amortised
cost using the effective interest method with the exception of
contingent consideration that is measured at fair value through
profit or loss.
i) Bank borrowings
All loans and borrowings are initially recognised at the fair value of
the consideration received net of issue costs associated with the
90
borrowing. Borrowings are subsequently stated at amortised cost;
any difference between the proceeds (net of transaction costs)
and the redemption value is recognised in the statement of profit
and loss over the period of the borrowings using the effective
interest method.
Financial expenses comprise interest expense on borrowings.
ii) Trade and other payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
iii) Contingent consideration
Contingent consideration is initially recognised and carried at the
fair value. Following the end of the measurement period contingent
consideration is continually remeasured to fair value with changes
in fair value being reflected in Profit or Loss. Any interest payable
on the balance is reflected in the value of the liability and charged
to Profit and Loss as it arises.
1.7 Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and impairment charges.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Depreciation is calculated to write off the cost of property, plant
and equipment less the estimated residual value on a straight-
line basis over the expected useful economic life of the assets
concerned. Estimated residual values are revised annually.
The useful lives over which these assets are depreciated are:
Leasehold improvements
over the term of the lease
Equipment
33.3% straight line
Fixtures and fittings
20% straight line
Right-of-use assets
term of the lease
(between 1 and 10 years)
1.8 Leases
The Group leases offices, equipment and vehicles. Rental contracts
are for periods of between 1 and 10 years. Lease terms are
negotiated on a lease by lease basis and contain a variety of terms
and conditions.
The Group assesses whether a contract is or contains a lease at
inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short term leases
(defined as leases with a lease term of 12 months or less) and
leases of low value assets (being those assets with a value less
than £5,000 when new). For short term and low value leases, the
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Group recognises the lease payments as an operating expense on a
straight line basis over the term of the lease.
a change in a floating interest rate, in which case a revised
discount rate is used);
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of
the following lease payments:
•
•
•
•
•
•
fixed payments (including in-substance fixed payments), less
any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the Group under residual
value guarantees;
the exercise price of a purchase option if the Group is
reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease
term assumed reflects the Group exercising that option.
The lease payments are discounted using the interest rate implicit
in the lease. If that rate cannot be determined, the Group’s
incremental borrowing rate is used, being the rate that the Group
would have to pay to borrow the funds necessary to obtain an
asset of similar value in a similar economic environment with similar
terms and conditions.
The lease liability is presented as a separate line in the consolidated
statement of financial position.
Right-of-use assets are recognised at commencement of the lease
and initially measured at the amount of the lease liability, plus any
incremental costs of obtaining the lease and any lease payments
made at or before the leased asset is available for use by the Group.
Subsequent to initial recognition, the lease liability is reduced
for payments made and increased to reflect interest on the lease
liability (using the effective interest method). The related right-of-
use asset is depreciated over the term of the lease or, if shorter,
the useful economic life of the leased asset. The lease term shall
include the period of an extension option where it is reasonably
certain that the option will be exercised. Interest on the lease
liability is recognised in the Statement of Comprehensive Income.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
•
•
the lease term has changed or there is a significant change
in the assessment of exercise of a purchase option, in which
case the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate;
The lease payments change due to changes in an index or
rate or a change in expected payment under a guaranteed
residual value, in which cases the lease liability is remeasured
by discounting the revised lease payments using the initial
discount rate (unless the lease payments change is due to
a lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the
lease liability is remeasured by discounting the revised lease
payments using a revised discount rate.
The Group did not make any such adjustments during the periods
presented.
In May 2021 the International Accounting Standards Board issued
COVID-19-Related Rent Concessions (the 2021 amendments)
which amended IFRS 16 Leases. These amendments introduced an
optional practical expedient providing lessees with an exemption
from assessing whether a COVID-19 related rent concession is a lease
modification. The Group has applied this practical expedient where
applicable, the impact of this election and any COVID-19 related rent
concession have not had a material impact on the closing value of the
right-of-use asset or lease liability at 30 April 2023.
1.9 Business combinations
Subject to the transitional relief in IFRS 1, all business combinations
are accounted for by applying the acquisition method. Business
combinations are accounted for using the acquisition method
as at the acquisition date, which is the date on which control is
transferred to the Group.
Acquisitions on or after 1 January 2010
For acquisitions on or after 1 January 2010, the Group measures
goodwill at the acquisition date as:
•
•
•
•
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the
acquiree; plus
the fair value of the existing equity interest in the acquiree;
less
the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is recognised
immediately in profit or loss.
Costs related to the acquisition, other than those associated with
the issue of debt or equity securities, are expensed as incurred.
Any contingent consideration payable is recognised at fair value at
the acquisition date. If the contingent consideration is classified
as equity, it is not re-measured and settlement is accounted for
within equity. Otherwise, subsequent changes to the fair value
of the contingent consideration are recognised in profit or loss.
Any interest payable on the balance is reflected in the value of the
liability and charged monthly to the Statement of Profit and Loss as
it arises. Further detail on contingent consideration is disclosed in
note 16.
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Notes to the consolidated financial statements
continued
On a transaction-by-transaction basis, the Group elects to measure
non-controlling interests, which have both present ownership
interests and are entitled to a proportionate share of net assets
of the acquiree in the event of liquidation, either at its fair value
or at its proportionate interest in the recognised amount of the
identifiable net assets of the acquiree at the acquisition date. All
other non-controlling interests are measured at their fair value at
the acquisition date.
–
–
–
it can be demonstrated how the software product will
generate probable future economic benefits;
adequate technical, financial and other resources to complete
the development and to use or sell software product are
available; and
the expenditure attributable to the software product during
its development can be reliably measured.
1.10 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.
Other intangible assets
Other intangible assets, including software licences, expenditure
on internally generated goodwill, brands and software, customer
contracts and relationships are capitalised at cost and amortised
on a straight-line basis over their estimated useful economic lives
through operating expenses.
Other intangible assets that are acquired by the Group are stated at
cost less accumulated amortisation and accumulated impairment
losses.
Customer lists
Customer lists that are acquired by the Group as part of a business
combination are stated at cost less accumulated amortisation
and impairment losses (see accounting policy ‘Impairment of
assets’). Cost reflects management’s judgement of the fair value
of the individual intangible asset calculated by reference to the net
present value of future benefits accruing to the Group from the
utilisation of the asset, discounted at an appropriate discount rate.
Brand value
Certain acquisitions have retained their trading name due to the
value of the brand in their specific market place.
Brand value is amortised over a period of up to fifteen years
based on the Directors’ assessment of the future life of the brand,
supported by trading history.
Internally generated computer software
Costs associated with maintaining computer software programs are
recognised as an expense when incurred. Development costs that
are directly attributable to the design and testing of identifiable and
unique software products controlled by the Group are recognised
as intangible assets where the following criteria are met:
–
–
it is technically feasible to complete the software product so
that it will be available for use;
management intends to complete the software product and
use or sell it;
–
there is an ability to sell or use the software product;
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset
in a subsequent period.
Computer software development costs recognised as assets
are amortised over their estimated useful lives, which does
not exceed five years. Computer software under development
is not amortised. Amortisation starts from the date on which
the software is available for use. If a decision is made to halt
development then the cost is immediately expensed.
Amortisation
Amortisation is charged to the income statement on a straight-line
basis over the estimated useful lives of intangible assets unless
such lives are indefinite. Intangible assets with an indefinite useful
life and goodwill are systematically tested for impairment at each
statement of financial position date. Other intangible assets are
amortised from the date they are available for use. The estimated
useful lives are as follows:
Customer lists
Brands
Computer software
3 to 11 years
15 years
3 years
1.11 Investment property
Investment properties are properties which are held either to earn
rental income or for capital appreciation or for both. Investment
properties are stated at fair value. Any gain or loss arising from a
change in fair value is recognised in profit or loss.
1.12 Impairment excluding investment properties
Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss
is assessed at each reporting date to determine whether it is
impaired. Management assess impairment of financial assets based
on a broad range of information, including past events, current
conditions and forecasts of the future cash flows of the asset that
can be estimated reliably.
Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes
the amount of impairment loss to decrease, the decrease in
impairment loss is reversed through profit or loss.
Under IFRS 9 the Group recognises expected credit losses (ECLs)
on receivables through application of the simplified method. The
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ECLs are determined using historic credit loss experience adjusted
for forward-looking factors and specific provisions based on
management knowledge and expertise.
Share-based payment transactions
The Group operates several equity settled share-based
compensation plans.
Intangibles and property, plant and equipment (non-financial
assets)
The carrying amount of the Group’s assets including property, plant
and equipment and intangibles other than goodwill is reviewed at
each year end date to determine whether there is any indication
of impairment. If any such indication exists, the asset’s recoverable
amount is estimated.
The grant date fair value of share-based payment awards made
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which
the options were granted.
An impairment loss is recognised whenever the carrying amount
of an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. Where
an impairment loss subsequently reverses, the carrying amount
of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for
the asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised in profit or loss where it relates to an
amount charged to profit or loss.
Goodwill (non-financial asset)
Goodwill is capitalised as an intangible asset and is not amortised
but tested for impairment annually and when there are any
indications that its carrying value is not recoverable. As such,
goodwill is stated at cost less any provision for impairment in value.
For impairment testing purposes, goodwill is allocated to cash-
generating units. If a subsidiary undertaking is subsequently sold,
goodwill arising on acquisition is taken into account in determining
the profit or loss on sale.
1.13 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit
plan under which the company pays fixed contributions into a
separate entity and will have no legal or constructive obligation
to pay further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
statement of profit and loss in the periods during which services
are rendered by employees.
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognised for the amount expected to be
paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and
the obligation can be estimated reliably.
The amount recognised as an expense is adjusted to reflect
the actual number of awards for which the related service and
non-market vesting conditions are expected to be met, such that
the amount ultimately recognised as an expense is based on the
number of awards that meet the related service and non-market
performance conditions at the vesting date, measured at the grant
date fair value of the award.
At each reporting date, the Group revises its estimates of the
number of share incentives which are expected to vest. The impact
of the revision of original estimates is recognised in the income
statement with a corresponding adjustment to equity.
1.14 Own shares held by EBT trust (treasury
reserve)
Transactions of the Group-sponsored EBT trust are included in
the Group financial statements. In particular, the Trust’s purchases
and sales of shares in the Company are recognised directly within
equity.
1.15 Contingent consideration treated as
remuneration
Certain acquisitions made by the Group include an element of
consideration, known as an earn-out, that is contingent on the
financial performance of the acquired business meeting pre-
determined targets over a specified period. Where the earn-out
is also contingent on the continued employment of the seller(s)
following the acquisition, this is then treated as a non-underlying
remuneration charge (see note 1.21), accrued over the retention
period (i.e. the period over which the effective employment
condition is applicable) as a liability. Where initial consideration
transferred is also subject to these same employment conditions,
this too is treated as a non-underlying remuneration charge,
with the prepaid consideration transferred being released to the
Statement of Profit and Loss over the retention period.
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Gateley (Holdings) PlcAnnual report and financial statements
Notes to the consolidated financial statements
continued
1.16 Provisions
Professional indemnity provision
A provision is recognised when the Group has a present legal or
constructive obligation as a result of a past event, that can be
reliably measured and it is probable that an outflow of economic
benefits will be required to settle the obligation. Where material,
the impact of the time value of money is taken into account by
discounting the expected future cash flow at a pre-tax rate, which
reflects risks specific to the liability.
Insurance cover is maintained in respect of professional negligence
claims. This cover is principally written through insurance
companies with coverage of up to £150 million for each claim.
Premiums are expensed as they fall due with prepayments or
accruals being recognised accordingly. Expected reimbursements
are recognised once they become receivable. The liability and
the associated reimbursement asset are shown separately in the
financial statements. Where outflow of resources is considered
probable and reliable estimates can be made, provision is made
for the cost (including related legal costs) of settling professional
negligence claims brought against the Group by third parties
and disciplinary proceedings brought by regulatory authorities.
Amounts provided for are based on management’s assessment of
the specific circumstances in each case. No separate disclosure
is made of the detail of such claims and proceedings, as to do so
could seriously prejudice the position of the Group. In the event
the insurance companies cannot settle the full liability, the liability
will revert to the Group.
Dilapidations provision
The Group recognise a provision for the future costs of
dilapidations on leased office space. The provision is an estimate
of the total cost to return applicable office space to its original
condition at the end of the lease term, spread over the term of the
lease. The estimated total cost is based on previous dilapidation
expense per square foot of office space.
1.17 Revenue recognition
IFRS 15 Revenue from contracts with customers
Under IFRS 15 Revenue from contracts with customers, revenue is
recognised either over time or at a point in time. The model uses
a contract based five-step analysis of transactions to determine
when, and how much, revenue is recognised; this includes the
matching of stand-alone process for services provided to the
satisfaction of performance obligations.
The Group considers that there are two contract types in issue in
the performance of the Group’s professional services, being non-
contingent and contingent contracts.
Non-contingent contracts
Non-contingent work is typically recognised over the duration
of the contract in line with the number of hours charged to the
engagement at a pre-established rate. Under IFRS 15 the hours
worked on these engagements are considered to be the satisfaction
of the performance obligation, therefore where collection of
revenue is considered probable, it is recognised in line with the
hours performed.
Contingent contracts
Contingent work is typically recognised at a point in time, once
the pre-agreed stages of the contract performance are reached
or concluded as a result of an event linked to each work type
performance. In line with IFRS 15 the Group recognises revenue
on these contracts at a point in time once the uncertainty over the
contingent event has been satisfied as this is the point at which the
performance obligation is considered to have been met.
Recognition of accrued revenue
The standard requires both contract assets and liabilities being
recognised. Whilst IFRS 15 requires that when an entity has an
unconditional right to consideration then at this point the contract
asset would become a trade receivable regardless of whether a bill
has been issued. However, the Group does not consider the right
to be unconditional until the point of billing at which point the
fee amount has been agreed and confirmed with the customer.
Therefore, these unbilled amounts are recognised as contract
assets as opposed to trade receivables. The Group have also
recognised a contract liability under the standard that represents
the amount of income that has been invoiced in advance of the
service being performed.
Recoverable expenses
Recoverable expenses and disbursements represent charges from
other professional service firms, sub-contractors and out of pocket
expenses incurred in respect of assignments and expected to be
recovered from clients.
Other income
Rental income, generated through the subletting of office space,
is recognised in line with IFRS 16, on a straight line basis over the
lease term.
1.18 Short term and low value lease payments
Payments made on short term and low value leases are recognised
in the Statement of Profit and Loss on a straight-line basis over the
term of the lease in prior year comparatives and where current year
leases meet the short-term lease criteria under IFRS 16.
1.19 Financial income and expenses
Financial expenses comprise interest payable and exchange losses
that are recognised in the Statement of Profit and Loss. Financial
income comprises interest receivable on funds invested and
exchange gains.
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Interest income and interest payable is recognised in profit or loss
as it accrues, using the effective interest method.
1.20 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity, in
which case it is recognised in equity.
The tax effect of the above is also included if considered significant.
1.22 Exceptional items
Exceptional items are one off transactions, unrelated to the
underlying trading performance of the Group disclosed separately
in the Consolidated Statement of Profit and Loss where the
quantum, nature or volatility of such items would otherwise distort
the underlying trading performance of the Group.
Current tax is the expected tax payable or receivable on the taxable
income or loss for the year, using tax rates and laws enacted or
substantively enacted at the statement of financial position date,
and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The
following temporary differences are not provided for: the initial
recognition of goodwill; the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit other than in a
business combination; and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based
on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates and laws enacted or
substantively enacted at the statement of financial position date.
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.
Details in respect of the non-underlying items recognised in
the current and prior year are set out in note 6 to the Financial
Statements.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which
the temporary difference can be utilised.
1.23 Ordinary dividends
Dividends are recognised as a liability in the period in which they
are approved by the Company’s shareholders.
1.21 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:
•
•
Consideration treated as remuneration: such charges are
treated as non-underlying in order to reflect the commercial
substance of the transaction. All former vendors who remain
employed by the Group are paid at market rates and the earn-
out remuneration is a function of the interpretation of IFRS,
and related emerging guidance only.
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 and non-underlying as they are non-cash items.
2. Accounting developments
New and revised IFRS in issue but not yet
effective
At the date of authorisation of these financial statements, certain
new standards, amendments and interpretations to existing
standards have been published by the IASB but are not yet effective
and have not been applied early to the Group:
Revised IFRS
Effective date
Disclosure of Accounting Policies –
Amendments to IAS 1 and IFRS Practice
Statement 2
Definition of Accounting Estimates –
Amendments to IAS 8
Deferred Tax related to Assets and
Liabilities arising from a Single Transaction –
Amendments to IAS 12
1 January 2023
1 January 2023
1 January 2023
The Directors do not expect that the adoption of the Standards
listed above will have a material impact on the financial statements
of the Group in future periods.
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Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
3. 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.
Estimates
Impairment assessment of trade receivables (note 20) and
unbilled revenue (note 19)
The carrying amount of trade receivables on client assignment is
held at selling price less lifetime estimated credit losses (ECLs).
The inclusions of the ECLs contributes to reducing the risk relating
to the amounts of debts that are recoverable or not recoverable.
ECLs have been estimated based on historic credit losses within
each operating segment for each ageing bracket. These credit
losses calculated have then been adjusted where appropriate for
the inclusion of management and legal professional judgement to
account for any forward looking information on specific clients.
Management have performed sensitivity analysis over the ECL
applied to trade receivables:
+1% increase in ECL
-1% decrease in ECL
Increase/
(decrease) in
value of trade
receivables
£’000
(582)
582
Management have also applied the same expectation of credit
losses for trade receivables to contract assets to assess the
recoverability of unbilled revenue recognised in the consolidated
accounts.
