Annual Report
for the year ended 30 April 2024
Fuelling growth through
continuing investment
Gateley (Holdings) Plc / Annual report and financial statements 2024
Gateley (Holdings) Plc Annual report and financial statements
C
Gateley (Holdings) Plc Annual report and financial statements
1
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.”
Nigel Payne,
Gateley Chairman
“
How 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 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.
1
Why we do what we do
Our purpose is to deliver
results that delight our clients,
inspire our people and support
our communities.
Forward thinking
Straight talking
Contents
Business overview
Highlights for the year
3
At a glance
5
Our story
6
Business overview
8
Continued investment in our Platform strategy
10
Investment in our people
16
Investment for growth
18
Responsible Gateley
19
Strategic report
Chairman’s statement
26
Chief Executive Officer’s review
28
Chief Financial Officer’s review
34
Principal activity, objectives, strategy and outlook
40
Principal risks and uncertainties
44
Section 172(1) statement
48
Task Force on Climate Related Financial Disclosures
49
Environmental actions statement
54
Social matters
56
Corporate governance
Board of Directors
60
Report on remuneration: voluntary disclosure
62
Directors’ report
69
Our financials
Independent auditors’ report to the members of
Gateley (Holdings) plc
74
Consolidated statement of profit and loss and other
comprehensive income
82
Consolidated statement of financial position
83
Consolidated statement of changes in equity
85
Consolidated cash flow statement
87
Notes to the consolidated financial statements
88
Parent company statement of financial position
124
Parent company statement of changes in equity
125
Parent company cash flow statement
126
Parent company notes to the financial statements
127
Notice of annual general meeting
139
Company information
147
Highlights for the year
I am pleased with our FY24 outturn given our cautious
view of market conditions during the Period, particularly
around the turn of the calendar year in H2. Our people
have worked hard to deliver another year of growth via our
increasingly diverse and resilient business model, combining
complementary legal and consultancy services.
During the Period we continued to make organic and
acquisitive investments in both our legal and consultancy
services and in related systems. RJA Consultants was
acquired onto our Property Platform in July 2023, adding
further expertise and capacity to our quantity surveying
and project management offering. It is already performing
ahead of the board's expectation.
Our legal services class actions team, established in May
2023, launched its first case in late February 2024. Our
investment in this team is a high-profile example of the
type of investment that we are looking to make to enhance
our returns over the medium to longer-term. Our M&A
and lateral hire pipeline remains encouraging and we are
committed to further enhancing each of our Platforms as
suitable opportunities arise, aided by our net cash position
and ample headroom in our banking facilities.
Looking forward, we are encouraged by strengthening
transactional activity levels, which began in Q4 FY24. Our
immediate outlook is best characterised as cautiously
optimistic. Our resilient and financially robust foundation,
allied to our unbroken track-record of growth, underpins our
confidence to continue our long-term strategy of investment
in people and systems. This strategy has worked well for us
since IPO in 2015 and through disciplined application of it,
we ensure that the Group remains well-positioned for further
growth and enhanced returns for all stakeholders."
Rod Waldie, Chief Executive Officer of Gateley, said:
“
Fuelling growth
through continuing investment
The Group delivered a good financial performance in FY24, increasing revenue by 6.0% to £172.5m, extending Gateley's unbroken record of
revenue growth since IPO in 2015. The board continued to invest for growth in line with its stated strategy and was pleased to deliver underlying
profit before tax of £23.0m (FY23: £25.1m) after reinstating the payment of employee bonuses this year of £4.5m (FY23: £nil),
in recognition of our people's contribution to a resilient outturn and our more positive outlook as we move into FY25.
The balance sheet remains strong, maintaining a net cash position. The Group has significant headroom in its banking facilities to enable further
investment in organic and acquisitive opportunities.
Underlying
FY24
FY23
Change
Group revenue
£172.5m
£162.7m
6.0%
Group underlying operating profit1
£20.3m
£25.0m
(18.9)%
Group underlying profit before tax1
£23.0m
£25.1m
(8.1)%
Underlying adjusted fully diluted EPS2
14.20p
16.28p
(12.8)%
Dividend per share
9.5p
9.5p
-%
Net assets
£80.3m
£78.1m
2.8%
Net cash3
£3.8m
£4.3m
(11.6)%
Reported
FY24
FY23
Change
Group profit before tax
£14.0m
£16.2m
(13.9)%
Group profit after tax
£10.1m
£12.2m
(17.7)%
Basic earnings per share ('BEPS')
7.74p
9.77p
(20.8)%
1 Underlying operating profit and underlying profit
before tax excludes remuneration for post-
combination services, gain on bargain purchase,
share-based payment charges, acquisition related
amortisation and exceptional items
2 Adjusted fully diluted EPS excludes remuneration
for post-combination services, gain on bargain
purchase, share-based payment charges, acquisition
related amortisation and exceptional items. It also
adjusts for the future weighted average number
of expected unissued shares from granted but
unexercised share options in issue based on a share
price at the end of the financial year
3 Net cash excludes IFRS 16 liabilities
We present below our financial performance for the Period both on an underlying and statutory basis.
Diversified business model yielding organic
revenue growth of 2.8%, comprising 0.8%
in Legal and 9.1% in Consultancy services
Consultancy revenues now 28.9% of the
Group (FY23: 25.7%)
Steadily improving activity throughout Q4
(and ongoing) resulted in utilisation of
83% for the Period, just below the Group's
operational target of 85%.
Operating profit margin, on a pre-bonus
basis, decreased 1.0% to 14.4% (FY23:
15.4%), reflecting salary and other
cost inflation and ongoing organic and
acquisitive investment
Underlying operating profit margin
of 11.7% (FY23: 15.4%) reflects the
reinstatement of Group staff bonuses
Net assets increased by 2.8% to £80.3m
(FY23: £78.1m), including net cash of
£3.8m (FY23: £4.3m)
Proposed final dividend of 6.2p (FY23:
6.2p), taking total dividends for the Period
to 9.5p per share (FY23: 9.5p)
Average headcount at 30 April 2024
increased by 6.7% to 1,536 (FY23:
1,439), including an increase in fee
earning professional staff of 6.8% from
1,000 to 1,068
Fuelling growth through investment
in diversification and strategic hires,
including:
• Continued execution of M&A strategy
with the July 2023 acquisition of Richard
Julian and Associates Limited ("RJA")
• Strategic hiring onto the Business
Services Platform to seed legal
services class actions and international
arbitration businesses and to create an
intellectual property commercialisation
and valuation offering in our patent and
trademark attorney businesses
Non-dilutive recirculation of internal
share ownership facilitated in April 2024
with the Group's Employee Benefit Trust
purchasing shares to fulfil anticipated FY25
restricted share scheme awards
The Group continues to perform well
against its strategy set out at IPO, being
to generate growth and resilience through
diversification, delivering strong returns
for our stakeholders
Ongoing investment for short-term
margin stability followed by long term
improvement
FY25 has started in line with the board's
expectations, with a good pipeline of work,
including steadily improving transactional
services activity
Financial highlights
Operational highlights
Current trading and outlook
Gateley (Holdings) Plc Annual report and financial statements
3
2
Business overview
Strategic report
Corporate governance
Our financials
Who are we?
People
Platform
part of Gateley
Corporate
Platform
Property
Platform
VINDEN
An unbroken track record of revenue and profit
growth through multiple economic cycles.
6% revenue growth in FY24 to £172.5m, with net
assets of £80.3m.
Attractive income stream with 70% of adjusted
post-tax profits earmarked for dividends.
Delivering results
1536 employees, of which over 1000 are fee earners.
159 internal promotions during FY24.
The only UK legal business to be ranked in the Glassdoor top
25 best companies for senior leadership.
70% of employees are share or option holders.
5 employee community groups to support diversity,
inclusion and belonging.
Investors in People accredited.
In 2023 our CEO was recognised in The Lawyer’s Hot 100 for
business leadership and setting the benchmark for listed law
firms.
Winner of the 2024 Birmingham Law Society ‘Equality,
Diversity and Inclusion’ award.
Inspiring our people
Rated 5 star/excellent on independent legal
review platform, Review Solicitors.
Winner of the ‘Legal/Professional Team of the
Year’ award at Property Week’s RESI Awards
2024.
Winner UK Law Firm of the Year 2023 Insider
Midlands Residential Property Awards and
shortlisted in the 2024 Insider North West
Residential Property Awards.
Listed in six areas in 2024 The Times Best Law
Firms.
Shortlisted as Corporate Law Firm of the Year at
the 2024 Dealmakers Awards in the Midlands.
Shortlisted for residential property and dispute
resolution in the 2023 Yorkshire Legal Awards.
Shortlisted as Regional Law Firm of the Year in
the 2023 Real Deals Private Equity Awards.
Recognised in 47 areas by Legal 500 2024 and 28
areas by Chambers & Partners 2024.
Delighting our clients
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.
A commitment to achieving net zero by 2040 and with a
carbon reduction plan to reduce emissions by 50% by 2030.
Sustainability Task Force reports progress to the Strategic
Board on a monthly basis identifying risks, opportunities and
progress made.
Strong sustainability governance framework with Strategic
Board accountability which ensures that climate-related risks
are managed in line with our Group-wide risk management
framework.
Taskforce on Climate Related Financial Disclosures (“TCFD”)
included within our FY24 Annual Report.
An active CSR programme through our Gateley Gives
committees in each office which fundraised over £100,000
last year.
Supporting our
communities
At a glance
Our purpose is to deliver results that delight our clients,
inspire our people and support our communities
Business Services
Platform
part of Gateley
£172.5m
2024
turnover
One of the things I think we all really value is when the
advice is tailored to us and Gateley manage to show a real
understanding of not just the business but also how we like to
operate. Ideagen is a fast-paced business where you need to be
readily adaptable to potential changes in business strategy
or the marketplace, and I think that Gateley being able to get
on board with that and deliver advice (particularly where
potential disputes are concerned) is really useful and allows
us to manage stakeholders internally in an effective way.”
VP Legal Operations, Ideagen
Gateley is a formidable legal and
advisory firm, evident from its wide
client base and extensive services. We
were particularly impressed by Gateley’s
steadfast commitment to ESG initiatives,
and DEI, showcasing the company’s
determination to make a positive impact.”
Judges at Property Week RESI Awards 2024
22
UK locations
1500
people
Over
5
Business overview
Strategic report
Corporate governance
Our financials
Gateley (Holdings) Plc Annual report and financial statements
4
Acquired Tozer
Gallagher which
now sits within
Gateley Vinden
Acquired Tweed
Law and The Vinden
Partnership (now
Gateley Vinden)
Acquired Persona
Associates
(now part of Gateley
Hamer) and t-three
Acquired GCL
Solicitors, Kiddy
& Partners and
International
Investment Services
(now Gateley Global)
Acquired Capitus
Ltd and Hamer
Associates forming
Gateley Capitus and
Gateley Hamer
We entered a new
chapter with a UK
law firm first, putting
aside the traditional
equity partnership
model to go Plc
Acquired Adamson
Jones, Symbiosis IP
and Smithers Purslow
forming Gateley
Smithers Purslow
Acquired RJA
Associates now
Gateley RJA
Established our class actions
practice, Austen Hays, and
launched our first claim in
February 2024.
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.
Our story
2016
2018
2024
2023
2022
2021
2020
2019
2015
Gateley (Holdings) Plc Annual report and financial statements
7
6
Business overview
Strategic report
Corporate governance
Our financials
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.
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.
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
Dealing with disputes that arise during everyday operations or change programmes, or
managing unexpected crisis scenarios, needs a decisive response. Our business services
experts help to address risks effectively, to assess the options, protect reputations and
ensure financial and team stability.
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. During the last year we established our legal services class actions practice,
Austen Hays who have since launched their first case.
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.
With corporate activity at the heart of our business, we advise private and public
companies, owner-managed businesses, and entrepreneurs at every stage of their corporate
lifecycle from start up to exit, dealing with all aspects of managing financial and governance
responsibilities along the way.
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.
How we operate
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.
Our investors
Delivering excellent returns and demonstrating that our shareholders’
investments are in safe hands.
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.
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.
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.
Business
overview
Gateley (Holdings) Plc Annual report and financial statements
9
8
Business overview
Strategic report
Corporate governance
Our financials
Since IPO we have funded a progressive investment strategy
to fuel our future growth. This year we have continued
to invest in people and systems to progress our strategy
of building a diverse and resilient professional services
business, delivered through each of our four Platforms of
Business Services, Corporate, People and Property.
Our ongoing M&A strategy saw us acquire RJA Consultants onto our Property Platform in July
2023 adding further expertise and capacity to our quantity surveying and project management
offering. It is already performing ahead of the board's expectations.
Our legal services class actions team, established as law firm, Austen Hays in May 2023,
launched its first case in late February 2024. Our investment in this team is a high-profile
example of the type of investment that we are looking to make to enhance our returns
over the medium to longer-term. We also invested in an international arbitration team by
making a couple of significant lateral hires from a Magic Circle firm, another example of
new specialist services, which are beginning to deliver complex long-term mandates.
Once again, our outturn for this year was underpinned by the range and quality of
legal and consultancy services offered through our Platforms. Our stated strategic
plan at IPO was to create resilience by diversifying our revenue streams. Nine
years and 14 acquisitions later, the diversity of services we can offer helped us
weather the impact of reduced transactional services activity throughout most
of the year, enabling us to maintain our unbroken record of year-on-year
revenue growth.
Our proposition remains unique; the ability to deliver complementary legal
and consultancy services to clients in our chosen markets. We continue to
appraise acquisition opportunities on each of our Platforms.
Continued investment in
our Platform strategy
Real Estate
16%
Housebuilding
26%
Construction
13%
Planning
3%
Disputes
2%
Consultancy
40%
Property
Employment
31%
Pensions
20%
Private Client
21%
Consultancy
28%
People
Banking
19%
Corporate
52%
Commercial
7%
Restructuring
16%
Tax
5%
Consultancy
2%
Corporate
Commercial Litigation
43%
Complex and International
Dispute Resolution
15%
Regulatory
8%
IPCT
8%
Consultancy
26%
Business
Services
FY24 Platform highlights - Platform Mix
Our stated strategic plan at
IPO was to create resilience by
diversifying our revenue streams.
Nine years and 14 acquisitions
later the diversity of services we
can offer has helped to maintain
our unbroken record of year-on-
year revenue growth.”“
Gateley (Holdings) Plc Annual report and financial statements
10
Business overview
Strategic report
Corporate governance
Our financials
11
Business Services
Platform
Richard Healey
Partner and Business Services Platform Head
Revenue on this Platform
grew by 14.0% to £24.9m,
underpinned by consistently
good activity throughout
the Period across the
Platform's legal services
dispute resolution teams,
allied to strong performance
from the Platform's patent
and trademark attorney
businesses.
In legal services, our regulatory and
business defence team had a record
year, which is reflective of clients' needs
for specialist advice in an increasingly
regulated environment across all sectors.
In addition, the dispute resolution teams
saw an increase in demand from both
UK and overseas clients. Projects from
overseas clients include a return of some
activity in Central Europe alongside new
mandates from clients in the Middle East
and Africa. These are representative
of new, strategically agile, steps to win
specialist work in new regions.
Buoyed by recent success in growing
dispute resolution services, we continue
to make strategic investment in
specialist service lines, predominantly in
competition litigation, class actions and
international arbitration where, in all
cases, we see huge opportunity.
Our recently recruited and highly
regarded senior experts in international
arbitration are winning new work
and forging strong credentials for us.
Alongside this, our recently formed
specialist class actions team has now
launched its first case.
In consultancy services, activity in our
growing patent and trademark attorney
business was strong throughout the
Period. Its outturn was enhanced by
the first full year contribution from
Symbiosis, specialising in the life sciences
industry and adding to Adamson Jones'
expertise in engineering, medical devices,
pharmaceuticals and biotechnology. Both
businesses are working well together
and with related legal services across
the Group and on shared opportunities.
We will continue to build critical mass in
these services where typical projects are
long-dated and our expertise is highly
valued by clients whose businesses are
founded upon ideas and inventions
that need to be protected to preserve
value. More UK and international client
opportunities exist here and will be
realised as we progress our strategy to
grow our business in this space.
In aggregate, consultancy revenue now
represents 26.0% (FY23: 22.9%) of
Business Services Platform revenue.
Corporate
Platform
Charles Glaskie
Partner and Corporate Platform Head
Our Corporate Platform
focuses on the corporate,
financial services and
restructuring markets
in both transaction and
business support services.
Currently, this Platform is dominated
by legal services, some of which
were challenged by lower volumes of
transactional activity during most of
FY24. As a result, the Platform's revenue
decreased by 4.4% to £37.1m. However, it
delivered a strong contribution margin.
It is likely that the Corporate Platform will
always be legal services dominated, with
the transactional teams on the Platform
drawing support, particular to each
transaction, from legal and consultancy
services on other Platforms.
Whilst constrained for most of FY24,
corporate transactional activity started to
return strongly in Q4, particularly with our
private equity clients and in wider M&A.
The corporate team generated a pipeline
in that period comprising an impressive
list of complex, high-value transactions
across a wide range of sectors, which
utilised additional legal and consultancy
services across the Group. Ultimately,
the team had another good year and
the corporate unit remains our biggest
internal referrer of business, with most,
if not all, other teams benefitting in some
way. The pipeline into FY25 is good.
This pattern is also reflected in our
banking team, which had a stronger
Q4 following a subdued period due to
reduced corporate transactions and bank
lending. There was some offset in the
form of an increase in loan covenant reset
and refinancing work, which enabled the
team to maintain revenue levels in Period
in line with FY23. This is an excellent
example of pro and counter-cyclical
revenue opportunities which exist in
almost all of our legal service lines.
Our restructuring and recovery teams
are a natural counterweight to traditional
transactional activity and following a
sustained period of quiet trading conditions
for some years now, revenue levels rose by
20.8% in FY24, as government pandemic
support for companies unwound and
inflationary pressures and interest rate
increases impacted UK businesses. Activity
remains strong in these teams. Mandates
have been generated both in-market and
internally, including working alongside
experts in Gateley Vinden and our legal
services construction unit in delivery of
market-leading services to insurers who
have bonded construction projects that
have become distressed.
In consultancy services, the team at
Gateley Global closed out a significant
contract providing services to help public
and private sector global clients realise
their international expansion plans, inward
and outward of the UK. In addition, the
team is a consistent cross-referrer of
revenue to other parts of the Group
as clients require mixed services to
implement expansion.
Legal (3.1)% / Consulting (49.4)%
£37.0m
(4.4)%
TOTAL REVENUE
Corporate
Legal 99%
Consulting 1%
Legal +9.5% / Consulting +29.3%
£24.9m
+14.0%
TOTAL REVENUE
Business Services
Legal 74%
Consulting 26%
Gateley (Holdings) Plc Annual report and financial statements
13
12
Business overview
Strategic report
Corporate governance
Our financials
People
Platform
Property
Platform
Our Property Platform
focuses on clients’ activities
in real estate development
and investment and in the
built environment in the
widest sense.
This remains our most diverse and mature
Platform and we maintain our view that
the range of expertise now housed on this
Platform puts us in a position to compete
with well-established, multi-disciplinary
property consultancies in the wider
market. Despite a very challenging back
drop for the property sector, revenue on
our Property Platform grew by 11.4% to
£91.0m during FY24 (FY23: £81.6m).
Whilst activity in the wider commercial
property market eased in FY23 (and
continued to be subdued throughout most
of FY24), we saw and continue to see an
increase in non-transactional advisory and
dispute resolution services. This includes
helping our wide range of residential
development clients navigate regulation
under the high-profile Building Safety Act
(post-Grenfell) and advising on related
remediation projects. This is long-dated,
specialist work in which we continue to
invest. Our construction team had a record
year and continues to be very busy. Our
real estate development team - a market
leader in the warehousing and logistics
sector had a slower start to the year before
returning strongly to growth. Elsewhere,
prevailing market conditions have resulted
in an increase in work helping or opposing
organisations seeking to exit commercially
onerous contracts.
In our market-leading house-builder
team, we continue to act for all of the
top developers, many of whom have
significantly reduced their panel of advisors
in favour of larger providers who cover
all bases, which describes Gateley both
geographically and in service lines, and this
should result in more work for the team.
Our clients need to continue to build and
sell and have other areas for which they
require our services. This includes shared
ownership framework agreements, bulk
sales to housing associations and build-
to-rent investors and housing-led urban
regeneration. We act for all of the leading
developers in this space and offer a unique
combination of legal and consultancy
services covering whole project life cycles.
In consultancy services, Gateley Smithers
Purslow ("GSP"), who deliver specialist
services to the property insurance complex
claims market, contributed revenue of
£17.6m (FY23: £13.7m), representing
annualised growth for that business of
28.5%. We also saw strong revenue growth
of 14.7% from Gateley Vinden's broad
range of specialist services.
Our acquisition of surveyors Richard
Julian and Associates Limited ("RJA")
in July 2023 extends our reach to
organisations that deliver affordable
housing, a resilient sector underpinned by
high levels of grant to support delivery of
the Government's housing targets. The
team also has specialists in major loss
property claims, which enhances related
expertise in both GSP and Gateley Vinden.
RJA has had an excellent start in Group,
exceeding expectation.
FY24 consultancy revenue represented
40.5% (FY23: 38.1%) of Property
Platform revenue.
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.
Revenue on this Platform contracted
by 4.3% due, in part, to a reduction
in headcount and reorganisation of
our legal services private client team
and a drop-off in required support
to transactional teams from our legal
services employment team.
We saw strong off-set to the above from
our legal services pension team and our
pension trustee business Entrust which,
together, grew revenue by 30.7%.
These relatively predictable revenue
streams are a further example of
deliberately designed resilience in our
model. This is a sector where we are
keen to make further investment to
service the increase in the number of
pension schemes looking to complete
all liability buy-outs, and/or out-source
management of their pension schemes,
working with Entrust.
t-three and Kiddy & Partners, our
talent assessment, development and
cultural change businesses, continue to
attract significantly sized clients buying
dual services, with particular focus on
scalable products to high growth clients.
They were pleased to maintain revenue
at £6.0m (FY23: £6.2m) alongside a
strong pipeline as organisations continue
to develop their people and/or transform
in some way.
In aggregate, consultancy revenue now
represents 30.8% of People Platform
revenue.
Andrew Macmillan
Partner and People Platform Head
Callum Nuttall
Partner and Property Platform Head
Legal +2.4% / Consulting +13.4%
£91.0m
+11.4%
TOTAL REVENUE
Property
Legal 60%
Consulting 40%
Legal (5.2)% / Consulting (2.2)%
£19.6m
(4.3)%
TOTAL REVENUE
People
Legal 69%
Consulting 31%
Gateley (Holdings) Plc Annual report and financial statements
15
14
Business overview
Strategic report
Corporate governance
Our financials
A culture and working environment to be proud of
Creating a sense of belonging and a culture where everyone can
be themselves has always been part of our purpose and how we
inspire our people. Our five internal community groups, Pride;
Ability; Inspire; Thrive and Unity are an example of how we achieve
this. These internal communities ensure we have a place of debate
where our people can learn from each other, educate one another
and celebrate differences.
Winners of the 2024 Birmingham Law Society ‘Equality, Diversity
and Inclusion’ award, we appreciate and support the contribution
that people from diverse backgrounds bring to our organisation
and we are proud that Glassdoor recognised us as the only UK
legal business to be ranked in the top 25 best companies for senior
leadership.
We are also proud to have placed in the top 100 employers
nationally in this year’s Stonewall Workplace Equality Index. The
index shows our progress in the legal table as we climb 50 places
compared to last year. As a top 100 employer we join several top
legal, construction, health, finance and education organisations
who have been praised for creating a welcoming workplace where
LGBTQ+ employees can bring their full selves to work.
Every October we recognise people from across the business who
have been nominated by their colleagues for our annual Gateley
Team Spirit Awards. A number of finalists are selected by a judging
panel to attend the annual award ceremony, hosted by our CEO
and winners are presented with their trophies and a prize as
acknowledgment of their achievements under our Gateley Team
Spirit values. These values are working together, being ambitious
for success, giving colleagues room to breathe, being forward
thinking and being trusted to do. We also recognise excellence in
leadership and colleagues who are delivering stellar results across
our four Platforms.
In addition, our landmark annual internal conferences are a key
component in arming our leadership and senior 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 theme was ‘Ambitious for Success: Gateley 2027’ where
we considered our growth ambitions and targets for the next three
years and how we are going to work together to realise those
ambitions.
Supporting career aspirations
The career paths at Gateley and the way we incentivise
our people as part of that are different to many traditional
professional services businesses and the broad range of career
opportunities we offer is attractive. We continue to evolve our
people strategies to drive a stimulating, purposeful and rewarding
environment in which our people can work towards achieving
their career aspirations. During the summer we announced a
total of 159 internal promotions for our fee earner and business
support teams and celebrated this right across the Group.
