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Gateley (Holdings) PLC Audited Preliminary Results 2021

20/07/2021 7:00am

UK Regulatory (RNS & others)


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RNS Number : 7459F

Gateley (Holdings) PLC

20 July 2021

20 July 2021

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. It forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Gateley (Holdings) Plc

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

AUDITED PRELIMINARY RESULTS 2021

Strong performance and growth demonstrating resilience through diversity

Gateley (AIM: GTLY), the legal and professional services group, announces its audited preliminary results for the year ended 30 April 2021 ("FY21" or the "Year").

The results demonstrate resilient double-digit revenue and profit growth, delivered through an increasingly diverse and successful business model, yielding strong and sustained cash generation, which enabled the reinstatement of dividend payments in the Year, with a total dividend of 7.5p (FY20: nil).

The Board is pleased to report that the high levels of activity, strong trading momentum, overall sense of optimism and confidence, which defined the Group's performance in H2 FY21, have continued into the new financial year ("FY22") and the Board is confident in the outlook for FY22.

Financial Highlights

 
                                            FY21        FY20   Change 
 
 Revenue                               GBP121.4m   GBP109.8m   +10.5% 
 Underlying operating profit before 
  tax(1)                                GBP20.5m    GBP18.7m   +10.0% 
 Underlying profit before tax(1)        GBP19.3m    GBP18.1m    +7.1% 
 Profit before tax                      GBP16.3m    GBP14.8m   +10.5% 
 Group profit after tax                 GBP13.2m    GBP11.7m   +12.2% 
 Basic earnings per share ("EPS")         11.18p      10.34p    +8.1% 
 Adjusted fully diluted EPS(2)            13.17p      12.45p    +5.8% 
 Net assets                             GBP59.3m    GBP44.8m   +32.2% 
 Net cash/(debt)(3)                     GBP19.6m   GBP(0.9)m   +20.5m 
 
 
 (1)   Underlying operating profit before tax and underlying profit 
        before tax excludes share based payment charges, amortisation 
        and exceptional items 
 (2)   Adjusted fully diluted EPS excludes share based payment 
        charges, amortisation and exceptional items. It also adjusts 
        for the future weighted average number of expected unissued 
        shares from granted but unexercised share option schemes 
        in issue based on a share price at the end of the financial 
        year 
 (3)   Net debt excludes IFRS 16 liabilities 
 (4)   Activity levels are the utilisation of professional staff 
        hours against budgeted hours 
 
 
 --   Strong financial performance with revenue and profit before 
       tax up 10.5% yielding strong cash generation and a 32.2% increase 
       in net assets 
 --   Average fee earner headcount rose 9.1% to 770 in FY21 (30 April 
       2020: 706) 
 --   Non-legal revenues increased by 27.3%, as complementary consultancy 
       businesses contributed GBP14m or 11.5% of total revenues (FY20: 
       GBP11m or 10.0%) 
 --   Overall activity levels(4) increased by 8% YOY 
 --   Cost-savings realised during the Year, as a result of successful 
       remote working arrangements 
 --   Strong balance sheet and disciplined working capital management 
       facilitated repayment of all bank debt 
 --   Staff bonuses and dividend payments resumed with total dividend 
       in the Year of 7.5p (FY20: nil) 
 

Operational Highlights

 
 --   'One team' culture and the retention of fee-earning capacity 
       throughout the early stages of the pandemic enabled the Group 
       to capitalise on the return of strong client demand in H2 FY21 
 --   Progression of Platform strategy, to build market-facing structures 
       on which complementary legal and consultancy services are aggregated 
 --   Net promoter score of +68 achieved from tri-annual client survey 
 --   Gateley remains the UK's most active M&A legal advisor by deal 
       volume, according to the latest Experian MarketIQ UK M&A league 
       table 
 --   Diversified and resilient business model reinforces the Board's 
       confidence in the future performance of the Group 
 

Current Trading and Outlook

 
 --   Strong trading in the first two months of the new financial 
       year with a good pipeline of new work in most units 
 --   Acquisition activity recommenced after temporary COVID-19 pause, 
       pipeline remains strong 
 --   Platform strategy continues apace with on-going integration 
       of all acquired businesses, to widen and enhance pipeline activity 
       in FY22 and beyond 
 

Rod Waldie, CEO of Gateley, said:

"I am delighted with the excellent FY21 outcome, a year in which we exceeded our own pandemic-adjusted performance expectations set in the first month of the Year. We have, once again, delivered year-on-year revenue growth. It is testament to the Group's long-established and resilient business model, which is enhanced by an increasing range of connected services offered to clients via our Platforms - market-facing structures on which we aggregate complementary legal and consultancy services. This, alongside our embedded 'one-team' culture and the outstanding collective contribution of our people, has been the driving force behind a strong financial performance especially in the context of an extremely disruptive year of uncertainty caused by the pandemic.

"I thank our fantastic people for their exceptionally hard work, commitment and can-do attitude. This includes the leadership team, whose priority has been the safety of our people throughout the Year and the smooth-running of our operational contingency plan, which resulted in the delivery of excellent service to our clients. The leadership team was calm and pragmatic throughout and demonstrated good judgment in planning for the worst whilst managing for better.

"I also thank our clients for their support throughout the Year and for giving us the opportunity to work with them on high quality mandates in both legal and consultancy services, which we are increasingly providing in tandem to our clients.

"As we continue our strategy to build a broader professional services business, focusing on both new and existing clients, the demand for these services is strong and we are carrying a robust pipeline of work into FY22. We remain excited by a wide range of opportunities and are looking forward to continuing to grow the Group, both organically and via acquisition, in line with our strategy."

Enquiries:

 
Gateley (Holdings) Plc 
Neil Smith, Finance Director                           Tel: +44 (0) 121 234 
                                                                       0196 
Nick Smith, Acquisitions Director and                  Tel: +44 (0) 20 7653 
 Head of Investor Relations                                            1665 
Cara Zachariou, Head of Corporate Communications       Tel: +44 (0) 121 234 
                                                     0074 Mob: +44 (0) 7703 
                                                                    684 946 
 
finnCap - Nominated Adviser and Broker                 Tel: +44 (0) 20 7220 
                                                                       0575 
Matt Goode / James Thompson (Corporate 
 Finance) 
Andrew Burdis (ECM) 
 
N+1 Singer - Joint Broker                              Tel: +44 (0) 20 7496 
                                                                       3000 
Peter Steel (Corporate Finance) 
Rachel Hayes (Corporate Broking) 
 
Belvedere Communications Limited - Financial 
 PR 
Cat Valentine (cvalentine@belvederepr.com)            Mob: +44 (0) 7715 769 
                                                                        078 
Keeley Clarke (kclarke@belvederepr.com)               Mob: +44 (0) 7967 816 
                                                                        525 
Llew Angus (langus@belvederepr.com)                   Mob: +44 (0) 7407 023 
                                                                        147 
                                                  gateleypr@belvederepr.com 
 

Chairman's Statement

Summary of the year

I am pleased with all aspects of the Group's performance in the year under review, a period during which we successfully navigated the disruption and uncertainty caused by the COVID-19 pandemic. Gateley has demonstrated the resilience of its operating model and diversification strategy, delivering excellent financial results under exceptional circumstances and emerging stronger out of the pandemic. The services we offer to clients are critical to their operations, emphasising just how important our legal and complementary professional services are to our broad, multi-sectoral, client-base.