Management have performed sensitivity analysis on the expectation
of recoverability applied to the contract assets balance:
Increase/
(decrease) in
value of contract
assets
£’000
(203)
203
+1% increase in ECL rate
-1% decrease in ECL rate
Management believe that the provision in place is sufficiently
prudent and therefore any increase in the rate applied is unlikely.
Unbilled revenue on client assignments (note 19)
The valuation of unbilled revenue involves detailed understanding of
contractual terms with clients, and affects the amount of revenue
recognised. 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. The extent of such uncertainty is
increased on contingent engagements as there is no certainty that
the amount will be recoverable at all until the contingent event is
satisfied. Management look to reduce this level of uncertainty by
conducting comprehensive risk assessments over each engagement
undertaken to minimise the overall risk held by the Group.
Provision is made for such factors as historical recoverability rates,
contingencies, agreements with clients, external expert’s opinion and
the potential credit risks, following interactions between legal staff,
finance and clients. In assessing whether unbilled time is recognised
as unbilled revenue, management are required to make estimates in
determining the point at which the contingency is resolved and when
the fair value of consideration can be measured reliably.
Where a case is contingent at the statement of financial position
date, no revenue is recognised. Where entitlement to income is
certain it is recognised at selling price.
Valuation of intangibles (note 15)
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. 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.
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4. Revenue and operating segments
The Chief Operating Decision Maker (“CODM”) is the Strategic Board. The Group have the following four strategic divisions, comprising
both legal and consultancy services, which are its reportable segments, and referred to as its Platforms.
The following summary describes the operations of each reportable segment as reported up to 30 April 2023 and also the new service lines:
Reportable segment/Platforms
Legal service lines
Consultancy service lines
Corporate
Business services
People
Property
Banking
Corporate
Restructuring advisory
Taxation
Commercial
Commercial Dispute Resolution
Complex International Litigation
Reputation, media and privacy law
Employment
Pension
Private client
Real Estate
Residential Development
Construction
Planning
Real Estate Dispute Resolution
GEG Services
International Investment Services
Adamson Jones
Symbiosis IP
Entrust Pension
Kiddy and Partners
T-three
Gateley Capitus
Gateley Hamer/Persona
Gateley Smithers Purslow
Gateley Vinden
The revenue and operating profit are attributable to the principal activities of the Group. A geographical analysis of revenue is given below:
United Kingdom
Europe
Middle East
North and South America
Asia
Other
2023
£’000
151,489
5,459
2,390
1,675
1,163
507
2022
£’000
127,386
5,336
923
692
1,501
1,411
162,683
137,249
The Group has no individual customers that represent more than 10% of revenue in either the 2023 or 2022 financial year. The Group’s
assets and costs are predominately located in the UK save for those assets and costs located in the United Arab Emirates (UAE) via its
Dubai subsidiary. Net Group assets of £0.08m (2022: Net Group assets of £0.08m) are located in the Group’s Dubai subsidiary. Revenue
generated by the Group’s Dubai subsidiary to customers in the UAE totalled £2.39m (2022: £0.92m) as disclosed above as due from the
customers in the Middle East.
96
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Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Notes to the consolidated financial statements
continued
2023
2022 (restated)
Business
Services
£’000
Corporate
£’000
People
£’000
Property
£’000
Total
segments
£’000
Segment revenue from services transferred at a
point in time
Segment revenue from services transferred over
time
Total Segment revenue
4,952
16,578
8,409
17,002
46,941
16,872
21,824
22,200
38,778
12,027
20,436
64,642
81,644
115,741
162,682
Segment contribution (as reported internally)
5,330
13,948
5,983
31,037
56,298
Costs not allocated to segments:
Other operating income
Personnel costs
Depreciation and amortisation
Other operating expenses
Share based payment charges
Gain on bargain purchase
Contingent consideration treated as
remuneration
Net financial income
Profit for the financial year before taxation
Other
expense
and
movement
in unbilled
revenue
£’000
1
-
1
1
Total
£’000
46,942
115,741
162,683
56,299
49
(11,091)
(7,246)
(15,104)
(1,984)
1,389
(6,190)
90
16,212
Business
Services
£’000
Corporate
£’000
People
£’000
Property
£’000
Total
segments
£’000
Other
expense
and
movement
in unbilled
revenue
£’000
Total
£’000
Segment revenue from services transferred at a
point in time
Segment revenue from services transferred over
time
Total segmental revenue
3,467
10,175
5,901
10,994
30,537
305
30,842
14,490
17,957
27,889
38,064
13,264
19,165
50,426
61,420
106,069
136,606
338
643
106,407
137,249
Segment contribution (as reported internally)
5,733
15,373
6,919
22,956
50,981
643
51,624
Costs not allocated to segments:
Other operating income
Personnel costs
Depreciation and amortisation
Other operating expenses
Share based payment charge
Gain on bargain purchase
Contingent consideration treated as
remuneration
Exceptional costs
Net financial expense
Profit for the financial year before taxation
-
(10,487)
(6,215)
(13,987)
(1,213)
12,380
(3,509)
(870)
(947)
26,776
Group entities may be engaged on a contingent basis; in such cases the Group considers the satisfaction of the contingent event as the
sole performance obligation within the contract. Fees are only billed once the contingent event has been satisfied. The initial financing of
these engagements is met by the Group. Due to the nature and timing of the billing, such engagements influence the contract asset balance
held in the balance sheet at year end. In the majority of cases the contingent event is expected to be concluded within one year of the
engagement date. The Group operates standard payment terms of 30 days. £16.4 million of the current period revenue is derived from
services satisfied, in part, in the previous period.
98
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Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
Services transferred over time
For non-contingent engagements, fee earners’ hourly rates are determined at the point of engagement with all hours attributed to the
engagement fully and accurately recorded. The recorded hours are then translated into fees to be billed and invoiced on a monthly basis.
The Group typically operates on 30 days credit terms, in line with IFRS 15 the performance obligations are fulfilled over time with revenue
being recognised in line with the hours worked.
Contract assets
Under IFRS 15 the Group recognises any goods or services transferred to the customer before the customer pays consideration, or before
payment is due, as a contract asset . These assets differ from accounts receivables. Accounts receivable are the amounts that have been
billed to the client and the revenue recognised, whereas these contract assets are amounts of work in progress where work has been
performed, yet the amounts have not yet been billed to the client. Due to the nature of the services delivered by the Group the significant
component of the cost of delivery is staff costs. As a result, there is little to no judgement exercised in determining the costs incurred as
they are driven by the time recorded by fee earners. Contract assets are subject to impairment under IFRS 9.
No other financial information has been disclosed as it is not provided to the CODM on a regular basis.
Contract Liabilities
Under IFRS 15 the Group is required to recognise contract liabilities based on those amounts recognised against contracts for which the
satisfaction of performance obligations has not yet been met. These liabilities relate to the deferred income recognised within Kiddy &
Partners, T-three Consulting Limited and GEG Services Limited as a result of their billing structure. The amounts recognised reflect the
agreed cost of the services to be performed and are realised in line with the ongoing cost of delivery. Due to the nature of the services
provided, the main component of this cost of delivery is staff costs, as a result there is little to no judgement exercised in determining the
value of the liability held at year end.
Practical expedients under IFRS 15
Under IFRS 15 companies are required to disclose the aggregate amount of the transaction price allocated to the performance obligations
that are unsatisfied at the end of the reporting period. However, only a small proportion of revenue contracts in issuance are for fixed
amounts, rather the company has a right to consideration from the customer in an amount that corresponds directly with the value to the
customer of the business’ performance completed to date. Therefore, the Group considers it impractical to estimate the potential value of
unsatisfied performance obligations and has elected to apply the practical expedient available under IFRS 15.
Business overview
Strategic report
Corporate governance
Our financials
6. Expenses and auditor’s remuneration
Included in operating profit are the following:
Depreciation on tangible assets (see note 13)
Depreciation on right-of-use asset (see notes 13 and 29)
Short term and low value lease payments (see note 29)
Operating lease costs on property (see note 29)
Loss on sale of fixed assets
Non-underlying items
Amortisation of intangible assets (see note 15)
Share based payment charges – Gateley Plc
Share based payment charges – Gateley Smithers Purslow Limited
Gain on bargain purchase
Consideration treated as remuneration
Exceptional items
Acquisition costs
One off remuneration charge – Gateley Smithers Purslow Limited
Total non-underlying and exceptional items
2023
£’000
936
3,976
82
166
82
2023
£’000
2,073
1,984
-
(1,389)
6,190
8,858
-
-
2022
£’000
851
3,783
75
-
16
Restated
2022
£’000
1,581
1,100
113
(12,380)
3,509
(6,077)
373
497
8,858
(5,207)
5. Other operating income
Rental and service charge income
2023
£’000
49
2022
£’000
-
Acquisition costs in the 2022 financial year represent professional fees in respect of the acquisition of SP 2018 Limited, Adamson Jones
Holdings Limited and the business and assets of Tozer Gallagher LLP.
Share based payment charges in Gateley Plc represent charges in accordance with IFRS 2 in respect of unexercised SAYE, CSOP, LTIP and
RSA schemes (See note 8).
100
101
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
Business overview
Strategic report
Corporate governance
Our financials
Share based payment charges in Gateley Smithers Purslow Limited represent shares awarded to staff following the successful acquisition of
SP 2018 Limited (See note 7 and 8).
8. Share based payments
2023
£’000
2022
£’000
Group
At the year end the Group has nine share-based payment schemes in existence.
Auditor’s remuneration
Fees payable to the Company’s Auditor in respect of audit services:
Audit of these financial statements
Audit of financial statements of subsidiaries of the Company
Amounts receivable by the Company’s auditor and its associates in respect of:
Other assurance services
107
22
129
34
85
20
105
31
Other assurance services relate to Solicitors Accounts Rules review with associated reporting to legal regulators. This work is entirely
assurance focused.
7. Personnel costs
The average number of persons employed by the Group during the year, analysed by category, was as follows:
Legal and professional staff
Administrative staff
The aggregate payroll costs of these persons were as follows:
Wages and salaries
Social security costs
Pension costs
Non-underlying items (see note 6)
Share based payment expense – Gateley Plc
Share based payment expense – Gateley Smithers Purslow Limited
Number of employees
2022
2023
1,000
439
1,439
2023
£’000
83,942
9,984
2,839
96,765
1,984
-
98,749
800
350
1,150
2022
£’000
76,672
7,769
2,076
86,517
1,100
113
87,730
Details of the Directors’ remuneration and share interests are given in the Summary of Directors’ remuneration for the year within the
Directors’ Remuneration Report on page 67.
Save As You Earn scheme (‘SAYE’)
The Group operates a HMRC approved SAYE scheme for all staff. Options under this scheme will vest if the participant remains employed
for the agreed vesting period of three years. Upon vesting, each option allows the holder to purchase the allocated ordinary shares at a
discount of 20% of the market price determined at the grant date.
During the year 360,365 SAYE 18/19 options vested with 311,806 being exercised by 30 April 2023 leaving 48,559 options still to be
exercised. New shares were issued to satisfy these options being 311,806 10p shares with a nominal value of £31,181.
Company Share Option Plan (‘CSOP’)
The Group operates an HMRC approved CSOP scheme for associates, senior associates, legal directors, equivalent positions in Gateley
Group subsidiary companies and Senior Management positions in our support teams. Options under this scheme will vest if the participant
remains employed for the agreed vesting period of three years. Upon vesting, each option allows the holder to purchase the allocated
ordinary shares at the price on the date of grant.
Long Term Incentive Plan (‘LTIP’)
The Group operates an LTIP for the benefit of Executive Directors and Senior Management. Awards under the LTIP may be in the form of
an option granted to the participant to receive ordinary shares on exercise dependent upon the achievement of profit related performance
conditions.
Performance conditions
Options granted under the LTIP are only exercisable subject to the satisfaction of the following performance conditions which will
determine the proportion of the option that will vest at the end of the three-year performance period. The awards will be subject to an
adjusted fully diluted earnings per share performance measure as described in the table below:
Adjusted, fully diluted earnings per Share Compound Annual Growth Rate (CAGR) over the three year
period ending 30 April 2023/2025/26
Amount Vesting %
Below 5%
5%
Between 5% and 10%
Above 10%
0%
25%
Straight line vesting
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.
Grant of equity share options under the LTIP
Certain senior employees and Executive Directors were granted options on 23 February 2023 based on performance conditions
commencing on 1 May 2023. In total, 1,320,000 options have been granted which, subject to satisfying the above performance conditions,
will vest in the period following the year ending 30 April 2026.
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.
102
103
Gateley (Holdings) PlcAnnual report and financial statements
Notes to the consolidated financial statements
continued
The annual awards granted under all schemes are summarised below:
Weighted
average
remaining
contractual
life
Weighted
average
exercise
price
Originally
granted
Number
Lapsed/
exercised
at 30 April
2022
Number
At 1 May
2022
Number
Granted
during
the year
Number
Lapsed
during
year
Number
Exercised
in the
year
Number
At
30 April
2023
Number
0 years
£1.27
620,432 (449,919)
170,513
0 years
£1.28
822,625 (218,412)
604,213
0.5 years
£1.02
2,337,197 (219,826) 2,117,371
1.3 years
£1.70
673,077
(14,925)
658,152
-
-
-
-
(243,513)
(157,137)
(134,037)
(36,476)
-
(243,848) (311,806)
48,559
2.4 years
£1.55
-
-
-
1,070,154
(36,850)
4,453,331
(903,082) 3,550,249
1,070,154
(815,385) (348,282) 3,456,736
-
-
-
1,873,858
501,015
1,033,304
SAYE
SAYE 18/19 –
21 September 2018
SAYE 19/20 –
30 September 2019
SAYE 20/21 –
6 November 2020
SAYE 21/22 –
25 August 2021
SAYE 22/23 –
22 September 2022
CSOPS
CSOPS 18/19 –
24 October 2018
CSOPS 20/21 –
7 July 2020
CSOPS 22/23 –
14 December 2022
LTIPS
LTIPS 20/21 – 22 July
2020
Business overview
Strategic report
Corporate governance
Our financials
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:
Grant date
Share price at date of grant
Exercise price
Volatility
Expected life (years)
Risk free rate
Dividend yield
Fair value per share
SAYE
CSOP
LTIP
RSA
22/09/2022 14/12/2022 23/02/2023 23/02/2023
£1.99
£1.74
£1.825
£1.825
1.55
31%
3.3
1.74
30%
3.3
£nil
27%
3.3
£nil
27%
5.0
3.473%
3.277%
3.523%
3.569%
4.29%
4.22%
4.38%
0.00%
Market based performance condition
-
-
-
Non-market based performance condition/no performance condition
£0.55
£0.30
£1.58
£1.825
Expected volatility was determined by using historical share price data of the Company since it listed on 8 June 2015. The expected life used in
the model has been based on management’s expectation of the minimum and maximum exercise period of each of the options granted.
The total charge to the income statement for all schemes now in place, included within non-underlying items, is £1,984,000
(2022: £1,213,000).
0 years
£1.44
812,131
(628,045)
184,086
0.2 years
£1.35
976,797
(147,045)
829,752
-
-
(97,969)
(62,470) (121,616)
-
2.6 years
£1.74
-
-
-
300,000
(10,000)
1,788,928
(775,090) 1,013,838
300,000
(170,439) (121,616) 1,021,783
-
-
731,783
290,000
9. Financial income and expense
Recognised in profit and loss
0.2 years
£0.00 1,405,766
(169,331) 1,236,435
LTIPS – 27 April 2022
2.0 years
£0.00 1,115,000
LTIPS 23 Feb 23
2.8years
£0.00
-
-
-
1,115,000
-
1,320,000
-
2,520,766
(169,331) 2,351,435
1,320,000
(224,188)
RSA
RSA – 27 April 2022
4.0 years
£0.00
1,422,560
RSA 23 February
2023
5.0 years
£0.00
-
1,422,560
-
-
-
1,422,560
-
-
-
1,175,000
(50,000)
1,422,560
1,175,000
(50,000)
-
-
(134,188)
(90,000)
-
-
-
-
-
-
-
1,102,247
1,025,000
1,320,000
3,447,247
1,422,560
1,125,000
2,547,560
Financial income
Interest income
Total financial income
Financial expense
Interest expense on bank borrowings measured at amortised cost
Interest on lease liability
Total financial expense
Net financial income/(expense)
2023
£’000
1,735
1,735
(495)
(1,150)
(1,645)
90
Restated
2022
£’000
194
194
(193)
(948)
(1,141)
(947)
104
105
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
10. Taxation
Current tax expense
Current tax on profits for the year
Under provision of taxation in previous period
Total current tax
Deferred tax expense
Origination and reversal of temporary differences
Under provision on share-based payment charges
Total deferred tax expense
Total tax expense
2023
£’000
4,974
58
5,032
(472)
(588)
(1,060)
3,972
2022
£’000
3,949
15
3,964
(211)
-
(211)
3,753
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom
applied to profits for the year are as follows:
Profit for the year (subject to corporation tax)
Tax using the Company’s domestic tax rate of 19%
Expenses not deductible/(deductible) for tax purposes
Under provision of taxation in previous period
Under provision on share-based payment charges
Total tax expense
2023
£’000
16,212
3,080
1,422
58
(588)
3,972
Restated
2022
£’000
26,776
5,087
(1,349)
15
-
3,753
The Finance Act 2022 increased the main rate of corporation tax to 25% from 1 April 2023. Closing deferred tax balances have therefore
been valued at 25% (2022: 19% or 25% depending on the date they expect to fully unwind).