A transparent equity journey
Part of our strategy set out at IPO focuses on our ability to be
able to incentivise our people in a way that creates an attractive
alternative to the competing LLP model.
During FY24 we issued circa 3.4m shares to participants across
our various share schemes. All of this is in line with our strategy
of creating wider equity participation for more of our people.
Nine years post IPO, 70 per cent of our people are either share or
option holders.
We compete in a sector in which potential overall reward for
the best emerging and senior people is high but we operate a
model that enables us to reward our people with equity at an
earlier stage on the career path and to spread that reward more
widely than might be the case in a tightly held equity partnership
structure.
Our Restricted Share Award Plan is pointed at senior leaders in
the business (meaning partners and partner equivalents). The
plan gives recipients immediate economic interest in the awarded
shares, subject only to a five year retention and non-dealing
restriction. The plan has been well received both internally and
by lateral hires. We see huge value in it as an almost unique way
of attracting and retaining quality senior people. The plan makes
our internal equity journey powerfully different, transparent and
meaningful.
Investment
in our people
Our business continues its unbroken track record of growth because we
have determined, productive and adaptable people on our side. We do
not underestimate this and understand that it is one of the reasons we
have been well placed to meet the challenges of the macro business
environment of the last few years.
The investment we make in attracting, developing and motivating our
people remains a priority and is key to ensuring our culture evolves in
the right way and that we can continue to innovate and realise our
growth ambitions.
Recognising our people’s career aspirations with
159 promotions across the business.
17
Business overview
Strategic report
Corporate governance
Our financials
Gateley (Holdings) Plc Annual report and financial statements
16
Investment
for growth
Our investment in organic and
acquisitive growth this year has
been focused on supporting
capacity in services that have
proven resilience and seeding
or enhancing new specialist
services and those where we
have deep sector expertise.
Our investments are for long-term returns and are exampled
this year by our acquisition of RJA Consultants, giving us deeper
specialist reach into the UK property market and through our
investment in class actions and international arbitration.
AI is at the top of our agenda and is a priority area for capital allocation,
alongside investment in acquisitions and people. We are very aware that
investment in suitably developed product will positively enhance the delivery
of some of our services and realise efficiencies which help us improve our
profitability. We have a cross-disciplinary steering group reporting directly to
the board on product assessment, procurement and integration. Our investment
this year has included recruitment of a specialist in-house AI development team to
create bespoke applications for both service delivery and internal uses.
Our development program will provide applications for use on each of our client-facing
Platforms and for our business support functions. The first of our internally designed
applications has just been launched for use by the residential development team on our
Property Platform. It significantly improves turnaround of the process that it is designed for
and is verificatory of the value of the ongoing investment that we will continue to make in AI
driven product.
During the year we also acquired new systems to support the on-boarding of our class action
claims through the team we have established at Austen Hays. This is specialist, long-term, high
value work which requires a bespoke technology platform, in which we have invested £0.5m so far
for current and future benefit.
Our commitment to Responsible Business is not just a
part of our corporate strategy, it’s also a guiding principle
that influences every decision we make as a business.
We believe that business success and social progress go hand in hand and through our annual
Responsible Business Report we aim to transparently share our challenges, achievements and
ambitions and hope that by doing so we can continue to inspire change within and beyond our
organisation.
Looking ahead, we have established a new set of objectives that align with the United Nations
Sustainable Development Goals (UN SDGs), with the aim to further strengthen the assistance we offer to
our communities. By aligning with the UN SDGs, it provides a strategic framework to address sustainability
challenges and ensures we are contributing to a universal agenda.
Responsible
Gateley
Our commitment to being a Responsible Business
remains a key part of how we do business. Together with
our supportive colleagues, clients and stakeholders, we
continue our journey in making a positive impact that
resonates within and beyond our corporate walls.”
Rod Waldie, Chief Executive Officer, Gateley
Inspiring change within
and beyond Gateley
To find out more about the UN Sustainable Development goals visit:
https://www.un.org/sustainabledevelopment/
UN Sustainable Development Goals include:
Our latest report outlines a new
set of objectives for the current
year to help us to continue to
evolve and make good progress
towards our ESG goals. You can view
our latest report here or by visiting:
https://gateleyplc.com/about-us/ethos/a-
responsible-business/
Responsible Business
Report 2024
Inspiring
change
within and
beyond Gateley
Earlier this year our class actions business, Austen Hays filed its first claim in the High Court against Grindr in the UK.
Grindr is the world’s largest LGBTQ+ social networking and dating app and is accused of sharing its app users' sensitive
personal data between 2018 and 2020 potentially affecting thousands of UK Grindr app users.
Gateley (Holdings) Plc Annual report and financial statements
19
18
Business overview
Strategic report
Corporate governance
Our financials
23/24 review of set objectives
Evaluating the value and impact of our efforts is as crucial as the actions we take, as it helps us understand where we are
making a difference and how we can improve and progress over time.
Here’s a summary of our progress on the goals we set ourselves during this financial year:
Responsible Gateley
continued
Collaborating with educators, charities
and partner organisations
We collaborate with an incredibly diverse range of communities.
Organisations of all different sizes, in a variety of sectors, with distinct and shared challenges and ambitions. Over the
last year we have collaborated to share good practices and create opportunities to listen and learn from one another.
We believe that by working together towards a common goal we can continue to deliver great results.
Volunteering plays an important part of our purpose by supporting communities. Since introducing our volunteering
policy, which grants our people 15 hours annually to dedicate to good causes they care about, we’ve worked hard over
the past 12 months to embed this policy across the Group. All activities are recorded on our Social Impact Dashboard
(SID) so we can measure our impact and keep a track of progress made.
ability
Supporting employees with disabilities and
raising awareness around neurodiversity
inspire
Nurturing our talent and supporting
their careers
thrive
Taking care of the health and wellbeing
of all our employees
pride
Supporting our LGBTQ+ community,
raising awareness across our business and
collaborating with related external charities,
groups and networks
unity
Recognising, celebrating and supporting
people from different cultures, religions
and backgrounds
Delivering impactful change
We aim to deliver impactful change within the
community, fostering growth and creating a
holistic approach to health and happiness.
By collaborating with local organisations and adopting innovative
approaches, we have implemented initiatives that are both meaningful and
sustainable. Our achievements underscore our commitment to create
vibrant, supportive communities, where individuals can thrive and
achieve their full potential.
Secure a new partnership with an
environmental charity to support our
sustainability action plan which is focused
on taking positive climate action.
We have partnered with the Heart of England Forest as a Forest Founder, which sees us play
a crucial role in creating and preserving great native woodland.
Collaborate on community initiatives with
clients.
During the year we have collaborated with several of our clients on volunteering and D&I
activities. This includes engaging with our clients’ CSR teams as a knowledge sharing activity.
Increase employee engagement in
community activities, doubling the number of
recorded activities.
We have more than doubled the number of activities with good causes from 95 in 2022 to
192 in 2023.
Embed Alzheimer’s Research UK as our
new charity partner focusing on World
Alzheimer’s Month across the Group in
September.
We shined a light on World Alzheimer’s Month by fundraising more than £5,000 through
our ‘Wear it Orange’ campaign and raised awareness by challenging the stigma surrounding
Alzheimer’s and dementia. The campaign saw our people wear orange wristbands, badges
and clothing as well as undertaking a charity skydive and an all-orange charity trolley
providing refreshments and games.
Introduce the menopause café to take
forward our commitment to the Workplace
Menopause Pledge.
We launched a monthly menopause café to make sure anyone going through the
perimenopause and menopause is supported. We currently have 55 colleagues signed up to
take part in these sessions.
Launch a Responsible Business podcast.
The Purpose Pod was launched in September 2023. Each episode shares insight from the
forward thinkers we engage with as a business as we delve into what inspires them, how they
support communities across the UK and how our own social values bring them together to
improve society.
Partner with more schools through an
outreach programme aligned to our offices
to encourage more diversity of candidates
applying for roles in law in the future.
We partnered with more schools to support a range of students of various ages, locations
and educational/social needs. We encouraged our people to volunteer their time to take part
in initiatives such as mentoring, providing guidance or hosting workshops to empower young
people and make a lasting impact through the power of education.
Embed our volunteering policy throughout
the Group offering different types of
volunteering opportunities.
Over the last 12 months we have committed to embedding our volunteering policy across
the Group and have offered opportunities with charities and educational institutes that we
work with such as the Heart of England Forest, University Academy 92, Sedgehill Academy,
RunThrough, Alzheimer’s Research UK, Ahead Partnership and more.
Introduce a new fertility policy.
We launched a new fertility policy in line with National Fertility Awareness Week. The policy
aims to raise awareness of fertility treatment and its impact on the workplace, encourage
open conversations between line managers and team members and direct employees to
relevant advice and assistance including time off.
All offices to support in a giving appeal for a
local charity during December.
All offices took part in a giving appeal for a local charity during December which included toy
drives, food bank collections and fundraising activities.
Promote and support our internal community
groups in every office, encouraging local
initiatives.
Every office has appointed community group champions and have actively promoted local
initiatives to celebrate events such as Black History Month, Neurodiversity Celebration
Week, Pride Month, Mental Health Awareness Week and more.
Explore car share pilot schemes.
We have explored a car share pilot scheme by seeking feedback from office representatives
to understand the next steps should there be an appetite for such a scheme.
Explore carbon neutral certification for the
whole Group.
Our Sustainability Task Force has made a strategic shift away from carbon neutral
certification, opting instead to focus on calculating carbon emissions and developing
a comprehensive carbon reduction plan as this approach better aligns with our goal of
achieving net zero by 2040.
Review of energy usage with input from
Inspired Energy.
This is detailed in our ESOS report.
Participate in sustainability volunteering
opportunities as part of the volunteering
policy.
Our people have been involved in various volunteering opportunities such as gardening,
woodland maintenance and tree planting during the year.
Colleagues from our Nottingham and Birmingham offices took part
in the Copa Del Leukaemia football tournament at St George’s Park
in Burton.
Marking International Women’s Day.
Shining a light on World Alzheimer’s Month in September.
Throughout the month we fundraised over £5,000 through
our ‘Wear it Orange’ campaign.
Colleagues ready to join in this year’s Birmingham Pride parade.
21
Gateley (Holdings) Plc Annual report and financial statements
20
Business overview
Strategic report
Corporate governance
Our financials
Responsible Gateley
continued
In March 2024, we were proud to have been awarded the Equality,
Diversity & Inclusion award at the 2024 Birmingham Law Society
Awards, for demonstrating excellence in promoting EDI within our
business and the wider legal community.
An important part of our purpose as a business is
making sure we create a working environment that
is inclusive and promotes equality and diversity. We
have shown the transformative effect this can have on
a business, its people, clients and society as a whole
and I could not be prouder that our efforts have been
recognised with this accolade.”
Rebecca Sherwin, partner in our Real Estate team and head of our Birmingham
office
Winners at Birmingham
There were many deserving finalists but there was only one winner!
Gateley is a formidable legal and advisory business, evident from its
wide client base and extensive services. We were particularly impressed
by Gateley’s steadfast commitment to ESG initiatives, and DEI,
showcasing the company’s determination to make a positive impact.”
Our Property Platform
celebrated success earlier this
year after being awarded the
accolade of ‘Legal / Professional
Team of the Year’ at Property
Week’s RESI Awards 2024.
Beating off stiff competition in a
category which saw seven firms
shortlisted, the judges claimed:
Winners at Property
Inspiring and
celebrating our people
We are a people business. So, inspiring and
celebrating our people and others is an important
part of our Responsible Business ethos. We work hard
to create a diverse and inclusive environment where our
people can deliver their best work. This is underpinned by
our values which form part of our Gateley Team Spirit.
Our sustainability agenda
We have pledged to achieve Net Zero by 2040. To help us reach this
goal, we are working towards calculating our carbon footprint across
all aspects of our business including business travel, waste, energy
and our supply chain. This will assist to identify carbon hotspots
and to help us to continue to develop our Carbon Reduction Plan
and stay on track with our sustainability goals.
We have made several significant changes to support our
environmental agenda already such as moving our main offices
onto a green tariff, installing screens in common areas of our
offices to reduce printing and increasing the focus on hotels we
use as a business to ensure they have sustainability credentials.
We are also proud to partner with the Heart of England Forest as
our environmental charity. During the year we participated in four
volunteering days engaging in activities such as tree guard removal,
coppicing, bracken clearance and tree planting to help create and
manage the forest.
While we understand there is a lot more to be done and we are in the early stages
of our environmental journey, we are proud of the progress we have made so far and are
focused on building the momentum in this important area.
We are committed to minimising our environmental impact
and ensuring sustainable practices throughout our
operations
The Purpose
Pod
During the year we launched a
Responsible Business Podcast called
The Purpose Pod. Aligned to our
purpose, it looks at how we delight
our clients, inspire our people, and
support our communities.
Each episode shares insight from the forward thinkers we
engage with as a business as we delve into what inspires them,
how they support communities across the UK and how our
own social values bring them together to improve society.
Click here to listen to the Purpose Pod episodes
As we look back on this year, I am
truly inspired by our collective
efforts to drive positive change
both within and beyond Gateley.
It is clear to see that every step we
take in promoting Responsible
Business practices benefits
everyone within our business as
well as contributing to happier
and healthier communities.”
Andlyn White, Responsible Business Manager, Gateley
“
Gateley (Holdings) Plc Annual report and financial statements
23
22
Business overview
Strategic report
Corporate governance
Our financials
25
Strategic
report
In this section
Chairman’s statement
26
Chief Executive Officer’s review
28
Chief Financial Officer’s review
34
Principal activity, objectives, strategy and outlook
40
Principal risks and uncertainties
44
Section 172 (1) statement
48
Task Force on Climate Related Financial Disclosures
49
Environmental actions statement
54
Social matters
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 26 to 38, form an
integral part of the Strategic report.
Gateley (Holdings) Plc Annual report and financial statements
25
24
Business overview
Strategic report
Corporate governance
Our financials
Chairman’s
statement
The board firmly believes that the use of equity as an incentive
and means of extending share ownership through all levels of the
Group, is a material point of positive differentiation for Gateley
in an intensely competitive staffing environment. It is therefore
an important component for our future growth ambitions.
In particular, we have worked hard over the last 12 months
to enhance our restricted share award scheme, principally to
facilitate recirculation of internally held shares. This is our main
equity incentive scheme for senior leaders in the Group. Our
enhancements present an efficient means of maintaining significant
equity at senior levels in the Group whilst minimising external
market impacts. We believe this will help secure and enhance
Gateley’s position as an attractive and sought after employer.
Responsible Business
The board has made the further development of Gateley’s
Responsible Business commitment a key strategic priority this year.
In September 2023, we published our third annual Responsible
Business report, for which we again received significant positive
feedback. We were delighted to achieve all 15 of our internally set
responsible business targets and are focused on reducing our CO2
emissions by 50% by 2030 and to become net zero by 2040.
Our Responsible Business actions focus on the wellbeing of our
employees, on being a force for good in society and within the
communities in which we operate, and by playing our part in
protecting and repairing our planet. Measuring the value and the
impact we are having in all these areas is as important as acting
because it enables us to evaluate where we are effecting change
and how we can continue to improve over time.
We will publish our next Responsible Business Report covering
objectives and activity for FY24 shortly.
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
David Wilton was appointed to the board as a non-executive
director and Chairman designate on 1 February 2024. The board
and David subsequently agreed not to continue with David’s
appointment as Chairman and David has since stood down from
the board.
The nomination committee has begun a process to recruit a new
Chairman. In the meantime, I have been asked, and have agreed, to
continue to chair the Group until a successor is appointed.
Dividends
We have maintained dividend to investors, recognising this is a key
component of shareholder return. An interim dividend of 3.3p per
share (FY23: 3.3p) was paid on 21 March 2024 to shareholders
on the register at the close of business on 24 February 2024. The
board is pleased to propose a final dividend of 6.2p per share
(FY23: 6.2p), giving a total dividend for the year of 9.5p per share
(FY23: 9.5p), subject to approval at the forthcoming Annual
General Meeting, which will be held on 23 September 2024. If
approved, this final dividend will be paid in October to shareholders
on the register at the close of business on 11 October 2024. The
shares will go ex-dividend on 10 October 2024.
Summary and outlook
This year has been another strong one for Gateley. Our people
have excelled in client delivery, they have continued to overcome
every challenge presented to them, and have delivered further
strategic progress for the business, combining to generate an
excellent set of results.
As we focus on service line enhancing opportunities that meet our
clients’ needs and fulfil our strategy to build a broader professional
services group, our acquisition pipeline remains strong, trading
in the current year to date has been in line with the board’s
expectations and we look forward to the immediate future with
cautious optimism.
Nigel Payne
Chairman
15 July 2024
Group revenue increased by 6.0% to £172.5m (FY23:
£162.7m) and, we generated underlying profit before
tax of £23.0m (FY23: £25.1m) after reinstating the
payment of employee bonuses this year of £4.5m (FY23:
£nil). These results have been delivered against the
unwelcome backdrop of challenging trading conditions
for professional service firms allied to wage and cost
inflation. The Group has again demonstrated the strength
of its business model and the resilience created by its
diversification strategy.
In FY23 we made the difficult decision not to make a
provision for staff bonuses for that year. For a business
such as ours, where staff retention and incentivisation
are important considerations, this was not ideal. I am
therefore delighted that, this year, we have been able to
declare a bonus which reflects the contribution made
by our people to delivering a strong underlying trading
performance and our more positive outlook as we
enter FY25. In doing so, we are moving back towards a
more normalised staff bonus pool with clear intent that
this remains a key component in overall reward to our
employees whilst preserving a balanced return to all of
our stakeholders. I would like to take this opportunity, on
behalf of the board, to acknowledge and thank our staff
across all levels of the Group. They have shown great
adaptability to the constant changes throughout the past
few years and their dedication towards the business, their
colleagues and clients has been first class in what was a
challenging year.
We continue our strategy to diversify the business,
placing the Group in a stronger position to deliver further
profitable growth in the coming years. To support our
acquisition strategy, we retain a three-year revolving
credit facility of up to £30m. This, combined with our
strong balance sheet, places us in a good position to
acquire further businesses in the future.
As we continue to grow and strengthen our business,
the board remains committed to providing our people
with the opportunity to own shares in the Company.
We believe that employee share ownership secures a
strong alignment with the Group’s external shareholders,
incentivises employees and is reflective of Gateley’s long-
established culture. We are delighted that at least 70% of
current staff are existing share or option holders in the
Company.
Summary of the year
I am delighted to present
Gateley’s audited final results
for the year ended 30 April
2024, another successful year
for the business and our ninth
consecutive year of revenue
growth since IPO in 2015.
Nigel Payne
Chairman
Gateley (Holdings) Plc Annual report and financial statements
27
26
Business overview
Strategic report
Corporate governance
Our financials
Chief Executive
Officer’s review
Introduction
I am pleased with the Group’s
performance in FY24. Our teams
combined to maintain Gateley’s
unbroken record of year-on-year
revenue growth. As always, I am grateful
to our people for their hard work and
commitment to delivering the best
possible outcomes for our clients.
During the Period we continued to invest in people and systems
to progress our strategy of building a diverse and resilient
professional services business, delivered through each of our four
Platforms of Business Services, Corporate, People and Property.
This investment necessarily includes the need to match prevailing
remuneration in a market in which there has been high pay inflation
across professional services. Combined with the increase in our
average headcount to 1,536 during the Period (FY23:1,439),
this resulted in a 12.1% increase in personnel costs, including
a resumption of staff bonus awards (£4.5m). This reflects the
contribution made by our people in delivering a strong underlying
trading performance and our more positive outlook as we move
into FY25. In doing so, we are moving back towards a more
normalised staff bonus pool with clear intent that this remains
a key component in overall reward to our employees whilst
preserving a balanced return to all of our stakeholders. Excluding
this bonus provision, our personnel costs increased 7.4%.
Our ongoing M&A strategy saw us acquire RJA Consultants onto
our Property Platform in July 2023, contributing to growth in
non-legal revenue across the Group to £49.9m (FY23: £41.8m),
or 28.9% (FY23: 25.7%) of Group revenue. Our proposition
remains unique; the ability to deliver complementary legal and
consultancy services to clients in our chosen markets. We continue
to appraise acquisition opportunities on each of our Platforms.
Whilst investment costs to some extent impact short-term margin
as acquisition, integration and system costs are absorbed, we
are confident that, in progressing our strategy, we will generate
margin-enhancing returns in the long-term.
As reported in April, we were pleased to support our EBT in
purchasing 1,864,622 shares at £1.26, predominately from staff
who were Partners at IPO. Those shares are warehoused by the
EBT to, imminently, award to certain senior staff via our restricted
share award scheme. This is a deliberate step in our controlled,
non-dilutive recirculation of internally held shares.
Rod Waldie
Chief Executive Officer
“We remain positive as our
increasingly resilient model
continues to deliver for us and
gives us confidence to continue
our investment strategy for
enhanced returns.”
Rod Waldie, Chief Executive Officer“
Our restricted share award scheme will become our sole equity
incentive scheme for our senior leaders. We will continue to
make controlled use of it, in a more meaningful way, because it
is proving to be a valuable differentiator for us in attracting and
retaining quality senior talent who are aligned with creating long-
term value for the Group and its stakeholders.
On 15 September 2023, we published our third annual
Responsible Business Report. Having achieved all 15 responsible
business targets set in our prior report, our 2023/24 report, sets
15 new objectives in-line with our purpose-led agenda. We have a
clear recognition that business is a key engine for change and our
responsible business journey progresses with conviction. Our
FY24 Responsible Business Report will be published shortly.
Finally, we are pleased to propose a final dividend of 6.2p at the
Group’s AGM on 23 September 2024, taking the total dividend
for the Period to 9.5p (FY23: 9.5p).
Results overview
The Group performed well during FY24, building on the progress
reported at the half year and delivering growth in revenue of
6.0% to £172.5m (FY23: £162.7m). Underlying profit before tax
decreased by 8.1% to £23.0m (FY23: £25.1m), reflecting the
board’s decision, unlike last year, to make a provision of £4.5m
for employee bonuses. Profit before tax decreased by 13.9% to
£14.0m (FY23: £16.2m). Profit after tax decreased by 17.7% to
£10.0m (FY23: £12.2m).
As a people business, our profit metrics are necessarily
influenced by our personnel costs. Pay inflation across
professional services, of the type in the Group, has been a
continuous characteristic since the end of the pandemic.
Our response has been a considered and deliberate attempt
to balance the capital allocation needs of the Group with the
competitive employment market in which our businesses
operate. We take reasonable steps to match market pay rates as
we continue to invest more widely in people and systems in line
with our strategy to grow our currently unique business model.
Our firm belief is that it is continual investment which will deliver
and enhance our long-term objectives and returns.
Alongside the in-Period acquisition of RJA Consultants, strategic
investments in new work streams, such as legal services class
actions and international arbitration, are progressing well. We
have also invested in AI and other new technology products,
with ongoing capital allocation to maximise its use for margin
improvement. Alongside all of this, and more general cost inflation,
our FY24 results delivered another year of solid profitability.
Once again, our outturn for the Period was underpinned by
the range and quality of legal and consultancy services offered
through our Platforms. Our stated strategic plan at IPO was to
create resilience by diversifying our revenue streams. Nine years
and 14 acquisitions later the diversity of services we can offer
helped us weather the impact of reduced transactional services
activity throughout most of the Period, enabling us to maintain
our unbroken record of year-on-year revenue growth.
Looking forward, we are pleased to see a continuation of the
improvement we saw in transactional services activity in Q4
FY24. Layering that improvement onto our broader service line
activity, and strategic long-term investments made in the Period
positions us well for FY25 and beyond.
Platform performance
Business Services Platform
This Platform supports clients in dealing with their commercial
agreements, managing risks, protecting assets and resolving
disputes.
Revenue on this Platform grew by 14.0% to £24.9m,
underpinned by consistently good activity throughout the Period
across the Platform’s legal services dispute resolution teams,
allied to strong performance from the Platform’s patent and
trademark attorney businesses.
In legal services, our regulatory and business defence team had
a record year, which is reflective of clients’ needs for specialist
advice in an increasingly regulated environment across all
sectors. In addition, the dispute resolution teams saw an increase
in demand from both UK and overseas clients. Projects from
overseas clients include a return of some activity in Central
Europe alongside new mandates from clients in the Middle East
and Africa. These are representative of new, strategically agile,
steps to win specialist work in new regions.