The second half of FY21 was extremely strong with high levels of activity, which more than compensated for the impact of the first National Lockdown and justified our decision to retain all fee earning staff during the early stages of the pandemic. Our business adjusted exceptionally well to working from home and servicing clients in a very different way. It was clear to the Board that the effect of the pandemic would be dramatic, so we took immediate steps to preserve the Group's liquidity by reducing costs and postponing cash outgoings, until the uncertainty lifted and we could support a return to more normal activity. The turning point arose just before the half year-end, when activity levels returned and our pipeline strengthened significantly.

Rod Waldie took the reins from Michael Ward on 1 May 2020. In his first year as CEO, Rod has had to make some tough decisions as a result of the pandemic, whilst at the same time leading the business and executing our strategy. Under his leadership, Gateley is emerging from the pandemic in an excellent position, with a strong pipeline of work, a host of growth opportunities and generally buoyed by the opportunities which we believe the exit from lockdown will present.

People and commitment to diversity

Our people and long-established 'one-team' culture are central to the Group's success. The team has risen ably to the challenges presented by the pandemic, showing immense dedication to the business, to their colleagues and to our clients.

The Group is committed to ensuring diversity, equity and inclusion. Our goal is to foster a positive work ethic, while remaining results and client focused, and demonstrate our commitment to doing the right thing. Promoting our diverse backgrounds, skill sets, and experiences, delivers better results for everyone. Our actions and ambitions in the journey to deliver this goal are set out within the Environmental, Social and Governance ("ESG") section of our Annual Report and accompanying Responsible Business statement, that we have recently adopted using a framework established to align with the Government-led initiative "Levelling Up".

Our listing on AIM allows us to share the value created by the Group and recognise the efforts of our teams. We have issued further SAYE, CSOP and our first Long Term Incentive Plan during the Year supporting further our belief that Group-wide share ownership creates strong alignment across all shareholders and colleagues connected with the business.

Dividends

Due to our strong performance in FY21 and our confidence in prospects for the business, the Board has reinstated its dividend policy during the year. An interim dividend of 2.5p per share was paid on 28 June 2021 to shareholders on the register at the close of business on 3 June 2021. Subject to approval at the forthcoming Annual General Meeting, the Board is pleased to propose a final dividend of 5.0p per share, giving a total dividend for the year of 7.5p per share (FY20: nil). The final dividend will be paid in mid-October 2021 to shareholders on the register at the close of business on 27 August 2021. The shares will go ex-dividend on 26 August 2021.

The Board's dividend policy remains to distribute up to 70% of profit after tax (PAT) to shareholders, typically one third following its half year results and two thirds after the full year results are known. The Board intends to return to more normal payment timings during FY22.

Summary and outlook

In what has been a uniquely challenging Year, our people have excelled in client delivery, have conquered every challenge presented to them, and have delivered further strategic progress for the business, all of which has combined to generate a solid set of results.

Our acquisition pipeline presents many interesting opportunities to enhance our service lines, with our clients' needs always in mind, and fulfil our strategy to build a broader professional services group.

We look forward to the future with confidence.

Nigel Payne

Chairman

20 July 2021

Chief Executive Officer's Review

Introduction

I am delighted with the Group's resilience and achievements during FY21. We exceeded our own adjusted performance expectations that we set at the start of the Year by taking timely and sensible steps to plot a steady and conservative course through the pandemic. Our key priorities were to maintain excellent service delivery to our clients, whilst ensuring the safety and wellbeing of our people; and I believe that we succeeded in achieving this.

By the beginning of H2 FY21 it was clear that demand for our services was strengthening significantly, and this remains the case with a good pipeline of work carrying into FY22.

The expanding depth and breadth of our offering through our Platforms is becoming increasingly attractive to existing and new clients due to our ability to deliver multiple legal and consultancy services on projects in a coordinated and well-managed way. Our Platforms are market-facing structures on which we aggregate complementary legal and consultancy services. I am excited about our opportunity to further expand these both organically and via acquisition in FY22 and beyond.

Owing to our excellent performance and disciplined working capital management in FY21, coupled with our confidence in the business, we are pleased to confirm the resumption of our stated dividend policy subject to approval at the forthcoming AGM.

Results overview

Our FY21 revenue increased by 10.5% to GBP121.4m (FY20: GBP109.8m) which, alongside our swiftly implemented cost-management initiatives, predominantly arising from agile working arrangements, have yielded an increase of 10.5% in profit before tax to GBP16.3m compared with GBP14.8m for the prior year.

Underlying adjusted profit before tax increased by 7.1% to GBP19.3m (FY20: GBP18.1m) and the Group has also increased profit after tax by 12.2% to GBP13.2m.

Our resilient revenue performance is a product of the breadth and balance of the Group's legal and consultancy service lines. After a significant reduction during H1 FY21, Corporate transactional activity returned in H2 FY21, and has since been relentless, as business owners and Private Equity reassessed the impact of the pandemic and their appetite for deal-making. In property, our legal and consulting teams, working together on our Property Platform, traded strongly throughout the Year. In addition, many of the Group's counter-cyclical service lines, including Dispute Resolution, also performed extremely well.

We concluded the Year with a significant pipeline of activity across most of our units, further evidencing our wider reach across our client-base via our Platforms.

Cash generation during the Year remained strong, as net cashflows from operating activities of GBP25.4m (FY20: GBP13.3m) represented 193.2% (FY20: 113.5%) of profit after tax. The Group ended the Year with net cash of GBP19.6m compared to net debt of GBP0.9m in the prior period as a result of our strategy to conserve cash at the outset of the pandemic.

People and Culture

We have great talent across our teams. Our 'one-team' culture and focus on excellence are enormous sources of comfort and strength as we successfully navigate the pandemic. We maintained excellent client service throughout the Year which is testament to the collective contribution of everyone working at Gateley. The way the team works together, supporting each other and our clients, has been inspiring. Never before has the power of the Gateley team spirit been more evident.

At Gateley we have an environment in which everyone is welcome and valued. This allows people to play to their strengths in a business which has an infrastructure for opportunity and fair career progression. We have internal networking groups that promote awareness and understanding and can drive positive change, including further advances in our diversity and inclusion efforts.

Our culture is a product of the way we integrate our people. Traditionally we are an office-based organisation and we are looking to return to our offices as soon as we sensibly can in a safe and efficient way in order to optimise induction, training and the day-to-day management of the delivery of our services. However, we will be doing this alongside further, and likely permanent, agile working in order to capture some of the positive working practices realised during the pandemic.