11. Earnings per share
Statutory earnings per share
Weighted average number of ordinary shares in issue, being weighted average
number of shares for calculating basic earnings per share
Shares deemed to be issued for no consideration in respect of share-based payments
Weighted average number of ordinary shares for calculating diluted earnings
per share
2023
Number
2022
Number
125,244,334
3,283,007
118,961,047
2,932,191
128,527,341
121,893,238
Business overview
Strategic report
Corporate governance
Our financials
Profit for the year and basic earnings attributable to ordinary equity shareholders
Non-underlying and exceptional items (see note 6)
Operating expenses
Tax on non-underlying and exceptional items
Underlying earnings before non-underlying and exceptional items
Earnings per share is calculated as follows:
Basic earnings per ordinary share
Diluted earnings per ordinary share
Basic earnings per ordinary share before non-underlying and exceptional items
Diluted earnings per ordinary share before non-underlying and exceptional items
12. Dividends
Equity shares:
Interim dividend in respect of 2023 (3.3p per share) - 24 March 2023
Final dividend in respect of 2022 (5.5p per share) - 22 October 2022
Interim dividend in respect of 2021 (2.5p per share) - 28 June 2021
Final dividend in respect of 2021 (5p per share) - 8 October 2021
Interim dividend in respect of 2022 (3p per share) - 31 March 2022
2023
£’000
12,240
8,858
(168)
20,930
2023
Pence
9.77
9.52
16.71
16.28
2023
£’000
4,169
6,835
-
-
-
11,004
Restated
2022
£’000
23,023
(5,207)
(94)
17,722
Restated
2022
Pence
19.35
18.89
14.90
14.54
2022
£’000
-
-
2,940
5,908
3,582
12,430
The board proposes to recommend a final dividend of 6.2p (2022: 5.5p) per share at the AGM. If approved, this dividend will be paid
in October 2023 to shareholders on the register at the close of business on 29 September 2023. The shares will go ex-dividend on
28 September 2023. This dividend has not been recognised as a liability in these final statements.
Breach of Companies Acts requirements in respect of historic dividend payments - circular to
shareholders
The board has become aware of a technical issue in respect of the payment of a number of historic dividends paid by the Company, as a
result of the restatement in respect of acquisition accounting, as outlined in note 15 to the Company accounts.
The Company has always filed its statutory annual accounts on time in accordance with the requirements of the Companies Act 2006
(the “Act”), and at all times had sufficient profits and other distributable reserves to justify the payment of dividends.
However, the Company has not satisfied certain procedural requirements of the Act before paying certain of the dividends in the years
since the Company’s IPO (the “Relevant Distributions”). These procedural requirements relate to the failure to file interim accounts at
Companies House which justified the payment of interim dividends or the payment of final dividends before the circulation to members of
the audited accounts of the Company in respect of the relevant financial year.
The Company has been advised that, as a consequence of the above distributions being made otherwise than in accordance with the Act,
it may have claims against past and present shareholders who were recipients of the Relevant Distributions and against those persons who
were directors of the Company at the time of the Relevant Distributions.
106
107
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
The Company wishes to put all potentially affected parties so far as possible in the position in which they were always intended to be had
the Relevant Distributions been made in accordance with the procedural requirements of the Act.
Accordingly, a resolution will be proposed at the upcoming annual general meeting, which will, if passed, give the board authority to enter
into deeds of release to discharge these parties from any obligation to repay any amount to the Company in connection with the Relevant
Distributions.
The proposed ratification of the Relevant Distributions, and the entry by the Company into the Shareholders’ Deed of Release and Directors’
Deed of Release will not have any effect on the Company’s financial position.
A circular to shareholders to convene the annual general meeting and giving more information about the Relevant Distributions will be sent
to shareholders shortly.
13. Property, plant and equipment
Leasehold
improvements
£’000
Equipment
£’000
Fixtures and
fittings
£’000
Right-of-use
assets
£’000
Total
£’000
Cost
Balance at 1 May 2021
Arising on acquisition after fair value
adjustments
Additions
Disposal
As at 30 April 2022
Balance at 1 May 2022
Additions
Disposal
As at 30 April 2023
Depreciation and impairment
Balance at 1 May 2021
Arising on acquisition after fair value
adjustments
Depreciation charge for the year
Eliminated on disposal
Balance at 30 April 2022
Balance at 1 May 2022
Depreciation charge for the year
Eliminated on disposal
Balance at 30 April 2023
Net book value
At 30 April 2022
At 30 April 2023
108
317
-
23
-
340
340
-
(27)
313
209
-
22
-
231
231
16
(27)
220
109
93
6,493
266
583
(110)
7,232
7,232
827
(323)
7,736
5,814
173
514
(94)
6,407
6,407
562
(247)
6,722
825
1,014
5,396
34,025
46,231
63
169
-
5,628
5,628
485
(88)
6,025
793
610
-
35,428
35,428
6,447
(1,722)
40,153
1,122
1,385
(110)
48,628
48,628
7,759
(2,160)
54,227
4,860
7,018
17,901
53
315
-
5,228
5,228
358
(82)
5,504
400
521
-
3,783
-
10,801
10,801
3,976
(1,722)
13,055
24,627
27,098
226
4,634
(94)
22,667
22,667
4,912
(2,078)
25,501
25,961
28,726
Business overview
Strategic report
Corporate governance
Our financials
14. Investment property
Fair value
Balance at 1 May 2021 and 30 April 2022
Balance at 1 May 2022 and 30 April 2023
£’000
164
164
The Group’s interest in its freehold property at 216 Capella House, Celestia Falcon Drive, Cardiff Bay, Cardiff, CF10 4RE was valued as at
30 April 2023 at £164,000 (2022: £164,000) by the Directors based on current open market values for existing use. However, it was noted
that a valuation by a qualified individual with relevant experience has not been performed during the year on the basis that it is not expected
by the Directors to have materially changed. Rental income of £nil (2022: £nil) was received during the year. Services charges of £3,089
(2022: £3,089) were incurred during the year.
15. Intangible assets and goodwill
Deemed cost
At 1 May 2021 (restated)
Arising through business combinations
At 30 April 2022
Arising through business combinations
At 30 April 2023
Amortisation
At 1 May 2021
Charge for the year
At 30 April 2022
Charge for the year
At 30 April 2023
Carrying amounts
At 30 April 2022
At 30 April 2023
Goodwill
£’000
Customer
lists
£’000
1,550
-
1,550
-
1,550
-
-
-
-
-
1,550
1,550
9,850
6,411
16,261
1,000
17,261
5,783
1,534
7,317
1,838
9,155
8,944
8,106
Brands
£’000
-
3,518
3,518
-
3,518
-
10
10
235
245
3,508
3,273
Total
£’000
11,400
9,929
21,329
1,000
22,329
5,783
1,544
7,327
2,073
9,400
14,002
12,929
109
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
Goodwill is allocated to the following cash generating units:
Property Group
Gateley Capitus Limited
Gateley Hamer Limited
GCL Solicitors (acquisition of trade and assets)
Persona Associates Limited
Gateley Vinden Limited
Tozer Gallagher (acquisition of trade and assets)
Gateley Smithers Purslow Limited
Employment , Pensions and Benefits Group
Kiddy & Partners Limited
International Investment Services Limited
T-three Consulting Limited
Business Services Group
Gateley Tweed (acquisition of goodwill)
Adamson Jones IP Limited
Symbiosis IP Limited
2023
£’000
Restated
2022
£’000
-
-
-
40
934
-
-
974
-
-
-
-
576
-
-
576
-
-
-
40
934
-
-
974
-
-
-
-
576
-
-
576
Impairment testing
The Group tests goodwill annually for impairment. The impairment test involves determining the recoverable amount of the cash generating
unit (CGU) to which the goodwill has been allocated. The Directors believe that each operating segment represents a cash generating unit
for the business and as a result, impairment is tested for each segment, and all the assets of each segment are considered.
The recoverable amount is based on the present value of expected future cash flows (value in use) which was determined to be higher than
the carrying amount of goodwill so no impairment loss was recognised.
Value in use was determined by discounting the future cash flows generated from the continuing operation of the Group and was based on
the following key assumptions:
1,550
1,550
A pre-tax discount rate of between 12 and 21% (2022: 12-21%) was applied in determining the recoverable amount. The discount
rate is based on the Group’s average weighted cost of capital of 10.18% and adjusted according to the risks attributable to each CGU.
The values assigned to the key assumptions represent management’s estimate of expected future trends and are based on both
external (industry experience, historic market performance and current estimates of risks associated with trading conditions) and
internal sources (existing management knowledge, track record and an in-depth understanding of the work types being performed).
o
o
o
Growth rates of between 2% to 10% (2022: 2-10%) are based on management’s understanding of the market opportunities for
services provided pertaining to the industry in which each CGU is aligned.
Increases in costs are based on current inflation rates and expected levels of recruitment needed to generate predicted revenue
growth.
Attrition rates are based on the historic experience and trends of client activity over a two to three year period and applied to
future fee forecasts.
•
•
110
Business overview
Strategic report
Corporate governance
Our financials
o
Cash flows have been typically assessed over a five-year period which management extrapolates cash using a terminal value
calculation based on an estimated growth rate of 2%. The expected current UK economic growth forecasts for the legal services
market is 2%.
•
The Group has conducted a sensitivity analysis on the impairment test of the CGU carrying value. The Directors believe that any
reasonably possible change in the key assumptions on which the recoverable amount of goodwill is based would not cause the
aggregate carrying amount to exceed the aggregate recoverable amount of the CGU.
16. Acquisitions
During the year ended 30 April 2023 the Group completed one acquisition:
Acquisition of Symbiosis IP Limited
On 3 October 2022 Adamson Jones IP Limited acquired the entire issued share capital of Symbiosis IP Limited. Symbiosis IP is a patent
attorney firm serving exclusively the life science industry. They have a wealth of experience in working closely with academic institutions and
early stage start-up companies.
The amounts recognised in respect of identifiable assets acquired and liabilities assumed are as set out in the table below:
Intangible asset relating to customer list
Cash
Trade receivables
Prepayments
Total assets
Trade payables
Accruals and other payables
Deferred tax
Total liabilities
Total identifiable net assets at fair value
Negative goodwill arising on acquisition
Total consideration
Satisfied by:
Initial cash consideration paid
Issue of 523,012 new 10p ordinary shares in Gateley (Holdings) Plc
Less: amounts subject to continuing employment conditions
Total consideration
Net cash outflow arising on acquisition
Cash paid
Net cash acquired
Net cash outflow arising on acquisition
Pre-
acquisition
carrying
amount
£’000
Policy
alignment
and fair
value
adjustments
£’000
-
483
330
33
846
(119)
(88)
-
(207)
639
1,000
-
-
-
1,000
-
-
(250)
(250)
750
Total
£’000
1,000
483
330
33
1,846
(119)
(88)
(250)
(457)
1,389
(1,389)
-
1,468
1,000
(2,468)
-
(1,468)
483
(985)
111
Gateley (Holdings) PlcAnnual report and financial statements
Notes to the consolidated financial statements
continued
The negative goodwill of £1,389,000 has been recognised immediately in the Statement of Profit and Loss.
From the date of acquisition Symbiosis IP Limited has contributed £1.3m of revenue to the Group’s Statement of Comprehensive Income
together with after tax profit of £0.2m. If the acquisition had been completed on the first day of the financial year, Group revenue and profit
after tax would have been higher by £1.2m and £0.2m respectively.
17. Other intangible assets
Cost
Balance at 1 May 2021
Additions
At 30 April 2022
Additions
At 30 April 2023
Amortisation
Balance at 1 May 2021
Charge for the year
At 30 April 2022
Charge for the year
At 30 April 2023
Net book amount at 30 April 2022
Net book amount at 30 April 2023
IT development
costs
£’000
Computer
software
£’000
258
-
258
24
282
-
-
-
40
40
258
242
121
319
440
763
1,203
97
37
134
221
355
306
848
Total
£’000
379
319
698
787
1,485
97
37
134
261
395
564
1,090
The Group’s amortisation policy, as disclosed in note 1.10, is to amortise other intangible assets from the date they are made available
for use.
18. Other investments
The Group holds other investment interests in the following third party investments:
Fair value
Balance at 1 May 2021
Loss on revaluation - FVOCI
Balance at 30 April 2022
Loss on revaluation - FVOCI
Balance at 30 April 2023
£’000
363
(190)
173
(26)
147
£nil (2022: £15,000) – Gateley Investments Limited holds a 1.9% investment in the ordinary shares of Manchester Biotech Limited
(formerly PeptiGelDesign Ltd).
£146,535 (2022: £157,998) – Gateley Plc holds a 3.0% investment in the ordinary shares in Incanthera Plc, acquired on 26 February 2020.
112
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Corporate governance
Our financials
19. Contract assets and liabilities
As at 30 April 2023
As at 30 April 2022
Contract
assets
£’000
20,388
17,239
Trade
receivables
£’000
54,167
50,201
Contract
liabilities
£’000
(499)
(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 recognised at appropriate intervals, normally on a monthly basis in arrears, in line
with the performance of the services and engagement obligations. Where such matters remain unbilled at the period end the asset is valued
on a contract-by-contract basis at its expected recoverable amount.
Contract assets in relation to contingent work are recognised at a point in time once the uncertainty over the contingent event has been
satisfied and all performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the expected
recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore performance
obligations may be settled in one period but the matter not billed until a later financial period. Until the performance obligations have been
performed the Group does not recognise any contract asset value at the year end.
During the year, contract assets of £nil (2022: £2,661,000) were acquired in business combinations.
An impairment loss of £542,000 has been recognised in relation to contract assets in the year (2022: loss £108,000). This is based on the
expected credit loss under IFRS 9 of these types of assets. The contract asset loss is estimated at 2.7% (2022: loss 0.6%) of the balance.
Contract assets recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract assets, as detailed in note 1.17.
Contract asset value at 1 May 2022
Contract assets arising on acquisition
Contract asset value added in the year
Contract asset value realised in the year
Contract asset value at 30 April 2023
2023
£’000
17,239
-
22,333
(19,184)
20,388
2022
£’000
13,900
2,661
19,237
(18,559)
17,239
The Group have applied ECLs to unbilled revenue in order to account for the potential default on amounts not yet billed to the client. The
ECLs have been calculated on the same basis as those applied to trade receivables.
Contract liabilities
When matters are billed in advance or on a basis of a monthly retainer, this is recognised in contract liabilities and released over time when
the services are performed.
Contract liabilities recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract liabilities.
Contract liabilities at 1 May 2022
Contract liabilities gained in the year
Contract liabilities credited to P&L in year
Contract liabilities at 30 April 2023
2023
£’000
569
469
(539)
499
2022
£’000
1,243
533
(1,207)
569
113
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
20. Trade and other receivables
Amounts falling due within one year:
Trade receivables
Prepaid consideration subject to earn-out service conditions
Prepayments
Other receivables including insurance receivables
Amounts falling due after one year:
Prepaid consideration subject to earn-out service conditions
2023
£’000
54,167
6,015
5,777
233
66,192
£’000
7,080
Restated
2022
£’000
50,201
5,712
5,626
341
61,880
£’000
9,707
Trade receivables
Trade receivables are recognised when a bill has been issued to the client, as this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is due. Trade receivables also includes disbursements.
Bills are payable within thirty days unless otherwise agreed with the client.
All trade receivables are repayable within one year.
Movement in loss allowance
Brought forward provision
Recognition of provisions for businesses acquired
Provision utilised
Charged to statement of profit and loss
Provisions released
2023
£’000
(3,941)
-
908
(984)
192
(3,825)
2022
£’000
(4,171)
(173)
1,161
(1,173)
415
(3,941)
The Group applies the simplified approach to providing for the expected credit losses under IFRS 9. Management have also elected to apply
an uplift to the IFRS 9 provision in the current year to account for the specific risks in the subsidiary entities where the application of IFRS 9
alone is not considered appropriate. The provision uplift is based on management’s assessment of specific clients and related debts, this is
presented separately to the ECL provision detailed below:
2023
Expected credit loss rate
Estimated total gross carrying amount £’000
Lifetime ECL £’000
Not passed
due
Past due
0-30 days
Past due
31-120 days
2.98%
33,175
987
4.93%
6,594
325
5.96%
5,943
354
Past due
greater than
120 days
17.58%
12,280
2,159
Total
57,992
3,825
114
Business overview
Strategic report
Corporate governance
Our financials
2022
Expected credit loss rate
Estimated total gross carrying amount £’000
Lifetime ECL £’000
Not passed
due
Past due
0-30 days
Past due
31-120 days
3.60%
31,544
1,136
4.45%
4,642
207
5.11%
5,429
277
Past due
greater than
120 days
18.53%
12,526
2,321
Total
54,141
3,941
The carrying amount of financial assets (including contract assets but not including equity investments) recorded in the financial
statements, which is net of any impairment losses, represents the Group’s maximum expected exposure to credit risk. Financial assets
include client and other receivables and cash. The Group does not hold collateral over these balances.
All the Group’s trade and other receivables have been reviewed for indicators of impairment. The specifically impaired trade receivables are
mostly due to customers experiencing financial difficulties.
An impairment loss of £984,000 has been recognised in relation to trade receivables in the year (2022: £1,173,000). This is based on the
expected credit loss under IFRS 9 of these types of assets. The trade receivables loss is estimated at 1.7% (2022: 2.3%) of the balance.
21. Other interest-bearing loans and borrowings
The contractual terms of the Group’s interest-bearing loans and borrowings, which are measured at amortised cost, with the exception of
loans to members that are held at fair value, are described below. For more information about the Group’s exposure to interest rate and
foreign currency risk, see note 27.