Buoyed by recent success in growing dispute resolution services,
we continue to make strategic investment in specialist service
lines, predominantly in competition litigation, class actions
and international arbitration where, in all cases, we see huge
opportunity. Our recently recruited and highly regarded senior
experts in international arbitration are winning new work and
forging strong credentials for us. Alongside this, our recently
formed specialist class action team has now launched its first case.
Gateley (Holdings) Plc Annual report and financial statements
29
Business overview
Strategic report
Corporate governance
Our financials
28
Chief Executive Officer’s review
continued
In consultancy services, activity in our growing patent and
trademark attorney business was strong throughout the Period.
Its outturn was enhanced by the first full year contribution from
Symbiosis, specialising in the life sciences industry and adding
to Adamson Jones’ expertise in engineering, medical devices,
pharmaceuticals and biotechnology. Both businesses are working
well together and with related legal services across the Group and
on shared opportunities. We will continue to build critical mass
in these services where typical projects are long-dated and our
expertise is highly valued by clients whose businesses are founded
upon ideas and inventions that need to be protected to preserve
value. More UK and international client opportunities exist here and
will be realised as we progress our strategy to grow our business in
this space.
In aggregate, consultancy revenue now represents 26.0% (FY23:
22.9%) of Business Services Platform revenue.
Corporate Platform
This Platform is focused on the corporate, financial services and
restructuring markets in both transaction and business support
services.
Currently, this Platform is dominated by legal services, some of which
were challenged by lower volumes of transactional activity during
most of FY24. As a result, the Platform’s revenue decreased by 4.4%
to £37.1m. However, it delivered a strong contribution margin.
It is likely that the Corporate Platform will always be legal services
dominated, with the transactional teams on the Platform drawing
support, particular to each transaction, from legal and consultancy
services on other Platforms.
Whilst constrained for most of FY24, corporate transactional
activity started to return strongly in Q4, particularly with our
private equity clients and in wider M&A. The corporate team
generated a pipeline in that period comprising an impressive list of
complex, high-value transactions across a wide range of sectors,
which utilised additional legal and consultancy services across
the Group. Ultimately, the team had another good year and the
corporate unit remains our biggest internal referrer of business,
with most, if not all, other teams benefitting in some way. The
pipeline into FY25 is good.
This pattern is also reflected in our banking team, which had a stronger
Q4 following a subdued period due to reduced corporate transactions
and bank lending. There was some offset in the form of an increase in
loan covenant reset and refinancing work, which enabled the team to
maintain revenue levels in Period in line with FY23. This is an excellent
example of pro and counter-cyclical revenue opportunities which exist
in almost all of our legal service lines.
Our restructuring and recovery teams are a natural counterweight
to traditional transactional activity and following a sustained period
of quiet trading conditions for some years now, revenue levels rose
by 20.8% in FY24, as government pandemic support for companies
unwound and inflationary pressures and interest rate increases
impacted UK businesses. Activity remains strong in these teams.
Mandates have been generated both in-market and internally,
including working alongside experts in Gateley Vinden and our legal
services construction unit in delivery of market-leading services to
insurers who have bonded construction projects that have become
distressed.
In consultancy services, the team at Gateley Global closed out a
significant contract providing services to help public and private
sector global clients realise their international expansion plans,
inward and outward of the UK. In addition, the team is a consistent
cross-referrer of revenue to other parts of the Group as clients
require mixed services to implement expansion.
People Platform
This Platform supports clients in dealing with and developing
people and in administering individuals’ personal affairs.
Revenue on this Platform contracted by 4.3% due, in part,
to a reduction in headcount and reorganisation of our legal
services private client team and a drop-off in required support to
transactional teams from our legal services employment team.
We saw strong offset to the above from our legal services pension
team and our pension trustee business Entrust which, together,
grew revenue by 30.7%. These relatively predictable revenue
streams are a further example of deliberately designed resilience
in our model. This is a sector where we are keen to make further
investment to service the increase in the number of pension
schemes looking to complete all liability buy-outs, and/or out-
source management of their pension schemes, working with
Entrust.
t-three and Kiddy & Partners, our talent assessment, development
and cultural change businesses, continue to attract significantly
sized clients buying dual services, with particular focus on scalable
products to high growth clients. They were pleased to maintain
revenue at £6.0m (FY23: £6.2m) alongside a strong pipeline as
organisations continue to develop their people and/or transform in
some way.
In aggregate, consultancy revenue now represents 30.8% of People
Platform revenue.
Property Platform
This Platform is focused on clients’ activities in real estate
development and investment and in the built environment in the
widest sense.
This remains our most diverse and mature Platform and we
maintain our view that the range of expertise now housed on this
Platform puts us in position to compete with well-established,
multi-disciplinary property consultancies in the wider market.
Despite a very challenging back drop for the property sector,
revenue on our Property Platform grew by 11.4% to £91.0m during
FY24 (FY23: £81.6m).
Whilst activity in the wider commercial property market eased in
FY23 (and continued to be subdued throughout most of FY24), we
saw and continue to see an increase in non-transactional advisory
and dispute resolution services. This includes helping our wide
range of residential development clients navigate regulation under
the high-profile Building Safety Act (post-Grenfell) and advising on
related remediation projects. This is long-dated, specialist work in
which we continue to invest. Our construction team had a record
year and continues to be very busy. Our real estate development
team – a market leader in the warehousing and logistics sector
had a slower start to the year before returning strongly to growth.
Elsewhere, prevailing market conditions have resulted in an
increase in work helping or opposing organisations seeking to exit
commercially onerous contracts.
In our market-leading house-builder team, we continue to act
for all of the top developers, many of whom have significantly
reduced their panel of advisors in favour of larger providers who
cover all bases, which describes Gateley both geographically and in
service lines, and this should result in more work for the team. Our
clients need to continue to build and sell and have other areas for
which they require our services. This includes shared ownership
framework agreements, bulk sales to housing associations and
build-to-rent investors and housing-led urban regeneration. We act
for all of the leading developers in this space and offer a unique
combination of legal and consultancy services covering whole
project life cycles.
In consultancy services, Gateley Smithers Purslow (“GSP”), who
deliver specialist services to the property insurance complex
claims market, contributed revenue of £17.6m (FY23: £13.7m),
representing annualised growth for that business of 28.5%. We also
saw strong revenue growth of 14.7% from Gateley Vinden’s broad
range of specialist services.
Our acquisition of surveyors Richard Julian and Associates Limited
(“RJA”) in July 2023 extends our reach to organisations that
deliver affordable housing, a resilient sector underpinned by high
levels of grant to support delivery of the Government’s housing
targets. The team also has specialists in major loss property claims,
which enhances related expertise in both GSP and Gateley Vinden.
RJA has had an excellent start in Group, exceeding expectation.
FY24 consultancy revenue represented 40.5% (FY23: 38.1%) of
Property Platform revenue.
Operational review
Our operational focus has been aimed at current and future
efficiency.
AI is at the top of our agenda and is a priority area for capital
allocation, alongside investment in acquisitions and people. We
are very aware that investment in suitably developed product
will positively enhance the delivery of some of our services and
realise efficiencies which help us improve our profitability. We
have a cross-disciplinary steering group reporting directly to the
board on product assessment, procurement and integration. Our
investment in-Period included recruitment of a specialist in-house
AI development team to create bespoke applications for both
service delivery and internal uses. Our development program
will provide applications for use on each of our client-facing
Platforms and for our business support functions. The first of our
internally designed applications has just been launched for use by
the residential development team on our Property Platform. It
significantly improves turnaround of the process that it is designed
for and is verificatory of the value of the ongoing investment that
we will continue to make in AI driven product.
In Period, we acquired new systems to support the on-boarding of
a legal services team to run class action claims. This is specialist,
long-term, high value work which requires a bespoke technology
platform, in which we have invested £0.5m so far for current and
future benefit.
We have previously reported planned rationalisation of some of
our office space. This is an on-going exercise, including the post-
Period surrender of our lease for office space in Leicester as part
of consolidation of some of our teams in the East Midlands to our
Nottingham office.
On-going integration of recently acquired businesses is proceeding
as planned, including positive enhancements to our Group
integration processes. In parallel, phase two of adoption of our
new, market-leading business management, productivity, and
financial management system (3E) has proceeded throughout
FY24 and into FY25.
Gateley (Holdings) Plc Annual report and financial statements
31
30
Business overview
Strategic report
Corporate governance
Our financials
Chief Executive Officer’s review
continued
People and Culture
Attracting, developing and motivating talent, at all levels across
the Group, is a key objective every year. In FY24, overall average
headcount in the Group increased by 6.7% to 1,536 (FY23:
1,439). Legal services average headcount growth was 1.2% to
1091 employees (FY23: 1,078). Average consultancy headcount
increased by 25.4% to 445 (FY23: 355), primarily as a result of
acquisitions and investment in GSP.
The Gateley offering remains differentiated and our broad range
of career opportunities is attractive. We continue to evolve our
people strategies to drive a stimulating, purposeful and rewarding
environment in which our people can progress their careers.
We recently announced a total of 159 internal promotions and
celebrated these across the Group.
The ability for all of our people to participate in share ownership is
attractive and represents a recruitment differentiator. During FY24
we issued circa 3.4m shares to participants across our various share
schemes. All of this is in line with our strategy of creating wider
equity participation for more of our people. Currently circa 70% of
our people either hold shares or participate in share schemes.
Once again, we owe the success of our business to the quality and
dedication of our people at all levels. Clients come to us for our broad
specialist knowledge and experience and our determination to deliver
results for them. As we extend our range of services, our strong client
relationships enable more cross-selling opportunities, which remains a
key focus for us in generating further organic growth.
Responsible Business
Being a Responsible Business remains an integral part of our
Purpose Statement;
“Our purpose is to deliver results that delight our clients,
inspire our people and support our communities.”
We were pleased to achieve all 15 of our internally-set responsible
business targets in 2022/2023 and, in-Period, we published our third
annual Responsible Business Report outlining actions taken and setting
targets for 2023/2024. Our next report will be published imminently.
Highlights from the last report include:
• A carbon reduction plan including a commitment to achieve net
zero emissions by 2040, with interim targets set by 2030;
• A new strategic partnership with Alzheimer’s Research UK; and
• The launch of an internal volunteering policy which provides
opportunities for our people to volunteer with the charity,
sustainability and education partners we work with.
We are proud of the progress that we have made since publishing
our Responsible Business Strategy in October 2021. We will
continue to evaluate where we are effecting change and how we
can improve and progress over time. Our journey continues with
conviction.
Current trading and outlook
Looking forward, we are encouraged by strengthening levels of
activity across our transactional services teams, which began during
the Spring. This is matched by improving pipelines for those teams.
Alongside this, we continue to see good non-transactional and
consultancy business activity. Therefore, our immediate outlook is
cautiously optimistic at the beginning of a new political dawn for
the UK.
From a long-term perspective, we remain positive as our
increasingly resilient model continues to deliver for us and gives
us confidence to continue our investment strategy for enhanced
returns.
The group enters FY25 with a positive mindset and belief in
strategy.
Roderick Waldie
Chief Executive Officer
15 July 2024
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.”
Rod Waldie, Chief Executive Officer
“
Gateley (Holdings) Plc Annual report and financial statements
33
32
Business overview
Strategic report
Corporate governance
Our financials
Financial overview
The Group has again grown revenue
both organically and through
acquisition, despite the challenging
economic backdrop of FY24 that
resulted in decreasing activity levels
throughout the year until Q4.
This year’s increase in costs, driven through a combination of
inflation and investment, alongside a return of bonuses, have
checked our progression on both profit and margin. Following
strong activity levels in transactional areas in Q4 alongside the
reorganisation of specific areas of the Group, we enter FY25
feeling confident of improving profitability in FY25.
Our dividend yield is 6.4% using the average share price
across FY24 and, even in an environment of higher interest
rates, remains at a level which we believe is attractive for all
shareholders.
Our revolving credit facility has significant headroom and
with a closing net cash position of £3.8 million we are well-
placed to capitalise on current market conditions, as we have
done previously, to enable further expansion and growth.
Revenue and activity levels
Group total revenue grew by 6.0% (FY23: 18.6%) to
£172.5m (FY23: £162.7m), including 2.8% organically.
Revenue from core legal service lines grew organically
by 0.8% (FY23: 4.9%), while organic revenue growth
from consultancy businesses was 9.1% (FY23: 15.2%).
Consultancy revenues of £49.9m (FY23: £41.8m)
now represent 28.9% (FY23: 25.7%) of total revenue,
demonstrating our strategy to build and diversify into a
broader professional services group, and further enhance
our unique offering to clients.
Fee earner utilisation levels during FY24 returned to FY22
levels at 83%, after FY23’s increase to 89%. Alongside a
static conversion of time into fees, this has contributed to
the Group’s decrease in profitability. Activity in Q4 of FY24
was 92% compared to an average of 81% in the first three
quarters. This Q4 FY24 utilisation average was 1% higher
than Q4 in FY23. We fully expect this improvement to
continue as we experience increased instructions from new
areas of investments and transactional activity continuing
to build ahead of the recent UK general election.
During this period of reduced activity levels, a number of key areas of the Group have been unable to pass on the recent market-driven staff
cost increases of the last few years, whilst lead generation has remained extremely competitive. As activity levels improve and the mix of
work changes towards recent new areas of investment, we are starting to see rate increases work through into improved recoveries.
However, activity in a number of our consultancy businesses is driven by alternative factors. Gateley Smithers Purslow (“GSP”) and Gateley
RJA are examples of two such areas of the Group that have seen activity increase significantly as a result of the rise in adverse economic
climate change and government policy in social/affordable housing, respectively. Both businesses have experienced impressive organic
growth since joining the Group of 28.3% and 26.0% respectively.
Costs and margins
The bridge in personnel costs from £96.8m in FY23 to £108.5m in FY24 of £11.7m arises due to a £4.5m bonus, growth in head count
and wage inflation of £4.4m, £2.4m of new payroll costs following the July 2023 acquisition of RJA and £0.4m of full year Symbiosis costs
acquired in October 2022, both of which were covered by revenue introduced. Average staff headcount has increased by 6.7% from 1,439
to 1,536 total staff. Average professional staff within this period have increased by 6.8% from 1,000 to 1,068.
Personnel costs (before bonus) to revenue in FY24 increased to 60.3% (FY23: 59.5%) which rises to 62.9%, as a result of the Group
awarding £4.5m of bonuses for exceptional performers during FY24. We continue to sensibly manage this key metric as market conditions
improve. The reinstatement of a bonus and the increase in investment income from trade related interest have both impacted our adjusted
profit before tax margin this year, which has decreased to 13.4% (FY23: 15.4%). The bonus reinstatement has reduced margin by 2.6%,
whilst the additional £2.7m of net interest income has increased this margin by 1.6%.
Operating expenses have increased by £2.7m or 7.6% to £38.8m (FY23: £36.1m) due mainly to the investment in new IT systems (£0.5m)
supporting new areas of work such as Class Actions, and the additional cost of the acquisition of RJA (£0.6m). Overall, operating overheads
have increased slightly as a percentage of revenue from 22.2% in FY23 to 22.5% in FY24 as predicted.
The table below represents Platform performance over the last two reported years along with each Platform’s direct contribution towards
our Group’s performance.
FY24
Business
Services
£m
Corporate
£m
People
£m
Property
£m
Total
£m
Revenue
24.9
37.0
19.6
91.0
172.5
Segmental contribution
7.5
14.0
5.8
33.2
60.5
Contribution margin
30.2%
37.7%
29.5%
36.5%
35.1%
FY23
Revenue
21.8
38.8
20.4
81.7
162.7
Segmental contributions
5.3
13.9
6.0
31.1
56.3
Contribution margin
24.4%
36.0%
29.3%
38.1%
34.6%
Revenue movement (%)
14.0%
(4.4%)
(4.3%)
11.4%
6.0%
Contribution margin change (%)
23.8%
4.7%
0.1%
(4.2)%
1.4%
Chief Financial
Officer’s review
Neil Smith
Chief Financial Officer
Gateley (Holdings) Plc Annual report and financial statements
35
34
Business overview
Strategic report
Corporate governance
Our financials
Chief Financial Officer’s review
continued
Underlying operating profit before tax
The Group has recorded £20.3m of underlying operating profit before tax (FY23: £25.0m). Whilst we have continued to strategically invest
across the business in our legal and consultancy teams, a particular focus has been on headcount investment in GSP to meet significant
demand. The reinstatement of a Group bonus (£4.5m) is the key difference between the two years.
Our underlying trading margins have decreased to 11.7% (FY23: 15.4%) as a factor of continued investment for growth and ongoing
inflationary pressure in our people costs despite decreased levels of activity in certain parts of the Group due to macro-economic factors.
Nevertheless, we are confident that our strategy of ongoing investment made by us will result in short term margin stability followed by
long-term improvement.
Underlying operating profit before tax excludes amortisation of acquisition related intangibles, all share-based charges and exceptional
acquisition related items, including the acquisition accounting treatment of consideration payments on acquisitions being reclassified
as employment costs in the income statement, as well as gains on bargain purchases arising from the related acquisition accounting.
Underlying operating profit before tax has been calculated as an alternative performance measure in order to provide a more meaningful
measure and year-on-year comparison of the profitability of the underlying business.
Extract of UK statement of comprehensive income
2024
£’000
2023
£’000
Revenue
172,492
162,683
Operating profit
11,177
16,122
Operating profit margin (%)
6.48
9.91
Reconciliation to alternative performance measure: underlying operating profit before tax
Operating profit
11,177
16,122
Non-underlying items
Amortisation of intangible assets
2,483
2,073
Share based payment charge – Gateley Plc
1,625
1,984
Share based payment charge – Gateley RJA Limited
61
-
Contingent consideration treated as remuneration
6,956
6,190
Gain on bargain purchase
(3,609)
(1,389)
Acquisitions costs
37
-
Reorganisation costs
1,159
-
One off remuneration charge – Gateley RJA Limited
367
-
Underlying operating profit before tax
20,256
24,980
Adjusted underlying operating profit margin (%)
11.74
15.36
Earnings Per Share (EPS)
Basic EPS decreased by 20.8% to 7.74p (FY23: 49.5% to 9.77p). Basic EPS before non-underlying and exceptional items decreased by
13.7% to 14.42p (FY23: increased by 12.1% to 16.71p). Diluted EPS decreased by 19.9% to 7.63p (FY23: increased by 49.6% to 9.52p).
Diluted EPS before non-underlying and exceptional items decreased by 12.8% to 14.20p (FY23: increased by 12.0% to 16.28p).
Share option schemes
Over 70% of our people are existing share or option holders in the Group. The board remains committed to providing its people with the
opportunity to own shares in the Company primarily through the continued issuance of restricted shares awards (RSAs) across senior
leaders within the Group and our Save As You Earn (“SAYE”) all staff share scheme. Such share ownership promotes strong alignment
with the Group’s external shareholders, improves our attraction to like-minded recruits and is reflective of Gateley’s culture of long-term
ownership. The RSAs, which vest on receipt, are subject to a five-year non-dealing restriction and are forfeited should employment cease
within that period.
On 14 September 2023, Long-Term Incentive Plan awards (“LTIP”) over 727,790 Ordinary Shares vested and were exercised on 21
September 2023 by 77 partners and persons discharging managerial responsibilities (‘PDMR’s’) following the conclusion of LTIP awards
vested at the end of a three-year period, with vesting and exercise dependent upon the achievement of profit related performance
conditions and continuous employment. Profit performance during the conditional period resulted in 68% of the total award being made.
Profits used to calculate underlying EPS each year are disclosed below:
2024
£’000
2023
£’000
2022
£’000
2021
£’000
Reported profit after tax
10,074
12,240
23,023
13,157
Adjustments for non-underlying and exceptional items:
– Amortisation of acquired intangible assets
2,483
2,073
1,581
2,073
– Share-based payment adjustments
1,686
1,984
1,213
956
– Contingent consideration treated as remuneration
6,956
6,190
3,509
-
– Gain on bargain purchase
(3,609)
(1,389)
(12,380)
-
– Reorganisation costs
1,159
– One off remuneration costs
367
-
-
-
– Acquisition-related costs
37
-
870
-
– Tax impact of above
(391)
(168)
(94)
-
Underlying profit after tax
18,762
20,930
17,722
16,186
Weighted average number of ordinary shares for calculating diluted
earnings per share
132,107,953
128,527,341
121,893,238
118,508,833
Underlying adjusted fully diluted EPS
14.20p
16.28p
14.54p
13.66p
Taxation
The Group’s tax charge for the Period was £3.9m (FY23: £4.0m) which comprised a corporation tax charge of £4.4m (FY23: £5.0m) and a
deferred tax credit of £0.5m (FY23: credit of £1.0m).
The deferred tax charge arises due to a combination of credits in respect of the share schemes that have vested in past years and the release
of deferred tax on brands. The total effective rate of tax is 27.8% (FY23: 24.5%) based on reported profits before tax. The increase in the
effective rate of tax is as a result of the increase in UK corporation tax rates and change in earn-out related consideration remuneration
charges and gains on bargain purchase from FY23 to FY24, the net effect of which is not allowable for corporation tax purposes.
The net deferred taxation liability has increased to £2.6m (FY23: £2.1m) as a result of the decreased deferred tax asset recognised on
share-based payment schemes yet to vest driven by a decrease in the Group’s share price.
Dividend
The Group paid an interim dividend of 3.3p per share on 21 March 2024 and proposes a final dividend at the Company’s Annual General
Meeting on 23 September 2024 of 6.2p (FY23: 6.2p) per share, which if approved, will be paid in October to shareholders on the register at
the close of business on 11 October 2024. The shares will go ex-dividend on 10 October 2024.
Gateley (Holdings) Plc Annual report and financial statements
37
36
Business overview
Strategic report
Corporate governance
Our financials
Chief Financial Officer’s review
continued
Balance sheet
The Group’s net asset position has increased by £2.2m (FY23: £3.0m) to £80.3m (FY23: £78.1m), due to the following movements:
There was a £17.9m increase in total current assets, resulting from £4.7m additional trade and other receivables through acquired businesses
and the strong organic growth of the Group. Contract assets (“unbilled revenue”) increased by £3.2m and cash at bank increased by £5.6m as
improvements were made in the collection of cash during this year.
Non-current assets decreased by £3.5m, resulting predominantly from a decrease of £3.5m from a change in property use and right of use
asset values as no new leases were entered into during FY24 as amortisation of right of use assets were the only key movements.
The board has carefully considered the impact of macro-economic uncertainties, on the future forecasts used in assessing the value in use
of the cash generating units to which the goodwill and intangibles relate and determined that, despite short term reductions, such forecasts
are more than sufficient to justify the carrying value of goodwill. Therefore, as at 30 April 2024, the board concluded that the goodwill and
intangible assets do not require impairment.
Total liabilities increased by £12.3m, due to the reintroduction of accrued bonuses together with increased lending from the Group’s Revolving
Credit Facility following the acquisition of RJA and the payment of earn out consideration to the vendors of GSP, offset by a reduction of £3.4m
in lease liabilities.
Cash flow
During the year, the Group increased its usage of its Revolving Credit Facility from £6.8m to £12.9m. The facility provides total committed
funding of £30m until April 2025 (supported by a letter of comfort for its extension to Oct 2025), split equally between Bank of Scotland
and HSBC UK, that is specifically earmarked to fund growth and expansion via acquisition. Interest is payable on the loan at a margin of
1.95% above the SONIA reference rate.
The Group also has in place a litigation funding facility for an initial £20m of funding towards significant litigation cases, which has the ability
to increase to £50m if required. To date the Group has not yet utilised this facility but has a number of large assignments currently being
assessed for consideration in FY25.
Cash generation remained strong with net cash inflows from operating activities increasing to £14.0m (from £9.7m in FY23) representing
138.8% (FY23: 79.6%) of profit after tax. The Group ended the year with net cash of £3.8m (FY23: £4.3m), as less cash was consumed
during the financial year on creditors together with management’s sustained focus on debt collection resulting in an improvement in debtor
days.
Adjusted free cashflow during the year from operations (after adjusting for IFRS 16 and IFRS 3 specific items noted in the table below) was
£17.7m (FY23: £6.0m), which represents an increase to 175.9% (FY23: 48.6%) of reported profit after taxation (“PAT”) and an increase
to 92.5% (FY23: 28.2%) of underlying PAT due to improved operational cash collection, significant increases in interest income and the
adjustments from acquisition related activity this year being more significant.