We are guided by our purpose - we exist to deliver results that delight our clients, inspire our people and improve our communities.

We are now committed to implementing our purpose-led ESG framework in a way that contributes to the wider levelling up agenda in the UK. Therefore, we were delighted to recently announce that we are partnering in the development of a set of fourteen Levelling Up Goals, as established earlier this year by former Education Secretary, Justine Greening. The Goals are the first major piece of work by the Purpose Coalition, which includes some of the UK's most purpose-led businesses, universities and public sector organisations. Gateley's contribution will be aimed at driving change in those areas in which we can legitimately make an impact including in diversity and inclusion and fair career progression, good health and wellbeing and other goals closely linked to our people and business model.

Operational Review

Our operational contingency plan did not include a reduction in fee earner headcount. Our strategy throughout the pandemic was to maintain our fee earner capacity so that we had sufficient resources to service projects as the market recovered. This proved to be a good strategy, in addition to which it did not constrain us from continuing with our strategic investment in people. During the Year, we made key new appointments across the Group including six senior lateral hire recruits to niche areas of our service offering. Our average fee earner headcount was 770 which is an increase from 706 at the end of FY20, mainly as a result of a full year of staff additions from acquisitions made at the end of FY20.

We have a strong balance sheet and we remain focused on investing in the right businesses and people to join our team. At Gateley, there is an opportunity to pursue a career in a dynamic professional services group whose development and growth is underpinned by the investment opportunities which our plc status affords us. Our ability to incentivise people through plc share ownership provides an attractive alternative to traditional professional services ownership models. During the year staff exercised SAYE and CSOP options to further widen our staff shareholder base.

We have spent many years building and growing our physical footprint across the UK, matching our office locations with opportunities that we see available to the Group. As a result, we currently provide our services from most of the major commercial centres in the UK. Our office network remains an important asset to us but a key decision made during the Year was to flex the use of our office space, maximising the benefits of agile working practices developed during the pandemic. This will enable us to grow and strengthen our business from existing locations, realising operational gearing opportunities.

During FY21 we continued to develop our market-facing Platforms on which we aggregate complementary legal and consultancy services. We have spent a considerable amount of time promoting the Platforms internally and externally. I am delighted with how well our legal and consulting businesses are combining to win multi-disciplinary work from existing and new clients. This gives us increased confidence to continue to invest in broadening and strengthening our Platforms as part of our strategy for profitable growth.

Our segmental performance is dealt with in our Finance Director's review. In particular, our Property teams traded well throughout the Year and our Corporate and Business Services Teams were extremely busy during H2 FY21, and remain so.

Our Dispute Resolution teams have also been busy. In particular, our International Dispute Resolution practice gained further momentum in FY21 in winning new mandates for complex, top-tier multi-disciplinary international work alongside mainstream insolvency and liquidator appointments and tax avoidance recovery work. This is highly specialist work, delivered through the expertise of a team who have long-established credentials in complex recovery cases in the UK and overseas. This is a good example of the returns we can generate through our strategy to invest in niche, highly specialised services and our ability to leverage counter-cyclical opportunities with established expertise. To assist in winning more of this type of work, we have very recently committed to a new litigation funding facility for long term complex projects.

Client and Industry Recognition

We conducted our Group-wide tri-annual client survey during the Year, scoring extremely highly (net promoter score +68). We were delighted with this result, which is in excess of the industry average.

Gateley remains the UK's most active M&A legal advisor by deal volume according to the latest Experian MarketIQ UK M&A league table. We are currently ranked first in the Midlands and the North West. In difficult times, this is a resounding testament to our referral network, staff and service delivery capabilities.

We were proud to be awarded 'Professional Services Firm of the Year' at the 2021 Birmingham Post Business Awards in June. We have also picked up a number of other awards during the Year including 'Excellence in Sales and Marketing' and 'Contribution to the Community' at the Greater Birmingham Chamber of Commerce Awards; 'Law Firm of the Year' at the Thames Valley Business Awards and in 'The Times Best Law Firms 2021' league table, where we featured across a number of categories. We await the outcome of a number of shortlists including 'Law Firm of the Year' and 'Corporate Team of the Year' at the 2021 Legal Business Awards.

Our Acquisitions and Platform strategy

A core part of our strategy remains growth and diversification via acquisitions which enhance quality and expertise in our chosen locations and expand the market-facing Platforms on which we aggregate and offer leading legal and consultancy services.

We believe that our strategy differentiates our business from "single discipline" competition, whilst at the same time offering a higher-value, more relevant service as we seamlessly deliver "Platform focused" legal and consultancy services to our clients. It also makes us more indispensable to our existing clients and more attractive to potential new clients. This is because we can help clients with a wider range of complex stand-alone or inter-related issues that need to be navigated to deliver desired outcomes. Our service lines continue to evolve based, in part, on what our clients tell us they need. Our plc status and established reputation help us to attract and retain first class professionals who are the backbone of our Platforms.

To this point we have successfully established our "Property Platform" and our "People Platform", on which we have previously reported. During FY21 we won a significant mandate to our "Corporate Platform" via our International Investment Services (IIS) business. After a competitive tender process IIS were appointed Project Manager and Inward Investment advisor for Cambridge & Peterborough Combined Authority's (CPCA) "new economic growth programme", a programme designed to identify and attract 1,000 innovative and high-growth SME's and 125 new inward investors to the CPCA region. We have also undertaken significant research across our "Business Services" Platform in preparation for its expansion in FY22.

We took a conscious decision not to make any acquisitions during FY21, having completed four earnings-enhancing acquisitions during FY20, we focused on integrating the businesses acquired during FY20. However, our strong performance during FY21 and our confidence in our strategy to build a broader professional services group means that we now intend to resume acquisition activity to further strengthen and diversify our services. I am pleased to report that the acquisition pipeline is strong and we remain committed to and excited by acquisition opportunities that may present in FY22 and beyond.

Current trading and outlook

The Group was profitable and cash positive throughout FY21 and we are seeing strong activity levels carry through into FY22 and a good pipeline of new work in most of our units. We are also seeing an increasing trend in larger and longer-term mandates in both legal and consultancy services, including new roles in longer-term programmes delivered via our People Platform to businesses that are now implementing post-pandemic operational reviews. Our recent investment in this Platform, and the related opportunities that are now available, encourage us to continue to invest in new capabilities across our Platforms in a way that complements our core legal services.

The stability resulting from decisions we took in H1 FY21, together with significantly improved trading conditions in H2 FY21, have laid the foundations for a good start to the current year. Our in-built resilience through our balanced business model, allied to our strong culture, means that we have started FY22 with confidence.

Our historic performance and our clear and meaningful strategy for the long-term development of our business demonstrate to our people, our clients and investors that their careers, instructions and investments are in safe hands, irrespective of macro-economic conditions.