Non-Current liabilities
Bank borrowings
2023
Fair
value
£’000
6,813
Carrying
amount
£’000
6,813
2022
Fair
value
£’000
5,715
Carrying
amount
£’000
5,715
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 drawn down against the facility in order
to fund the initial cash consideration in the acquisition of SP 2018 Limited. On 3 October 2022 a further £1m was drawn down against the
facility in order to fund the cash consideration in the acquisition of Symbiosis IP Limited.
As at 30 April 2023, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments where
applicable) as summarised below:
30 April 2023
Bank borrowings
Trade and other payables
Total
Current
Within
6 months
£’000
-
9,665
9,665
6 to
12 months
£’000
-
1,364
1,364
Non-current
1 – 5
years
£’000
Later than
5 years
£’000
7,997
-
7,997
-
-
-
115
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting period as follows:
30 April 2022 (restated)
Bank borrowings
Trade and other payables
Total
Current
Within
6 months
£’000
-
8,335
8,335
6 to
12 months
£’000
-
-
-
Non-current
1 – 5
years
£’000
Later than
5 years
£’000
6,485
40
6,525
-
-
-
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting
date.
22. Trade and other payables
Current
Trade payables
Other taxation and social security payable
Other payables
Contingent consideration treated as remuneration
Accruals
Contract liabilities
Non-current
Contingent consideration treated as remuneration
23. Deferred tax
Deferred tax assets and liabilities are summarised below:
2023
£’000
9,370
9,913
295
1,364
4,492
499
25,933
£’000
-
-
Restated
2022
£’000
7,935
10,122
374
26
12,693
569
31,719
£’000
40
40
Deferred tax asset
The deferred tax asset recognised in the Consolidated Statement of Financial Position represents the future tax impact of issued share
based payments schemes that are yet to vest.
At 1 May 2022
Credited during the year in the Consolidated Income Statement
Debited during the year to retained earnings
At 30 April 2023
Share-based payments
£’000
638
590
(398)
830
Business overview
Strategic report
Corporate governance
Our financials
Deferred tax liability
The deferred tax liability recognised in the Consolidated Statement of Financial Position represents the future tax impact of the Group’s
benefit from customer lists obtained through acquisitions.
Customer lists
£’000
At 1 May 2021
Arising through business combinations – Tozer Gallagher LLP,
Adamson Jones Holdings Limited and SP 2018 Limited
Credited during the year in the Consolidated Income Statement
At 30 April 2022
Arising through business combinations – Symbiosis IP Limited
Credited during the year in the Consolidated Income Statement
At 30 April 2023
24. Provisions
Current provision
Professional indemnity provision
Total current provision
Non-current provision
Professional indemnity provision
Dilapidations provision
Total non-current provision
Total provisions
Professional indemnity estimated claim cost
Brought forward
Provisions made during the year
Provisions reversed during the year
At end of year
Non-current
Current
772
2,482
(165)
3,089
250
(398)
2,941
2022
£’000
101
101
649
214
863
964
2022
£’000
725
35
(10)
750
649
101
750
2023
£’000
107
107
903
387
1,290
1,397
2023
£’000
750
350
(90)
1,010
903
107
1,010
The Group from time to time receives claims in respect of alleged professional negligence which it defends where appropriate but makes
provision for the best estimate of probable amounts considered likely to be payable as set out above. Inevitably, these estimates depend on
the outcome and timing of future events and may need to be revised as circumstances change. A different assessment of the likely outcome
in each case or of the probable cost involved may result in a different level of provision recognised. Professional indemnity Insurance cover
is maintained in respect of professional negligence claims.
116
117
Gateley (Holdings) PlcAnnual report and financial statements
Notes to the consolidated financial statements
continued
Dilapidations provision
The Group has leases for a number of offices, some of which include dilapidation clauses. The Group maintains the office buildings
throughout each lease term with regular maintenance, however a cost is likely to arise at the end of the lease term in order to return the
space to its original condition. Management have therefore elected to introduce a dilapidations provision to account for the future cost.
The provision is based on management’s estimate of the total costs across all applicable leases to be recognised on a straight line basis over
the total lease terms.
At 1 May
Provision made in the year
At 30 April
25. Net debt
Cash and cash equivalents
Debt
Total loans brought forward
Revolving credit facility – due in more than one year
New lease liability in the year
Repayment of lease liability
Total loan carried forward
Brought forward from previous year
Movement during year
Net debt at the year end
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
1 May 2022
Cashflows:
Repayments
Receipt of revolving credit facility
Non-cash
Loan arrangement fee unwind
New lease liability in the year
30 April 2023
Long term
borrowings
£’000
5,715
(2,000)
3,000
98
-
6,813
Short term
borrowings
£’000
-
-
-
-
-
-
2023
£’000
214
173
387
2023
£’000
11,105
(34,641)
(1,098)
(7,597)
4,550
(38,786)
(18,536)
(9,145)
(27,681)
Lease
liabilities
£’000
28,926
(4,550)
-
-
7,597
31,973
2022
£’000
214
-
214
2022
£’000
16,105
(30,445)
(5,715)
(2,351)
3,870
(34,641)
(10,840)
(7,696)
(18,536)
Total
£’000
34,641
(6,550)
3,000
98
7,597
38,786
Business overview
Strategic report
Corporate governance
Our financials
Long term
borrowings
£’000
Short term
borrowings
£’000
-
-
5,715
-
-
5,715
-
-
-
-
-
-
Lease
liabilities
£’000
30,445
(3,870)
-
793
1,558
28,926
Total
£’000
30,445
(3,870)
5,715
793
1,558
34,641
1 May 2021
Cashflows:
Repayments
Receipt of revolving credit facility
Non-cash
Fair value on acquisition
New lease liability in the year
30 April 2022
26. Share capital
Authorised, issued and fully paid
Ordinary shares of 10p each
Brought forward
Issued on acquisition of Tozer Gallagher LLP
Issued on acquisition of Adamson Jones IP Limited
Issued on acquisition of Gateley Smithers Purslow Limited
Issued on acquisition of Symbiosis IP Limited
Issued as part of contingent consideration of Tozer
Gallagher LLP
Issued on vesting of RSA
Issued on vesting of SAYE
Issued on vesting of CSOPS
At 30 April
2023
Number
2023
£
2022
Number
2022
£
124,556,879
12,455,687
117,914,205
11,791,420
-
-
-
523,012
25,071
1,175,000
356,195
-
-
-
-
52,301
2,507
117,500
35,620
-
142,179
543,668
3,312,322
-
-
1,477,560
308,819
858,126
14,218
54,367
331,232
-
-
147,756
30,882
85,813
126,636,157
12,663,615
124,556,879
12,455,688
The Company has one class of Ordinary shares which carry no right to fixed income.
On 3 October 2022 the Company acquired the entire issued share capital of Symbiosis IP Limited in part for the issue of 523,012 10p
ordinary shares.
Between 1 May 2022 and 30 April 2023 356,195 10p ordinary shares were issued upon vesting of the 2018/2019 SAYE schemes to participants.
On 23 February 2023 1,175,000 10p ordinary shares were issued upon issue of the 2023 RSA scheme to participants.
27. Financial instruments and related disclosures
Financial risk management
The board has overall responsibility for the oversight of the Group’s risk management framework. A formal process for reviewing and
managing risk in the business has been developed. A register of strategic and operational risk is maintained and reviewed by the board, who
also monitor the status of agreed actions to mitigate key risks.
Management’s objective in managing financial risks is to ensure the long-term sustainability of the Group.
As the Group’s principal financial instruments comprise cash, client receivables and unbilled revenue, the main risks are those that relate to
credit in regard to receivables.
118
119
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
Business overview
Strategic report
Corporate governance
Our financials
Credit risk
Credit risk refers to the risk that the counterparty will default on its contractual obligations resulting in financial loss to the Group. The
Group’s credit risk is primarily attributable to its trade receivables.
The Group continuously monitors the credit quality of customers and risk attributable to specific debts. The Group’s policy is to deal only
with credit worthy counterparties, with standard credit terms being 30 days. The credit terms as negotiated with customers are subject to
close monitoring and internal approval. The ongoing credit risk is managed through regular review of ageing analysis.
Trade receivables across the Group have been assessed with regard to credit risk characteristics which vary across segmental reporting lines
according to the nature of the industry, size and financial position of the counterparty. The Group also considers days past due in making
this assessment as well as historical credit losses experienced within over a period of 12 months before 30 April 2023.
Fair value disclosures
The fair value of each class of financial assets and liabilities is the carrying amount, based on the following assumptions:
Trade receivables, trade payables, short term
deposits and borrowings
The fair value approximates to the carrying value because of the short maturity of these
instruments.
Long-term borrowings
The fair value of bank loans and other loans approximates to the carrying value reported
in the statement of financial position.
Fair value hierarchy
Financial instruments carried at fair value should be measured with reference to the following levels:
The expected loss rates derived from this assessment are adjusted to reflect current and forward-looking information affecting the ability
of the customers to settle the receivables. The Group has a policy of performing credit checks and the large spread of reputable clients
ensures there are no unacceptable concentrations of credit risk.
•
•
Level 1: quoted prices in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
Historic cash collection rates and the Group write-off of financial instruments do not show an increased likelihood of default once the
payments are more than 30 days past due. The Group holds long standing relationships with most clients therefore there is no increased
risk perceived based on the age of the contractual payment alone.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all
trade receivables and contract assets.
The board considers financial instruments where contractual payments are significantly past due on a monthly basis to determine the risk of
default. As part of this process and financial instruments that have had a significant increase in credit risk are identified. For these purposes
default is considered to be where the counterparty to the financial instrument fails to fulfil part or all of their financial obligation. The Group
will consider a financial asset to be credit impaired based on both the age of the item and specific knowledge held by the fee earner in
relation to the client’s ability and intention to meet their obligations.
In circumstances where fee earners and the board find sufficient indicators that there is no longer reasonable expectation of recovery, the
amounts are written off.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group ensures that it has
sufficient cash or loan facilities to meet all its commitments when they fall due by ensuring that there is sufficient cash or working capital
facilities to meet the cash requirements of the Group.
Gateley Plc is financed through a combination of unsecured bank loans together with cash generated from operations. The board reviews
the projected financing requirements annually when agreeing the Group’s budget and, based on this review, sets the value of the future
capital requirements of the business. The cash flow forecast for the entire Group is updated regularly and compared to the budget with any
significant variance being reported to the board.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s income. The
Group’s exposure to market risk predominantly relates to interest and currency risk. Management does not consider this to be a significant
risk to the Group.
Interest rate risk
The Group’s bank borrowings incur variable interest rate charges linked to SONIA plus a margin. Management do not consider this to be a
significant risk to the Group.
Foreign currency risk
The Group has an overseas operation based in Dubai and another in the Republic of Ireland which, therefore, exposes the Group to changes
in Sterling/Dirham and Sterling/Euro exchange rates. Management does not consider this to be a significant risk to the Group due to the
total value of transactions conducted in Dubai and the Republic of Ireland.
•
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
The fair value of financial assets and liabilities are as follows (there is no difference between the carrying value of the financial assets and
liabilities and their fair value):
Cash and cash equivalents
Contract assets
Trade receivables at amortised cost
Total financial assets
Trade and other payables
Current financial liabilities
Long-term borrowings
Other payables due after more than one year
Total financial liabilities
2023
£’000
11,105
20,388
54,167
85,660
(15,521)
(15,521)
(6,813)
-
(22,334)
Restated
2022
£’000
16,105
17,239
50,201
83,545
(21,028)
(21,028)
(5,715)
(40)
(26,783)
Financial assets contain trade receivables and unbilled revenue whereas financial liabilities contain trade payables, other payables, contingent
consideration treated as remuneration and accruals.
Measurement of fair value of financial instruments
The Group performs valuations of financial items for financial reporting purposes, including Level 3 fair values, in consultation with third
party valuation specialists for complex valuations. Valuation techniques are selected based on the characteristics of each instrument, with
the overall objective of maximising the use of market-based information.
Financial instruments sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the impact of short term fluctuations on its earnings. At the end of
each reporting period, the effect of hypothetical changes in interest and currency rates are as follows:
Interest rate sensitivity analysis
The table below shows the Group’s sensitivity to interest rates on floating rate borrowings (i.e. cash and cash equivalents and bank
borrowings which attract interest at floating rates) if interest rates were to change by +/- 1%. The impact on the results in the Statement of
Profit and Loss and other comprehensive income and equity would be:
120
121
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
Business overview
Strategic report
Corporate governance
Our financials
+1 % movement in interest rates
-1 % movement in interest rates
2023
Increase/
(decrease)
in profit and loss
£’000
70
(70)
2022
Increase/
(decrease)
in profit
and loss
£’000
1
(1)
The table below shows amounts recognised in the Statement of Comprehensive Income for short term and low value leases as at 30 April 2023:
Expenses relating to short-term leases
Expenses relating to leases of low-value assets, excluding short-term leases of
low value assets
Property
£’000
Equipment
£’000
166
-
166
20
62
82
Total
£’000
186
62
248
The Group’s borrowing facility consists solely of a revolving credit facility which provides committed funding of £30m until April 2025.
The total minimum undiscounted lease payments at 30 April 2023 under non-cancellable operating lease rentals were:
2023
£’000
359
2022
£’000
183
Within one year
In the second to fifth year inclusive
After five years
30. Related parties
30 April 2023
£’000
30 April 2022
£’000
4,088
19,219
11,437
34,744
4,645
22,435
16,606
43,686
Foreign exchange rate sensitivity analysis
The Group had the following net currency denominated financial instruments at year end:
Net currency
The effect of foreign currency fluctuations on the financial statements is immaterial.
28. Capital commitments
There were no capital commitments at 30 April 2023 (2022: £nil)
29. Lease liabilities – IFRS 16
The Group has leases for offices, vehicles and some IT equipment, with the exception of short-term leases and leases of low-value assets
each lease is held on the balance sheet as a right-of-use asset and corresponding lease liability. Property leases have a remaining term of one
to ten years. Leases of vehicles and IT equipment have a term of three to five years. Lease payments on all those recognised on the balance
sheet are fixed. Unless there is a contractual right for the Group to sublet the asset to a third party, the right of use asset can only be used
by the Group.
The table below provides additional information on the right-of-use assets by class of assets:
Number of
leased assets*
Average
length of lease
remaining
Opening lease
asset
£’000
Net additions
£’000
Depreciation
£’000
Closing lease
asset
£’000
Office buildings
IT equipment
15
1
4.5 years
2.5 years
24,616
11
4,725
0
(2,253)
(2)
27,088
9
* Where properties within the same building are leased on a floor by floor basis on the same contractual terms, the Group has elected to treat these as a portfolio and are counted
as a single leased asset within the table
Lease liabilities are presented in the Statement of Financial Position as follows:
Current lease liability
Non-current lease liability
2023
£’000
3,257
28,716
2022
£’000
3,719
25,207
A number of property leases held by the Group include break or termination options. The lease liability has been calculated based on the
likelihood of such option being exercised. An option would only be exercised when in line with the Group’s wider strategy.
In line with IFRS 16 Leases the Group has elected not to recognise a lease liability for leases with a term of 12 months or less, or for leases
of low value assets. The payments made under such leases are expensed to the profit and loss on a straight-line basis. Any variable lease
payments incurred are expensed as incurred.
Gateley Plc entered into a lease agreement for the Leicester office, in which some of the Directors have a beneficial interest. The annual
rent charge under the lease is £120,000 (2022: £120,000) and the amounts outstanding at the year-end are £nil (2022: £80,000).
Compensation paid to key management personnel
At the year end, Directors of Gateley (Holdings) Plc control 3.40% (2022: 5.07%) of the voting shares of the Company.
The key management personnel comprise the Strategic Board on the basis that they make any final key decisions.
Short term compensation paid to key management personnel during the year totalled £3.155m (2022: £4.065m).
Short term remuneration to key management personnel is included in personnel costs and analysed as follows:
Wages and salaries
Social security
Pension costs
31. Pensions
2023
£’000
2,754
401
-
3,155
2022
£’000
3,553
512
-
4,065
The Group participates in a defined contribution scheme operated by Aegon UK Plc, the assets of which are held separately from the Group.
The amounts charged to the profit and loss account in respect of this scheme represent contributions payable in respect of the accounting
year. The total annual pension cost for the defined contribution scheme was £2,839,162 (2022: £2,076,081) and the outstanding balance
at the year end was £54,216 (2022: £40,609).
122
123
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
32. Subsequent events
On 19 July 2023, Gateley (Holdings) Plc completed the acquisition of the entire issued share capital of Richard Julian and Associates
Limited (‘RJA’) for a maximum consideration of £6,000,000. The initial consideration payable on completion was £3,931,000, split as
£2,027,000 paid in cash and £1,904,000 through the issuance of 1,192,163 new ordinary shares of 10 pence each in Gateley (‘Ordinary
Shares’). The cash consideration is being funded by the existing revolving credit facility. RJA is a chartered surveying practice, providing
quantity surveying and project management services across a variety of construction sectors. It specialises in the provision of these services
to organisations that deliver affordable housing, a resilient sector which is underpinned by high levels of grants to support delivery of the
Government’s housing targets.
At the time when the financial statements were authorised for issue, the determination of the fair values of the assets and liabilities acquired
had not been finalised because the individual valuations had not been concluded. It was not possible to provide detailed information about
each class of acquired receivables and any contingent liabilities of the acquired entity.