2024
£’000
2023
£’000
Net cash generated from operations
18,887
14,065
Tax paid
(4,902)
(4,320)
Net interest received
4,043
1,364
Cash outflow from IFRS 16 leases (rental payments excluded from operating cash flows under IFRS 16)
(5,091)
(4,579)
Cash outflow paid on acquisitions
5,825
1,518
Purchase of property, plant and equipment
(1,045)
(1,312)
Purchase of other intangible assets
-
(787)
Free cash flow
17,717
5,949
Profit after tax
10,074
12,240
Free cash flow (%)
175.9%
48.6%
Adjusted free cash flow
Profit after tax
10,074
12,240
Non-underlying operating items
7,516
8,858
Exceptional items
1,563
-
Underlying profit after tax
19,153
21,098
Free cash flow
92.5%
28.2%
Overall, working capital levels have increased on the previous year, as unbilled revenue represented 61 days of pro-forma net revenue
compared to 53 days last year, and Group debtor days have decreased to 111 days of pro-forma net revenue from 113 days last year, which
includes revenue from acquisitions on a full year pro-forma basis. I am pleased we have made good progress in debt collection with a strong
finish to the year that resulted in a pleasing net cash position. We have made a good start to collections in FY25. Unbilled revenue recognised in
the Group’s statutory accounts, from time recorded on non-contingent work, remains low as a percentage of revenue and totalled just £23.5m
or 13.6% of revenue recognised over the year (FY23: £20.4m or 12.5%).
Summary
FY24 continued our unbroken record of revenue growth since IPO in 2015. Our recent acquisitions have settled into the Group well and
activity levels that were subdued at the start of the Period, recovered strongly in Q4 and into FY25. There is no doubt that reduced activity
at a time of continued inflation has remained a challenge to our trading margin but I am pleased to return a bonus to staff for exceptional
performance this year alongside £23.0m of underlying profit before tax and a 9.5p dividend to shareholders.
We remain confident that the investments we have made, alongside an improving market, will support our medium to longer-term growth
strategy and a margin improvement. We have maintained rigid control of costs and improved our working capital position that supports the
Group’s growth ambitions and its healthy net cash position within a strong balance sheet with significant bank facility headroom.
Share ownership rewards for our staff continue to play a significant part in our vision of wider, long-term connectivity across the Group and
will deliver a significant opportunity to all staff in FY25 and beyond.
Neil Smith
Chief Financial Officer
15 July 2024
Gateley (Holdings) Plc Annual report and financial statements
39
38
Business overview
Strategic report
Corporate governance
Our financials
The Group’s services are tailored to those required by local,
regional and national clients and are provided from twenty-
one 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.
Principal activity, objectives,
strategy and outlook
The principal activity of the Gateley Group during the year was the provision
of commercial legal services together with complementary professional
consultancy services. The Group sells its services through 26 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.
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:
•
The retention of existing employees, working together to
deliver 100% client satisfaction by looking after our clients’
businesses as if they were our own
•
Attracting new talent wishing to be a part of a pioneering law
led 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)
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 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.
Overview for the year
See Chief Financial Officer’s report on pages 34 to 39 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 6.0% (2023: 18.6%) to £172.5m (2023:
£162.7m)
•
Underlying profit before tax down 8.1% (2023: up 16.2%) to
£23.0m (2023: £25.1m)
•
Profit after tax down 17.7% (2023: down 47.0%) to £10.1m
(2023: £12.2m)
•
Operating profit margin 6.5% (2023: 9.9%) – Operating profit
as a percentage of revenue
•
Basic Earnings per share (EPS) down 20.8% (2023: down
49.5%) to 7.74p (2023: 9.77p)
•
Total dividend declared remains at 9.5p (2023: 9.5p)
Alternative Performance Measures (APMs):
•
Operating profit before non-underlying charges down 18.9%
to £20.3m (2023: £25.0m). Operating profit before non-
underlying charges excludes income or expenses that relate to
remuneration for post-combination services, gain on bargain
purchase, 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 11.7% (2023: 15.4%) – operating
profit before non-underlying and exceptional charges as a
percentage of revenue.
•
Revenue per pound of salary cost £1.59 (2023: £1.68):
Employees are the driving force behind revenue earned
and also the largest operating expense within the Group.
Therefore this measure monitors the ratio between the two.
41
Business overview
Strategic report
Corporate governance
Our financials
Gateley (Holdings) Plc Annual report and financial statements
40
•
Revenue days 111 (2023: 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.
•
Utilisation 83% (2023: 89%): 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 16.1% (2023: 9.2%): 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 £3.8m (2023: £4.3m): Net cash is calculated by
subtracting the amount of other interest-bearing loans and
borrowings from the cash balance. 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 7.74p (2023: 9.77p). Diluted EPS was 7.63p (2023:
9.52p). Adjusted, fully diluted EPS was 14.20p (2023: 16.28p).
Cash flow generated and net debt position
Net cash generated from operating activities was £14.0m (2023:
£9.7m).
The Group’s net cash position as at 30 April 2024 was £3.8m
(2023: £4.3m).
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
2025 which show positive earnings and cash flow generation.
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.
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 continues to work closely with its supportive banks,
utilising the three-year Revolving Credit Facility, of which £13m
was drawn down at 30 April 2024, with committed funding
of £30m until April 2025. As at 30 April 2024 the Group has
net cash of £3.8m and continues to sensibly manage its cash
position within permitted covenants relating to its facility.
Discussions are underway with the Group’s banking partners
to provide a new facility, with terms anticipated to be agreed
well ahead of expiry of the current facility. Furthermore, the
Group’s supportive banks have provided a comfort letter that
expresses their willingness to extend the current facility to
October 2025, should it be required.
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 at
least 12 months from the approval of these financial
statements. Accordingly, they have adopted the going
concern basis of accounting in preparing the annual
Group financial statements.
Principal activity, objectives,
strategy and outlook
continued
Gateley (Holdings) Plc Annual report and financial statements
42
Business overview
Strategic report
Corporate governance
Our financials
43
Macro-economic headwinds and inflationary pressures
Reputation
Details of Risk
Details of Risk
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.
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’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.
M Chance: Medium
M Impact: Medium
= Change in risk: No change
M Chance: Medium
H Impact: High
= Change in risk: No change
Mitigating Factors
Mitigating Factors
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 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.
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.
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.
Operational & IT risk
Cyber and data risk
Details of Risk
Details of Risk
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.
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.
M Chance: Medium
H Impact: High
= Change in risk: No change
H Chance: High
H Impact: High
= Change in risk: No change
Mitigating Factors
Mitigating Factors
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 2022 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.
Gateley (Holdings) Plc Annual report and financial statements
45
44
Business overview
Strategic report
Corporate governance
Our financials
Principal risks and uncertainties
continued
46
Regulatory Compliance
Acquisition risk
Details of Risk
Details of Risk
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.
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.
A failure to successfully integrate acquisitions may impact on
Group profitability.
The availability of viable acquisition opportunities may decrease.
L Chance: Low
M Impact: Medium
= Change in risk: No change
L Chance: Low
M Impact: Medium
= Change in risk: No change
Mitigating Factors
Mitigating Factors
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 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.
Integration plans are formulated as part of the acquisition process
and executed in anticipation of and following acquisition as
appropriate.
The Group has an experienced in-house acquisitions team with
a proven track record that undertakes a robust due diligence
process with external experts being utilised where necessary.
Risks are further mitigated through the retention and appropriate
incentivisation of acquisition targets’ senior management.
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.
Professional liability and uninsured risks
Employees
Details of Risk
Details of Risk
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.
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: Low
M Impact: Medium
= Change in risk: No change
L Chance: Medium
M Impact: High
= Change in risk: No change
Mitigating Factors
Mitigating Factors
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.
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.
Gateley (Holdings) Plc Annual report and financial statements
47
46
Business overview
Strategic report
Corporate governance
Our financials
Section 172(1) statement
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
Strategy: Acquisition of businesses during the year
Application of s.172
The Group has made two acquisitions in the year. During the board’s
consideration of the acquisitions, 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
Application of s.172
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 FY24.
Governance: Board effectiveness
Application of s.172
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.
Finance: Approval of 2024/25 budget
Application of s.172
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 FY25 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.
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.
We continue to make good progress 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.
The disclosure has been prepared under the requirements of UK
CFD (United Kingdom Climate-related financial disclosures), under
section 414CA and 414CB of Companies Act 2006. We understand
effective management and adaptation to climate-related issues will
be an iterative process, that will require continuous improvement.
We are committed to building on our current understanding,
management, and resilience to climate risk and will look to
continuously advance our strategic and financial planning to ensure
effective climate change adaptation. We will be transparent and
communicate our progress in this space via annual CFD-aligned
reporting. 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. 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 through Department Heads, including Facilities; IT; Risk;
Finance; HR and Marketing.
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.
Task Force on Climate Related
Financial Disclosures
Being a purpose-led business, we are committed to minimising the impact that
we have on the environment and operating in a sustainable manner.
Risk management
Describe the organisation’s processes for identifying and
assessing climate-related risks and opportunities.
As outlined previously, our board reports on the climate-related
risks and opportunities 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. During the year we have shared best practice with
clients in respect of sustainability.
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.
Six climate-related risks and opportunities were identified as
potentially material to the Group, which included 4 transition risks, 1
physical risk and 1 opportunity. Further information on these risks is
included within the tables on page 51.
Describe the organisation’s processes for managing climate-
related risks.
Our processes for managing climate-related risks are consistent
with our process for managing other risks in the business and
follow standard risk management processes, i.e. a risk identification
exercise is performed. This is then followed by an assessment of
the identified risks and a mitigation plan is prepared accordingly.
The response is implemented, and the risk is monitored and
reported on an ongoing basis.
The process for prioritising climate-related risks is similar to other
risks, i.e. these are prioritised based on the assessment of their
likelihood and potential impact on our operations, e.g. our financial
performance.
Describe how processes for identifying, assessing and
managing climate-related risks and opportunities 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.
Gateley (Holdings) Plc Annual report and financial statements
49
48
Business overview
Strategic report
Corporate governance
Our financials
Task Force on Climate Related Financial Disclosures
continued
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.
1.5 degrees above pre-industrial levels
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. This could lead to clients being
unable to meet payment terms.
There is an opportunity for the Group to offer relevant
services to support our clients negatively impacted by
such weather events.
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.
Transition to a
net zero carbon
economy.
Short/ medium
term
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.
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 quarterly
through each of our four Platforms (see note 4) and
discussed within our Strategic Board.
Clients / People
Reputation
Medium and
long term
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 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 for 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
and 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. Reputational
damage is considered a principal risk of the group and
further information can be found on page 44.
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).
Gateley (Holdings) Plc Annual report and financial statements
51
50
Business overview
Strategic report
Corporate governance
Our financials
Task Force on Climate Related Financial Disclosures
continued
Risk/ opportunity
Timeframe
Business impact
Business response
Communities
Reducing carbon
with our supply
chain
Short, medium
and 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.
Infrastructure
Business occupancy
Short and
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 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. We
continue to consolidate our occupied office space and have
closed our Leicester office during the year, relocating team
members to our Nottingham office/other offices such as
London.
Reviews of our building lease arrangements continue as and
when commitments are up for renewal.
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.
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.
We are a resilient and diversified business which ensures
that we can provide support to a diverse client base and
are not over-reliant on a sector or geography.
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 we are able to
deliver excellent client service regardless of office location.
With continued use of 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 become 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.
Gateley reports Scope 1 and Scope 2 greenhouse gas emissions
annually which helps us to monitor our carbon footprint and
reduce emissions. We report GHG emissions and energy use under
the Streamlined Energy and Carbon Reporting (SECR) under the
Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018. The intensity ratios
were calculated for Gateley Plc and have been calculated using
turnover, energy usage and greenhouse gas emissions figures. For
further information, see page 54 for our SECR reporting.
Moving forward, we will consider developing and implementing
further metrics that may be used to effectively monitor identified
priority climate-related risks and opportunities (identified in
Strategy) and measure performance of mitigation actions.
So far, we have focused our efforts on the climate risk identification
and assessment process to better understand our risk profile
across various climate scenarios, and where best to prioritise our
efforts. We have continued to concentrate on our GHG emissions
measurement and reporting process in line with SECR Regulations
2018, and will consider the use of both current year and historic
emissions data to identify a baseline to set GHG emission reduction
targets. In FY25, we will evaluate the opportunity to establish
GHG emissions reduction targets for our Group, the outcome
of which we expect to be reported in next year’s Annual Report.
Going forward, we will also consider developing and implementing
metrics and associated targets relating to our priority climate-
related risks and opportunities identified from this year’s climate
risk assessment. As our analysis matures, we may revise the
appropriateness of any metrics and targets, as well as look to
identify new metrics and targets to effectively monitor and
measure our climate-related performance over time.
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 54.
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
businesses 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.
Gateley (Holdings) Plc Annual report and financial statements
53
52
Business overview
Strategic report
Corporate governance
Our financials
Environmental actions statement
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.
Following on from the Paperlite project that we introduced across our
business in 2020, we have continued to find ways to reduce the amount
of printing required including the installation of two monitors on all
hot desks and the introduction of DocuSign e-signature technology. As
a result of our reduction in printing, we were able to remove most of
our desk printers, which were donated to local charities through our
relationship with social enterprise, Make Good Grow, and have completed
a procurement exercise to appoint a print partner who will deliver
sustainable and efficient multi-functional devices to each of our offices.
We continue to use Microsoft Teams to reduce travel between offices
including delivering our Leadership Lunches, Gateley Leadership
Overview and new starter inductions virtually. Our Gateley Agile
approach encourages meetings to be held virtually where not all
attendees can attend in person.
We continue to review our property estate and colleagues have moved
into existing offices in order to reduce our footprint. For example,
our Adamson Jones colleagues joined our existing Nottingham office
and Gateley Smithers Purslow moved into our Nottingham and
Manchester offices.
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 2023 to 30 April 2024.
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 2024 and 30 April 2023:
•
Database 2023, Version 1.1
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 GHG emissions using the most recent
emissions factors published by BEIS in 2022, and then divided by the
gross Calorific Value to deduce kWh consumption.0
2024
2023
Change
Energy (thousand kWh)
Natural Gas
1,023
1,304
(22%)
Electricity
2,545
2,530
1%
Transport
289
292
(1%)
Total energy (thousand kWh)
3,857
4,126
(7%)
Emissions (tCO2e)
Natural Gas
187
304
(38%)
Electricity
540
590
(8%)
Transport
68
69
(1%)
Total SECR emissions
795
963
(17%)
Intensity metrics
£m turnover
173
163
6%
tCO2e per £m of turnover
4.6
5.9
(22%)
Average headcount
1,536
1,439
7%
tCO2e per employee
0.5
0.7
(23%)
Square footage (thousand sq.ft)
117
126
(7%)
tCO2e per square foot
6.8
7.6
(11%)
The Gateley RJA team supporting their local community
through our volunteering programme, transforming an
allotment area at Kibworth Primary School.
55
Business overview
Strategic report
Corporate governance
Our financials
Gateley (Holdings) Plc Annual report and financial statements
54
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 (2023: £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 24 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
15 July 2024
Social matters
We have a long-standing commitment to support our staff
in engaging with their local communities and charities. This
is achieved by allowing all staff to spend up to 15 hours
undertaking paid volunteering leave per calendar year. 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 helps build these communities.
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.
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 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.
Thrive 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 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.
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.
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.
Gateley (Holdings) Plc Annual report and financial statements
57
56
Business overview
Strategic report
Corporate governance
Our financials
59
Corporate
governance
In this section
Board of Directors
60
Report on remuneration: voluntary disclosure
62
Directors’ report
69
Gateley (Holdings) Plc Annual report and financial statements
58
Business overview
Strategic report
Corporate governance
Our financials
59
Board of Directors
Details of the directors, their roles and backgrounds are as follows:
Committee Key:
N Nomination R Remuneration A Audit & Risk
Chair Board Key: H Gateley (Plc) Holdings S Strategic O Operations
Nigel Payne
Rod Waldie
Victoria Garrad
Neil Smith
Non-Executive Chairman
Chief Executive Officer
Chief Operating Officer
Chief Financial Officer and
Company Secretary
aged 64
aged 56
aged 50
aged 48
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 the Non-
Executive Chairman of Green Man
Gaming (Holdings) plc and Main
Market listed Braemar Plc, and
Non-Executive Director of JSE
listed Sun International Limited,
AIM listed GetBusy plc and Kwalee
Limited.
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 Director of Ascot
Racecourse Betting and Gaming
Limited, 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.
Rod was appointed to the position
of Chief Executive Officer on
1 May 2020. 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, Rod 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.
Rod 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 25 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 30 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
for the Gateley Group he is also
the Group’s compliance officer
for finance and administration
(“COFA”) and a fellow of the
Association of Certified Chartered
Accountants.
Committees & Boards:
N R A H
Committees & Boards:
N H S
Committees & Boards:
H S O
Committees & Boards:
H S O
Joanne Lake
Colin Jones
Non-Executive Director
Non-Executive Director
(appointed 6 September 2023)
aged 60
aged 64
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 Non-
Executive Chairman of AIM-
quoted digital services group,
Made Tech Group Plc, Senior
Independent Director of Main
Market-listed land promotion,
property development and
construction group, Henry Boot
Plc. Joanne is also Non-Executive
Director of Main Market quoted
Braemar Plc and Pollen Street
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.
Colin joined the Board on 6
September 2023 and is now our
Remuneration Committee Chair.
He is currently Non-Executive
Chair of Centaur Media Plc, the
market intelligence company,
having joined in 2018 as a Non-
Executive Director. He is also
Non-Executive Director and
Audit Committee Chair of M&C
Saatchi Plc, the AIM-quoted
marketing solutions company;
a Non-Executive Director of
Datatec Limited, an international
information and communications
technology company; and a
Non-Executive Director of The
City Literary Institute, London’s
leading adult education college.
Colin previously spent over 20
years as CFO of Euromoney
Institutional Investor Plc, the FTSE
250-listed media company, until
he retired in 2018. Colin began
his career at Price Waterhouse
where he qualified as a chartered
accountant.
Committees & Boards:
N A R H
Committees & Boards:
A R H
Board changes
On 22 August 2024 Edward Knapp was appointed as
Independent Non-Executive Director and Chair Designate.
Edward becomes a Non-Executive Director with immediate
effect and will become Chairman when Nigel Payne steps down
from the board on 1 November 2024.
Edward is a global business leader with extensive experience
in growth strategy design and delivery, technology, risk
management and transformation with a particular focus on
professional and financial services. He has held executive
and senior leadership roles in consultancy and professional
services, high-growth technology companies and major financial
institutions worldwide, including McKinsey & Company,
Barclays, HSBC, Revolut and M&G, where he has most recently
brought a particular focus on advisory, wealth management
and talent. As a member of the UK Endorsement Board he is
accountable for influencing, endorsing and adopting standards
for audit, accounting and professional services spanning UK
PLCs. He currently serves as a Non-Executive Director of F&C
Investment Trust plc and has extensive international private-
equity backed and plc board and advisory experience, including
Chairman of the Audit and Risk Committee and Non-Executive
Director of AIM company Ten Lifestyle Group plc and formerly
as a Non-Executive Director of Mattioli Woods plc.
On appointment, Edward will become a member of the
Remuneration, Audit and Risk and Nomination Committees.
From 1 November 2024, he will take over the role of Chairman
of the Board, and Chairman of the Nomination Committee.
Gateley (Holdings) Plc Annual report and financial statements
61
60
Business overview
Strategic report
Corporate governance
Our financials
Our senior talent comprises partners in our legal business
together with equivalent roles in our consultancy businesses and
business support teams. For the purposes of this report, such
cohort are referred to as “Leaders.”
In September 2023 conditional options granted in 2020 pursuant
to the Group’s Long Term Incentive Plan (LTIP) matured. The
options were conditional upon the achievement of EPS related
performance conditions and continuous employment. Measured
against the performance conditions, 68% of the total awards
were capable of being exercised by participants, and 77 Leaders
including two Executive Directors (Neil Smith and Victoria Garrad)
received shares pursuant to the LTIP. The number of shares
received by the Executive Directors are set out on page 68.
As part of our focus on incentivisation and retention of senior
talent, the Group’s Restricted Share Award Plan (“RSA Plan”),
introduced in FY22, was utilised to reward certain Leaders as
well as those employees who were promoted to leadership
roles during FY24. Awards of Restricted Shares were made to
12 Leaders during FY24, with the average award being 65,844
shares. Our rationale at IPO in 2015 included the ability for us
to adopt a structure that enables us to incentivise our people in
a different way to the competing Limited Liability Partnership
model. The RSA Plan represents further progression of our
incentivisation strategy and is now the preferred share option
scheme for all Leaders across the Group including the Executive
Directors. We do not envisage making any further LTIP awards.
The intention is to utilise the RSA Plan annually as a flexible
element of overall reward to selected Leaders including the
Executive Directors. In April 2024, the Company supported the
Group’s Employee Benefit Trust (“EBT”) to purchase 1,864,622
shares at £1.26, predominately from staff who were partners
at IPO. Those shares are warehoused by the EBT and will be
awarded in FY25 through the RSA Plan to approximately 90
Leaders, who did not participate in the IPO or who did not
receive a material number of shares at IPO (including Executive
Directors). This is a progressive step to facilitate re-circulation
of internally held shares from former equity partners who
participated in the IPO to those Leaders who now form part
of our senior talent pool and who merit a long-term share
ownership award. This non-dilutive recirculation mechanism is a
key differentiator for the Group in attracting and retaining quality
senior talent who are incentivised and aligned with creating long
term value for the Group and its stakeholders.
On a more general basis, the board remains committed to
providing all of its people with the opportunity to own shares in
the Company and continues to grant awards under the Save As
You Earn scheme. At least 70% of current staff are existing share
or option holders in the Company.
Executive Director remuneration
As referenced in previous reports, the Committee has been
gradually aligning the remuneration for the Group’s Executive
Directors to market rates. In last year’s Remuneration Report,
the Committee acknowledged that the remuneration for the
Executive Directors remained broadly below the market rate for
similar roles in similar sized AIM listed businesses, but following
careful reflection, the Committee considered that FY24 was not
the time to implement any material increases, as a result of the
geo-political and macro-economic factors. The Committee did,
however, commit to continue to focus on Executive Director
remuneration to ensure that it is aligned with market rates and
supports 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.
To deliver on this commitment, the Committee engaged FIT
Remuneration Consultants LLP (“FIT”) to provide external
remuneration advice. FIT is a founder member of the
Remuneration Consultants Group and the voluntary code of
conduct of that body is designed to ensure that objective and
independent advice is given to remuneration committees. The
Remuneration Committee is satisfied that the advice received
was objective and independent.
During FY24, FIT completed an independent benchmarking of
the Group’s Executive Directors’ remuneration. Following careful
consideration of this exercise, the Committee determined that
the salaries and benefits for the Executive Directors were below
market benchmarks, and accordingly these have been increased
with effect from 1 May 2024 to the amounts set out on page 66.
This was the first formal benchmarking exercise that has been
undertaken and the Committee regards the increased levels
of remuneration as appropriate and not above that seen in
comparable companies.
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.
Colin Jones
Remuneration Committee Chair
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
forthcoming 2024 AGM.
Key reward principles
Remuneration at Gateley for executives and the wider workforce is
guided by the following principles:
•
Underpin 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.
•
Provide reward outcomes that fairly reflect Group and personal
performance and take into account the returns to shareholders.
Bonus outcome for FY24
The Group continued to perform well throughout FY24 against the
backdrop of challenging trading conditions for professional service
firms. The Group’s resilient business model delivered growth in
revenue in line with consensus market expectations.
The continued hard work, dedication and loyalty from employees
during the year has been paramount to the Group’s performance. For
FY23 we made the difficult decision to make no bonus awards across
both the Executive Directors and wider workforce. Given staff retention
and incentivisation are so important in a business such as ours, we
considered the position for FY24 and determined it was appropriate
to award bonuses to reflect the contribution made by our people to
delivering a strong underlying trading performance. This included
awarding bonuses under the merit pool, in which the Executive
Directors participate. The amounts paid to the Executive Directors are
set out on page 66. Total bonuses across the business for FY24 were
£4.5m and the board regarded this as an appropriate allocation of
resources and in our shareholders’ best interests for the long-term.
Share plans
During FY24, the Group continued to focus on the growth, attraction,
incentivisation and retention of talent. We remain committed to
providing our people with the opportunity to own shares in the
Company believing that employee share ownership secures a strong
alignment with the Group’s shareholders, incentivises and retains
employees and is reflective of our long-established culture.
Dear shareholders,
I am pleased to present the
Directors’ Remuneration Report
for the financial year ended 30 April
2024, my first as Remuneration
Committee chair. This letter
introduces the report, outlines
the major decisions on Directors’
remuneration taken during the
year and, importantly, explains the
context in which these decisions
have been taken.
Report on remuneration:
voluntary disclosure
Colin Jones
Remuneration Committee Chair
Gateley (Holdings) Plc Annual report and financial statements
63
62
Business overview
Strategic report
Corporate governance
Our financials
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 reader’s understanding of the business. The
information is unaudited except where stated.