Looking forward, opportunities exist to grow the business and continue to broaden our range of professional services both organically and through acquisitions that enhance our client offering and deliver strong returns. We look forward to the future with confidence.

Rod Waldie

Chief Executive Officer

20 July 2021

Finance Director's Review

Financial overview

Activity levels have recovered well from the pandemic-affected start to the Year. As client confidence quickly returned to the UK economy the Group's activity levels recovered at the half year from 2% down against the prior half year, to positively conclude the Year 8% ahead of FY20. This extremely strong second half of the Year enabled the Group to repair, in full, cuts in pay made in H1 FY21 and to award staff an annual bonus in recognition of their hard work, dedication and contribution to the overall performance of the Group.

The measures taken by the Group to embrace changes in working practices driven by the pandemic resulted in a lower cost-base to carry forward into FY22, and demonstrate how agile we can continue to be as a professional services business.

Our strategy to conserve cash throughout the Year and wait until the FY21 outcome was known before declaring internal and external stakeholder rewards, from a robust financial position, has proven to be the right decision, and enables us to plan for future growth with confidence in our established, resilient and well-balanced business model.

Our track record of delivering profitable annual results, supported by strong cash generation and attractive investment returns, is based on being a responsible business with a strong focus on social and governance objectives.

Revenue

Group total revenue grew by 10.5% (FY20: 6.1%) to GBP121.4m (FY20: GBP109.8m). Revenue from core legal service lines grew organically by 5.5% (FY20: 3.5%) and rose by a further 1.0% through increased year-on-year revenue from the acquisition of Tweed. In addition, revenue from complementary consultancy businesses grew by 27.3% to GBP14.0m or 11.5% of total revenues (FY20: GBP11.0m or 10.0%), highlighting the on-going success of our Platforms diversification strategy.

With legal and consultancy service lines working increasingly closer together we finished the Year in a stronger position than we started it, with a significantly enhanced pipeline of activity and unbilled work-in- progress.

Our Property reporting segment performed consistently well throughout the Year, while our Corporate segment navigated unprecedented H2 FY21 increases in transactional activity that did not abate when the UK's anticipated Capital Gains Tax changes did not materialise. Our legal Corporate reporting segment generated revenue growth of 10.5% (FY20 17.1%) as we remain at the top of deal-volume league tables, as a result of our expertly delivered services to our Private Equity and M&A clients. Our Property reporting segment grew strongly by 17.0% (FY20: 3.8%) as we took advantage of opportunities generated by our most mature Platform operating at regional and national levels in the UK's construction, property development and housing markets, which rely upon long-term specialist legal support.

In contrast, whilst litigation activity lines grew within our Banking and Financial Services segment and Business Services segment, the extension of UK-wide Government stimulus and support continues to dampen the need for traditional restructuring and recovery activities. The broad balance of services the entire Group provides, however, supports our confidence that we remain well-placed in FY22 to advise clients if difficulties emerge as Government support is gradually withdrawn.

Our Employment, Pensions and Benefits segment grew by 4.6% (FY20: 22.8%) as our People Platform consultancy businesses t-three and Kiddy & Partners ("Kiddy") in particular needed time to adjust as people interactions were severely impacted by the pandemic. Both of t-three and Kiddy & Partners have now successfully introduced virtual delivery products and services, to complement their traditional delivery models. Although the immediate effects of the pandemic challenged these businesses, their focus on talent assessment and development and cultural change, represents strong future sales propositions to a client-base inevitably needing to adjust and change as a result of the pandemic. Both businesses are confident of a return to growth in FY22. Employment legal services advice at the end of FY20 was also boosted by furlough advice to clients at the end of that year which was not repeated again in FY21.

Underlying operating profit before tax

The Group has recorded strong underlying operating profit before tax of GBP20.5m which has increased by 10.0% from GBP18.7m in FY20. This resulted in the Group maintaining consistent trading margin performance of 16.9% (FY20: 17.0%). Despite disruption throughout the Year I am pleased with the Group's ability to turn improved activity levels across the business into fees, and sensibly manage costs at both personnel and operating expense levels. Our strategy to maintain fee earner headcount in order to service the now visible increase in client activity, as capacity in H2 FY21 reached 98%, and to maximise any cost savings resulting from our agile working strategy, have proven to be the correct strategies to deploy. The table below highlights the significant change we experienced in the second half of the year.

 
                               H1 20   H2 20    FY20   H1 21   H2 21    FY21  FY variance 
                                GBPm    GBPm    GBPm    GBPm    GBPm    GBPm            % 
 
Revenue                         51.8    58.0   109.8    50.5    69.6   121.4       +10.5% 
Other income                     0.1     0.6     0.7     1.9     0.6     2.5       257.1% 
Personnel costs               (32.0)  (31.5)  (63.5)  (30.7)  (46.8)  (77.5)       +22.0% 
Overheads and depreciation    (13.0)  (15.3)  (28.3)  (13.6)  (12.3)  (25.9)        -8.5% 
                              ------  ------  ------  ------  ------  ------  ----------- 
Underlying operating profit 
 before tax                      6.9    11.8    18.7     8.1    12.4    20.5        +9.6% 
 
Margin (%)                     13.3%   20.3%   17.0%   16.0%   17.8%   16.8%        -0.2% 
Utilisation (%)                  81%     79%     80%     79%     98%     88%        +8.0% 
Organic growth (%)             10.5%    2.8%    3.5%  (9.5)%   20.0%    4.7%        +1.2% 
                              ------  ------  ------  ------  ------  ------  ----------- 
 

Underlying operating profit before tax excludes amortisation of acquired intangibles, impairment of intangibles and all share-based charges. 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         2021     2020 
                                                     GBP'000  GBP'000 
 
Revenue                                              121,375  109,838 
Operating profit                                      17,505   15,361 
Operating profit margin (%)                           14.42%   13.99% 
 
Reconciliation to alternative performance measure: 
 underlying operating profit before tax 
Operating profit                                      17,505   15,361 
 
 
Non-underlying items 
Share based payment charge - Gateley Plc                 956      821 
Share based payment charge - Kiddy & Partners              -      534 
Amortisation of intangible assets                      2,073    1,375 
 
Exceptional items 
Acquisitions costs                                         -      107 
Impairment of software development costs                   -      463 
 
Underlying operating profit before tax                20,534   18,661 
                                                     =======  ======= 
 
Adjusted underlying operating profit margin (%)       16.92%   16.99% 
 

Personnel costs and operating expenses

Our total personnel costs increased by 21.9% to GBP77.5m (FY20: GBP63.5m ) due to the full-year cost of staff introduced to the business through acquisitions made at the end of FY20, and the reinstatement of Group-wide bonuses to all staff following cancellation of all bonuses in FY20 caused by the uncertainty of the COVID-19 pandemic.