33. Restatement of acquisition accounting
Impact on Group income statement and financial position
Following a review of the prior period annual report by the Financial Reporting Council’s (‘FRC’) Corporate Reporting Review (‘CRR’)
team1, we have identified a number of previous acquisitions whereby there is deemed to be a substantive service condition attached to the
consideration transferred. Whilst forfeiture of contingent payments by a ‘bad leaver’ is at the discretion of the remuneration committee,
and not automatic, as outlined in IFRS 3 and the January 2013 IFRIC update, this discretion is in the gift of the Group and not the leaver
and as such, payments should be treated as remuneration for post-combination services, rather than treating them in the initial assessment
of consideration transferred at the point of acquisition. The Group’s accounting policy in respect of these arrangements is outlined at
note 1.15.
1 Scope and limitations of the FRC review: The review conducted by the FRC was performed solely on the Group’s published 2022 Annual Report and Accounts and does not
provide any assurance that the Annual Report and Accounts are correct in all material respects The FRC’s review did not benefit from detailed knowledge of the Company’s
business or an understanding of the underlying transactions entered into. The FRC accepts no liability for reliance on their review by the Company or any third party.
This change of accounting has no impact on the underlying results or tax position of the Group.
The historical acquisitions that have been impacted by this restatement are as follows:
Gateley Capitus Limited – acquired April 2016
Gateley Hamer Limited – acquired September 2016
GCL Solicitors – acquired May 2018
Kiddy & Partners Limited – acquired July 2018
Gateley Global Limited (formerly International Investment Services Limited) – acquired November 2018
t-three Group Limited – acquired December 2019
Gateley Legal NI and Gateley Legal Ireland (formerly trading as Gateley Tweed) – acquired February 2020
Gateley Vinden Limited – acquired March 2020
Tozer Gallagher – acquired July 2021
Adamson Jones Holdings Limited – acquired January 2022
Gateley Smithers Purslow Limited – acquired April 2022
Business overview
Strategic report
Corporate governance
Our financials
Consequently, the FY22 results, including the April 2021 opening Group statement of financial position, have been restated in these financial
statements to reflect a decrease in goodwill corresponding to the fair value initially recognised for the relevant consideration on these
acquisitions, being £18,588k at April 2022 (2021: £10,148k).
For those acquisitions where the relevant earn-out periods had not ended by 30 April 2022, the restated FY22 statement of financial
position includes the recognition of a prepaid earn-out asset totalling £15,419k (2021: £3,494k), the removal of all related earn-out
liabilities, with fair values totalling £5,460k (2021: £nil), and the inclusion instead of a liability in respect of the accrued non-underlying
remuneration costs, being £66k as at 30 April 2022 (2021: £nil).
Group statement of financial position
2022
(as previously
presented)
£’000
Impact of
restatement
£’000
2022
(restated)
£’000
2021
(as previously
presented)
£’000
Impact of
restatement
£’000
2021
(restated)
£’000
32,590
27,500
60,090
89,512
(5,360)
(34,874)
(40,234)
(31,793)
(4,662)
(36,455)
72,913
44,863
28,050
72,913
(18,588)
-
(18,588)
15,419
5,320
-
5,320
74
-
74
2,225
2,225
-
2,225
14,002
27,500
41,502
104,931
(40)
(34,874)
(34,914)
(31,719)
(4,662)
(36,381)
75,138
47,088
28,050
75,138
15,765
29,277
45,042
76,598
(120)
(29,237)
(29,357)
(29,032)
(3,985)
(33,017)
59,266
41,560
17,706
59,266
(10,148)
-
(10,148)
3,494
-
-
135
-
135
(6,519)
(6,519)
-
(6,519)
5,617
29,277
34,894
80,092
(120)
(29,237)
(29,357)
(28,897)
(3,985)
(32,882)
52,747
35,041
17,706
52,747
Intangible assets & goodwill
Other non-current assets
Total non-current assets
Current assets
Other payables
Other non-current liabilities
Total non-current liabilities
Trade and other payables
Other current liabilities
Total current liabilities
Net assets
Retained earnings
Other equity
Total equity
The impact on the FY22 income statement is the recognition of a gain on bargain purchase, totalling £12,380k, the removal of a net financial
cost representing the fair value adjustments to the previously recognised earn-out liabilities, including the unwinding of present value
discounting, totalling £8k, the inclusion of the above mentioned non-underlying remuneration costs, totalling £3,509k, and the reversal of
the previously recognised credit of £135k in respect of contingent consideration that was released as earn out targets were not met.
124
125
Gateley (Holdings) PlcAnnual report and financial statements Notes to the consolidated financial statements
continued
Group statement of comprehensive income
Revenue
Personnel costs, excluding IFRS 2 charge
Depreciation – Property, plant and equipment
Depreciation – Right-of-use asset
Impairment of trade receivables and contract assets
Other operating expenses, excluding non-underlying and exceptional items
Operating profit before non-underlying and exceptional items
Non-underlying operating items
Exceptional items
Total non-underlying and exceptional items
Operating profit
Financing income
Financing expense
Profit before tax
Taxation
Profit for the year after tax attributable to equity holders of the parent
Other comprehensive income
- Exchange differences on foreign branch
- Revaluation of investments held at fair value through other comprehensive income
Profit for the financial year and total comprehensive income all attributable to equity
holders of the parent
Statutory Earnings per share
Basic
Diluted
2022
(as previously
presented)
£’000
Impact of
restatement
£’000
2022
(restated)
£’000
137,249
(86,517)
(851)
(3,783)
(866)
(22,716)
22,516
(2,659)
(870)
(3,529)
18,987
194
(1,149)
18,032
(3,753)
14,279
58
(190)
-
-
-
-
-
-
-
8,736
-
8,736
8,736
-
8
8,744
-
8,744
-
-
137,249
(86,517)
(851)
(3,783)
(866)
(22,716)
22,516
6,077
(870)
5,207
27,723
194
(1,141)
26,776
(3,753)
23,023
58
(190)
14,147
8,744
22,891
12.00
11.71
7.35
7.18
19.35
18.89
Group cash flow statement
The resulting impact on the Group cash flow statement is to recognise all payments made in acquiring businesses where the vendors are
subject to a continuing employment clause as operating activities, rather than investing activities, as previously presented. The associated
gains on bargain purchase of £12,380k are deducted and the non-underlying remuneration charges of £3,509k added back, to arrive at
operating cash flows, as set out below. The remaining adjustments are in respect of the £8k of interest and the reversal of the previously
recognised credit of £135k in respect of contingent consideration that was released as earn out targets were not met.
126
Business overview
Strategic report
Corporate governance
Our financials
Cash flows from operating activities
Profit for the year after tax
Adjustments for:
Depreciation and amortisation
Financial income
Financial expense
Release of contingent consideration
Interest charge on capitalised leases
Equity settled share-based payments
Gain on bargain purchase
Acquisition related earn-out remuneration charge
Initial consideration paid on acquisitions, net of cash acquired
Loss on disposal of property, plant and equipment
Tax expense
Increase in trade and other receivables
(Decrease)/increase in trade and other payables
Increase in provisions
Cash generated from operations
Tax paid
Net cash flows from operating activities
Investing activities
Acquisition of property, plant and equipment
Acquisition of other intangible assets
Cash acquired on business combinations
Interest received
Net cash used in investing activities
Financing activities
Interest and other financial income paid
Lease repayments
Receipt of new revolving credit facility, net of refinancing costs
Proceeds from sale of own shares
Acquisition of own shares by Employee Benefit Trust
Cash received for shares issued on exercise of SAYE/CSOP
options
Dividends paid
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
Note
2022
£’000
Impact of
restatement
Restated
2022
£’000
14,279
8,744
23,023
13/15/17
9
9
6
9
7
16
6
6
10
24
13
17
9
9
21
6,215
(194)
201
(135)
948
1,213
-
-
-
16
3,753
26,296
(10,233)
758
433
16,846
(4,497)
12,349
(775)
(319)
(5,982)
194
(6,882)
(201)
(3,870)
5,715
90
(39)
1,768
12
(12,430)
(8,967)
(3,500)
19,605
16,105
25
-
-
(8)
135
-
-
(12,380)
3,509
(7,033)
-
-
(7,033)
(66)
58
-
(7,041)
-
(7,041)
-
-
7,033
-
7,033
8
-
-
-
-
-
-
8
-
-
-
6,215
(194)
193
-
948
1,213
(12,380)
3,509
(7,033)
16
3,753
19,263
(10,299)
816
25
9,805
(4,497)
5,308
(775)
(319)
1,051
194
151
(193)
(3,870)
5,715
90
(39)
1,768
(12,430)
(8,959)
(3,500)
19,605
16,105
127
Gateley (Holdings) PlcAnnual report and financial statements Parent company statement of financial position
at 30 April 2023
Parent company statement of changes in equity
for the year ended 30 April 2023
Business overview
Strategic report
Corporate governance
Our financials
Non-current assets
Investments
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Other interest-bearing loans and borrowings
Other payables
Total non-current liabilities
Current liabilities
Other payables
Total current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Share based payment reserve
Retained earnings
Total equity
Note
5
6
8
7
7
9
2023
£’000
40,155
40,155
22,309
-
22,309
62,464
(6,813)
-
(6,813)
(1,501)
(1,501)
(8,314)
54,150
12,664
11,846
15,413
5,913
8,314
54,150
Restated
2022
£’000
Restated
2021
£’000
33,623
33,623
20,711
439
21,150
54,773
(5,715)
(40)
(5,755)
(15)
(15)
(5,770)
49,003
12,456
11,342
14,465
4,813
5,927
49,003
30,119
30,119
9,180
107
9,287
39,406
-
(17)
(17)
-
-
(17)
39,389
11,792
9,421
6,815
3,600
7,761
39,389
Under section s408 of the Companies Act 2006 the company is exempt from the requirement to present its own profit and loss account.
The profit for the year to 30 April 2023 was £13,391,000 (2022: £10,596,000).
These Financial Statements were approved by the Directors on 5 September 2023 and were signed and authorised on their behalf by:
Roderick Waldie
Chief Executive Officer
Neil A Smith
Chief Financial Officer
Company registered number: 09310078.
The accompanying notes on pages 131 to 143 form an integral part of these financial statements.
At May 2021 (as previously presented)
Impact of restatement
At 1 May 2021 (restated)
Comprehensive income:
Profit for the year
Total comprehensive income
Transactions with owners:
Dividend paid
Issue of share capital
Share-based payment transactions
Total equity at 30 April 2022 (restated)
At May 2022 (as previously presented)
Impact of restatement
At 1 May 2022 (restated)
Comprehensive income:
Profit for the year
Total comprehensive income
Transactions with owners:
Dividend paid
Issue of share capital
Share-based payment transactions
Share
capital
£’000
11,792
-
11,792
-
-
-
664
-
12,456
12,456
-
Share
premium
£’000
9,421
-
9,421
-
-
-
1,921
-
11,342
11,342
-
12,456
11,342
-
-
-
208
-
-
-
-
504
-
Total equity at 30 April 2023
12,664
11,846
Share
based
payment
reserve
£’000
3,600
-
3,600
-
-
-
1,213
4,813
4,813
-
4,813
-
-
-
-
1,100
5,913
Other
reserves
£’000
6,815
-
6,815
-
-
-
7,650
-
14,465
14,465
-
14,465
-
-
-
948
-
Retained
earnings
£’000
8,123
(362)
7,761
10,596
10,596
Total
Equity
£’000
39,751
(362)
39,389
10,596
10,596
(12,430)
(12,430)
-
-
5,927
6,416
(489)
5,927
13,391
13,391
10,235
1,213
49,003
49,492
(489)
49,003
13,391
13,391
(11,004)
(11,004)
-
-
1,660
1,100
54,150
15,413
8,314
The following describes the nature and purpose of each reserve within equity:
Share premium – Amount subscribed for share capital in excess of nominal value.
Other reserves – Represents the difference between the actual and nominal value of shares issued by the Company in the acquisition of
subsidiaries.
Share-based payment reserve – Represents the accumulated share based payment charge and is not distributable.
Retained earnings – All other net gains and losses and transactions with owners not recognised anywhere else.
The accompanying notes on pages 131 to 143 form an integral part of these financial statements.
128
129
Gateley (Holdings) PlcAnnual report and financial statements
Parent company cash flow statement
for the year ended 30 April 2023
Parent company notes to the financial statements
For the period ended 30 April 2023
(forming part of the financial statements)
Business overview
Strategic report
Corporate governance
Our financials
Note
Cash flows from operating activities
Profit for the year
Interest expense
Increase in liabilities
(Increase)/decrease in other receivables
Net cash flows from operating activities
Investing activities
Initial consideration paid on acquisitions
Net cash used in investing activities
Financing activities
Receipt of funds for issue of SAYE/RSA shares
Receipt of revolving credit facility, net of refinancing costs
8
Receipt of funds for issue of shares on acquisition of Tozer Gallagher
Interest paid
Dividends paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of year
The accompanying notes on pages 131 to 143 form an integral part of these financial statements.
2023
£’000
13,391
462
66
(4,655)
9,264
-
-
610
1,000
-
(309)
(11,004)
(9,703)
(439)
439
-
Restated
2022
£’000
10,596
-
10
856
11,462
(6,615)
(6,615)
1,900
5,715
300
-
(12,430)
(4,515)
332
107
439
1. Basis of preparation and significant accounting policies
Gateley (Holdings) Plc (the “Company”) is a company incorporated and domiciled in the UK under the Companies Act. The nature of the
Group’s operations and its principal activities are set out in the Strategic Report.
The Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards and with the
requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The accounting policies set out
below have, unless otherwise stated, been applied consistently to all periods presented in these Financial Statements.
Judgements made by the Directors, in the application of these accounting policies that have significant effect on the Financial Statements
and estimates with a significant risk of material adjustment in the next year are discussed in note 13 below.
The individual Financial Statements of the Company are presented in the currency of the primary economic environment in which it
operates (its functional currency). For the purposes of the Financial Statements, the results and financial position of the company are
expressed in GBP, which is the functional and presentational currency of the Company.
Measurement convention
The Financial Statements are prepared on the historical cost basis except where Adopted IFRSs require an alternative treatment. The principal
variations relate to financial instruments which are carried at fair value.
1.1 Going concern
See full explanation on page 44 of the Strategic Report.
Having reviewed the Company’s forecasts, which includes an analysis of both short term cash flow forecasts and longer term cash flow
forecasts, the risk and uncertainties surrounding the current and future demand for legal services, and other reasonably possible variations
in trading performance, the Company expects to be able to operate within the Company’s financing facilities and in accordance with the
covenants set out in those facility agreements.
Sensitivity analysis has been performed in respect of specific scenarios which could negatively impact our future performance such as lower
levels of revenue growth, lower than forecast receipts of cash, and reduced levels of gross margin expansion. In addition, the Directors have
also considered mitigating actions such as lower capital expenditure and other short-term cash management activities within the Company’s
control. On this basis, the Directors have a reasonable basis to conclude that the Company is forecast to continue to trade in line with
existing financing facilities for the foreseeable future.
Accordingly the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.2 Classification of financial instruments issued by the Company
Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or
financial liabilities with another party under conditions that are potentially unfavourable to the Company; and
(b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a non-derivative that includes no
obligation to deliver a variable number of the Company’s own equity instruments or is a derivative that will be settled by the Company’s
exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the financial instruments are classified as a financial liability.
130
131
Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
1.5 Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent
that it relates to a business combination, or items recognised directly in equity or other comprehensive income. Current tax is the expected
tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the statement of
financial position date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill;
the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the
foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the Statement of Financial Position date.
A deferred tax asset is recognised on deductible temporary differences only to the extent that it is probable that future taxable profits will
be available against which they can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it
is no longer probable that the related tax benefit will be realised.
1.6 Ordinary dividends
Dividends are recognised as a liability in the period in which they are approved by the Company’s shareholders.
1.7 New and revised IFRS in issue but not yet effective
At the date of authorisation of these Financial Statements, certain new standards, amendments and interpretations to existing standards
have been published by the IASB but are not yet effective and have not been applied early to the Group:
Revised IFRS
Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement 2
Definition of Accounting Estimates – Amendments to IAS 8
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
Effective date
1 January 2023
1 January 2023
1 January 2023
The Directors do not expect that the adoption of the Standards listed above will have a material impact on the Financial Statements of the
Group in future periods.
2. Expenses
Audit fees in relation to the audit of these accounts of £10,000 (2022: £10,000) have been borne by Gateley Plc. The company does not
have any employees (2022: Nil).
Parent company notes to the financial statements
continued
1.3 Non derivative financial instruments
Financial Assets
The Company’s financial assets include cash and cash equivalents and trade and other receivables. All financial assets are recognised when
the Company becomes party to the contractual provisions of the instrument.
i) Investments
Fixed asset investments are stated at cost less provision for any impairment in value.
Investments in subsidiary undertakings are stated as fixed asset investments, at cost less amounts written off for impairment with any
subsequent year adjustments stated directly into the profit and loss account. Investments are reviewed for impairment where events
or circumstances indicate that their carrying amount may not be recoverable. In some instances investments are subject to contingent
consideration, this is included in the cost of investment. The amount of contingent consideration due is assessed regularly by management
based on actual and forecast performance. Any changes to contingent consideration due are recognised within the Statement of Profit and
Loss. Cost of investment also includes share-based payment charges of equity settled share-based payment schemes to be settled on behalf
of subsidiary companies.
ii) Other receivables
Other receivables (except unbilled amounts for client work) are initially recognised at their transaction value and carried at amortised cost
under IFRS 9.
In line with IFRS 9, the Company recognises any expected credit loss against trade receivables in order to recognise the inherent risk that
the Company may not be able to collect all amounts due according to the original terms of the receivable. The amount of the provision
recorded is based on a broad range of information including past events, current conditions and forecasts of the future cash flows of the
asset and is recognised in the Statement of Profit and Loss in other operating expenses.
iii) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held at call with banks. For the purpose of the cash flow statement, cash and
cash equivalents includes bank overdrafts in addition to the definition above.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Group after deducting all its liabilities.