This report sets out:
•
a description of how the Remuneration Committee operates;
•
a summary of the Directors’ remuneration policy – setting out
the parameters within which the remuneration arrangements
for Directors operate; and
•
details of the remuneration paid to the Directors for FY24 and
expected to be paid for FY25.
The Committee
The Committee is appointed by the board and is formed entirely
of Non-Executive Directors. The Committee was chaired by
Suzanne (Suki) Thompson until she resigned from the board with
immediate effect due to ill- health on 27 June 2023. Joanne Lake
chaired the Committee until 6 September 2023 when Colin Jones
was appointed to the board and commenced his role as Chair of
the Committee. Joanne Lake remained on the Committee and the
other member 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
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 Leaders. The
Committee’s terms of reference are available for public inspection
on request.
The Executive Directors are invited to attend meetings when
appropriate, but no Director is present when his or her
remuneration is discussed.
The remuneration of the Non-Executive Directors is determined by
the board in consultation with the Executive Directors.
Activities during the year
The main activities undertaken by the Committee during the year
included: -
•
Determining incentive outcomes for the Executive Directors
for FY24;
•
Setting salary increases and benefit provision for the Executive
Directors for FY25 following the independent market
benchmarking exercise;
•
Further embedding and evolving the strategy for use of
the RSA Plan including granting awards under the RSA Plan
to senior talent to support long-term share ownership for
this cohort;
•
Approving the vesting in FY24 of awards granted under the
LTIP in 2020.
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 Leaders 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.
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.
Appropriate salary increases will be awarded to provide alignment with the market 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 and is paid in cash after the end of the year. All
Executive Directors participate in the merit pool.
Neil Smith and Victoria 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 is self-funding. The merit pool
is distributed to participants based on their individual performance during the year as
determined by appropriate financial and non-financial criteria.
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 pre-determined 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.
Restricted Share Award (RSA Plan)
Designed to incentivise participants to perform at
the highest levels and to retain senior talent within
the Group with direct alignment with shareholder
interests.
Executive Directors and selected Leaders may
participate in the RSA Plan as determined by the
Strategic Board and approved by the Remuneration
Committee.
Awards are granted in the form of nil-cost options
which vest on receipt. Awards are subject to a five year
non-dealing restriction (“Restricted Period”) and are
forfeited should the employment of the participant be
terminated or should notice of termination be served
in the Restricted Period (whether such notice is served
by the Company or the employee).
The award of restricted shares to a participant pursuant to the RSA Plan is performance
related having regard to the participant’s individual performance and contribution to
the Group.
The number of awards made under the RSA Plan is set after taking into account the
current and expected dilution from all share schemes.
The Company applies a guideline for dilution from all share plans which is 15% of issued
share capital from time to time and which (as is normal) counts in all awards made
by the Company (and which have not lapsed) under all of its share plans in the prior
10 years.
The Company regards this guideline as appropriate for a people-focused business on
the AIM market which has been listed for almost 10 years and the Company intends to
continue operating its share plans using a mix of dilutive shares within this guideline and
shares purchased on the market when it is appropriate to do so.
Pension and benefits
The Executive Directors do not participate in a company funded pension scheme (other
than at a qualifying earnings level of employer contribution) nor do they receive a cash
allowance in lieu of employer pension contributions.
Until FY24, the Executive Directors did not receive Company funded benefits. From
FY25, as a result of the independent benchmarking exercise, the Company has agreed to
fund the provision of private medical insurance, income protection insurance and critical
illness insurance for Executive Directors and Leaders.
This report is for the year ended 30 April 2024. 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.
Report on remuneration: voluntary disclosure
continued
Gateley (Holdings) Plc Annual report and financial statements
65
64
Business overview
Strategic report
Corporate governance
Our financials
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,
Leaders may participate in the merit bonus pool, performance
bonus pool and RSA Plan 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. 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 2024.
Non-Executive Directors’ fees
The 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 Director has sufficient time to carry out
their duties in light of their other business commitments. This
exercise concluded that all of the Non-Executive Directors 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.
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.
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 Colin Jones was appointed as
a Non-Executive Director on 6 September 2023.
Summary of Directors’ remuneration for the year
The following table represents the Directors’ remuneration for the years ended 30 April 2024 and 30 April 2023:
Salaries
and fees
£’000
Bonus
£’000
Share
options
£’000
Total
2024
£’000
Salaries
and fees
£’000
Bonus
£’000
Share
options
£’000
Total
2023
£’000
Nigel Payne
76
-
-
76
72
-
-
72
Joanne Lake
50
-
-
50
48
-
-
48
Suzanne Thompson1
21*
-
-
-
48
-
-
48
Colin Jones2
34*
-
-
-
-
-
-
David Wilton4
15*
-
-
-
-
-
-
Roderick Waldie
339
83
-
422
323
-
-
323
Neil Smith
252
83
17
352
225
-
-
225
Victoria Garrad
252
83
17
352
240
-
-
240
Michael Ward3
70*
-
-
70
152
-
-
152
1,109
249
34
1,392
1,108
-
-
1,108
1. Suzanne Thompson resigned from the board with immediate effect on 27 June 2023 due to ill-health.
2. Colin Jones was appointed as a Non-Executive Director with effect from 6 September 2023.
3. Michael Ward resigned from the Board with effect from 27 October 2023.
4. David Wilton was appointed as a Non-Executive Director and Chairman designate with effect from 1 February 2024. The board and David Wilton mutually agreed not to
continue with his appointment and he stood down from the board on 14 May 2024.
* Amounts pro-rated
Salary and fee increases for FY24
Details of FY24 salary and fee increases are set out in the FY23
report on remuneration.
Salary and fee increases for FY25
As referenced earlier in this report, having engaged independent
remuneration consultants (FIT Remuneration LLP) to externally
benchmark Executive Director remuneration, the Committee
agreed to increase Rod Waldie's salary from £338,000 to £380,000
and Neil Smith's and Victoria Garrad’s salaries from £252,000 to
£300,000 respectively with effect from 1 May 2024, The Committee
is satisfied that these salary levels for FY25 are appropriate and that
even with these changes our Executive Directors’ salaries remain at
lower end of market-suggested levels.
It should be noted that although the market benchmarking data
was used to inform the Committee’s deliberations, it only formed
one part of a much broader consideration when determining the
appropriate salary levels. We are aware that salary increases of
this nature can sometimes be phased across a number of financial
years. However, this was not considered appropriate in this case
as the salaries for these business-critical roles have been relatively
low since IPO and at FY24 levels had become inconsistent with our
stated remuneration principles where we aim to attract, retain and
motivate the very best talent, without paying excessively.
Also as a result of the external benchmarking exercise, the
Committee determined to change the Company’s policy with
regards to the provision of insurance benefits for its most senior
Leaders in the Group. With effect from 1 May 2024, the Company
will fund the provision of private medical insurance, income
protection insurance and critical illness insurance rather than
requiring individuals to fund such benefits via deductions from
salary. Senior Leaders are categorised as those partners (or
partner equivalents) eligible to participate in the merit pool bonus
scheme (which includes the Executive Directors) and senior lateral
hire partners who have joined the Group since IPO. The uplift in
the provision of insurance benefits for the Executive Directors
was taken into account when the Committee determined the
level of increase in salary for the Executive Directors. Changing
the policy with regards to the provision of benefits provides a
retention element to the remuneration packages for all Leaders for
modest additional cost to the business and further differentiates
the position of Leaders from that of a partner in a traditionally
structured professional services business.
With regard to the Non-Executive Directors, Nigel Payne's annual
fee as chair increased to £100,000 (FY24: £75,000) with effect
from 1 May 2024, bringing it in line with the market rate expected
to be paid to the incoming chair once appointed. This positioning
(consistent with that for the Executive Directors’ FY25 salaries)
is at the lower end of market-suggested levels for Chair fees. The
annual fee for other Non-Executive Directors was also increased for
FY25 to £55,000 (FY24: £50,000) to reflect the time commitment
required in order for the Non-Executive Directors to effectively
carry out their duties.
Bonus outcome for FY24
The Group continued to perform well throughout FY24 despite
challenging trading conditions and delivered growth in revenue
and a strong underlying trading performance. This was due to the
continued hard work, dedication and loyalty from employees. The
Committee therefore considered it appropriate to award bonuses
to employees in respect of FY24. This included awarding bonuses
under the merit pool, in which the Executive Directors participate.
No bonuses were awarded under the performance pool.
Long-term incentives granted during the year
No awards were granted pursuant to the LTIP in FY24 and the
RSA Plan has replaced the LTIP as the share incentive scheme for
Leaders including the Executive Directors.
No shares were awarded to the Executive Directors under the RSA
Plan during FY24. The Committee intend to award Neil Smith and
Victoria Garrad shares under the RSA Plan in July 2024 at what it
believes is a modest level compared to share awards in comparator
companies for Executive Directors, and the Committee is satisfied
that the total remuneration opportunities combining fixed salary,
bonus and long-term share-based pay continue to reflect a cautious
and cost sensitive perspective for the Executive Directors which has
applied since IPO and served the business well to date.
Rod Waldie will continue to not participate in the share incentive
scheme for FY25 as he is deemed to be sufficiently incentivised by
his existing shareholding.
Long term incentives vested during the year
In September 2023 conditional options granted in 2020 pursuant
to the Group’s LTIP matured. 68% of the total awards were capable
of being exercised by participants, including Neil Smith and Victoria
Garrad who each received 10,682 shares against the initial grant of
15,974 options.
Report on remuneration: voluntary disclosure
continued
Gateley (Holdings) Plc Annual report and financial statements
67
66
Business overview
Strategic report
Corporate governance
Our financials
Directors' Interests
Directors' shareholdings at the year end were as follows:
At 30 April 2024
At 30 April 2023
10p ordinary shares
10p ordinary shares
Number of shares
Percentage Holding
Number of shares
Percentage Holding
Nigel Payne
70,918
0.05%
70,942
0.06%
Joanne Lake
26,300
0.02%
26,300
0.02%
Suzanne Thompson
-
-
12,272
0.01%
Colin Jones
-
-
Roderick Waldie
1,235,670
0.93%
1,275,670
1.01%
Michael Ward1
-
-
1,990,000
1.57%
Victoria Garrad
535,235
0.40%
569,478
0.45%
Neil Smith
333,399
0.24%
362,537
0.29%
1. Michael Ward resigned from the board with effect from 27 October 2023.
The following Directors held share options under the LTIP Scheme as at 30 April 2024:
Number of shares at
30 April 2024
Date of grant
Exercise price
Earliest exercise date
Neil Smith
25,000
27 April 2022
£nil
1 May 2025
Neil Smith
40,000
23 February 2023
£nil
1 May 2026
Victoria Garrad
25,000
27 April 2022
£nil
1 May 2025
Victoria Garrad
40,000
23 February 2023
£nil
1 May 2026
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 Executive
Directors are Locked-in Shareholders in respect of the share
interests detailed above.
The Agreement became effective on 8 June 2020 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 2020.
Report on remuneration: voluntary disclosure
continued
The Directors present their annual report and the audited financial
statements for the year ended 30 April 2024.
Principal activities
The principal activities of the Gateley 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 32 and the Chief Financial Officer’s
review on pages 34 to 39. The Group’s key performance indicators
(KPIs) are set out on pages 41 and 42. The strategic report, which
includes a description of the principal risks and uncertainties facing
the Group, is set out on pages 24 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 2024 the EBT purchased 2,948,417
shares with a nominal value of 10p in the company (2023:
281,702) at a cost of £3,338,986 (2023: £435,791).
Dividends
The Directors propose to recommend a final dividend of 6.2p
(2023: 6.2p) per share, be paid, giving a total dividend for the year
of 9.5p (2023: 9.5p). The final dividend has not been included
within creditors as it was not approved before the year end.
Directors’ report
The Directors and their interests in the shares of the parent company
10p ordinary shares
10p ordinary shares
Number of
shares
2024
Percentage
Holding
2024
Number of
shares
2023
Percentage
Holding
2023
Nigel Terrence Payne
70,918
0.05%
70,942
0.06%
Joanne Carolyn Lake
26,300
0.02%
26,300
0.02%
Colin Robert Jones
-
-
-
-
Roderick Richard Waldie
1,235,670
0.93%
1,275,670
1.01%
Victoria Louise Garrad
535,235
0.40%
569,478
0.45%
Neil Andrew Smith
333,399
0.24%
362,537
0.29%
Substantial shareholdings
The Company was notified that the following held interest of 3% or more of the issued share capital of the Company as at 30 April 2024:
Name
Number of
ordinary shares
% of issued
share capital
Liontrust Asset Management
13,862,113
10.42%
Octopus Investments
11,430,163
8.59%
Columbia Threadneedle Investments
7,734,910
5.81%
Gateley (Holdings) Plc Annual report and financial statements
69
68
Business overview
Strategic report
Corporate governance
Our financials
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.
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.
Auditor
In accordance with section 489 of the Companies Act 2006,
a resolution for the re-appointment of MHA as auditor of the
Company is to be proposed at the forthcoming Annual General
Meeting.
By order of the board
Rod Waldie
Chief Executive Officer
15 July 2024
One Eleven Edmund Street
Birmingham
West Midlands
B3 2HJ
Directors’ report
continued
Gateley (Holdings) Plc Annual report and financial statements
71
70
Business overview
Strategic report
Corporate governance
Our financials
Business overview
Strategic report
Corporate governance
Our financials
73
Business overview
Strategic report
Corporate governance
Our financials
Gateley (Holdings) Plc Annual report and financial statements
72
Financial
statements
In this section
Independent auditors’ report to the members
of Gateley (Holdings) plc
74
Consolidated statement of profit and loss and other
comprehensive income
82
Consolidated statement of financial position
83
Consolidated statement of changes in equity
85
Consolidated cash flow statement
87
Notes to the consolidated financial statements
88
Parent company statement of financial position
124
Parent company statement of changes in equity
125
Parent company cash flow statement
126
Parent company notes to the financial statements
127
Notice of Annual General Meeting
139
Company information
147
Gateley (Holdings) Plc Annual report and financial statements
75
74
Business overview
Strategic report
Corporate governance
Our financials
Independent auditor’s report
to the members of Gateley (Holdings) plc
For the purpose of this report, the terms “we” and “our” denote MHA 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 76 and
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 2024.
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 32 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 14 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 2024 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.
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 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.
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, including an assessment of inputs and assumptions and
respective challenge in assessing the budgets and forecasts.
•
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
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
2024
2023
Group
£1,146k
£810k
5% (2023: 5% profit before tax) of underlying profit before tax and
exceptional items
Parent Company
£630k
£405k
1% (2023: 1%) of net assets
Key audit matters
Group (recurring)
•
Revenue recognition - cut off of billed revenue
•
Accrued income – existence and valuation* **
*This key audit matter did not include the assertion of existence in the prior year.
**This key audit mater included the assertion of cut-off in the prior year.
Gateley (Holdings) Plc Annual report and financial statements
77
76
Business overview
Strategic report
Corporate governance
Our financials
Independent auditor’s 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
Key observations
communicated to the
Group’s Audit Committee
Revenue recognition – cut off of billed revenue (note 4)
Revenue (in respect of client matters)
is recognised in accordance with IFRS 15
‘Revenue from Contracts with Customers’.
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
accrued income should be written off as
irrecoverable.
Revenue is one of the material balances in
the financial statements and is of particular
interest to potential and existing investors
which is why its recognition has been
classified as a key audit matter.
We reviewed a sample of sales invoices issued
post year end to ensure that any services had
been provided pre year end had been recognised
in accrued income. The evidence of services
being provided included, but was not limited to,
time records maintained by fee earners and client
contracts.
Pre year end cut off testing was tested within our
revenue existence and receivables existence tests,
where a sample of invoices were tested to ensure
they were recognised in the correct period, and
that the entity was entitled to the revenue.
We reviewed post year end time sheets to identify
if accrued revenue is complete which fed into our
revenue testing.
Nothing has come to
our attention indicating
that there is a material
misstatement in the cut-
off of billed revenue.
Accrued income – existence and valuation (note 19)
Accrued income arises where work has
been performed on a matter, but an invoice
has not been raised pre year end. There
is judgement in the calculation of accrued
income in terms of the recoverability of the
time recorded and whether the accrued
income relates to a live matter.
Contingent accrued income may not be
included in the year-end accrued income
valuation, even though the contingent event
has not occurred and therefore should be
recognised as accrued income.
Revenue and accrued income are two of
the most material figures in the financial
statements and would be of particular
interest to potential and existing investors
which is why they have been classified as a
KAM.
We evaluated the Group’s accounting policies for
recognition of accrued 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 reviewed, on a sample basis, client engagement
terms to ensure client matters are classified correctly
between contingent and noncontingent and also to
support the existence of accrued revenue recognised
in the period. Where engagement letters were not
available, we obtained sufficient audit evidence such
as email correspondence.
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. As part of the
audit procedures, we agreed a sample of contingent
matters to post year-end billing.
Key audit matter description
How the scope of our audit responded to the key
audit matter
Key observations
communicated to the
Group’s Audit Committee
Accrued income and contract assets are
synonymous.
For accrued income recognised in the year, we
tested on a sample basis that entitlement to revenue
had been obtained through proof of service being
delivered and that time had been recorded pre
year-end confirming that the matter is live to prove
existence of revenue.
We performed controls testing by reviewing
management internally designed and developed
application tool, which requires fee earners to visit all
matters live at the year-end. As part of this exercise,
fee earners are required to adjust the accrued income
figure to what they deem appropriate at the year-end
and are also required to ensure that all matters are
correctly classified between contingent and non-
contingent.
Following the extraction of data from the application
tool, management performs a top-up assessment
identifying any exceptions in matters. We then
tested the completeness of data, the reviews of
significant write offs and unusual recoveries to test
managements approach to reviewing accrued income.
We assessed the valuation of the accrued income
by review of after date billing and movements on
timesheets to ensure the matter is live. We also tested
and challenged the expected credit losses (ECL)
against accrued income.
We also reviewed the accrued income accounts
disclosure to identify any material omissions and to
ensure the disclosure was materially accurate.
Nothing has come to
our attention indicating
that there is any material
misstatement in the
existence or valuation of
accrued income.
Gateley (Holdings) Plc Annual report and financial statements
79
78
Business overview
Strategic report
Corporate governance
Our financials
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.
Group
Parent
Overall Materiality
£1,146k (2023: £810k)
£630k (2023: £405k)
•
Basis of
determining
overall
materiality
We determined materiality based on 5% underlying profit before tax
and exceptional items (2023: 5% profit before tax).
We consider underlying profit before tax and exceptional items to
be the main measure by which the users of the financial statements
assess the financial performance, success and risk exposure of the
Group. Therefore, we consider this to be the most appropriate
benchmark for Group materiality
Following the change in accounting treatment of acquisitions in
the prior year (involving a prior period adjustment) we took the
opportunity to review the basis of materiality based on the fact that
the business remains fundamentally unaltered, but the change of
accounting treatment results in lower reported profits. We are also
aware that stakeholders are primarily focused on the underlying
profits of the group rather than the effects of acquisitions and
exceptional items. We therefore considered it appropriate to use
underlying profit before tax and exceptional items as the new basis
of materiality in the current year.
We determined materiality on the
basis of 1% (2023: 1%) of the
Parent Company’s net assets.
Net assets were deemed to be the
appropriate benchmark for the
calculation of materiality as this is a
key area of the financial statements
because the Parent Company is
largely a holding company incurring
limited costs.
Performance
materiality
£802.2k (2023: £567k)
£441k (2023: £283.5k)
•
Basis of
determining
overall
performance
materiality
We set performance materiality based on 70% (2023: 70%) of
overall materiality.
We set performance materiality
based on 70% (2023: 70%) of
overall materiality.
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.
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.
De minimis
We agreed to report any corrected or uncorrected adjustments
exceeding £57.3k (2023: £40.5k) to the Audit Committee as well
as differences below this threshold that in our view warranted
reporting on qualitative grounds.
We agreed to report any corrected
or uncorrected adjustments
exceeding £31.5k (2023: £20.25k)
to the Audit Committee as well as
differences below this threshold
that in our view warranted reporting
on qualitative grounds.
Independent auditor’s report
continued
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 23 reporting components
of the Group, we identified 22 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
•
Gateley Smithers Purslow Limited
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
Revenue
Net assets/
(liabilities)
Profit
before tax
Full scope audit
3
80%
107%
79%
Analytical review and specific targeted procedures
20
20%
(7%)
21%
Total
23
100%
100%
100%
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 placed reliance on controls for the purposes of accrued income
testing. Our specific testing has been documented in the key audit matters section.
We deployed our internal IT specialists to obtain an understanding of the general IT environment. They obtained assurance sufficient
that the IT system could be relied on in relation to our controls testing and noted a small number of minor management points for
the clients attention. Our internal specialists also reviewed the integration of the time recording application with the accounting
application, no significant issues were noted in this regard.
Climate-related risks
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.
Gateley (Holdings) Plc Annual report and financial statements
81
80
Business overview
Strategic report
Corporate governance
Our financials
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.
Strategic report and directors report
In our opinion, based on the work undertaken in the course of
the audit:
•
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.
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.
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
Independent auditor’s report
continued
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,
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.
•
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 to meet
market expectations and management bias in accounting
estimates particularly in determining expected credit losses
and provisions against accrued income.
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;
–
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
15 July 2024
MHA is the trading name of MacIntyre Hudson LLP, a limited liability
partnership in England and Wales (registered number OC312313)
Gateley (Holdings) Plc Annual report and financial statements
83
82
Business overview
Strategic report
Corporate governance
Our financials
Note
2024
£’000
2023
£’000
Revenue
4
172,492
162,683
Other operating income
5
153
49
Personnel costs, excluding IFRS 2 charge
7
(108,490)
(96,765)
Depreciation – Property, plant and equipment
13
(1,140)
(936)
Depreciation – Right-of-use asset
13
(3,949)
(3,976)
Impairment of trade receivables and contract assets
19/20
(591)
(1,334)
Other operating expenses, excluding non-underlying and exceptional items
(38,219)
(34,741)
Operating profit before non-underlying and exceptional items
6
20,256
24,980
Non-underlying operating items
6
(7,516)
(8,858)
Exceptional items
6
(1,563)
-
(9,079)
(8,858)
Operating profit
6
11,177
16,122
Financial income
9
4,999
1,735
Financial expense
9
(2,221)
(1,645)
Profit before tax
13,955
16,212
Taxation
10
(3,881)
(3,972)
Profit for the year after tax attributable to equity holders of the parent
10,074
12,240
Other comprehensive income
Items that are or may be reclassified subsequently to profit or loss
- Revaluation of other investments
129
(26)
- Exchange differences on translation of a foreign branch
(20)
(49)
Profit for the financial year and total comprehensive income all attributable to
equity holders of the parent
10,183
12,165
Statutory Earnings per share
Basic
11
7.74p
9.77p
Diluted
11
7.63p
9.52p
The results for the periods presented above are derived from continuing operations.
The accompanying notes on pages 88 to 123 form an integral part of these financial statements.
Consolidated statement of profit and loss
and other comprehensive income
for the year ended 30 April 2024
Note
2024
£’000
2023
£’000
Non-current assets
Property, plant and equipment
13
1,583
1,628
Right of use asset
13
23,621
27,098
Investment property
14
164
164
Deferred tax asset
23
373
830
Intangible assets and goodwill
15
13,768
12,929
Other intangible assets
17
647
1,090
Other investments
18
275
147
Total non-current assets
40,431
43,886
Current assets
Contract assets
19
23,543
20,388
Trade and other receivables
20
82,473
73,272
Cash and cash equivalents
25
16,674
11,105
Total current assets
122,690
104,765
Total assets
163,121
148,651
Non-current liabilities
Other interest-bearing loans and borrowings
21
-
(6,813)
Lease liability
29
(24,178)
(28,716)
Deferred tax liability
23
(2,968)
(2,941)
Provisions
24
(3,725)
(1,290)
Total non-current liabilities
(30,871)
(39,760)
Current liabilities
Other interest-bearing loans and borrowings
21
(12,908)
-
Trade and other payables
22
(33,112)
(25,933)
Lease liability
29
(4,346)
(3,257)
Provisions
24
(175)
(107)
Current tax liabilities
(1,378)
(1,482)
Total current liabilities
(51,919)
(30,779)
Total liabilities
(82,790)
(70,539)
NET ASSETS
80,331
78,112
Consolidated statement of financial position
at 30 April 2024
Gateley (Holdings) Plc Annual report and financial statements
85
84
Business overview
Strategic report
Corporate governance
Our financials
Note
2024
£’000
2023
£’000
EQUITY
Share capital
26
13,304
12,664
Share premium
35
11,846
Merger reserve
(9,950)
(9,950)
Other reserve
19,383
15,413
Treasury reserve
(4,012)
(677)
Translation reserve
(71)
(51)
Retained earnings
61,642
48,867
TOTAL EQUITY
80,331
78,112
These financial statements were approved by the directors on 15 July 2024 and were signed and authorised for issue on their behalf by:
Rodrick R Waldie
Neil A Smith
Chief Executive Officer
Chief Financial Officer
Company registered number: 09310078
The accompanying notes on pages 88 to 123 form an integral part of these financial statements.