Prior to the pandemic our headcount was increased organically to meet client demand and as a result of making four acquisitions, and notwithstanding the pandemic we took the decision to continue to strengthen our legal and consultancy teams with key hires throughout the Year. In total six (FY20: 11) new legal partners joined the business and we made nine (FY20: six) internal promotions to legal partner.

Average numbers of legal and professional staff rose by 9.1% (FY20: 15.7%) to 770 (FY20: 706), whilst support staff numbers remained static at 343 (FY20: 341). Personnel costs as a percentage of fees increased to 63.8% of revenue from 57.8% in FY20, excluding share-based payment charges, due to the Board's decision to retain fee earning staff at the start of the pandemic, together with the reinstatement of Group-wide bonuses in FY21. COVID-19 Job Retention Scheme income totalling GBP1.9m (FY20: GBP0.4m) was received during the Year and disclosed within other income. Furlough income has been repaid to HMR&C in respect of those roles that we did not retain in the business beyond 1 November 2020.

Other operating expenses reduced by GBP2.7m or 11.5% (FY20: increased 8.5%) to GBP21.0m (FY20: GBP23.8m) as the cost of travel, marketing and premises reduced following a full year of remote working in line with UK Government policy. Operating expenses as a percentage of revenue decreased by 4.3% to 17.3% (FY20: 21.6%).

Earnings Per Share (EPS)

Basic EPS increased by 8.1% to 11.18p (FY20: 10.34p). Basic EPS before non-underlying and exceptional items increased by 4.5% to 13.26p (FY20: 12.69p). Diluted EPS increased by 9.5% to 11.10p (FY20: 10.14p). Diluted EPS before non-underlying and exceptional items decreased by 5.8% to 13.17p (FY20: 12.45p).

Long-Term Incentive Plan ('LTIP')

The Group introduced a new LTIP share scheme at the start of the Year that aligns share option rewards with compound annual growth in EPS over a three-year vesting period based on underlying trading profit after tax rather than share price. The LTIP scheme uses EPS growth based on underlying profit after tax, as the most appropriately aligned profit measure that staff participating within the scheme can be held accountable for and is referred to as underlying fully-diluted EPS starting with the closing performance of FY19. Profits used to calculate underlying EPS each year are disclosed below:

 
                                                    2021          2020          2019 
                                                 GBP'000       GBP'000       GBP'000 
Reported profit after tax                         13,157        11,723        13,041 
Adjustments for non-underlying and 
 exceptional items: 
- Anticipated impact of IFRS 16 if 
 it had been adopted in earlier years                  -             -         (313) 
- Amortisation of acquired intangible 
 assets                                            2,073         1,375         1,406 
- Share-based payment adjustments                    956         1,355           655 
 - Impairment of software development 
  costs                                                -           463             - 
- Acquisition-related costs                            -           107            61 
                                            ------------  ------------  ------------ 
Underlying profit after tax                       16,186        15,023        14,850 
                                            ============  ============  ============ 
 
 Weighted average number of ordinary 
  shares for calculating diluted earnings 
  per share                                  118,508,833   115,599,727   112,280,569 
                                            ============  ============  ============ 
 
   Underlying adjusted fully diluted 
   EPS                                            13.66p        13.00p        13.23p 
                                            ============  ============  ============ 
 
 

Taxation

The Group's tax charge for the Year was GBP3.2m (FY20: GBP3.0m) which comprised a corporation tax charge of GBP3.8m (FY20: GBP3.4m) and a deferred tax credit of GBP0.6m (FY20: credit of GBP0.4m).

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 19.3% (FY20: 20.6%) based on reported profits before tax. The decrease is partially as a result of the decrease in marketing and entertaining costs incurred during the year that are typically not tax deductible.

The net deferred taxation liability was GBP0.8m (FY20: GBP1.2m).

Dividend

The Board reinstated dividends following the successful outcome of the Year and paid an interim dividend of 2.5p on the 28 June 2021, and proposes a full year final dividend at the Company's Annual General Meeting on 29 September 2021 of 5.0p (FY20: nil) per share, which if approved, will be paid in mid-October 2021 to shareholders on the register at the close of business on 27 August 2021. The shares will go ex-dividend on 26 August 2021.

Balance sheet

The Group's net asset position has increased by GBP14.5m (FY20: GBP14.3m) to GBP59.3m (FY20: GBP44.8m), due to the following movements:

There was a GBP22.1m increase in total current assets, resulting from GBP3.1m additional trade and other receivables available for collection, a GBP2.2m increase in contract assets ("unbilled revenue") and a GBP16.7m increase in cash at bank. The strong end of year cash position is as a result of conservation of cash at the outset of the pandemic which included the cancellation of all bonuses and dividends payable on the FY20 outturn. This cash policy enabled the Group to repay all outstanding term debt and finish the Year with net cash of GBP19.6m (FY20: Net debt GBP0.9m). Debt at the Year-end comprised unsecured term loans of GBPnil (FY20: GBP3.1m), whilst loans to former partners of acquired businesses totalled GBPnil (FY20: GBP0.7m).

Non-current assets increased by GBP1.0m mainly as a result of an increase of GBP4.1m from new right of use assets less a GBP2.7m decrease in intangible assets and goodwill as a result of the reassessment of earn-out payments due to Kiddy and t-three that were deemed no longer due and payable at the end of FY21 due to the effect COVID-19 has had on their ability to meet earn-out conditions previously set.

The Board has carefully considered the impact of COVID-19 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 2021, the Board concluded that the goodwill and intangible assets do not require impairment.

Total liabilities increased by GBP8.7m, as the Group reinstated bonuses, that were accrued at the year-end, but also repaid all deferred Government taxes from FY20 and term bank loans in full towards the end of the FY21 year.

Working capital and cash flow

After increasing overdraft facilities at the start of the Year to GBP20m as a precautionary measure at the outset of the pandemic, they reduced back down to pre-pandemic levels of GBP10m by the end of the Year.

The Group is confident its strong cash generation supports the day-to-day working capital needs of the Group and is seeking to provide longer-term committed facilities for acquisitions and expansion in FY22. The Group has also agreed terms for a litigation funding facility that will commence in early FY22.

At the Year-end, unbilled revenue recognised in the Group's statutory accounts, from time recorded on non-contingent work, totalled GBP13.9m or 11.5% of revenue recognised over the Year (FY20: GBP11.7m or 10.6%) unbilled revenue represented 49 days compared to 48 days of Pro-forma net revenue. Group debtor days remained consistent at 104 days compared to 103 days in FY20 of Pro-forma net revenue and are typically at their peak on the last day of the financial year due to billing activity towards the end of the financial year. Pro-forma net revenue includes revenue from acquisitions on a full year pro-forma basis.

Free cashflow during the Year from operations (post cashflow from IFRS 16 leases) was GBP20.8m (FY20: GBP10.6m) which represents 158.2% (FY20: 90.2%) of profit after taxation.