The Company’s financial liabilities comprise borrowings and contingent consideration treated as remuneration. All financial liabilities are
recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method with the exception of
contingent consideration that is measured at fair value through profit or loss.
1.4 Impairment
Financial assets (including receivables)
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective
evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss scenario is likely to occur after the initial
recognition of the asset, and that the loss event has a negative effect on the estimated future cash flows of that asset that can be estimated
reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount
and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired
asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss
to decrease, the decrease in impairment loss is reversed through profit or loss.
Under IFRS 9 the Group recognises expected credit losses (ECLs) on receivables through application of the simplified method. The amount
of the provision recorded is based on a broad range of information including past events, current conditions and forecasts of the future
cash flows of the asset. Whilst the longevity and impact of the COVID-19 pandemic is unknown, management have considered the potential
defaults on receivables as a result and reflected these in the ECLs calculated.
132
133
Gateley (Holdings) PlcAnnual report and financial statements Business overview
Strategic report
Corporate governance
Our financials
Parent company notes to the financial statements
continued
3. Investment income
Intercompany dividends to the Company have been received from other Group entities as detailed below:
Investments in subsidiaries
The Company has effective control of the following:
Dividend received from Gateley Plc – 25 April 2023
Dividend received from Gateley Plc – 3 February 2023
Dividend received from Gateley Plc – 31 October 2022
Dividend received from Gateley Smithers Purslow Limited – 19 October 2022
Dividend received from Gateley Vinden Limited – 19 October 2022
Dividend received from Gateley Plc – 29 October 2021
Dividend received from Gateley Plc – 29 April 2022
Dividend received from T-Three Consulting Limited – 29 April 2022
Dividend received from Gateley Hamer Limited – 29 April 2022
Dividend received from Gateley Vinden Limited – 29 April 2022
2023
£’000
8,600
350
4,500
200
350
-
-
-
-
-
14,000
2022
£’000
-
-
-
-
-
3,570
5,053
800
628
949
11,000
4. Taxation
The Company’s profit for the year arises from the receipt of intercompany dividends and the issuance of new shares to Gateley EBT Limited,
which are not chargeable to corporation tax. As a result, no provision for corporation tax is needed in these financial statements.
5. Investments
At 1 May 2021 (restated)
Share-based payment charge
Capital contribution in respect of acquisition related remuneration
Balance at 30 April 2022 (restated)
At 1 May 2022 (restated)
Share-based payment charge
Capital contribution in respect of acquisition related remuneration
Balance at 30 April 2023
£’000
30,119
1,213
2,291
33,623
33,623
1,100
5,432
40,155
Gateley Plc
Entrust Pension Limited
Gateley Capitus Limited
Gateley Hamer Limited
Kiddy & Partners Limited
International Investments Services Limited
Persona Associates Limited
T-Three Consulting Limited*
T-Three Group Limited
T-Three Holdings Limited*
Gateley Vinden Limited
GEG Services Limited
Matsa Holdings Limited
Thomas Alexander Holdings Limited*
TVP Holdings Limited*
SP 2018 Limited
Smithers Purslow Group Limited*
Gateley Smithers Purslow Limited*
Byrom Clark Roberts Limited*
Registered office
One Eleven, Edmund Street,
Birmingham, B3 2HJ
Ship Canal House 98, King Street,
Manchester, M2 4WU
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, B3 2HJ
Ordinary share
proportion held
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Nature of business
Legal services
Pension trustee services
Tax incentive services
Specialist property
consultancy
Human capital consultancy
UK Investment consultancy
Dormant
Human capital consultancy
Intermediate holding company
Intermediate holding company
Corporate advisory, dispute
resolution and consultancy to
the built environment in the
property and construction
markets
UK Investment services
provider
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Intermediate holding company
Architecture, building
surveyance and civil &
structural engineering
100%
Dormant
134
135
Gateley (Holdings) PlcAnnual report and financial statements Parent company notes to the financial statements
continued
Business overview
Strategic report
Corporate governance
Our financials
Ainsley Stokes Limited*
Adamson Jones Holdings Limited
Adamson Jones IP Limited*
Symbiosis IP Limited*
Gateley EBT Limited
Gateley Investments Limited*
Ensco Trustee Company Limited*
Gateley Secretaries Limited*
Gateley Incorporations Limited*
Gateley Custodian and Nominee Services
Limited*
Gateley Custodian and Nominee Services
No.2 Limited*
Gateley Omega Limited (formerly Ensco
1413 Limited)
Gateley UK LLP**
Gateley Tweed LLP***
Registered office
One Eleven, Edmund Street,
Birmingham, B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
Imperial House, 4-10 Donegall
Square East, Belfast, Northern
Ireland, BT1 5HD
Victoria Louise Garrad, Callum Laing Nuttall,
Thomas Oliver Durrant and Richard Julian
Healey trading as Gateley Tweed***
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
136
Ordinary share
proportion held
100%
Nature of business
Architecture, building
surveyance and civil &
structural engineering
Gateley Heritage LLP*
100%
Intermediate holding company
Gateley (Manchester) LLP*
Registered office
One Eleven, Edmund Street,
Birmingham, West Midlands,
B3 2HJ
Ship Canal House 98, King Street,
Manchester, M2 4WU
Ordinary share
proportion held
Nature of business
100%
Non-trading
51%
Non-trading
100%
Patent attorney
100%
Patent attorney
*
**
***
these investments are indirectly held at the year end.
certain Directors of Gateley (Holdings) Plc and Gateley Plc as individuals are members of this entity, although effective control is held by Gateley (Holdings) Plc via a trust
holding arrangement.
These entities are related entities of Gateley Plc since the majority of its Members are also board members of Gateley Plc. In substance they are controlled by Gateley Plc and
so their results are included in the consolidated results of Gateley (Holdings) Plc. In accordance with local governance regulations, direct ownership in Gateley Tweed LLP
and Gateley Tweed (a partnership in Ireland) is not permitted however both entities will be recognised as subsidiary undertakings of Gateley Plc under section 1162(4) of
the Companies Act 2006 and thus subsidiary undertakings of the Group by virtue of section 1162(5) of the Companies Act 2006.
100%
Employee benefit trust
6. Other receivables
100%
Corporate investment
company
100%
Corporate trustee company
100%
Non-trading
100%
Non-trading
100%
Non-trading
Amounts falling due within one year:
Amounts owed from Gateley Plc
Amounts owed from Gateley EBT Limited
Amounts owed from Gateley Vinden Limited
Amounts owed from Adamson Jones IP Limited
Prepaid consideration subject to earn-out service conditions
Amounts falling due after one year:
Prepaid consideration subject to earn-out service conditions
100%
Non-trading
All intercompany receivables are anticipated to be due within one year and repayable on demand.
2023
£’000
9,051
517
50
2,000
4,946
16,564
£’000
5,745
5,745
2022
£’000
5,010
903
-
-
5,431
11,344
£’000
9,367
9,367
100%
Non-trading
100%
n/a
n/a
Legal services via a branch in
Dubai
Legal services in Northern
Ireland
Legal Services in Ireland
The Directors are satisfied that no provisioning for impairment is required in respect of the receivables at 30 April 2023 (2022: £Nil)
The carrying amount of financial assets (excluding investments) recorded in these accounts, which is net of any impairment losses,
represents the Company’s maximum exposure to credit risk. Financial assets include amounts due from Gateley Plc. The Company does not
hold collateral over these balances.
7. Other payables
Contingent consideration treated as remuneration due in one year
Other payables
2023
£’000
1,364
137
1,501
2022
£’000
-
15
15
137
Gateley (Holdings) PlcAnnual report and financial statements Parent company notes to the financial statements
continued
Contingent consideration treated as remuneration due in more than one year
8. Other interest-bearing loans and borrowings
2023
£’000
-
Restated
2022
£’000
40
The contractual terms of the Company’s interest-bearing loans and borrowings, which are measured at amortised cost, are described below.
For more information about the Group’s exposure to interest rate and foreign currency risk, see note 27.
Non-Current liabilities
Bank borrowings
2023
Fair
value
£’000
6,813
Carrying
amount
£’000
6,813
2022
Fair
value
£’000
5,715
Carrying
amount
£’000
5,715
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 drawn down against the facility in order
to fund the initial cash consideration in the acquisition of SP 2018 Limited. On 3 October 2022 a further £1m was drawn down against the
facility in order to fund the cash consideration in the acquisition of Symbiosis IP Limited.
As at 30 April 2023, the Company’s non-derivative financial liabilities have contractual maturities (including interest payments where
applicable) as summarised below:
30 April 2023
Other payables
Bank borrowings
Total
Current
Within 6
months
£’000
-
-
-
6 to 12
months
£’000
1,364
-
1,364
Non-current
1 – 5
years
£’000
Later than
5 years
£’000
-
7,997
7,997
-
-
-
This compares to the maturity of the Company’s non-derivative financial liabilities in the previous reporting period as follows:
30 April 2022
Other payables
Bank borrowings
Total
Current
Within 6
months
£’000
-
-
-
6 to 12
months
£’000
-
-
-
Non-current
1 – 5
years
£’000
Later than
5 years
£’000
40
6,485
6,525
-
-
-
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting
date.
Business overview
Strategic report
Corporate governance
Our financials
9. Capital and reserves
Authorised, issued and fully paid
Ordinary shares of 10p each
Brought forward
2023
Number
2023
£
2022
Number
2022
£
124,556,879
12,455,687
117,914,205
11,791,420
Issued on acquisition of Tozer Gallagher LLP
Issued on acquisition of Adamson Jones IP Limited
Issued on acquisition of Gateley Smithers Purslow Limited
-
-
-
-
-
-
142,179
543,668
3,312,322
Issued on acquisition of Symbiosis IP Limited
523,012
52,301
Issued as part of contingent consideration of Tozer
Gallagher LLP
Issued on vesting of RSA
Issued on vesting of SAYE
Issued on vesting of CSOPS
At 30 April
25,071
1,175,000
356,195
-
2,507
117,500
35,620
-
-
-
1,477,560
308,819
858,126
126,636,157
12,663,615
124,556,879
12,455,688
The Company has one class of Ordinary shares which carry no right to fixed income.
On 3 October 2022 the Company acquired the entire issued share capital of Symbiosis IP Limited in part for the issue of 523,012 10p
ordinary shares.
Between 1 May 2022 and 30 April 2023 356,195 10p ordinary shares were issued upon vesting of the 2018/2019 SAYE schemes to
participants.
On 23 February 2023 1,175,000 10p ordinary shares were issued upon issue of the 2023 RSA scheme to participants.
10. Financial instruments and related disclosures
Financial risk management
The board has overall responsibility for the oversight of the Company’s risk management framework. A formal process for reviewing and
managing risk in the business has been developed. A register of strategic and operational risk is maintained and reviewed by the board, who
also monitor the status of agreed actions to mitigate key risks.
Management’s objective in managing financial risks is to ensure the long-term sustainability of the Company and Group.
As the Company’s principal financial instruments comprise cash and inter-group receivables. The main risks are those noted below:
Credit risk
Credit risk is the risk of financial loss to the Company if a subsidiary to a financial instrument fails to meet its contractual obligation. The
Company has a policy of monitoring subsidiaries who perform credit checks which together with the spread of reputable clients ensures
there are no unacceptable concentrations of credit risk.
14,218
54,367
331,232
-
-
147,756
30,882
85,813
138
139
Gateley (Holdings) PlcAnnual report and financial statements Parent company notes to the financial statements
continued
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company ensures that the
Group has sufficient cash or loan facilities to meet all its commitments when they fall due by ensuring that there is sufficient cash or working
capital facilities to meet the cash requirements of the Company.
Gateley Plc is financed through a combination of unsecured bank loans together with cash generated from operations. The board reviews
the projected financing requirements annually when agreeing the Group’s budget and, based on this review, sets the value of the future
capital requirements of the business. The cash flow forecast for the entire Group is updated regularly and compared to the budget with any
significant variance being reported to the board.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Company’s income.
The Company’s exposure to market risk predominantly relates to interest and currency risk. Management does not consider this to be a
significant risk to the Company.
Interest rate risk
The Company’s bank borrowings incur variable interest rate charges linked to SONIA plus a margin. Management does not consider this to
be a significant risk to the Company or Group.
Foreign currency risk
The Group has one overseas operation based in Dubai which, therefore, exposes the Group to changes in Sterling/ Dirham exchange rates.
Management does not consider this to be a significant risk to the Company or Group.
Fair value disclosures
The fair value of each class of financial assets and liabilities is the carrying amount, based on the following assumptions:
Inter Group receivables
The fair value approximates to the carrying value because of the short maturity of these
instruments.
Fair value hierarchy
Financial instruments carried at fair value should be measured with reference to the following levels:
•
•
Level 1: quoted prices in active markets for identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices)
•
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs)
There are no financial instruments carried at fair value within this financial information.
Business overview
Strategic report
Corporate governance
Our financials
The fair value of financial assets and liabilities are as follows (there is no difference between the carrying value of the financial assets and
liabilities and their fair value):
Cash and cash equivalents
Group receivables
Total financial assets
Other payables
Current financial liabilities
Long-term borrowings
Other payables
Total non-current liabilities
Total financial liabilities
2023
£’000
-
11,618
11,618
(1,501)
(1,501)
(6,813)
(1,364)
(8,177)
(9,678)
2022
£’000
439
5,913
6,352
(15)
(15)
(5,715)
(40)
(5,755)
(5,770)
The Company itself does not have any exposure to foreign exchange rates. The Group’s exposure is detailed in note 27.
Financial instruments sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the impact of short term fluctuations on its earnings. At the end of
each reporting period, the effect of hypothetical changes in interest and currency rates are as follows:
Interest rate sensitivity analysis
The table below shows the Company’s sensitivity to interest rates on floating rate borrowings (i.e. cash and cash equivalents and bank
borrowings which attract interest at floating rates) if interest rates were to change by +/- 1%. The impact on the results in the Statement of
Profit and Loss and other comprehensive income and equity would be:
+1 % movement in interest rates
-1 % movement in interest rates
2023
Increase/
(decrease)
in profit
and loss
£’000
70
(70)
2022
Increase/
(decrease)
in profit
and loss
£’000
1
(1)
The borrowing facility consists solely of a revolving credit facility which provides committed funding of £30m until April 2025.
11. Share-based payments
Details of the Group’s share-based payment schemes in operation are shown in note 8 of the Group financial statements. All shares are
issued by Gateley (Holdings) Plc.
12. Related parties
None of the Executive Directors received any remuneration from the Company during the year, other than dividend income. They are
however remunerated by Gateley Plc, further details can be found in note 30 of the Group Financial Statements.
140
141
Gateley (Holdings) PlcAnnual report and financial statements Parent company notes to the financial statements
continued
13. Accounting estimates and judgements
The preparation of these Financial Statements under IFRS requires management to make estimates and assumptions which affect these
Financial Statements. The key estimates and assumptions relate to the impairment assessment of investments.
Impairment of investments (note 5)
The total carrying amount of investments is held net of impairment losses. In determining whether investments are impaired requires
an estimation of the future value arising from a subsidiary or the trade and assets acquired with it. The value in use calculation requires
an estimate of the future cash flows expected to arise from a subsidiary or cash generating unit and the use of a suitable discount rate
in order to calculate present value. Any change in estimates could result in an adjustment to recorded amounts. Management does not
believe any impairment is necessary against the carrying value of its investments.
14. Contingent liability
A cross guarantee between the Company and Gateley Plc exists in respect of all loans and overdrafts. The value of the contingent liability at
30 April 2023 is £6,813,000 (2022: £5,715,000).
See note 33 to the Group Financial Statements for further background on the restatement.
The financial results of the Company are only impacted by this restatement in relation to any acquisitions that were made directly by the
Company (rather than by a direct or indirect subsidiary of the Company). For these acquisitions, during the earn-out period the Company
was directly liable for the earn-out amounts accrued and paid.
Following the restatement, the non-underlying remuneration costs in relation to these acquisitions is treated as an increase in the quantum
of the relevant investment in subsidiary, with no income statement impact in the Company itself as the amounts reflect services to the
subsidiary and were paid on the subsidiary’s behalf.
However, where initial consideration transferred was also subject to the same leaver provisions, this too will be recognised over the service
period, rather than on acquisition as had previously been the case.
The total impact on the previously stated cost of investment for FY22 is a reduction of £20,619k (2021: £2,908k), the recognition of a
prepaid earn-out asset totalling £14,798k (2021: £2,411k), with a reduction in liabilities of £5,320k (2021: £135k) and retaining earnings of
£489k (2021: £362k).
Non-current assets
Investments
Total non-current assets
Current assets
Other receivables
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Other payables
Other interest-bearing loans and borrowings
Total non-current liabilities
Current liabilities
Other payables
Trade payables
Total current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium
Other reserves
Share-based payment reserve
Retained earnings
Total equity
142
Business overview
Strategic report
Corporate governance
Our financials
2022
(as previously
presented)
£’000
Impact of
restatement
£’000
2022
(restated)
£’000
54,242
54,242
5,913
439
6,352
60,594
(5,360)
(5,715)
(11,075)
(27)
-
(27)
(11,102)
49,492
12,456
11,342
14,465
4,813
6,416
49,492
(20,619)
(20,619)
14,798
-
14,798
(5,821)
5,320
-
5,320
12
-
12
5,332
(489)
-
-
-
-
(489)
(489)
33,623
33,623
20,711
439
21,150
54,773
(40)
(5,715)
(5,755)
(15)
-
(15)
(5,770)
49,003
12,456
11,342
14,465
4,813
5,927
49,003
143
Gateley (Holdings) PlcAnnual report and financial statements Notice of annual general meeting
NOTICE IS GIVEN that the Annual General Meeting of the above named Company will be held at One Eleven Edmund Street, Birmingham B3 2HJ
on 17 October 2023 at 12:30 p.m. Shareholders will be asked to consider and, if thought fit, to pass the following resolutions of which resolutions 1
to 9 (inclusive) will be proposed as ordinary resolutions and resolutions 10 to 13 (inclusive) will be proposed as special resolutions.