Share
capital
£’000
Share
premium
£’000
Merger
reserve
£’000
Other
reserve
£’000
Treasury
reserve
£’000
Retained
earnings
£’000
Foreign
currency
translation
reserve
£’000
Total
Equity
£’000
At 1 May 2022
12,456
11,342
(9,950)
14,465
(261)
47,088
(2)
75,138
Comprehensive income:
Profit for the year
-
-
-
-
-
12,240
-
12,240
Revaluation of other investments
-
-
-
-
-
(26)
-
(26)
Exchange rate differences
-
-
-
-
-
-
(49)
(49)
Total comprehensive income
-
-
-
-
-
12,214
(49)
12,165
Transactions with owners recognised
directly in equity:
Issue of share capital
208
504
-
948
-
-
-
1,660
Purchase of own shares at nominal value
-
-
-
-
-
(133)
-
(133)
Sale of treasury shares
-
-
-
-
20
-
-
20
Purchase of treasury shares
-
-
-
-
(436)
-
-
(436)
Recognition of tax benefit on gain from equity
settled share options
-
-
-
-
-
(398)
-
(398)
Dividend paid
-
-
-
-
-
(11,004)
-
(11,004)
Share based payment transactions
-
-
-
-
-
1,100
-
1,100
Total equity at 30 April 2023
12,664
11,846
(9,950)
15,413
(677)
48,867
(51)
78,112
At 1 May 2023
12,664
11,846
(9,950)
15,413
(677)
48,867
(51)
78,112
Comprehensive income:
Profit for the year
-
-
-
-
-
10,074
-
10,074
Revaluation of other investments
-
-
-
-
-
129
-
129
Exchange rate differences
-
-
-
-
-
-
(20)
(20)
Total comprehensive income
-
-
-
-
-
10,203
(20)
10,183
Transactions with owners recognised
directly in equity:
Issue of share capital
640
1,919
-
3,970
-
-
-
6,529
Cancellation of share premium account
-
(13,730)
-
-
-
13,730
-
-
Purchase of own shares at nominal value
-
-
-
-
-
(166)
-
(166)
Sale of treasury shares
-
-
-
-
4
-
-
4
Purchase of treasury shares
-
-
-
-
(3,339)
-
-
(3,339)
Recognition of tax benefit on gain from equity
settled share options
-
-
-
-
-
(343)
-
(343)
Dividend paid
-
-
-
-
-
(12,335)
-
(12,335)
Share based payment transactions
-
-
-
-
-
1,686
-
1,686
Total equity at 30 April 2024
13,304
35
(9,950)
19,383
(4,012)
61,642
(71)
80,331
Consolidated statement of changes in equity
Consolidated statement of financial position
continued
Gateley (Holdings) Plc Annual report and financial statements
87
86
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 123 form an integral part of these financial statements.
Note
2024
£’000
2023
£’000
Cash flows from operating activities
Profit for the year after tax
10,074
12,240
Adjustments for:
Depreciation and amortisation
13/15/17
8,015
7,246
Financial income
9
(4,999)
(1,735)
Financial expense
9
1,051
495
Interest charge on capitalised leases
9
1,170
1,150
Equity settled share-based payments
7
1,686
1,100
Gain on bargain purchase
16
(3,609)
(1,389)
Acquisition related earn-out remuneration charge
6
6,956
6,190
Earn-out consideration paid - acquisition of subsidiary
(3,790)
(50)
Initial consideration paid on acquisitions
(2,035)
(1,468)
Loss on disposal of property, plant and equipment
6
-
82
Tax expense
10
3,881
3,972
18,400
27,833
Increase in trade and other receivables
(10,658)
(6,942)
Increase/(decrease) in trade and other payables
8,642
(7,259)
Increase in provisions
24
2,503
433
Cash generated from operations
18,887
14,065
Tax paid
(4,902)
(4,320)
Net cash flows from operating activities
13,985
9,745
Investing activities
Acquisition of property, plant and equipment
13
(1,045)
(1,312)
Acquisition of other intangible assets
17
-
(787)
Cash acquired on business combinations
16
1,239
483
Interest received
9
4,999
1,735
Net cash flows from investing activities
5,193
119
Financing activities
Interest and other financial income paid
9
(956)
(371)
Lease repayments
(5,091)
(4,550)
Receipt of new revolving credit facility
21
6,000
1,000
Proceeds from sale of own shares
4
-
Acquisition of own shares by Employee Benefit Trust
(3,339)
(416)
Cash received for shares issued on exercise of SAYE/CSOP options
2,108
477
Dividends paid
12
(12,335)
(11,004)
Net cash used in financing activities
(13,609)
(14,864)
Net increase/(decrease) in cash and cash equivalents
5,569
(5,000)
Cash and cash equivalents at beginning of year
11,105
16,105
Cash and cash equivalents at end of year
25
16,674
11,105
The accompanying notes on pages 71 to 119 form an integral part of these financial statements.
Consolidated cash flow statement
for year ended 30 April 2024
Consolidated statement of changes in equity
continued
Gateley (Holdings) Plc Annual report and financial statements
89
88
Business overview
Strategic report
Corporate governance
Our financials
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.
Audit exemption of subsidiaries
The following subsidiaries, consolidated into these Group
accounts, 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
Registered number
Gateley UK LLP
OC315778
Gateley EBT Limited
09576648
Gateley Capitus Limited
03324995
Gateley Hamer Limited
03948095
Gateley Omega Limited
13367322
Kiddy & Partners Limited
11379755
Gateley Global Limited
08597472
T-Three Consulting Limited
03959623
Gateley Vinden Limited
03830233
Matsa Holdings Limited
08293396
Thomas Alexander Holdings Limited
02280956
TVP Holdings Limited
06548795
SP 2018 Limited
11344448
Byrom Clark Roberts Limited
02390547
Gateley Smithers Purslow Limited
01402539
Smithers Purslow Group Limited
05508205
Ainsley Stokes Limited
03219786
Adamson Jones IP Limited
07188937
Symbiosis IP Limited
06658551
Gateley RJA Limited
07941809
Austen Hays Limited
14581598
GEG Services Limited
12374579
The outstanding liabilities at 30 April 2024 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.
Notes to the consolidated financial statements
(forming part of the financial statements)
1. Basis of preparation and material
accounting policies
Gateley (Holdings) Plc is a public company limited by shares,
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 24 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 variations in trading performance, mitigating
actions available to management the Group expects to be able to
operate within the Group’s financing facilities.
The Group’s Revolving Credit Facility expires in April 2025
however, discussions are underway with the Group’s banks to
provide a new facility, with terms anticipated to be agreed well
ahead of expiry of the current facility. Furthermore, the Group’s
supportive banks have provided a comfort letter that expresses
their willingness to extend the current facility to October 2025,
should it be required.
Sensitivity analysis has been performed in respect of specific
scenarios which could negatively impact our future performance
such as lower levels of revenue growth, lower than forecast
receipts of cash, and reduced levels of gross margin expansion.
In addition, the Directors have also considered further mitigating
actions such as lower capital expenditure and other short-term
cash management activities within the Group’s control. On this
basis, the Directors have a reasonable basis to conclude that
the Group is forecast to continue to trade in line with existing
financing facilities for the foreseeable future and at least
12 months from the approval of these financial statements.
Accordingly, the Directors continue to adopt the going concern
basis of accounting in preparing the financial statements.
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
Gateley (Holdings) Plc Annual report and financial statements
91
90
Business overview
Strategic report
Corporate governance
Our financials
concerned. Annual reviews are made of estimated useful lives
and material residual values.
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 Group recognises the lease payments as an operating
expense on a straight line basis over the term of the lease.
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;
•
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.
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.
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.
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 LLP’s)
are classified as a financial liability. Profit distributions relating to
equity instruments are debited direct to equity.
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 the simplified approach within 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 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
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
93
92
Business overview
Strategic report
Corporate governance
Our financials
Under IFRS 9 the Group recognises expected credit losses
(ECLs) on receivables through application of the simplified
method. The ECLs are determined using historic credit loss
experience adjusted for forward-looking factors and specific
provisions based on management knowledge and expertise.
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.
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.
Share-based payment transactions
The Group operates several equity settled share based
compensation plans.
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.
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.
1.10 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units for the
purpose of impairment assessment and is not amortised but is
tested at least annually for impairment, or whenever events or
changes in circumstances indicate the carrying value may not be
recoverable.
Other intangible assets
Other intangible assets, including software licences, expenditure
on internally generated computer software, brands, 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 15 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;
–
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.
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
3 to 11 years
Brands
15 years
Computer software
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.
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
95
94
Business overview
Strategic report
Corporate governance
Our financials
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.
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.
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.
1.21 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 as non-underlying as they are non-cash
items and do not need to be replaced on the statement
of financial position once fully written down, therefore
this cost will ultimately disappear from the statement of
comprehensive income.
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.
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.
1.23 Ordinary dividends
Dividends are recognised as a liability in the period in which they
are approved by the Company’s shareholders.
2. Accounting developments
New and revised IFRS in issue but not yet
effective
There have been no changes to international accounting
standards this year that have a material impact on the group’s
results. No forthcoming new international accounting standards
are expected to have a material impact on the financial
statements of the group.
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 the recognition of both contract assets
and liabilities. 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.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
97
96
Business overview
Strategic report
Corporate governance
Our financials
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 inclusion 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:
Increase/(decrease)
in value of trade
receivables
£’000
+1% increase in ECL
(582)
-1% decrease in ECL
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
+1% increase in ECL rate
(235)
-1% decrease in ECL rate
235
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.
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 2024 and also the new service
lines:
Reportable segment/Platforms
Legal service lines
Consultancy service lines
Corporate
Banking
Commercial
Corporate
Restructuring advisory
Taxation
GEG Services
International Investment Services
Business services
Austen Hays
Commercial Dispute Resolution
Complex International Litigation
IP
Regulatory
Reputation, media and privacy law
Adamson Jones
Symbiosis IP
People
Employment
Pensions
Private client
Entrust Pension
Kiddy and Partners
T-three
Property
Real Estate
Residential Development
Construction
Planning
Real Estate Dispute Resolution
Capitus
Hamer/Persona
RJA
Smithers Purslow
Vinden
The revenue and operating profit are attributable to the principal activities of the Group. A geographical analysis of revenue is given
below:
2024
£’000
2023
£’000
United Kingdom
156,760
151,489
Europe
9,016
5,459
Middle East
1,797
2,390
North and South America
2,478
1,675
Asia
1,878
1,163
Other
563
507
172,492
162,683
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
99
98
Business overview
Strategic report
Corporate governance
Our financials
The Group has no individual customers that represent more than 10% of revenue in either the 2024 or 2023 financial year. The Group’s
assets and costs are predominately located in the UK save for those assets and costs located in the United Arab Emirates (UAE) via
its Dubai subsidiary. Net Group assets of £0.09m (2023: Net Group assets of £0.08m) are located in the Group’s Dubai subsidiary.
Revenue generated by the Group’s Dubai subsidiary to customers in the UAE totalled £1.80m (2023: £2.39m) as disclosed above as
due from the customers in the Middle East.
2024
Business
Services
£’000
Corporate
£’000
People
£’000
Property
£’000
Total
£’000
Segment revenue from services transferred at a point in time
5,648
15,845
7,918
18,936
48,347
Segment revenue from services transferred over time
19,241
21,219
11,636
72,049
124,145
Total Segment revenue
24,889
37,064
19,554
90,985
172,492
Segment contribution (as reported internally)
7,523
13,975
5,772
33,240
60,510
Costs not allocated to segments:
Other operating income
153
Personnel costs
(18,087)
Depreciation and amortisation
(8,015)
Other operating expenses
(16,788)
Share based payment charges
(1,686)
Gain on bargain purchase
3,609
Contingent consideration treated as remuneration
(6,956)
Exceptional items
(1,563)
Net financial income
2,778
Profit for the financial year before taxation
13,955
2023
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
4,952
16,578
8,409
17,002
46,941
1
46,942
Segment revenue from services transferred
over time
16,872
22,200
12,027
64,642
115,741
-
115,741
Total segmental revenue
21,824
38,778
20,436
81,644
162,682
1
162,683
Segment contribution (as reported
internally)
5,330
13,948
5,983
31,037
56,298
1
56,299
Costs not allocated to segments:
Other operating income
49
Personnel costs
(11,091)
Depreciation and amortisation
(7,246)
Other operating expenses
(15,104)
Share based payment charges
(1,984)
Gain on bargain purchase
1,389
Contingent consideration treated as
remuneration
(6,190)
Net financial income
90
Profit for the financial year before taxation
16,212
Group entities may be engaged on a contingent basis; in such cases the Group considers the satisfaction of the contingent event as the
sole performance obligation within the contract. Fees are only billed once the contingent event has been satisfied. The initial financing
of these engagements is met by the Group. Due to the nature and timing of the billing, such engagements influence the contract asset
balance held in the balance sheet at year end. In the majority of cases the contingent event is expected to be concluded within one year
of the engagement date. The Group operates standard payment terms of 30 days. £11.1 million (2023: £16.4m) of the current period
revenue is derived from services satisfied, in part, in the previous period.
Services transferred over time
For non-contingent engagements, fee earners’ hourly rates are determined at the point of engagement with all hours attributed to the
engagement fully and accurately recorded. The recorded hours are then translated into fees to be billed and invoiced on a monthly
basis. The Group typically operates on 30 days credit terms, in line with IFRS 15 the performance obligations are fulfilled over time with
revenue being recognised in line with the hours worked.
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
101
100
Business overview
Strategic report
Corporate governance
Our financials
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.
5. Other operating income
2024
£’000
2023
£’000
Rental and service charge income
153
49
6. Expenses and auditor’s remuneration
Included in operating profit are the following:
2024
£’000
2023
£’000
Depreciation on tangible assets (see note 13)
1,140
936
Depreciation on right-of-use asset (see notes 13 and 29)
3,949
3,976
Short term and low value lease payments (see note 29)
76
82
Operating lease costs on property (see note 29)
116
166
Loss on sale of fixed assets
-
82
Notes to the consolidated financial statements
continued
2024
£’000
2023
£’000
Non-underlying items
Amortisation of intangible assets (see note 15)
2,483
2,073
Share based payment charges – Gateley Plc
1,625
1,984
Share based payment charges – Gateley RJA Limited
61
-
Gain on bargain purchase
(3,609)
(1,389)
Consideration treated as remuneration
6,956
6,190
7,516
8,858
Exceptional items
Acquisition costs
37
-
Reorganisation costs
1,159
-
One off remuneration charge – Gateley RJA Limited
367
-
Total non-underlying and exceptional items
9,079
8,858
Acquisition costs relate to third-party professional fees in connection with prospecting and completing acquisitions during the period.
Share based payment charges in Gateley Plc represent charges in accordance with IFRS 2 in respect of unexercised SAYE, CSOP, LTIP
and RSA Plan (See note 8).
Share based payment charges in Gateley RJA Limited represent shares awarded to staff following the successful acquisition of the
Company (See notes 7 and 8).
Reorganisation costs relate to restructuring and integration projects around the Group.
Auditor’s remuneration
2024
£’000
2023
£’000
Fees payable to the Company’s Auditor in respect of audit services:
Audit of these financial statements
115
107
Audit of financial statements of subsidiaries of the Company
23
22
138
129
Amounts receivable by the Company’s auditor and its associates in respect of:
Other assurance services
37
34
Other assurance services relate to Solicitors Accounts Rules review with associated reporting to legal regulators. This work is entirely
assurance focused.
Gateley (Holdings) Plc Annual report and financial statements
103
102
Business overview
Strategic report
Corporate governance
Our financials
7. Personnel costs
The average number of persons employed by the Group during the year, analysed by category, was as follows:
Number of employees
2024
2023
Legal and professional staff
1,068
1,000
Administrative staff
468
439
1,536
1,439
The aggregate payroll costs of these persons were as follows:
2024
£’000
2023
£’000
Wages and salaries
94,402
83,942
Social security costs
10,928
9,984
Pension costs
3,160
2,839
108,490
96,765
Non-underlying items (see note 6)
Share based payment expense – Gateley Plc
1,625
1,984
Share based payment expense – Gateley RJA Limited
61
-
110,176
98,749
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 48.
8. Share based payments
Group
At the year end the Group has eleven unexercised grants across four different equity-settled share based payment schemes.
Save As You Earn scheme (‘SAYE’)
The Group operates a HMRC approved SAYE scheme for all staff. Options under this scheme will vest if the participant remains
employed for the agreed vesting period of three years. Upon vesting, each option allows the holder to purchase the allocated ordinary
shares at a discount of 20% of the market price determined at the grant date.
During the year 1,766,571 SAYE 19/20 options vested with 1,395,589 being exercised by 30 April 2024 leaving 370,982 options still to
be exercised. New shares were issued to satisfy these options being 1,395,589 10p shares with a nominal value of £139,559.
Company Share Option Plan (‘CSOP’)
The Group operates an HMRC approved CSOP scheme for associates, senior associates, legal directors, equivalent positions in Gateley
Group subsidiary companies and Senior Management positions in our support teams. Options under this scheme will vest if the
participant remains employed for the agreed vesting period of three years. Upon vesting, each option allows the holder to purchase
the allocated ordinary shares at the price on the date of grant.
Long Term Incentive Plan (‘LTIP’)
The Group operates an LTIP for the benefit of Executive Directors and Senior Management. Awards under the LTIP may be in the
form of an option granted to the participant to receive ordinary shares on exercise dependent upon the achievement of profit related
performance conditions.
Notes to the consolidated financial statements
continued
Performance conditions
Options granted under the LTIP are only exercisable subject to the satisfaction of the following performance conditions which will
determine the proportion of the option that will vest at the end of the three-year performance period. The awards will be subject to an
adjusted fully diluted earnings per share performance measure as described in the table below:
Adjusted, fully diluted earnings per Share Compound Annual Growth Rate (CAGR)
over the three year period ending 30 April 2025/26
Amount Vesting %
Below 5%
0%
5%
25%
Between 5% and 10%
Straight line vesting
Above 10%
100%
The options will generally be exercisable after approval of the financial statements during the year of exercise. The performance period
for any future awards under the LTIP will be a three-year period from the date of grant. Vested and unvested LTIP awards are subject
to a formal malus and clawback mechanism.
During the year 742,998 LTIP 2020 options vested with 727,790 being exercised by 30 April 2024. New shares were issued to satisfy
these options being 727,790 10p shares with a nominal value of £72,779.
Restricted Share Award Plan (‘RSA Plan’)
The Group operates an RSA Plan for the benefit of Senior Management. Awards under the RSA Plan entitle the option holder to
participate in dividends however, the shares are restricted for a period of 5 years from issue, such that they cannot be traded.
The annual awards granted under all schemes are summarised below:
Weighted
average
remaining
contractual
life
Weighted
average
exercise
price
Originally
granted
Number
Lapsed/
exercised
at
30 April
2023
Number
At 1 May
2023
Number
Granted
during
the year
Number
Lapsed
during
year
Number
Exercised
in the
year
Number
At
30 April
2024
Number
SAYE
SAYE 19/20 –
30 September 2019
0 years
£1.28
822,625
(774,066)
48,559
-
-
(48,559)
-
SAYE 20/21 –
6 November 2020
0 years
£1.02
2,337,197
(463,339)
1,873,858
-
(107,287) (1,395,589)
370,982
SAYE 21/22 -
25 August 2021
0.3 years
£1.70
673,077
(172,062)
501,015
-
(219,751)
-
281,264
SAYE 22/23 -
22 September 2022
1.4 years
£1.55
1,070,154
(36,850)
1,033,304
-
(426,326)
(2,129)
604,849
SAYE 23/24 -
3 November 2023
2.5 years
£1.14
-
-
-
1,801,308
(95,668)
-
1,705,640
4,903,053 (1,446,317) 3,456,736
1,801,308
(849,032) (1,446,277)
2,962,735
CSOPS
CSOPS 20/21 –
7 July 2020
0 years
£1.35
976,797
(245,014)
731,783
-
(58,818)
(438,263)
234,702
CSOPS 22/23 -
14 December 2022
1.6 years
£1.74
300,000
(10,000)
290,000
-
(40,000)
-
250,000
1,276,797
(255,014)
1,021,783
-
(98,818)
(438,263)
484,702
Gateley (Holdings) Plc Annual report and financial statements
105
104
Business overview
Strategic report
Corporate governance
Our financials
Weighted
average
remaining
contractual
life
Weighted
average
exercise
price
Originally
granted
Number
Lapsed/
exercised
at
30 April
2023
Number
At 1 May
2023
Number
Granted
during
the year
Number
Lapsed
during
year
Number
Exercised
in the
year
Number
At
30 April
2024
Number
LTIPS
LTIPS 20/21 –
22 July 2020
0 years
£0.00
1,405,766
(303,519)
1,102,247
-
(374,457)
(727,790)
-
LTIPS - 27 April
2022
1.0 years
£0.00
1,115,000
(90,000)
1,025,000
-
(135,000)
-
890,000
LTIPS 23 Feb 2023
1.8 years
£0.00
1,320,000
-
1,320,000
-
(190,000)
-
1,130,000
3,840,766
(393,519)
3,447,247
-
(699,457)
(727,790)
2,020,000
RSA Plan
RSA Plan - 27 April
2022
3.0 years
£0.00
1,422,560
-
1,422,560
-
(237,500)
-
1,185,060
RSA Plan
23 February 2023
3.8 years
£0.00
1,175,000
(50,000)
1,125,000
-
(187,500)
-
937,500
RSA Plan
21 September
2023
4.4 years
£0.00
-
-
-
790,131
-
-
790,131
2,597,560
(50,000)
2,547,560
790,131
(425,000)
-
2,912,691
Fair value calculations
The award is accounted for as equity-settled under IFRS 2. The fair value of awards which are subject to non-market based
performance conditions is calculated using the Black Scholes option pricing model. The inputs to this model for awards granted during
the financial year are detailed below:
SAYE
RSA Plan
Grant date
03/11/2023
21/09/2023
Share price at date of grant
£1.31
£1.54
Exercise price
£1.14
£nil
Volatility
18.9%
18.9%
Expected life (years)
3.3
5.0
Risk free rate
4.36%
4.43%
Dividend yield
4.50%
0.00%
Fair value per share
Market based performance condition
-
-
Non-market based performance condition/no performance condition
£0.23
£1.535
Expected volatility was determined by using historical share price data of the Company since it listed on 8 June 2015. The expected life
used in the model has been based on management’s expectation of the minimum and maximum exercise period of each of the options
granted.
The total charge to the income statement for all schemes now in place, included within non-underlying items, is £1,686,000 (2023:
£1,984,000).
Notes to the consolidated financial statements
continued
9. Financial income and expense
Recognised in profit and loss
2024
£’000
2023
£’000
Financial income
Interest income
4,999
1,735
Total financial income
4,999
1,735
Financial expense
Interest expense on bank borrowings measured at amortised cost
(1,051)
(495)
Interest on lease liability
(1,170)
(1,150)
Total financial expense
(2,221)
(1,645)
Net financial income
2,778
90
10. Taxation
2024
£’000
2023
£’000
Current tax expense
Current tax on profits for the year
4,341
4,974
Under provision of taxation in previous period
73
58
Total current tax
4,414
5,032
Deferred tax expense
Origination and reversal of temporary differences
(646)
(472)
Over/(under) provision on share-based payment charges
113
(588)
Total deferred tax expense
(533)
(1,060)
Total tax expense
3,881
3,972
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United
Kingdom applied to profits for the year are as follows:
2024
£’000
2023
£’000
Profit for the year (subject to corporation tax)
13,955
16,212
Tax using the Company’s domestic tax rate of 25% (2023: 19%)
3,489
3,080
Expenses not deductible for tax purposes
206
1,422
Under provision of taxation in previous period
73
58
Over/(under) provision on share-based payment charges
113
(588)
Total tax expense
3,881
3,972
The Finance Act 2021 increased the main rate of corporation tax to 25% from 1 April 2023.