 
                                                                2021     2020 
                                                             GBP'000  GBP'000 
Net cash generated from operations                            29,457   15,229 
 
Tax paid                                                     (4,039)  (2,767) 
Net interest (paid)/received                                 (1,197)       97 
Cash outflow from IFRS 16 leases (rental payments excluded 
 from operating cash flows 
 under IFRS 16)                                              (2,890)    (801) 
Purchase of property, plant and equipment                      (503)    (857) 
Purchase of other intangible assets                             (10)    (329) 
                                                             -------  ------- 
Free cash flow                                                20,818   10,572 
 
Underlying profit after tax                                   13,151   11,723 
 
Free cash flow (%)                                            158.2%    90.2% 
 

Summary

After laying sensible foundations at the start of the Year to minimise spending and conserve cash, the Group has successfully navigated through the financial effects of COVID-19 on the business. We have seamlessly adapted to agile working and as activity levels strengthened, we have returned pay cuts to staff and benefitted from the cost-savings opportunities that have arisen. We conclude another Year of growth with significant net cash, a strong pipeline of activity and renewed confidence in our strategy to diversify further and become a wider professional services group.

Neil Smith

Finance Director

20 July 2021

Consolidated statement of profit and loss and other comprehensive income

for the year ended 30 April 2021

 
                                                            Note        2021        2020 
                                                                     GBP'000     GBP'000 
 
  Revenue                                                      3     121,375     109,838 
 
  Other operating income                                       4       2,451         665 
  Personnel costs, excluding IFRS 2 charge                     7    (77,460)    (63,531) 
  Depreciation - Property, plant and equipment                13     (1,045)     (1,083) 
  Depreciation - Right-of-use asset                           13     (3,751)     (3,455) 
  Impairment of trade receivables and contract 
   assets                                                  18/19     (1,834)       (631) 
  Other operating expenses, excluding non-underlying 
   and exceptional items                                            (19,202)    (23,142) 
                                                                  ----------  ---------- 
 
  Operating profit before non-underlying and exceptional 
   items                                                       6      20,534      18,661 
 
  Non-underlying operating items                               6     (3,029)     (2,730) 
  Exceptional items                                            6           -       (570) 
                                                                  ----------  ---------- 
                                                                     (3,029)     (3,300) 
 
  Operating profit                                             6      17,505      15,361 
 
  Investment income received                                   5           -         138 
  Financing income                                             9         176         523 
  Financing expense                                            9     (1,373)     (1,266) 
                                                                  ----------  ---------- 
 
  Profit before tax                                                   16,308      14,756 
 
  Taxation                                                    10     (3,151)     (3,033) 
                                                                  ----------  ---------- 
 
  Profit for the year after tax attributable to 
   equity holders of the parent                                       13,157      11,723 
                                                                  ==========  ========== 
 
  Other comprehensive income 
  Items that are or may be reclassified subsequently 
   to profit or loss 
  Foreign exchange translation differences 
  - Exchange differences on foreign branch                              (87)          29 
                                                                  ----------  ---------- 
  Profit for the financial year and total comprehensive 
   income all attributable to equity holders of 
   the parent                                                         13,070      11,752 
                                                                  ==========  ========== 
 
 
  Statutory Earnings per share 
  Basic                          11  11.18p  10.34p 
  Diluted                        11  11.10p  10.14p 
 

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

Consolidated statement of financial position at 30 April 2021

 
                                                Note      2021      2020 
                                                       GBP'000   GBP'000 
Non-current assets 
  Property, plant and equipment                   13     1,323     1,873 
  Right of use asset                              13    27,007    22,879 
  Investment property                             14       164       164 
  Intangible assets & goodwill                    15    15,765    18,438 
  Other intangible assets                         16       282       303 
  Other investments                               17       363       229 
                                                      --------  -------- 
                                                        44,904    43,886 
Total non-current assets 
  Current assets 
  Contract assets                                 18    13,900    11,684 
  Trade and other receivables                     19    43,093    39,997 
  Deferred tax asset                              22       138        19 
  Cash and cash equivalents                       24    19,605     2,923 
                                                      --------  -------- 
 
Total current assets                                    76,736    54,623 
                                                      --------  -------- 
 
Total assets                                           121,640    98,509 
                                                      ========  ======== 
 
  Non-current liabilities 
  Other interest-bearing loans and borrowings     20         -   (2,369) 
  Lease liability                                 27  (27,702)  (22,109) 
  Other payables                                  21     (120)     (922) 
  Deferred tax liability                          22     (772)   (1,208) 
  Provisions                                      23     (763)     (461) 
                                                      --------  -------- 
  Total non-current liabilities 
                                                      (29,357)  (27,069) 
                                                      --------  -------- 
 
  Current liabilities 
  Other interest-bearing loans and borrowings     20         -   (1,437) 
  Trade and other payables                        21  (29,032)  (20,169) 
  Lease liability                                 27   (2,743)   (3,347) 
  Provisions                                      23     (176)     (252) 
  Current tax liabilities                              (1,066)   (1,399) 
                                                      --------  -------- 
 
  Total current liabilities                           (33,017)  (26,604) 
                                                      --------  -------- 
 
  Total liabilities                                   (62,374)  (53,673) 
                                                      ========  ======== 
 
  NET ASSETS                                            59,266    44,836 
                                                      ========  ======== 
 
  EQUITY 
 
 Share capital                                    25    11,792    11,761 
 Share premium                                           9,421     9,153 
 Merger reserve                                        (9,950)   (9,950) 
 Other reserve                                           6,815     6,815 
 Treasury reserve                                        (312)     (417) 
 Translation reserve                                      (60)        27 
 Retained earnings                                      41,560    27,447 
                                                      --------  -------- 
  TOTAL EQUITY                                          59,266    44,836 
                                                      ========  ======== 
 

Consolidated statement of changes in equity

 
                               Share     Share    Merger     Other  Treasury   Retained       Foreign    Total 
                             capital   premium   reserve   reserve   reserve   earnings      currency   Equity 
                                                                                          translation 
                                                                                              reserve 
                             GBP'000   GBP'000   GBP'000   GBP'000   GBP'000    GBP'000       GBP'000  GBP'000 
 
At 1 May 2019, as 
 previously reported          11,086     6,755   (9,950)     1,770   (1,057)     21,982           (2)   30,584 
Adjustment from adoption 
 of IFRS 16 (net of 
 tax)                              -         -         -         -         -      (725)             -    (725) 
                            --------  --------  --------  --------  --------  ---------  ------------  ------- 
Restated balance 
 at 1 May 2019                11,086     6,755   (9,950)     1,770   (1,057)     21,257           (2)   29,859 
 
  Comprehensive income: 
Profit for the year                -         -         -         -         -     11,723             -   11,723 
Exchange rate differences          -         -         -         -         -          -            29       29 
                            --------  --------  --------  --------  --------  ---------  ------------  ------- 
Total comprehensive 
 income                            -         -         -         -         -     11,723            29   11,752 
 