ORDINARY RESOLUTIONS
1.
2.
3.
4.
5.
6.
7.
8.
9.
To receive the Company’s annual accounts for the financial year ended 30 April 2023 together with the Directors’ Report and the
Auditors’ report on those accounts.
To approve the Directors’ Remuneration Report for the financial year ended 30 April 2023, which is set out in the Company’s annual
report for the financial year ended 30 April 2023.
To declare a final dividend for the year ended 30 April 2023 of 6.2p per share payable in October 2023 to shareholders on the register
of members at the close of business on 29 September 2023. The shares will go ex-dividend on 28 September 2023.
To reappoint Roderick Richard Waldie (who retires in accordance with article 23.4.2 of the Company’s articles of association and,
being eligible, offers himself for re-election) as a Director of the Company.
To reappoint Nigel Terrence Payne (who retires in accordance with article 23.4.2 of the Company’s articles of association and, being
eligible, offers himself for re-election) as a Director of the Company.
To appoint Colin Robert Jones (in accordance with article 23.1 of the Company’s articles of association) as a Director of the Company.
To appoint MacIntyre Hudson LLP as auditors of the Company to hold office until the conclusion of the next Annual General Meeting
of the Company.
To authorise the Directors to fix the remuneration of the auditors of the Company.
THAT, in substitution for all existing and unexercised authorities and powers, the Directors of the Company be generally and
unconditionally authorised for the purpose of section 551 Companies Act 2006 (the Act) to exercise all or any of the powers of the
Company to allot shares of the Company or to grant rights to subscribe for, or to convert any security into, shares of the Company
(such shares and rights being together referred to as Relevant Securities) up to an aggregate nominal value of £4,289,099 to such
persons at such times and generally on such terms and conditions as the Directors may determine (subject always to the articles of
association of the Company), such authority, unless previously renewed, varied or revoked by the Company in general meeting, to
expire at the conclusion of the next Annual General Meeting of the Company (or, if earlier, at the close of business on 17 January
2025) save that the Directors of the Company may, before the expiry of such period, make an offer or agreement which would
or might require relevant securities or equity securities (as the case may be) to be allotted after the expiry of such period and
the Directors of the Company may allot relevant securities or equity securities (as the case may be) in pursuance of such offer or
agreement as if the authority conferred by this resolution had not expired.
SPECIAL RESOLUTIONS
To adopt the articles of association that are produced to the Annual General Meeting, marked “X” and initialled by the Chairman
for the purposes of identification, as the new articles of association of the Company in substitution for, and to the exclusion of, the
existing articles of association with effect from the conclusion of the Annual General Meeting.
THAT, if resolution 9 above is passed, and in substitution for all existing and unexercised authorities and powers, the Directors of the
Company be and are hereby generally and unconditionally empowered pursuant to section 570 of the Act to allot equity securities (as
defined in section 560 of the Act) (Equity Securities) for cash under the authority given by that resolution 9 and/or to sell ordinary
shares held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such
authority to be limited to:
11.1 the allotment of Equity Securities or sale of treasury shares in connection with a rights issue or similar offer in favour of ordinary
shareholders where the Equity Securities respectively attributable to the interests of all ordinary shareholders are proportionate (as
nearly as may be) to the respective numbers of ordinary shares held by them on that date provided that the Directors of the Company
may make such exclusions or other arrangements to deal with any legal or practical problems under the laws of any territory or the
requirement of any regulatory body or any stock exchange or with fractional entitlements as they consider necessary or expedient;
11.2 the allotment of Equity Securities or sale of treasury shares (otherwise than under paragraph 11.1 above) up to an aggregate
nominal amount of £1,299,727 representing approximately 10% of the current share capital of the Company; and
10.
11.
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11.3 the allotment of Equity Securities or sale of treasury shares (otherwise than under paragraphs 11.1 or 11.2 above) up to a
nominal amount equal to 20% of any allotment of Equity Securities or sale of treasury shares from time to time under paragraph
11.2 above such authority to be used only for the purposes of making a follow-on offer which the Directors determine to be
of a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying Pre-Emption Rights most
recently published by the Pre-Emption Group prior to the date of this notice, such authorities, unless previously renewed, varied
or revoked by the Company in general meeting, to expire at the end of the next Annual General Meeting of the Company (or,
if earlier, at the close of business on 17 January 2025) save that the Directors of the Company may, before the expiry of such
period, make an offer or agreement which would or might require Equity Securities to be allotted (and treasury shares to be
sold) after the expiry of such period and the Directors of the Company may allot Equity Securities (and sell treasury shares) in
pursuance of such offer or agreement as if the authority conferred by this resolution had not expired.
12.
THAT, if resolution 9 above is passed, and in addition to any authority granted under resolution 11 above, the Directors of the
Company be and are hereby generally and unconditionally empowered pursuant to section 570 of the Act to allot Equity Securities for
cash under the authority given by that resolution 9 and/or to sell ordinary shares held by the Company as treasury shares for cash as if
section 561 of the Act did not apply to any such allotment of Equity Securities, such authority to be:
12.1 limited to the allotment of Equity Securities or sale of treasury shares pursuant to the authority granted under resolution 9 up
to an aggregate nominal amount of £1,299,727 representing approximately 10% of the current share capital of the Company
used only for the purposes of financing (or refinancing, if the authority is to be used within six months after the original
transaction) a transaction which the Directors of the Company determine to be an acquisition or other capital investment of a
kind contemplated by the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre-Emption
Group prior to the date of this notice of Annual General Meeting of the Company; and
12.2 limited to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph 12.1 above) up to a
nominal amount equal to 20% of any allotment of equity securities or sale of treasury shares from time to time under paragraph
12.1 above used only for the purposes of making a follow-on offer which the Directors determine to be of a kind contemplated
by paragraph 3 of Section 2B of the Statement of Principles on Disapplying Pre-Emption Rights most recently published by
the Pre-Emption Group prior to the date of this notice, such authorities, unless previously renewed, varied or revoked by the
Company in general meeting, to expire at the end of the next Annual General Meeting of the Company (or, if earlier, at the close
of business on 17 January 2025) save that the Directors of the Company may, before the expiry of such period, make an offer
or agreement which would or might require Equity Securities to be allotted (and treasury shares to be sold) after the expiry of
such period and the Directors of the Company may allot Equity Securities (and sell treasury shares) in pursuance of such offer or
agreement as if the authority conferred by this resolution had not expired.
13.
THAT, for the purposes of section 701 of the Act, the Company be generally and unconditionally authorised to make market purchases
(within the meaning of section 693(4) of the Act) of ordinary shares of £0.10 each in the capital of the Company (Ordinary Shares)
provided that:
13.1 the maximum number of Ordinary Shares which may be purchased is 12,997,269 (representing 10% of the Company’s issued
share capital);
13.2 the minimum price which may be paid for each Ordinary Share is £0.10;
13.3 the maximum price which may be paid for each Ordinary Share is an amount equal to 105% of the average of the middle market
quotations for an Ordinary Share as derived from the Daily Official List of The London Stock Exchange plc for the five business
days immediately preceding the day on which the Ordinary Share in question is purchased;
13.4 unless previously renewed, varied or revoked by the Company in general meeting, to expire at the end of the next Annual General
Meeting of the Company (or, if earlier, at the close of business on 17 January 2025); and
13.5 the Company may make a contract or contracts to purchase Ordinary Shares under the authority conferred by this resolution
prior to the expiry of such authority which contract or contracts will or maybe executed wholly or partly after the expiry of such
authority, and may make a purchase of Ordinary Shares in pursuance of any such contract or contracts.
14.
THAT, conditional on: (a) the audited annual accounts and reports for the year ended 30 April 2023 being laid before shareholders;
(b) delivery of the completed accounts for the year ended 30 April 2023 to the Registrar of Companies; and (c) the audited annual
accounts for the year ended 30 April 2023 showing sufficient distributable profits to enable the releases being entered into:
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14.1 the appropriation of distributable profits of the Company (as shown in the annual accounts of the Company made up to 30 April
2023 received in resolution 1 above) to the payment of the unlawful element of each of the dividends set out below (each a
Relevant Dividend and together the Relevant Dividends), the unlawful elements of those Relevant Dividends together having
a total aggregate sum not exceeding £7,127,330.72, be and are authorised, each by reference to the same record date as the
original accounting entries for the Relevant Dividends:
Date of dividend
payment
16 March 2018 interim dividend
15 March 2019 interim dividend
8 October 2021 final dividend
31 March 2022 interim dividend
21 October 2022 final dividend
31 March 2023 interim dividend
Total aggregate value
Amount per
ordinary share
Total aggregate amount
of dividend paid
Total unlawful element
of dividend paid
2.2p
2.6p
5.0p
3.0p
5.5p
3.3p
–
£2,351,024.57
£2,853,261.84
£5,907,839.15
£3,582,071.34
£6,834,993.06
£4,169,312.76
–
£450,100.00
£1,532,609.17
£1,087,741.27
£2,875,579.72
£915,742.78
£265,557.79
£7,127,330.72
14.2 any and all claims which the Company has, or may have, arising out of or in connection with the approval, declaration and/
or payment of the Relevant Dividends against its current or former shareholders who appeared on the register of members on
the relevant record date for each respective Relevant Dividend (or the personal representatives and their successors in title (as
appropriate) of a shareholder’s estate if that shareholder is deceased and/or the successors in title or assignees for corporate
members) be waived and released, and a deed of release in favour of those shareholders (or the personal representatives and their
successors in title (as appropriate) of a shareholder’s estate if that shareholder is deceased and/or successors in title or assignees
for corporate members) be entered into by the Company and any Director in the presence of a witness, any two Directors or any
Director and the Company Secretary be authorised to execute that deed of release as a deed for and on behalf of the Company; and
14.3 any and all claims which the Company has, or may have, arising out of or in connection with the approval, declaration and/or
payment of the Relevant Dividends against all Directors (present and former) of the Company at the time of declaration and
payment of each respective Relevant Dividend (or the personal representatives and their successors in title (as appropriate) of
any Director’s estate if that Director is deceased), including any breach of fiduciary duties, be waived and released, and a deed of
release in favour of those Directors who acted as Directors of the Company at the time of the declaration and payment of each
Relevant Dividend (or the personal representatives and their successors in title (as appropriate) of any Director’s estate if that
Director is deceased) be entered into by the Company and any Director in the presence of a witness, any two Directors or any
Director and the Company Secretary be authorised to execute that deed of release as a deed for and on behalf of the Company.
15.
THAT the amount standing to the credit of the share premium account of the Company be reduced by the sum of £11,912,728.70 to
£Nil and the amount standing to the credit of the other reserve account of the Company be reduced by the sum of £17,188,681.71
to £Nil.
BY ORDER OF THE BOARD
Neil Andrew Smith
Secretary
Date:
22 September 2023
Registered office:
One Eleven
Edmund Street
Birmingham
B3 2HJ
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NOTES:
Entitlement to Attend and Vote
1.
To be entitled vote at the Meeting (and for the purposes of the determination by the Company of the votes that may be cast in
accordance with Regulation 41 of the Uncertified Securities Regulations 2001), only those members registered in the Company’s
register of members at close of business on 13 October 2023 (or, if the Meeting is adjourned, close of business on the date which is
two business days before the adjourned Meeting) shall be entitled to vote at the Meeting. Changes to the register of members of the
Company after the relevant deadline shall be disregarded in determining the rights of any person to vote at the Meeting.
Voting on a poll
2.
In line with best practice, voting at the meeting will be on a poll, rather than a show of hands. Each shareholder present at the meeting
will be entitled to one vote for every Ordinary Share registered in his or her name and each corporate representative or proxy will be
entitled to one vote for each Ordinary Share which he or she represents.
Website Giving Information Regarding the Meeting
3.
Information regarding the Meeting, including the information required by Section 311A of the Act, is available from www.gateleyplc.
com/investors.
Appointment of Proxies
4.
If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise all or any of
your rights to attend, speak and vote at the Meeting. You can appoint a proxy only using the procedures set out in these notes and the
notes to the proxy form.
5.
6.
7.
A proxy does not need to be a member of the Company but must attend the Meeting to represent you. If you wish your proxy to
speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your instructions
directly to them.
You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not
appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please indicate on your
proxy submission how many shares it relates to.
A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the
resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or
abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
Appointment of Proxy Using Hard Copy Proxy Form
8.
A hard copy form of proxy has not been sent to you but you can request one directly from the registrars, Link Asset Services’ general
helpline team on Tel: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding
public holidays in England and Wales. Or via email at shareholderenquiries@linkgroup.co.uk or via postal address at Link, Group,
Central Square, 29 Wellington Street, Leeds, LS1 4DL. In the case of a member which is a company, the proxy form must be executed
under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or
any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with
the proxy form. For the purposes of determining the time for delivery of proxies, no account has been taken of any part of a day that is
not a working day.
Appointment of a Proxy Online
9.
You may submit your proxy electronically using the Share Portal service at www.signalshares.com. Shareholders can use this service
to vote or appoint a proxy online. The same voting deadline of 48 hours (excluding non-working days) before the time of the meeting
applies. Shareholders will need to use the unique personal identification Investor Code (IVC) printed on your share certificate. If you
need help with voting online, please contact our Registrar, Link Asset Services’ portal team on 0371 664 0391. Calls are charged at the
standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international
rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding public holidays in England and Wales. Or via email at
shareholderenquiries@linkgroup.co.uk.
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Corporate Representatives
15.
A corporation which is a member can appoint one or more corporate representatives who may exercise, on its behalf, all its powers as
a member provided that no more than one corporate representative exercises powers over the same share.
Issued Shares and Total Voting Rights
16.
As at 22 September 2023, the Company’s issued share capital comprised 129,972,694 Ordinary Shares of £0.10 each. Each Ordinary
Share carries the right to one vote at a General Meeting of the Company and, therefore, the total number of voting rights in the
Company on 22 September 2023 is 129,972,694. The website referred to in note 3 will include information on the number of shares
and voting rights.
Questions at the Meeting
17.
Under Section 319A of the Act, the Company must answer any question you ask relating to the business being dealt with at the
Meeting unless:
•
•
•
answering the question would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential
information;
the answer has already been given on a website in the form of an answer to a question; or
it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered.
Website Publication of Audit Concerns
18.
Under Section 527 of the Act, shareholders meeting the threshold requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s financial statements
(including the Auditor’s Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any circumstances
connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual financial statements
and reports were laid in accordance with Section 437 of the Act (in each case) that the shareholders propose to raise at the relevant
meeting. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying
with Sections 527 or 528 of the Act . Where the Company is required to place a statement on a website under Section 527 of the Act,
it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website.
The business which may be dealt with at the Meeting for the relevant financial year includes any statement that the Company has been
required under Section 527 of the Act to publish on a website.
Documents on Display
19.
Copies of the letters of appointment of the Directors of the Company and a copy of the proposed new articles of association of the
Company, together with a copy of the existing articles of association of the Company marked to show the changes being proposed will
be available for inspection at the registered office of the Company from the date of this notice until the end of the Meeting.
Notice of annual general meeting
continued
Appointment of Proxies Through Crest
10.
CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for
the Meeting and any adjournment(s) of it by using the procedures described in the CREST Manual (available from https://www.
euroclear.com/site/public/EUI). CREST Personal Members or other CREST sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take
the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST
message (a CREST Proxy Instruction) must be properly authenticated in accordance with Euroclear UK & International Limited’s (EUI)
specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must
be transmitted so as to be received by the issuer’s agent (ID: RA10) by 12:30 p.m. on 13 October 2023. For this purpose, the time of
receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from
which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that EUI does not make available
special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to
the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a
CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or
voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST
system by any particular time.
In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to
those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a
CREST Proxy Instruction in the circumstances set out in Regulation 35(5) (a) of the Uncertificated Securities Regulations 2001.
Appointment of Proxies Through Proxymity Voting
11.
If you are an institutional investor you may also be able to appoint a proxy electronically via the Proxymity platform, a process which has
been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io.
Your proxy must be lodged by 12.30pm on 13 October 2023 in order to be considered valid or, if the meeting is adjourned, by the time
which is 48 hours before the time of the adjourned meeting. Before you can appoint a proxy via this process you will need to have agreed
to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will
govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity platform may be revoked completely
by sending an authenticated message via the platform instructing the removal of your proxy vote.
Appointment of Proxy by Joint Members
12.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted
by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the
Company’s register of members in respect of the joint holding, the first-named being the most senior.
Changing Proxy Instructions
13.
To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off
times for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment
received after the relevant cut-off time will be disregarded. Where you have appointed a proxy using the hard-copy proxy form
and would like to change the instructions using another hard-copy proxy form, please contact Link Asset Services as per the
communication methods shown in note 8. If you submit more than one valid proxy appointment, the appointment received last before
the latest time for the receipt of proxies will take precedence.
Termination of Proxy Appointments
14.