Gateley (Holdings) Plc Annual report and financial statements
107
106
Business overview
Strategic report
Corporate governance
Our financials
11. Earnings per share
Statutory earnings per share
2024
Number
2023
Number
Weighted average number of ordinary shares in issue, being weighted average
number of shares for calculating basic earnings per share
130,127,316
125,244,334
Shares deemed to be issued for no consideration in respect of share based payments
1,980,638
3,283,007
Weighted average number of ordinary shares for calculating diluted earnings
per share
132,107,953
128,527,341
2024
£’000
2023
£’000
Profit for the year and basic earnings attributable to ordinary equity
shareholders
10,074
12,240
Non-underlying and exceptional items (see note 6)
Operating expenses
9,079
8,858
Tax on non-underlying and exceptional items
(391)
(168)
Underlying earnings before non-underlying and exceptional items
18,762
20,930
Earnings per share is calculated as follows:
2024
Pence
2023
Pence
Basic earnings per ordinary share
7.74
9.77
Diluted earnings per ordinary share
7.63
9.52
Basic earnings per ordinary share before non-underlying and exceptional items
14.42
16.71
Diluted earnings per ordinary share before non-underlying and exceptional items
14.20
16.28
12. Dividends
2024
£’000
2023
£’000
Equity shares:
Final dividend in respect of 2022 (5.5p per share) - 22 October 2022
-
6,835
Interim dividend in respect of 2023 (3.3p per share) - 24 March 2023
-
4,169
Final dividend in respect of 2023 (6.2p per share) - 23 October 2023
7,997
-
Interim dividend in respect of 2024 (3.3p per share) - 21 March 2024
4,338
-
12,335
11,004
The board proposes to recommend a final dividend of 6.2p (2023: 6.2p) per share at the AGM. If approved, this dividend will be
paid in October 2024 to shareholders on the register at the close of business on 11 October 2024. The shares will go ex-dividend on
10 October 2024. This dividend has not been recognised as a liability in these final statements.
Notes to the consolidated financial statements
continued
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 2022
340
7,232
5,628
35,428
48,628
Additions
-
827
485
6,447
7,759
Disposal
(27)
(323)
(88)
(1,722)
(2,160)
As at 30 April 2023
313
7,736
6,025
40,153
54,227
Balance at 1 May 2023
313
7,736
6,025
40,153
54,227
Additions
-
699
346
472
1,517
Arising through business combinations
34
90
-
-
124
Disposal
-
(22)
-
(630)
(653)
As at 30 April 2024
347
8,503
6,371
39,994
55,215
Depreciation and impairment
Balance at 1 May 2022
231
6,407
5,228
10,801
22,667
Depreciation charge for the year
16
562
358
3,976
4,912
Eliminated on disposal
(27)
(247)
(82)
(1,722)
(2,078)
Balance at 30 April 2023
220
6,722
5,504
13,055
25,501
Balance at 1 May 2023
220
6,722
5,504
13,055
25,501
Depreciation charge for the year
29
823
287
3,949
5,089
Arising through business combinations
15
59
-
-
74
Eliminated on disposal
-
(22)
-
(630)
(652)
Balance at 30 April 2024
264
7,582
5,791
16,374
30,011
Net book value
At 30 April 2023
93
1,014
521
27,098
28,726
At 30 April 2024
83
921
580
23,621
25,204
Gateley (Holdings) Plc Annual report and financial statements
109
108
Business overview
Strategic report
Corporate governance
Our financials
14. Investment property
£’000
Fair value
Balance at 1 May 2022 and 30 April 2023
164
Balance at 1 May 2023 and 30 April 2024
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 2024 at £164,000 (2023: £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 (2023: £nil) was received during the year. Services
charges of £3,089 (2023: £3,089) were incurred during the year.
15. Intangible assets and goodwill
Goodwill
£’000
Customer
lists
£’000
Brands
£’000
Total
£’000
Deemed cost
At 1 May 2022
1,550
16,261
3,518
21,329
Arising through business combinations
-
1,000
-
1,000
At 30 April 2023
1,550
17,261
3,518
22,329
Arising through business combinations
-
3,322
-
3,322
At 30 April 2024
1,550
20,583
3,518
25,651
Amortisation
At 1 May 2022
-
7,317
10
7,327
Charge for the year
-
1,838
235
2,073
At 30 April 2023
-
9,155
245
9,400
Charge for the year
-
2,248
235
2,483
At 30 April 2024
-
11,403
480
11,883
Carrying amounts
At 30 April 2023
1,550
8,106
3,273
12,929
At 30 April 2024
1,550
9,180
3,038
13,768
Within intangible assets includes a Gateley Smithers Purslow customer list asset of £4m (2023: £4.5m) which has a remaining life
of 9 years, and a Gateley RJA customer list asset of £3m (2023: £nil) which has a remaining useful life of 4 years and 3 months.
The entirety of the brand intangible relates to Gateley Smithers Purslow and has a remaining life of 13 years.
Goodwill is allocated to the following cash generating units:
2024
£’000
2023
£’000
Property Group
Gateley Capitus Limited
-
-
Gateley Hamer Limited
-
-
GCL Solicitors (acquisition of trade and assets)
-
-
Persona Associates Limited
40
40
Gateley Vinden Limited
934
934
Tozer Gallagher (acquisition of trade and assets)
-
-
Gateley Smithers Purslow Limited
-
-
Gateley RJA Limited
-
-
974
974
Employment , Pensions and Benefits Group
Kiddy & Partners Limited
-
-
International Investment Services Limited
-
-
T-three Consulting Limited
-
-
-
-
Business services Group
Gateley Tweed (acquisition of goodwill)
576
576
Adamson Jones IP Limited
-
-
Symbiosis IP Limited
-
-
576
576
1,550
1,550
Impairment testing
The Group tests goodwill annually for impairment. The impairment test involves determining the recoverable amount of the cash
generating unit (CGU) to which the goodwill has been allocated. The Directors believe that each operating segment represents a
cash generating unit for the business and as a result, impairment is tested for each segment, and all the assets of each segment are
considered.
The recoverable amount is based on the present value of expected future cash flows (value in use) which was determined to be higher
than the carrying amount of goodwill so no impairment loss was recognised.
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
111
110
Business overview
Strategic report
Corporate governance
Our financials
Value in use was determined by discounting the future cash flows generated from the continuing operation of the Group and was based
on the following key assumptions:
•
A pre-tax discount rate of between 12 and 21% (2023: 12-21%) was applied in determining the recoverable amount. The
discount rate is based on the Group’s average weighted cost of capital of 10.18% and adjusted according to the risks attributable
to each CGU.
•
The values assigned to the key assumptions represent management’s estimate of expected future trends and are based on both
external (industry experience, historic market performance and current estimates of risks associated with trading conditions)
and internal sources (existing management knowledge, track record and an in-depth understanding of the work types being
performed).
o
Growth rates of between 2% to 10% (2023: 2-10%) are based on management’s understanding of the market opportunities
for services provided pertaining to the industry in which each CGU is aligned.
o
Increases in costs are based on current inflation rates and expected levels of recruitment needed to generate predicted
revenue growth.
o
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.
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 2024 the Group completed two acquisitions. Gateley (Holdings) Plc completed the acquisition of
the entire share capital of Austen Hays Limited on 23 August 2023 for total consideration of £1. As this is immaterial to the financial
statements no further disclosures have been made in respect of this acquisition.
Acquisition of Gateley RJA Limited
On 19 July 2023 Gateley (Holdings) Plc acquired the entire issued share capital of Richard Julian and Associates Limited (‘RJA’). RJA
specialises in the provision of quantity surveying and project management services to organisations in the affordable housing sector.
The primary reason for the business combination is discussed within the CEO’s review on page 28.
The amounts recognised in respect of identifiable assets acquired and liabilities assumed are as set out in the table below:
Pre-
acquisition
carrying
amount
£’000
Policy
alignment
and fair
value
adjustments
£’000
Total
£’000
Intangible asset relating to customer list
-
3,322
3,322
Property, plant and equipment
82
-
82
Cash
1,239
-
1,239
Trade receivables
583
-
583
Prepayments and accrued income
89
-
89
Total assets
1,993
3,322
5,315
Trade payables
(7)
-
(7)
Accruals and other payables
(399)
-
(399)
Corporation tax
(227)
-
(227)
Other taxes and social security
(242)
-
(242)
Deferred tax
-
(831)
(831)
Total liabilities
(875)
(831)
(1,706)
Total identifiable net assets at fair value
1,118
2,491
3,609
Negative goodwill arising on acquisition
(3,609)
Total consideration
-
Satisfied by:
Initial cash consideration paid
2,035
Issue of 1,192,163 new 10p ordinary shares in Gateley (Holdings) Plc
1,896
Contingent cash consideration payable
1,034
Contingent share consideration payable
1,035
Less: amounts subject to continuing employment conditions
(6,000)
Total consideration
-
Net cash outflow arising on acquisition
Cash paid
(2,035)
Net cash acquired
1,239
Net cash outflow arising on acquisition
(796)
A contingent consideration arrangement was entered into as part of the acquisition. A further £2.1 million could be payable with any
payment subject to RJA achieving at least £4 million of revenue over the first 12 months post-acquisition, and not less than £5 million
of revenue for the following 12 months. Such payment is to be split in shares and cash as agreed between the Sellers and the Company,
providing no Seller is entitled to receive more than 50% of their total consideration in cash.
The negative goodwill of £3,609,000 has been recognised immediately in the statement of profit and loss and included within
non-underlying expenses.
From the date of acquisition Gateley RJA Limited has contributed £4.2m of revenue to the Group’s Statement of Comprehensive
Income together with after tax profit of £0.7m. If the acquisition had been completed on the first day of the financial year, Group
revenue and profit after tax would have been higher by £1.1m and £0.2m respectively.
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
113
112
Business overview
Strategic report
Corporate governance
Our financials
17. Other intangible assets
IT development
costs
£’000
Computer
software
£’000
Total
£’000
Cost
Balance at 1 May 2022
258
440
698
Additions
24
763
787
At 30 April 2023
282
1,203
1,485
Additions
-
-
-
At 30 April 2024
282
1,203
1,485
Amortisation
Balance at 1 May 2022
-
134
134
Charge for the year
40
221
261
At 30 April 2023
40
355
395
Charge for the year
80
363
443
At 30 April 2024
120
718
838
Net book value at 30 April 2023
242
848
1,090
Net book value at 30 April 2024
162
485
647
The Group’s amortisation policy, 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:
£’000
Fair value
Balance at 1 May 2022
173
Loss on revaluation - FVOCI
(26)
Balance at 30 April 2023
147
Gain on revaluation - FVOCI
128
Balance at 30 April 2024
275
£nil (2023: £nil) – Gateley Investments Limited holds a 1.9% investment in the ordinary shares of Manchester Biotech Limited
(formerly PeptiGelDesign Ltd).
£275,433 (2023: £146,535) – Gateley Plc holds a 3.0% investment in the ordinary shares in Incanthera Plc, acquired on
26 February 2020.
19. Contract assets and liabilities
Contract
assets
£’000
Trade
receivables
£’000
Contract
liabilities
£’000
As at 30 April 2024
23,543
58,056
(409)
As at 30 April 2023
20,388
54,167
(499)
Contract assets
Contract assets consist of unbilled revenue in respect of professional services performed to date.
Contract assets in relation to non-contingent work are recognised at appropriate intervals, normally on a monthly basis in arrears, in
line with the performance of the services and engagement obligations. Where such matters remain unbilled at the period end the asset
is valued on a contract-by-contract basis at its expected recoverable amount.
Contract assets in relation to contingent work are recognised at a point in time once the uncertainty over the contingent event has
been satisfied and all performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the
expected recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore
performance obligations may be settled in one period but the matter not billed until a later financial period. Until the performance
obligations have been performed the Group does not recognise any contract asset value at the year end.
During the year, contract assets of £nil (2023: £nil) were acquired in business combinations.
The Group applies the simplified approach to providing for the expected credit losses on contact assets.
An impairment loss of £656,000 has been recognised in relation to contract assets in the year (2023: loss £542,000). This is based on
the expected credit loss under IFRS 9 of these types of assets. The contract asset loss is estimated at 2.8% (2023: loss 2.7%) of the
balance.
Contract assets recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract assets, as detailed in note 1.17.
2024
£’000
2023
£’000
Contract asset value at 1 May
20,388
17,239
Contract assets arising on acquisition
-
-
Contract asset value added in the year
24,759
22,333
Contract asset value realised in the year
(21,604)
(19,184)
Contract asset value at 30 April
23,543
20,388
The Group have applied ECLs to unbilled revenue in order to account for the potential default on amounts not yet billed to the client.
The ECLs have been calculated on the same basis as those applied to trade receivables.
Contract liabilities
When matters are billed in advance or on a basis of a monthly retainer, this is recognised in contract liabilities and released over time
when the services are performed.
Contract liabilities recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract liabilities.
2024
£’000
2023
£’000
Contract liabilities at 1 May
499
569
Contract liabilities gained in the year
879
469
Contract liabilities credited to P&L in year
(969)
(539)
Contract liabilities at 30 April
409
499
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
115
114
Business overview
Strategic report
Corporate governance
Our financials
20. Trade and other receivables
2024
£’000
2023
£’000
Amounts falling due within one year:
Trade receivables
58,056
54,167
Prepaid consideration subject to earn-out service conditions
6,717
6,015
Prepayments
7,249
5,777
Other receivables including insurance receivables
2,083
233
74,105
66,192
£’000
£’000
Amounts falling due after one year:
Prepaid consideration subject to earn-out service conditions
8,368
7,080
Trade receivables
Trade receivables are recognised when a bill has been issued to the client, as this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due. Trade receivables also 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
2024
£’000
2023
£’000
Brought forward provision
(3,825)
(3,941)
Recognition of provisions for businesses acquired
-
-
Provision utilised
1,187
908
Charged to statement of profit and loss
(1,062)
(984)
Provisions released
443
192
(3,257)
(3,825)
The Group applies the simplified approach to providing for the expected credit losses under IFRS 9. Management have also elected to
apply an uplift to the IFRS 9 provision in the current year to account for the specific risks in the subsidiary entities where the application
of IFRS 9 alone is not considered appropriate.
2024
Not passed
due
Past due
0-30 days
Past due
31-120 days
Past due
greater than
120 days
Total
Expected credit loss rate
2.32%
2.53%
2.69%
14.86%
Estimated total gross carrying amount £’000
35,813
6,777
4,343
14,380
61,313
Lifetime ECL £’000
831
172
117
2,137
3,257
Notes to the consolidated financial statements
continued
2023
Not passed
due
Past due
0-30 days
Past due
31-120 days
Past due
greater than
120 days
Total
Expected credit loss rate
2.98%
4.93%
5.96%
17.58%
Estimated total gross carrying amount £’000
33,175
6,594
5,943
12,280
57,992
Lifetime ECL £’000
987
325
354
2,159
3,825
The carrying amount of financial assets (including contract assets but not including equity investments) recorded in the financial
statements, which is net of any impairment losses, represents the Group’s maximum expected exposure to credit risk. Financial assets
include client and other receivables and cash. The Group does not hold collateral over these balances.
All the Group’s trade and other receivables have been reviewed for indicators of impairment. The specifically impaired trade receivables
are mostly due to customers experiencing financial difficulties.
An impairment loss of £1,062,000 has been recognised in relation to trade receivables in the year (2023: £984,000). This is based on
the expected credit loss under IFRS 9 of these types of assets. The trade receivables loss is estimated at 1.7% (2023: 1.7%) of the
balance.
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 are described
below. For more information about the Group’s exposure to interest rate and foreign currency risk, see note 27.
2024
2023
Fair
value
£’000
Carrying
amount
£’000
Fair
value
£’000
Carrying
amount
£’000
Non-Current liabilities
Bank borrowings
12,908
12,908
6,813
6,813
On 18 April 2022, the Company entered into a Revolving Credit Facility which provides total committed funding of £30m until
April 2025. Interest is payable at a margin of 1.95% above the SONIA reference rate. A commitment fee of one third of the applicable
margin is payable on the undrawn amounts.
As at 30 April 2024, the Group’s non-derivative financial liabilities have contractual maturities (including interest payments where
applicable) as summarised below:
Current
Non-current
30 April 2024
Within
6 months
£’000
6 to
12 months
£’000
1 – 5
years
£’000
Later than
5 years
£’000
Bank borrowings
-
14,133
-
-
Leases
2,721
2,720
19,855
7,926
Trade and other payables
12,839
-
-
-
Total
15,560
16,853
19,855
7,926
Gateley (Holdings) Plc Annual report and financial statements
117
116
Business overview
Strategic report
Corporate governance
Our financials
This compares to the maturity of the Group’s non-derivative financial liabilities in the previous reporting period as follows:
Current
Non-current
30 April 2023
Within
6 months
£’000
6 to
12 months
£’000
1 – 5
years
£’000
Later than
5 years
£’000
Bank borrowings
-
-
7,997
-
Leases
2,044
2,044
19,219
11,437
Trade and other payables
9,665
1,364
-
-
Total
11,709
3,408
27,216
11,437
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the
reporting date.
22. Trade and other payables
2024
£’000
2023
£’000
Current
Trade payables
12,839
9,370
Other taxation and social security payable
8,143
9,913
Other payables
-
295
Contingent consideration treated as remuneration
324
1,364
Accruals
11,397
4,492
Contract liabilities
409
499
33,112
25,933
23. Deferred tax
Deferred tax assets and liabilities are summarised below:
Deferred tax asset
The deferred tax asset recognised in the consolidated statement of financial position represents the future tax impact of issued share
based payments schemes that are yet to vest.
Share-based payments
£’000
At 1 May 2022
638
Credited during the year in the Consolidated income statement
590
Debited during the year to retained earnings
(398)
At 1 May 2023
830
Debited during the year in the Consolidated income statement
(114)
Debited during the year to retained earnings
(343)
At 30 April 2024
373
Notes to the consolidated financial statements
continued
Deferred tax liability
The deferred tax liability recognised in the Consolidated Statement of Financial Position represents the future tax impact of the Group’s
benefit from customer lists obtained through acquisitions.
Customer lists
£’000
At 1 May 2022
3,089
Arising through business combinations – Symbiosis IP Limited
250
Credited during the year in the Consolidated income statement
(398)
At 30 April 2023
2,941
Arising through business combinations – Gateley RJA Limited
831
Credited during the year in the Consolidated income statement
(804)
At 30 April 2024
2,968
24. Provisions
2024
£’000
2023
£’000
Current provision
Professional indemnity provision
175
107
Total current provision
175
107
Non-current provision
Professional indemnity provision
3,088
903
Dilapidations provision
637
387
Total non-current provision
3,725
1,290
Total provisions
3,900
1,397
Professional indemnity estimated claim cost
2024
£’000
2023
£’000
Brought forward
1,010
750
Provisions made during the year
2,253
350
Provisions reversed during the year
-
(90)
At end of year
3,263
1,010
Non-current
3,088
903
Current
175
107
3,263
1,010
The Group from time to time receives claims in respect of alleged professional negligence which it defends where appropriate but
makes provision for the best estimate of probable amounts considered likely to be payable as set out above. Inevitably, these estimates
depend on the outcome and timing of future events and may need to be revised as circumstances change. A different assessment of
the likely outcome in each case or of the probable cost involved may result in a different level of provision recognised. Professional
indemnity Insurance cover is maintained in respect of professional negligence claims.
Gateley (Holdings) Plc Annual report and financial statements
119
118
Business overview
Strategic report
Corporate governance
Our financials
Dilapidations provision
The Group has leases for a number of offices, some of which include dilapidation clauses. The Group maintains the office buildings
throughout each lease term with regular maintenance, however a cost is likely to arise at the end of the lease term in order to return
the space to its original condition. Management have therefore elected to introduce a dilapidations provision to account for the future
cost. The provision is based on management’s estimate of the total costs across all applicable lease to be recognised on a straight line
basis over the total lease terms.
2024
£’000
2023
£’000
At 1 May
387
214
Provision made in the year
250
173
At 30 April
637
387
25. Net debt
2024
£’000
2023
£’000
Cash and cash equivalents
16,674
11,105
Debt
Total loans brought forward
(38,786)
(34,641)
Revolving credit facility
(6,095)
(1,098)
New lease liability in the year
(1,642)
(7,597)
Repayment of lease liability
5,091
4,550
Total loan carried forward
(41,432)
(38,786)
Brought forward from previous year
(27,681)
(18,536)
Movement during year
2,923
(9,145)
Net debt at the year end
(24,758)
(27,681)
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
Long term
borrowings
£’000
Short term
borrowings
£’000
Lease
liabilities
£’000
Total
£’000
1 May 2023
6,813
-
31,973
38,786
Cashflows:
Repayments
(5,000)
-
(5,091)
(10,091)
Receipt of revolving credit facility
11,000
-
-
11,000
Non-cash
Reclassification to short term borrowings
-
-
-
-
Loan arrangement fee unwind
95
-
-
95
New lease liability in the year
-
-
1,642
1,642
Reclassification to short term borrowings
(12,908)
12,908
-
-
30 April 2024
-
12,908
28,524
41,432
Notes to the consolidated financial statements
continued
Long term
borrowings
£’000
Short term
borrowings
£’000
Lease
liabilities
£’000
Total
£’000
1 May 2022
5,715
-
28,926
34,641
Cashflows:
Repayments
(2,000)
-
(4,550)
(6,550)
Receipt of revolving credit facility
3,000
-
-
3,000
Non-cash
Fair value on acquisition
98
-
-
98
New lease liability in the year
-
-
7,597
7,597
30 April 2023
6,813
-
31,973
38,786
26. Share capital
Authorised, issued and fully paid
2024
2024
2023
2023
Number
£
Number
£
Ordinary shares of 10p each
Brought forward
126,636,157
12,663,615
124,556,879
12,455,687
Issued on acquisition of Richard Julian and Associates
Limited
1,192,163
119,216
-
-
Issued as part of contingent consideration of
Gateley Smithers Purslow Limited
1,661,790
166,179
-
-
Issued on acquisition of Symbiosis IP Limited
-
-
523,012
52,301
Issued as part of contingent consideration of
Tozer Gallagher LLP
-
-
25,071
2,507
Issued on vesting of RSA Plan
790,131
79,013
1,175,000
117,500
Issued on vesting of SAYE
1,591,555
159,156
356,195
35,620
Issued on vesting of LTIP
727,790
72,779
Issued on vesting of CSOPS
438,263
43,826
-
-
At 30 April
133,037,849
13,303,784
126,636,157
12,663,615
The Company has one class of Ordinary shares which carry no right to fixed income. Each share has full rights in respect to voting.
On 19 July 2023 the Company acquired the entire issued share capital of Richard Julian and Associates Limited in part for the issue of
1,192,163 10p ordinary shares.
On 2 November 2023 the Company issued 1,661,790 10p ordinary shares to satisfy the contingent consideration on the acquisition of
Gateley Smithers Purslow Limited.
Between 1 May 2023 and 30 April 2024 1,591,555 10p ordinary shares were issued upon vesting of the 2019/2020 SAYE schemes to
participants.
On 27 September 2023 727,790 10p ordinary shares were issued upon vesting of the 2020 LTIP scheme to participants.
On 21 September 2023 790,131 10p ordinary shares were issued upon issue of the FY24 RSA Plan to participants.
Gateley (Holdings) Plc Annual report and financial statements
121
120
Business overview
Strategic report
Corporate governance
Our financials
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 and contract assets.
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 2024.
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.
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.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers.
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 on the grounds of materiality.
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. See page 116 for further analysis.
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/Dirhams 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.
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:
•
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)
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):
2024
£’000
2023
£’000
Quoted investments
275
147
Cash and cash equivalents
16,674
11,105
Contract assets
23,621
20,388
Trade receivables at amortised cost
58,056
54,167
Total financial assets
98,626
85,807
Trade and other payables
(21,385)
(15,521)
Current borrowings
(12,908)
-
Current financial liabilities
(34,293)
(15,521)
Long-term borrowings
-
(6,813)
Other payables due after more than one year
-
-
Total financial liabilities
(34,293)
(22,334)
Financial assets contain trade receivables and unbilled revenue whereas financial liabilities contain trade payables, other payables,
contingent consideration and accruals.
Measurement of fair value of financial instruments
The Group performs valuations of financial items for financial reporting purposes, 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. The only instruments held at fair value are quoted investments and as these are
immaterial to the financial statements no further disclosures have been made in respect of the specific valuation techniques used.
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:
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
123
122
Business overview
Strategic report
Corporate governance
Our financials
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:
2024
Increase/
(decrease)
in profit and loss
£’000
2023
Increase/
(decrease)
in profit and loss
£’000
+1 % movement in interest rates
130
70
-1 % movement in interest rates
(130)
(70)
The group’s borrowing facility consists solely of a revolving credit facility which provides committed funding of £30m until April 2025.
Foreign exchange rate sensitivity analysis
The Group had the following net currency denominated financial instruments at year end:
2024
£’000
2023
£’000
Net currency
112
359
The effect of foreign currency fluctuations on the financial statements is immaterial.