  Transactions with 
  owners 
  recognised directly 
  in equity: 
Issue of share capital           675     2,398         -     5,045         -          -             -    8,118 
Recognition of tax 
 benefit on gain from 
 equity settled share 
 options                           -         -         -         -         -        374             -      374 
Purchase of own shares 
 at nominal value                  -         -         -         -         -      (163)             -    (163) 
Sale of treasury 
 shares                            -         -         -         -     1,915          -             -    1,915 
Purchase of treasury 
 shares                            -         -         -         -   (1,275)          -             -  (1,275) 
Dividend paid                      -         -         -         -         -    (6,007)             -  (6,007) 
Share based payment 
 transactions                      -         -         -         -         -        821             -      821 
Deferred tax on equity 
 settled element of 
 share based payment 
 charge                            -         -         -         -         -      (558)             -    (558) 
                            --------  --------  --------  --------  --------  ---------  ------------  ------- 
Total equity at 30 
 April 2020                   11,761     9,153   (9,950)     6,815     (417)     27,447            27   44,836 
                            --------  --------  --------  --------  --------  ---------  ------------  ------- 
 
At 1 May 2020                 11,761     9,153   (9,950)     6,815     (417)     27,447            27   44,836 
 
  Comprehensive income: 
Profit for the year                -     -         -             -         -     13,157             -   13,157 
Exchange rate differences          -     -         -             -         -          -          (87)     (87) 
                            --------  --------  --------  --------  --------  ---------  ------------  ------- 
Total comprehensive 
 income                            -     -         -             -         -     13,157          (87)   13,070 
 
  Transactions with 
  owners 
  recognised directly 
  in equity: 
Issue of share capital            31    550        -             -         -          -             -      581 
Sale of treasury 
 shares                            -   (282)       -             -       400          -             -      118 
Purchase of treasury 
 shares                            -     -         -             -     (295)          -             -    (295) 
Share based payment 
 transactions                      -     -         -             -         -        956             -      956 
Total equity at 30 
 April 2021                   11,792   9,421    (9,950)      6,815     (312)     41,560          (60)   59,266 
                            ========  ========  ========  ========  ========  =========  ============  ======= 
 

Consolidated statement of changes in equity (continued)

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.

Consolidated cash flow statement for year ended 30 April 2021

 
                                                  Note      2021      2020 
                                                         GBP'000   GBP'000 
 Cash flows from operating activities 
 Profit for the year after tax                            13,157    11,723 
 Adjustments for: 
 Depreciation and amortisation                13/15/16     6,869     5,913 
 Financial income                                    9     (176)     (523) 
 Financial expense                                   9       416       426 
 Interest charge on capitalised leases               9       957       840 
 Impairment of Goodwill                              5         -       619 
 Equity settled share-based payments                 6       956       821 
 Profit on disposal of property, 
  plant and equipment                                6       (3)         - 
 Loss on disposal of other intangible 
  assets                                            16         -       282 
 Profit on sale of investment                     5/17         -     (138) 
 Tax expense                                        10     3,151     3,033 
                                                        --------  -------- 
                                                          25,327    22,996 
  Increase in trade and other receivables                (5,312)   (1,730) 
 Increase/(decrease) in trade and 
  other payables                                           9,216   (5,280) 
  Increase in provisions                            23       226        83 
                                                        --------  -------- 
 Cash generated from operations                           29,457    16,069 
 Tax paid                                                (4,039)   (2,767) 
                                                        --------  -------- 
 Net cash flows from operating activities                 25,418    13,302 
                                                        --------  -------- 
 Investing activities 
 Acquisition of property, plant and 
  equipment                                         13     (503)     (857) 
 Acquisition of other intangible 
  assets                                            16      (10)     (329) 
 Cash received on disposal of property,                       11         - 
  plant and equipment 
 Cash received on sale of investments                          -       208 
 Acquisition of other investments                   17     (134)     (214) 
 Contingent consideration paid - 
  acquisition of subsidiary                                (363)     (625) 
 Consideration paid on acquisitions, 
  net of cash acquired                                         -   (2,657) 
 
 Net cash used in investing activities                     (999)   (4,474) 
                                                        --------  -------- 
 Financing activities 
 Interest receivable                                 9       176       523 
 Interest and other financial income 
  paid                                               9     (416)     (426) 
 Interest charge on capitalised leases               9     (957)     (840) 
 Lease repayments                                        (2,890)     (801) 
 Repayment of term bank loans                       20   (3,077)   (2,573) 
 Repayment of loans from former members 
  of GCL Solicitors & Directors of 
  IIS                                               20     (729)     (402) 
 Funds from former members of Gateley 
  Tweed                                             20         -        30 
 Proceeds from sale of own shares                            145       642 
 Acquisition of own shares                                 (288)         - 
 Cash received for shares issued 
  on exercise of SAYE/CSOP/SARS options                      299     1,062 
 Dividends paid                                     12         -   (6,007) 
 
 Net cash used in f inancing activities                   (7737)   (8,792) 
                                                        --------  -------- 
 Net increase in cash and cash equivalents                16,682        36 
 Cash and cash equivalents at beginning 
  of year                                                  2,923     2,887 
                                                        --------  -------- 
 Cash and cash equivalents at end 
  of year                                           24    19,605     2,923 
                                                        ========  ======== 
 
 

Notes to the financial statements

   1              Basis of preparation and significant accounting policies 

The financial information set out in this financial results announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. The consolidated statement of comprehensive profit and loss and other comprehensive income, consolidated statement of financial position, consolidated statement of change in equity, consolidated statement of cashflows and the associated notes have been extracted from the Group's financial statements for the year ended 30 April 2021, upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006. The statutory accounts for the year ended 30 April 2021 will be delivered to the Registrar of Companies following the Annual General Meeting.

These condensed preliminary financial statements for the year ended 30 April 2021 have been prepared on the basis of the accounting policies as set out in the 2020 financial statements.

The recognition and measurement requirements of all International Financial Reporting Standards ('IFRSs'), International Accounting Standards ('IAS') and interpretations currently endorsed by the International Accounting Standards Board ('IASB') and its committees as adopted by the EU and as required to be adopted by AIM listed companies have been applied.

   1.1          Statement of Directors responsibilities 

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

   1.2          Cautionary statement 

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

   2          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 Finance Directors review, together with the financial position of the Group, its cash flows, liquidity position and borrowing. Financial projections have been prepared to April 2023 which show positive earnings and cash flow generation. The COVID-19 situation at the start of the year created an unprecedented and constantly changing challenge to all businesses. Management successfully navigated the business through the impact of the pandemic on the Group's financial performance. The Group has applied 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 the current financial projections based on various downside scenarios to illustrate the potential impact from a downturn in client activity. Over the last 12 months the Group has proven that our business model can operate in an agile way to allow staff to work 100% of the time from home. Therefore Management do not consider there would be any loss of utilisation in the Group's personnel from home working, a loss of capacity from staff being unable to work due to sickness.

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.