In order to revoke a proxy instruction you will need to inform the Company by sending a signed hard copy notice clearly stating your
intention to revoke your proxy appointment to Link Asset Services, at the address shown in note 8. In the case of a member which
is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company
or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed, or a duly
certified copy of such power or authority, must be included with the revocation notice. The revocation notice must be received by
Link Asset Services no later than 48 hours before the Meeting. If you attempt to revoke your proxy appointment but the revocation is
received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid. Appointment
of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend the
Meeting in person, your proxy appointment will automatically be terminated.
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The Directors have no present intention of purchasing Ordinary Shares in the market. The authority given under this resolution will lapse,
unless renewed, at the conclusion of the next Annual General Meeting of the Company or on the date which is 15 months after the relevant
resolution being passed (whichever is the earlier).
Resolution 14 – Dividend rectification
The Directors have become aware of certain procedural issues in relation to the declaration and payment of six historical dividend
payments, further details of which are set out in the text of the resolution.
In brief, the Act sets out certain requirements which must be satisfied in order for a company to declare and pay dividends (interim
or otherwise). In respect of certain dividends previously paid by the Company it has become apparent that, in contravention of the
requirements of the Act, the Company did not properly prepare and file interim accounts to justify the relevant dividends at Companies
House before declaring those dividends.
The consequence of those dividends being paid otherwise than in accordance with the Act is that the Company may have a claim against all
shareholders who received those dividends as well as a claim against all Directors (former or present) who approved the declaration and
payment of those dividends. It is therefore proposed that the Company enter into the Shareholders’ Deed of Release and the Directors’ Deed
of Release (as those terms are defined in the Annex to this Notice). The consequence of the entry into those deeds by the Company is that the
Company will be unable to make any claims against: (a) the Recipient Shareholders; and (b) the Relevant Directors, in each case in respect of
the payment of the Relevant Dividends otherwise than in accordance with the Act. However, it should be made clear that the Company’s clear
intention is that no party should be put in a worse position as a result of these procedural breaches. The breaches were technical in nature and
in substance the Company could afford to pay the unlawful dividends. The Directors consider it appropriate that no claims should be made and
are trying to provide legal effect to the commercial transaction intended at the time the unlawful dividends were paid.
As such, the purpose of resolution 14 is to:
(i)
authorise the Company to appropriate distributable profits equal to the amount of the dividends paid otherwise than in accordance
with the Act; and
(ii)
authorise the Company to enter into deeds of release having the effect of releasing all relevant shareholders and directors from any
liability that may exist in respect of those dividends, including any breach of fiduciary duties.
Further details of the background to and impact of resolution 14 are set out in the Annex to this Notice.
Resolution 15 – Reduction of capital
The Company is seeking to eliminate the share premium account of £11,912,728.70 and the other reserve account of £17,188,681.71 which
will be credited to a distributable equity reserve for future distributions.
The proposed reduction of the share premium account and other reserve account will not involve any distribution or repayment to
Shareholders. The principal effect will be to enable the Company to be put in a position where it has sufficient headroom to lawfully pay
dividends out of distributable profits. The Directors will determine the question of future distributions to Shareholders in accordance with
the best interests of the Company.
The reduction of capital will not change the number of Ordinary Shares in issue or the rights attaching to those shares. The Ordinary Shares
will continue to be traded on AIM. Additionally, the reduction of capital will not affect the future trading prospects of the Company and its
net assets will not be reduced as a consequence of the Reduction of Capital.
Notice of annual general meeting
continued
EXPLANATORY NOTES ON CERTAIN BUSINESS OF THE ANNUAL GENERAL MEETING
Resolution 9 – Directors’ power to allot relevant securities
Under section 551 of the Act, relevant securities may only be issued with the consent of the shareholders, unless the shareholders pass a
resolution generally authorising the Directors to issue shares without further reference to the shareholders. This resolution authorises the
general issue of shares up to an aggregate nominal value of £4,289,099, which is equal to 33% of the nominal value of the current ordinary
share capital of the Company. Unless previously revoked or varied, the authority will expire on the conclusion of the next Annual General
Meeting of the Company or on the date which is 15 months after the resolution being passed (whichever is the earlier).
Resolution 10 – Adoption of new articles of association
The Directors are proposing that the Company adopts new articles of association to allow the Company to hold general meetings (including
Annual General Meetings) as a physical meeting and/or (as the Directors determine) as an electronic meeting (that is, by means of some
form of electronic platform). The Directors consider it prudent to obtain the flexibility to hold meetings in such a way.
Resolutions 11 and 12 – Disapplication of pre-emption rights on equity issues for cash
Section 561 of the Act requires that a company issuing shares for cash must first offer them to existing shareholders following a statutory
procedure which, in the case of a rights issue, may prove to be both costly and cumbersome. These resolutions exclude that statutory
procedure as far as rights issues are concerned. These special resolutions are drawn up in accordance with the Pre-Emption Group’s
Statement of Principles, and enable the Directors to allot shares up to:
(a) an aggregate nominal value of £1,299,727, which is equal to 10% of the nominal value of the current ordinary share capital of the
Company, which could be used for any purpose (together with an additional aggregate nominal value of £259,945, which is equal to
2% of the nominal value of the current ordinary share capital of the Company, which could only be used for making a follow-on offer
to retail investors or existing investors not allocated shares in the offer); and
(b) an additional aggregate nominal value of £1,299,727, which is equal to 10% of the nominal value of the current ordinary share capital
of the Company, which could only be used for an acquisition or specified capital investment (together with an additional aggregate
nominal value of £259,945, which is equal to 2% of the nominal value of the current ordinary share capital of the Company, which
could only be used for making a follow-on offer to retail investors or existing investors not allocated shares in the offer),
subject in each case to resolution 9 being passed. The Directors believe that the limited powers provided by these resolutions will maintain
a desirable degree of flexibility. Unless previously revoked or varied, the disapplications will expire on the conclusion of the next Annual
General Meeting of the Company or on the date which is 15 months after the relevant resolution being passed (whichever is the earlier).
Resolution 13 – Company’s authority to purchase Ordinary Shares
In certain circumstances it may be advantageous for the Company to purchase its own shares and this resolution seeks the authority
from shareholders to do so. This is the first time that the Company has sought authority to make market purchases up to an aggregate of
12,997,269 Ordinary Shares, representing approximately 10% of the Company’s issued ordinary share capital as at 22 September 2023,
being the latest practicable date prior to the publication of this notice.
Granting authority for the Company to purchase Ordinary Shares in the market is intended to allow the Directors to take advantage
of opportunities that may arise to increase shareholder value. The Directors will exercise this power only when, in the light of market
conditions prevailing at the time, they believe that the effect of such purchases will be to increase earnings per share and will be likely to
promote the success of the Company for the benefit of its members as a whole. Other investment opportunities, appropriate gearing levels
and the overall position of the Company will be taken into account when exercising this authority. The price paid for shares will not be less
than the nominal value of £0.10 per share nor more than 5% above the average of the middle market quotation of the Company’s Ordinary
Shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the
shares are purchased.
The Company may hold in treasury any of its own shares that it purchases pursuant to the Act and the authority conferred by this
resolution. This gives the Company the ability to reissue treasury shares quickly and cost-effectively and provides the Company with greater
flexibility in the management of its capital base. It also gives the Company the opportunity to satisfy employee share scheme awards with
treasury shares. Once held in treasury, the Company is not entitled to exercise any rights, including the right to attend and vote at meetings
in respect of shares. Further, no dividend or other distribution of the Company’s assets may be made to the Company in respect of the
treasury shares.
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Notice of annual general meeting
continued
ANNEX
Rectification of Relevant Dividends
1. Background to and reasons for resolution 14
1.1
The Act requires that a public limited company must satisfy certain criteria in order to be able to declare and pay a dividend. Not
only must a public limited company have distributable profits but the Act also provides that a public limited company may only
pay a dividend:
1.1.1 if, at the time of the dividend, the amount of its net assets are not less than the aggregate of its called-up share capital and
undistributable reserves; and
1.1.2 if, and to the extent that, the dividend does not reduce the amount of those net assets to less than the aggregate amount of
its called-up share capital and undistributable reserves.
1.2
1.3
1.4
Before paying the Relevant Dividends (as defined below), the Company should have ensured that it had the requisite level of
distributable profits and net assets. In order to make this determination, the Company was required to prepare and refer to
“relevant accounts” (as defined by the Act).
If the annual accounts of a company showed sufficient distributable profits to declare a dividend, then those accounts will
constitute “relevant accounts” for the purposes of the Act. Where they do not, a company may prepare “interim accounts” (as
defined in the Act) which show the requisite level of distributable profits and net assets provided that those interim accounts are
filed at Companies House before the declaration and payment of an interim dividend.
Upon further review in conjunction with the audit of the Company for the financial year ending 30 April 2023, it has come to the
board’s attention that, in relation to the Relevant Dividends, the technical requirements of the Act as regards the preparing and filing
of relevant accounts had not been satisfied (albeit the Company would have been in a position to comply with those requirements),
which resulted in the Relevant Dividends being paid otherwise than in accordance with the requirements of the Act.
1.5
The total amount of the unlawful element of the Relevant Dividends declared and paid is £7,127,330.72. The Relevant Dividends
were paid in accordance with the Company’s dividend policy and established practice.
2. The consequences of the Relevant Dividends having been made otherwise than in accordance with the Act
2.1
2.2
2.3
Given that the Relevant Dividends have been declared and paid otherwise than in accordance with the Act, the Company may
have claims against past and present shareholders who were recipients of the Relevant Dividends (the Recipient Shareholders)
and against persons who were directors of the Company at the time of the declaration and payment of the Relevant Dividends
(being Nigel Terrence Payne, Joanne Carolyn Lake, Suzanne Frances Allison Thompson, Roderick Richard Waldie, Michael James
Ward, Neil Andrew Smith, Victoria Louise Garrad and Peter Gareth Davies, together the Relevant Directors).
If resolution 14 is not passed, the Company would, in theory, retain the ability to bring these potential claims against both the
Recipient Shareholders and the Relevant Directors.
The Company has no intention of bringing such claims, and the board’s intention is to instead put all potentially affected parties
in the position, so far as is possible, in which they were always intended to be had the Relevant Dividends been declared and paid
in accordance with the requirements of the Act.
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3. The Relevant Dividends
3.1
The issues discovered and referred to at paragraphs 1 and 2 above affect the unlawful element of the following dividends (the
Relevant Dividends) paid by the Company and result in each of the Relevant Dividends being made otherwise in accordance
with the Act:
Date of dividend payment
16 March 2018 interim dividend
15 March 2019 interim dividend
8 October 2021 final dividend
31 March 2022 interim dividend
21 October 2022 final dividend
31 March 2023 interim dividend
Total aggregate value
Amount per ordinary
share
Total aggregate amount of
dividend paid
Total unlawful element of
dividend paid
2.2p
2.6p
5.0p
3.0p
5.5p
3.3p
–
£2,351,024.57
£2,853,261.84
£5,907,839.15
£3,582,071.34
£6,834,993.06
£4,169,312.76
–
£450,100.00
£1,532,609.17
£1,087,741.27
£2,875,579.72
£915,742.78
£265,557.79
£7,127,330.72
3.2
The issues set out above only affect the Relevant Dividends and do not affect any other dividends declared or paid by the Company.
4.
Proposed remedial action
4.1
In order to remedy the potential consequences of the Relevant Dividends having been declared and paid otherwise than in
accordance with the Act and to put all potentially affected parties in the position, so far as possible, in which they were always
intended to be had the Relevant Dividends been made in accordance with the Act, the Company is proposing resolution 14, the
full text of which is set out in the Notice.
4.2
If passed, the effect of resolution 14, will be to:
4.2.1 authorise the appropriation of, in aggregate, an amount not exceeding £7,127,330.72 of the distributable profits of the
Company to the payment of the Relevant Dividends;
4.2.2 waive any and all claims which the Company has, or may have, in respect of the payment of the Relevant Dividends against
its shareholders and former shareholders who appeared on the register of members on the relevant record date of each
respective Relevant Dividend (or the personal representatives and their successors in title of the estate of any deceased
shareholders or former shareholders), such waiver to be effected by way of the Company entering into a deed of release in
favour of those Recipient Shareholders (the Shareholders’ Deed of Release); and
4.2.3 waive any and all claims which the Company may have against all Directors (present or former) of the Company at the
time of the declaration and/or payment of each respective Relevant Dividend and the personal representatives (and their
successors in title) of the estate of any deceased Directors, such waiver to be effected by way of the Company entering into
a deed of release in favour of those Relevant Directors (the Directors’ Deed of Release).
The Company has been advised that the approach the Company is proposing way of resolution 14 is consistent with the approach
taken by other UK incorporated publicly quoted companies who have declared and paid dividends otherwise than in compliance
with the Act.
Resolution 14, the full text of which is set out in the Notice of AGM, is proposed as a special resolution and, if passed, will, in
conjunction with the relevant deeds of release, put all potentially affected parties in the position, so far as possible, in which they
were always intended to be had the Relevant Dividends been made in compliance with all of the procedural requirements of the Act.
4.3
4.4
5. The authorisation of the appropriation of the Company’s distributable profits and the Shareholders’ Deed of Release
5.1
The Company proposes to seek authorisation to appropriate an aggregate sum of £7,127,330.72 of the distributable profits
of the Company (being a sum equal to the aggregate of the unlawful elements of the Relevant Dividends paid to the Recipient
Shareholders) to the payment of those dividends. As a matter of common law, it is necessary for the appropriation of
distributable profits to be approved by shareholders.
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5.2
5.3
5.4
5.5
The proposed authorisation of the appropriation of the Company’s distributable profits to the payment of the Relevant Dividends
and by the Company entering into the Shareholders’ Deed of Release, will not have any effect on the Company’s financial position.
This is because the aggregate amount of the unlawful element of the Relevant Dividends is equal to, and offset by, the release
of each Recipient Shareholder from their liability to repay the amount already paid to them in respect of the unlawful element
of their respective Relevant Dividends, and the Company will not be required to make any further payments to shareholders in
respect of the Relevant Dividends.
The Company has not recorded or disclosed the potential right to make claims against the Recipient Shareholders as an asset or
contingent asset in its financial statements. Under the Company’s International Financial Reporting Standards (IFRS) accounting
policies, it could only record such a right as an asset when an inflow of economic benefit in favour of the Company as a result of
such claim or claims being brought was virtually certain, and the board notes that the Company has no intention of bringing such
a claim principally as it would not be appropriate to do so and also as the likelihood of any such claim being successful is very
low. The value of any economic benefit which the Company may derive from bringing claims against the Recipient Shareholders
is uncertain (and, in any case, incapable of estimation with any certainty) on the basis that it may be possible for the Recipient
Shareholders to establish defences to any such claims and there can be no certainty as to the amounts which could be recovered
by the Company (if any).
In addition, under IFRS, a contingent asset is required to be disclosed only when an inflow of economic benefit in favour of the
Company is probable. The board has concluded that any inflow of economic benefit as a result of such claims is less than probable.
Accordingly, the Company’s entry into the Shareholders’ Deed of Release will not itself result in any decrease in the Company’s
net assets or level of its distributable reserves.
6. Directors’ Deed of Release
6.1
6.2
The entry by the Company into the Directors’ Deed of Release will not have any impact on the Company’s financial position as
the Company has not recorded or disclosed its right to potentially make claims against the Relevant Directors in respect of the
Relevant Dividends as an asset or contingent asset of the Company.
As set out in paragraph 5.3 above, under the Company’s IFRS accounting policies, it could only record such right as an asset or
contingent asset when an inflow of economic benefit in favour of the Company as a result of such claim or claims being brought
was virtually certain and the board notes that the Company has no intention of bringing such a claim, primarily as it would not
be appropriate to do so and also as the likelihood of such claim being successful is very low. The value of any economic benefit
which the Company may derive from bringing claims against the Relevant Directors is uncertain (and, in any case, incapable of
estimation with any certainty) on the basis that the Relevant Directors would be entitled to seek the court’s relief against such
claims and there can be no certainty as to the amounts (if any) which could be recovered by the Company (if any).
6.3
The Company’s entry into the Directors’ Deed of Release does not involve the disposition of any recognised asset or contingent
asset in favour of the Relevant Directors.
7. Tax position of UK Shareholders
7.1
It is the Company’s expectation that the tax position of UK shareholders should not be impacted by any procedural irregularity in
relation to the Relevant Dividends. Therefore, the Company does not expect the passing of resolution 14 to have an effect on the
UK tax position of such persons.
7.2
If any UK tax resident shareholder has any doubts about their tax position, they should consult with an independent professional adviser.
8. Tax position of non-UK Shareholders
8.1
It is also the Company’s expectation that the tax position of non-UK shareholders should not be impacted by any procedural
irregularity in relation to the Relevant Dividends. Therefore, the Company does not expect the passing of resolution 14 to have an
effect on the non-UK tax position of such persons.
8.2
If any non-UK tax resident shareholder has any doubts about their tax position, they should consult with an independent
professional adviser.
Registrars
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Financial PR adviser
Belvedere Communications
25 Finsbury Circus
London
EC2M 7EE
Website
www.gateleyplc.com
Registration number
09310078
Registered office
One Eleven Edmund Street
Birmingham
B3 2HJ
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer and
Company Secretary
Executive Director
Non-Executive Chairman
Non-Executive Director
Directors
RR Waldie
V L Garrad
NA Smith
MJ Ward
NT Payne
JC Lake
Auditor
MHA
Rutland House
148 Edmund Street
Birmingham
B3 2FD
Nominated advisor and broker
Liberum
5 Ropemaker Street
London
EC2Y 9LY
Principal bankers
HSBC Bank Plc
6th Floor 120 Edmund Street
Birmingham
B3 2QZ
Lloyds Bank Plc
125 Colmore Row
Birmingham
West Midlands
B3 3SF
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