28. Capital commitments
There were no capital commitments at 30 April 2024 (2023: £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
12
4.5 years
27,088
-
(3,849)
23,239
IT equipment
1
0 years
9
-
(9)
-
Electric vehicles
13
2.4 years
-
472
(90)
382
* Where properties within the same building are leased on a floor by floor basis on the same contractual terms, the Group has elected to treat these as a portfolio and are
counted as a single leased asset within the table
Lease liabilities are presented in the statement of financial position as follows:
2024
£’000
2023
£’000
Current lease liability
4,346
3,257
Non-current lease liability
24,178
28,716
A number of property leases held by the Group include break or termination options. The lease liability has been calculated based on
the likelihood of such option being exercised. An option would only be exercised when in line with the 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.
The table below shows amounts recognised in the Statement of Comprehensive Income for short term and low value leases as at
30 April 2024:
Property
£’000
Equipment
£’000
Total
£’000
Expenses relating to short-term leases
116
16
132
Expenses relating to leases of low-value assets, excluding short-term
leases of low value assets
-
60
60
116
76
192
The total minimum undiscounted lease payments at 30 April 2024 under non-cancellable operating lease rentals were:
30 April 2024
£’000
30 April 2023
£’000
Within one year
5,441
4,088
In the second to fifth year inclusive
19,855
19,219
After five years
7,926
11,437
33,222
34,744
30. Related parties
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 £60,000 (2023: £120,000) and the amounts outstanding at the year-end are £nil (2023: £nil).
Compensation paid to key management personnel
At the year end, Directors of Gateley (Holdings) Plc control 1.64% (2023: 3.40%) 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 £3.597m (2023: £3.155m).
Short term remuneration to key management personnel is included in personnel costs and analysed as follows:
2024
£’000
2023
£’000
Wages and salaries
3,166
2,754
Social security
431
401
Pension costs
-
-
3,597
3,155
31. Pensions
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 £3,159,992 (2023: £2,839,162) and the
outstanding balance at the year end was £74,268 (2023: £54,216).
32. Post balance sheet events
The Directors are not aware of any material post balance sheet events.
Notes to the consolidated financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
125
124
Business overview
Strategic report
Corporate governance
Our financials
Note
2024
£’000
2023
£’000
Non-current assets
Investments
5
47,727
40,155
Total non-current assets
47,727
40,155
Current assets
Other receivables
6
28,373
22,309
Cash and cash equivalents
379
-
Total current assets
28,752
22,309
Total assets
76,479
62,464
Non-current liabilities
Other interest-bearing loans and borrowings
8
-
(6,813)
Total non-current liabilities
-
(6,813)
Current liabilities
Other interest-bearing loans and borrowings
8
(12,908)
-
Other payables
7
(561)
(1,501)
Total current liabilities
(13,469)
(1,501)
Total liabilities
(13,469)
(8,314)
Net assets
63,010
54,150
Equity
Share capital
9
13,304
12,664
Share premium
35
11,846
Other reserves
19,383
15,413
Share based payment reserve
7,599
5,913
Retained earnings
22,689
8,314
Total equity
63,010
54,150
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 2024 was £12,980,000 (2023: £13,391,000).
These financial statements were approved by the directors on 15 July 2024 and were signed and authorised on their behalf by:
Rodrick R Waldie
Neil A Smith
Chief Executive Officer
Chief Financial Officer
Company registered number: 09310078.
The accompanying notes on pages 127 to 136 form an integral part of these financial statements.
Parent company statement of financial position
at 30 April 2024
Parent company statement of changes in equity
for year ended 30 April 2024
Share
capital
£’000
Share
premium
£’000
Share
based
payment
reserve
£’000
Other
reserves
£’000
Retained
earnings
£’000
Total
Equity
£’000
At 1 May 2022
12,456
11,342
4,813
14,465
5,927
49,003
Comprehensive income:
Profit for the year
-
-
-
-
13,391
13,391
Total comprehensive income
-
-
-
-
13,391
13,391
Transactions with owners:
Dividend paid
-
-
-
-
(11,004)
(11,004)
Issue of share capital
208
504
-
948
-
1,660
Share based payment transactions
-
-
1,100
-
-
1,100
Total equity at 30 April 2023
12,664
11,846
5,913
15,413
8,314
54,150
At 1 May 2023
12,664
11,846
5,913
15,413
8,314
54,150
Comprehensive income:
Profit for the year
-
-
-
-
12,980
12,980
Total comprehensive income
-
-
-
-
12,980
12,980
Transactions with owners:
Dividend paid
-
-
-
-
(12,335)
(12,335)
Issue of share capital
640
1,919
-
3,970
-
6,529
Cancellation of share premium account
(13,730)
-
-
13,730
-
Share based payment transactions
-
-
1,686
-
-
1,686
Total equity at 30 April 2024
13,304
35
7,599
19,383
22,689
63,010
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 127 to 136 form an integral part of these financial statements.
Gateley (Holdings) Plc Annual report and financial statements
127
126
Business overview
Strategic report
Corporate governance
Our financials
Parent company notes to the financial statements
For the period ended 30 April 2024
(forming part of the financial statements)
1. Basis of preparation and material 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 246 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 and at least 12 months from the approval of these
financial statements.
Accordingly the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.
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.
Note
2024
£’000
2023
£’000
Cash flows from operating activities
Profit for the year
12,985
13,391
Interest expense
1,051
462
(Decrease)/Increase in liabilities
(940)
66
Increase in other receivables
(1,875)
(4,655)
Net cash flows from operating activities
11,221
9,264
Investing activities
Initial consideration paid on acquisitions
(2,035)
-
Earn-out consideration paid - acquisition of subsidiary
(3,790)
-
Net cash used in investing activities
(5,825)
-
Financing activities
Receipt of funds for issue of SAYE/RSA Plan/COP/LTIP shares
2,274
610
Receipt of revolving credit facility
8
6,000
1,000
Interest paid
(956)
(309)
Dividends paid
(12,335)
(11,004)
Net cash used in financing activities
(5,017)
(9,703)
Net increase/(decrease) in cash and cash equivalents
379
(439)
Cash and cash equivalents at beginning of the year
-
439
Cash and cash equivalents at end of year
379
-
The accompanying notes on pages 127 to 136 form an integral part of these financial statements.
Parent company cash flow statement
for year ended 30 April 2024
Gateley (Holdings) Plc Annual report and financial statements
129
128
Business overview
Strategic report
Corporate governance
Our financials
Parent company notes to the financial statements
continued
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
There have been no changes to international accounting standards this year that have a material impact on the Company’s results.
No forthcoming new international accounting standards are expected to have a material impact on the financial statements of the
Company.
2. Expenses
Audit fees in relation to the audit of these accounts of £10,000 (2023: £10,000) have been borne by Gateley Plc. The company does
not have any employees (2023: Nil).
3. Investment income
Intercompany dividends to the Company have been received from other Group entities as detailed below:
2024
£’000
2023
£’000
Dividend received from Gateley Plc – 25 April 2023
-
8,600
Dividend received from Gateley Plc – 3 February 2023
-
350
Dividend received from Gateley Plc – 31 October 2022
-
4,500
Dividend received from Gateley Smithers Purslow Limited – 19 October 2022
-
200
Dividend received from Gateley Vinden Limited – 19 October 2022
-
350
Dividend received from Gateley Plc – 23 October 2023
1,000
-
Dividend received from Gateley RJA Limited – 16 November 2023
600
-
Dividend received from Gateley Plc – 12 February 2024
3,900
-
Dividend received from Gateley Plc – 30 April 2024
8,600
-
14,100
14,000
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.
Gateley (Holdings) Plc Annual report and financial statements
131
130
Business overview
Strategic report
Corporate governance
Our financials
Registered office
Ordinary share
proportion held
Nature of business
Thomas Alexander Holdings Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Intermediate holding company
Austen Hays Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Legal services
TVP Holdings Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Intermediate holding company
SP 2018 Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Intermediate holding company
Smithers Purslow Group Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Intermediate holding company
Gateley Smithers Purslow Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Architecture, building
surveyance and civil &
structural engineering
Byrom Clark Roberts Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Dormant
Ainsley Stokes Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Architecture, building
surveyance and civil &
structural engineering
Adamson Jones IP Limited
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Patent attorney
Symbiosis IP Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Patent attorney
Gateley RJA Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Quantity surveyors
Gateley EBT Limited
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Employee benefit trust
Gateley Investments Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Corporate investment
company
Ensco Trustee Company Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Corporate trustee company
Gateley Secretaries Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
Gateley Incorporations Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
Gateley Custodian and Nominee Services
Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
Gateley Custodian and Nominee Services
No.2 Limited*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
Gateley Omega Limited (formerly Ensco
1413 Limited)
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
Gateley Trust Corporation Limited
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
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
£’000
At 1 May 2022
33,623
Share based payment charge
1,100
Capital contribution in respect of acquisition related remuneration
5,432
Balance at 30 April 2023
40,155
At 1 May 2023
40,155
Share based payment charge
1,686
Capital contribution in respect of acquisition related remuneration
5,886
Balance at 30 April 2024
47,727
Investments in subsidiaries
The Company has effective control of the following:
Registered office
Ordinary share
proportion held
Nature of business
Gateley Plc
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Legal services
Entrust Pension Limited
Ship Canal House 98, King Street,
Manchester, M2 4WU
100%
Pension trustee services
Gateley Capitus Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Tax incentive services
Gateley Hamer Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Specialist property
consultancy
Kiddy & Partners Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Human capital consultancy
Gateley Global Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
UK Investment consultancy
T-Three Consulting Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Human capital consultancy
Gateley Vinden Limited*
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Corporate advisory, dispute
resolution and consultancy to
the built environment in the
property and construction
markets
GEG Services Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
UK Investment services
provider
Matsa Holdings Limited
One Eleven, Edmund Street,
Birmingham, B3 2HJ
100%
Intermediate holding company
Parent company notes to the financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
133
132
Business overview
Strategic report
Corporate governance
Our financials
7. Other payables
2024
£’000
2023
£’000
Contingent consideration treated as remuneration due in one year
324
1,364
Other payables
237
137
561
1,501
8. Other interest-bearing loans and borrowings
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.
2024
2023
Fair
value
£’000
Carrying
amount
£’000
Fair
value
£’000
Carrying
amount
£’000
Non-Current liabilities
Bank borrowings
12,908
12,908
6,813
6,813
On 18 April 2022, the Company entered into a revolving credit facility which provides total committed funding of £30m until April
2025. Interest is payable at a margin of 1.95% above the SONIA reference rate. A commitment fee of one third of the applicable margin
is payable on the undrawn amounts.
As at 30 April 2024, the Company’s non-derivative financial liabilities have contractual maturities (including interest payments where
applicable) as summarised below:
30 April 2024
Current
Non-current
Within 6
months
£’000
6 to 12
months
£’000
1 – 5
years
£’000
Later than
5 years
£’000
Other payables
-
561
-
-
Bank borrowings
-
14,133
-
-
Total
-
14,694
-
-
This compares to the maturity of the Company’s non-derivative financial liabilities in the previous reporting period as follows:
30 April 2023
Current
Non-current
Within 6
months
£’000
6 to 12
months
£’000
1 – 5
years
£’000
Later than
5 years
£’000
Other payables
-
1,364
-
-
Bank borrowings
-
-
7,997
-
Total
-
1,364
7,997
-
The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the
reporting date.
Registered office
Controlling
interest held
Nature of business
Gateley UK LLP**
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Legal services via a branch in
Dubai
Gateley (NI) LLP***
Imperial House, 4-10 Donegall
Square East, Belfast, Northern
Ireland, BT1 5HD
n/a
Legal services in Northern
Ireland
Victoria Louise Garrad and Richard Julian
Healey trading as Gateley Ireland***
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
n/a
Legal Services in Ireland
Gateley Heritage LLP*
One Eleven, Edmund Street,
Birmingham, West Midlands, B3 2HJ
100%
Non-trading
*
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
(NI) LLP and Gateley Ireland (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.
6. Other receivables
2024
£’000
2023
£’000
Amounts falling due within one year:
Amounts owed from Gateley Plc
11,832
9,051
Amounts owed from Gateley EBT Limited
646
517
Amounts owed from Gateley Vinden Limited
50
50
Amounts owed from Adamson Jones IP Limited
2,000
2,000
Prepaid consideration subject to earn-out service conditions
5,831
4,946
20,359
16,564
£’000
£’000
Amounts falling due after one year:
Prepaid consideration subject to earn-out service conditions
8,014
5,745
8,014
5,745
All intercompany receivables are anticipated to be due within one year and repayable on demand. No interest is charged
on intercompany balances repayable on demand.
The Directors are satisfied that no provisioning for impairment is required in respect of the receivables at 30 April 2024 (2023: £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.
Parent company notes to the financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
135
134
Business overview
Strategic report
Corporate governance
Our financials
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 do not consider this
to be a significant risk to the Company or Group. See page 115 for further analysis.
Foreign currency risk
The Group has one overseas operation based in Dubai which, therefore, exposes the Group to changes in Sterling/ Dirhams 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.
There are no financial instruments carried at fair value within this financial information.
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):
2024
£’000
2023
£’000
Cash and cash equivalents
379
-
Group receivables
14,528
11,618
Total financial assets
14,907
11,618
Current borrowings
(12,908)
-
Other payables
(561)
(1,501)
Current financial liabilities
(13,469)
(1,501)
Long-term borrowings
-
(6,813)
Other payables
-
(1,364)
Total non-current liabilities
-
(8,177)
Total financial liabilities
(13,469)
(9,678)
The Company itself does not have any exposure to foreign exchange rates. The Group’s exposure is detailed in note 27.
9. Capital and reserves
Authorised, issued and fully paid
2024
2024
2023
2023
Number
£
Number
£
Ordinary shares of 10p each
Brought forward
126,636,157
12,663,615
124,556,879
12,455,687
Issued on acquisition of Richard Julian and Associates
Limited
1,192,163
119,216
-
-
Issued as part of contingent consideration of
Gateley Smithers Purslow Limited
1,661,790
166,179
-
-
Issued on acquisition of Symbiosis IP Limited
-
-
523,012
52,301
Issued as part of contingent consideration of
Tozer Gallagher LLP
-
-
25,071
2,507
Issued on vesting of LTIP
727,790
72,779
-
-
Issued on vesting of RSA Plan
790,131
79,013
1,175,000
117,500
Issued on vesting of SAYE
1,591,555
159,156
356,195
35,620
Issued on vesting of CSOPS
438,263
43,826
-
-
At 30 April
133,037,849
13,303,784
126,636,157
12,663,615
The Company has one class of Ordinary shares which carry no right to fixed income.
On 19 July 2023 the Company acquired the entire issued share capital of Richard Julian and Associates Limited in part for the issue
of 1,192,163 10p ordinary shares.
On 2 November 2023 the Company issued 1,661,790 10p ordinary shares to satisfy the contingent consideration on the acquisition
of Gateley Smithers Purslow Limited
Between 1 May 2023 and 30 April 2024 1,591,555 10p ordinary shares were issued upon vesting of the 2019/2020 SAYE schemes
to participants.
On 27 September 2023 727,790 10p ordinary shares were issued upon vesting of the 2020 LTIP scheme to participants
On 21 September 2023 790,131 10p ordinary shares were issued upon issue of the FY24 RSA Plan 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.
Parent company notes to the financial statements
continued
Gateley (Holdings) Plc Annual report and financial statements
137
136
Business overview
Strategic report
Corporate governance
Our financials
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:
2024
2023
Increase/
(decrease)
in profit
and loss
£’000
Increase/
(decrease)
in profit
and loss
£’000
+1 % movement in interest rates
130
70
-1 % movement in interest rates
(130)
(70)
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.
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 do 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 2024 is £12,908,000 (2023: £6,813,000).
Parent company notes to the financial statements
continued
Reconciliation of alternative performance measures
Underlying profit before tax
The Directors seek to present a measure of underlying profit performance which is not impacted by exceptional items or
items considered non-operational in nature. These include non-trading, non-cash and one-off items disclosed separately in the
consolidated income statement where the quantum, nature or volatility of such items are considered by management to otherwise
distort the underlying performance of the Group. This measure is described as ‘underlying’ and is used by management to assess
and monitor profit performance only at the before and after tax level. In line with the board’s wish to simplify reporting of profits,
the board have moved away from reporting adjusted Earnings Before Interest Tax Depreciation and Amortisation (“EBITDA”),
following the introduction of IFRS 16 ‘Leases’.
2024
£’000
2023
£’000
Reported profit before tax
13,955
16,212
Adjustments for non-underlying and exceptional items:
- Amortisation of intangible assets
2,483
2,073
- Share-based payment adjustment
1,686
1,984
- Gain on bargain purchase
(3,609)
(1,389)
- Consideration treated as remuneration
6,956
6,190
- Exceptional items
1,563
-
Underlying profit before tax
23,034
25,070
Amortisation of acquired intangible assets is identified as a non-cash item released to the income statement therefore such cost
is removed when considering the underlying trading performance of the Group by adding to profit the annual amortisation charge.
Consideration treated as remuneration: such charges are treated as non-underlying in order to reflect the commercial substance
of the transaction. All former vendors who remain employed by the Group are paid at market rates and the earnout remuneration
is a function of the interpretation of IFRS, and related emerging guidance only.
The adjustment for share-based payments relates to the impact of the accounting standard for share-based compensation. The
cost of all share-based schemes is settled entirely by the issue of shares where the proportions can vary from one year to another
based on events outside of the businesses control e.g., share price. Under IFRS the anticipated future share cost is expensed to the
income statement over the vesting period. The adjustment above addresses this by adding to profit the IFRS 2 charge in relation
to outstanding share awards. This adjustment is made so that non-cash expenses are removed from profit.
Underlying operating profit
2024
£’000
2023
£’000
Reported operating profit
11,177
16,122
Adjustments for non-underlying and exceptional items:
- Amortisation of intangible assets
2,483
2,073
- Share-based payment adjustment
1,686
1,984
- Gain on bargain purchase
(3,609)
(1,389)
- Consideration treated as remuneration
6,956
6,190
- Exceptional items
1,563
-
Underlying operating profit
20,256
24,980
Appendix
Gateley (Holdings) Plc Annual report and financial statements
139
138
Business overview
Strategic report
Corporate governance
Our financials
Cash generated from operations
a) Free cash flows
2024
£’000
2023
£’000
Net cash generated from operations
18,887
14,065
Repayment of lease liabilities
(5,091)
(4,579)
Net interest received
4,043
1,364
Tax paid
(4,902)
(4,320)
Cash outflow paid on acquisitions
5,825
1,518
Purchase of property, plant and equipment
(1,045)
(1,312)
Purchase of other intangible assets
-
(787)
Free cash flows
17,717
5,949
b) Working capital measures
2024
£’000
2023
£’000
WIP days
Amounts recoverable from clients in respect of contract assets (unbilled revenue)
23,543
20,388
Unbilled disbursements
5,389
3,368
Total WIP
28,932
23,756
Annualised revenue
173,312
163,583
WIP days
61
53
2024
£’000
2023
£’000
Debtor days
Trade receivables
58,056
54,167
Less unbilled disbursements
(5,389)
(3,368)
Total debtors
52,667
50,799
Annualised revenue
173,312
163,583
Debtor days
111
113
2024
£’000
2023
£’000
Gross lock-up days
Total WIP
28,932
23,756
Total debtors
52,667
50,799
Total gross lock-up
81,599
74,555
Annualised revenue
173,312
163,583
Gross lock-up days
172
166
Annualised revenue reflects the total revenue for the previous 12-month period inclusive of pro-forma adjustments for acquisitions.
Appendix
continued
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 23 September 2024 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 8 (inclusive) will be proposed as ordinary resolutions and resolutions 9 to 12 (inclusive) will be proposed as
special resolutions.
ORDINARY RESOLUTIONS
1.
To receive the Company’s annual accounts for the financial year ended 30 April 2024 together with the directors’ report and the
auditors’ report on those accounts.
2.
To approve the directors’ remuneration report for the financial year ended 30 April 2024, which is set out in the Company’s
annual report for the financial year ended 30 April 2024.
3.
To declare a final dividend for the year ended 30 April 2024 of 6.2p per share payable in October 2024 to shareholders on the
register of members at the close of business on 11 October 2024. The shares will go ex-dividend on 10 October 2024.
4.
To reappoint Edward Knapp (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.
5.
To reappoint Neil Andrew Smith (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.
6.
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.
7.
To authorise the directors to fix the remuneration of the auditors of the Company.
8.
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
£4,406,140.04 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 23 December 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
9.
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.
10. THAT, if resolution 8 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 8 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:
10.1 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;
Gateley (Holdings) Plc Annual report and financial statements
141
140
Business overview
Strategic report
Corporate governance
Our financials
10.2 the allotment of Equity Securities or sale of treasury shares (otherwise than under paragraph 10.1 above) up to an
aggregate nominal amount of £1,335,193.95 representing approximately 10% of the current share capital of the Company;
and
10.3 the allotment of Equity Securities or sale of treasury shares (otherwise than under paragraphs 10.1 or 10.2 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 10.2 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 23 December 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.
11. THAT, if resolution 8 above is passed, and in addition to any authority granted under resolution 10 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 8 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:
11.1 limited to the allotment of Equity Securities or sale of treasury shares pursuant to the authority granted under resolution
8 up to an aggregate nominal amount of £1,335,193.95 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
11.2 limited to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph 11.1 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 11.1 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 23 December 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.
Notice of annual general meeting
continued
12. 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:
12.1 the maximum number of Ordinary Shares which may be purchased is 13,351,940 (representing 10% of the Company’s
issued share capital);
12.2 the minimum price which may be paid for each Ordinary Share is £0.10;
12.3 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;
12.4 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 23 December 2025); and
12.5 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.
BY ORDER OF THE BOARD
Neil Andrew Smith, Secretary
Date:
30 August 2024
Registered office:
One Eleven, Edmund Street, Birmingham, B3 2HJ
Gateley (Holdings) Plc Annual report and financial statements
143
142
Business overview
Strategic report
Corporate governance
Our financials
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 19 September 2024 (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.
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.
6.
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.
7.
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 9:00 a.m. – 5:30 p.m.,
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 9:00 a.m. –5:30 p.m., Monday to Friday excluding public holidays in
England and Wales. Or via email at shareholderenquiries@linkgroup.co.uk.
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
19 September 2024. 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 12:30 p.m. on 19 September 2024 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.
Gateley (Holdings) Plc Annual report and financial statements
145
144
Business overview
Strategic report
Corporate governance
Our financials
Notice of annual general meeting
continued
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.
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 30 August 2024, the Company’s issued share capital comprised 133,519,395 Ordinary Shares. 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 30 August 2024 was 133,519,395. 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.
EXPLANATORY NOTES ON CERTAIN BUSINESS OF THE ANNUAL GENERAL
MEETING
Resolution 8 – 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 £4,406,140.04, 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 9 – 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 allow the Company to hold general meetings virtually. In the directors’
opinion, virtual general meetings are environmentally friendly, provide easier access to a broader range of shareholders and are
commensurate with the Company’s ESG policies and responsible business principles. The directors are keen to adopt this change with
these factors in mind, particularly given that the attendance by external shareholders at the last several AGMs has been less than one
person on average.
Resolutions 10 and 11 – 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 £1,335,194.04, 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 £267,037.90, 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 £1,335,194.04, 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 £267,037.90, 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 8 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).
Gateley (Holdings) Plc Annual report and financial statements
147
146
Business overview
Strategic report
Corporate governance
Our financials
Notice of annual general meeting
continued
Resolution 12 – 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. The Company has sought authority to make market purchases up to an aggregate of 13,351,940 Ordinary
Shares, representing approximately 10% of the Company’s issued ordinary share capital as at 30 August 2024, 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.
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).
Company information
Registration number
09310078
Registered office
One Eleven Edmund Street
Birmingham
B3 2HJ
Directors
RR Waldie
Chief Executive Officer
V L Garrad
Chief Operating Officer
NA Smith
Chief Financial Officer and
Company Secretary
NT Payne
Non-Executive Chairman
JC Lake
Non-Executive Director
CR Jones
Non-Executive Director
Independent auditor
MHA
Rutland House
148 Edmund Street
Birmingham
B3 2FD
Nominated advisor and broker
Panmure Liberum
25 Ropemaker Street
London
EC2Y 9LY
Principal bankers
HSBC Bank Plc
1 Centenary Square
Birmingham
B1 1HQ
Lloyds Bank Plc
125 Colmore Row
Birmingham
West Midlands
B3 3SF
Registrars
Link Group
6th Floor
65 Gresham Street
London
EC2V 7NQ
Website
www.gateleyplc.com
www.gateleyplc.com
A