Furthermore, as an extra safeguard to support the Group's liquidity position the Board has worked closely with its supportive banks in order to find the right balance between overdraft and other longer term funding facilities. As at 30 April 2021 the Group operates an unsecured overdraft facility of up to GBP10m, it has repaid all term debt during the year totalling GBP2.4m and is currently in discussions regarding a litigation funding facility of up to GBP20m to support the working capital needs of large litigation work streams and an acquisition funding facility alongside a revolving credit facility. Due to its sensibly managed cash position resulting in net cash at the 30 April 2021 of GBP19.6m these new facilities have not yet been finalised but the Group aims to have these in place by 31 October 2021.

The Group expects to be able to operate within the Group's existing financing facilities for the foreseeable future and currently demonstrates significant debt capacity headroom based on its strong financial performance. Accordingly, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and they have adopted the going concern basis of accounting in preparing the annual Group financial statements.

   3          Revenue and operating segments 

The Chief Operating Decision Maker ("CODM") is the Strategic Board. The Group have the following five strategic divisions, which are its reportable segments. These divisions offer a mixture of legal and consultancy services to clients. With effect from 1 May 2020 all service lines are managed through two separately reporting lines renamed Gateley Legal and Gateley Consultancy.

The following summary describes the operations of each reportable segment as reported up to 30 April 2021 and also the new service lines:

 
 Reportable segment      Legal service lines                         Consultancy service 
                          (Gateley Legal)                             lines 
                                                                      (Gateley Consultancy) 
 Banking and financial   Asset finance                               Vinden 
  services                Banking 
                          Restructuring 
                        ------------------------------------------  ------------------------- 
 Corporate               Corporate                                   International Investment 
                          Private client/Family                       Services 
                          Taxation                                    GEG Services 
                        ------------------------------------------  ------------------------- 
 Business services       Commercial                                  Vinden 
                          Commercial Dispute Resolution/Litigation 
                          Shipping 
                          Tweed (reputation, media 
                          and privacy law) 
                        ------------------------------------------  ------------------------- 
 Employment, Pensions    Employment                                  Entrust 
  and Benefits            Pension                                     Kiddy & Partners 
                                                                      T-three 
                        ------------------------------------------  ------------------------- 
 Property                Real Estate                                 Capitus 
                          Residential Development                     Hamer/Persona 
                          Construction                                Vinden 
                          Planning 
                        ------------------------------------------  ------------------------- 
 

The revenue and operating profit are attributable to the principal activities of the Group. A geographical analysis of revenue is given below:

 
                             2021     2020 
                          GBP'000  GBP'000 
 
United Kingdom            109,934  104,911 
Europe                      6,231    2,748 
Middle East                   937      454 
North and South America     1,045      533 
Asia                          802      289 
Other                       2,426      903 
                          -------  ------- 
                          121,375  109,838 
                          =======  ======= 
 

The Group has no individual customers that represent more than 10% of revenue in either the 2021 or 2020 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 GBP0.07m (FY20: Net Group assets of GBP0.04m) are located in the Group's Dubai subsidiary. Revenue generated by the Group's Dubai subsidiary to customers in the UAE totalled GBP0.96m (FY20: GBP0.50m) as disclosed above as due from the customers in the Middle East.

2021

 
                                Banking  Corporate   Business   Employee  Property      Total  Other expense     Total 
                                    and              Services   Pensions             segments   and movement 
                              Financial                              and                         in unbilled 
                               Services                         Benefits                             revenue 
                                GBP'000    GBP'000    GBP'000    GBP'000   GBP'000    GBP'000        GBP'000   GBP'000 
Segment revenue from 
 services 
 transferred at a point 
 in time                          3,239      7,437      1,357      3,780    13,289     29,102          1,361    30,463 
Segment revenue from 
 services 
 transferred over time           12,774     14,450     11,996     10,472    39,654     89,346          1,566    90,912 
                             ----------  ---------  ---------  ---------  --------  ---------  -------------  -------- 
Total Segment revenue            16,013     21,887     13,353     14,252    52,943    118,448          2,927   121,375 
                             ----------  ---------  ---------  ---------  --------  ---------  -------------  -------- 
 
Segment contribution (as 
 reported internally)             5,291      7,100      5,688      4,597    24,406     47,082          2,927    50,009 
Costs not allocated to 
 segments: 
 Other operating income                                                                                          2,448 
 Personnel costs                                                                                               (8,240) 
 Depreciation and 
  amortisation                                                                                                 (6,869) 
 Other operating expenses                                                                                     (18,887) 
 
Share based payment charges                                                                                      (956) 
Net financial expense                                                                                          (1,197) 
                                                                                                              -------- 
Profit for the financial 
 year before taxation                                                                                           16,308 
                                                                                                              ======== 
 

2020

 
                                Banking  Corporate   Business   Employee  Property      Total  Other expense     Total 
                                    and              Services   Pensions             segments   and movement 
                              Financial                              and                         in unbilled 
                               Services                         Benefits                             revenue 
                                GBP'000    GBP'000    GBP'000    GBP'000   GBP'000    GBP'000        GBP'000   GBP'000 
Segment revenue from 
 services 
 transferred at a point 
 in time                          6,495      6,956      3,628      1,611    15,699     34,389            579    34,968 
Segment revenue from 
 services 
 transferred over time           10,206     12,845      8,927     12,020    29,372     73,370          1,500    74,870 
                             ----------  ---------  ---------  ---------  --------  ---------  -------------  -------- 
Total Segment revenue            16,701     19,801     12,555     13,631    45,071    107,759          2,079   109,838 
                             ----------  ---------  ---------  ---------  --------  ---------  -------------  -------- 
 
Segment contribution (as 
 reported internally)             6,538      7,616      4,992      4,876    21,317     45,339          2,079    47,418 
Costs not allocated to 
 segments: 
 Other operating income                                                                                            665 
 Investment income                                                                                                 138 
 Personnel costs                                                                                               (7,523) 
 Depreciation and 
  amortisation                                                                                                 (5,913) 
 Other operating expenses                                                                                     (17,361) 
Share based payment charges                                                                                      (821) 
Exceptional costs                                                                                              (1,104) 
Net financial expense                                                                                            (743) 
                                                                                                              -------- 
Profit for the financial 
 year before taxation                                                                                           14,756 
                                                                                                              ======== 
 

Group entities may be engaged on a contingent basis; in such cases the Group consider 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 types 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. GBP15.2 million 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.

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.

   4              Other operating income 
 
                                                     2021     2020 
                                                  GBP'000  GBP'000 
 
Rental and service charge income                        2      216 
COVID-19 Job retention scheme income                1,945      416 
Exchange gain                                           -       17 
Cash incentives - Bank account switching income         1       16 
Profit on sale of fixed assets                          3        - 
Amounts received against terminated contract          500        - 
                                                  -------  ------- 
                                                    2,451      665 
                                                  =======  ======= 
 
   5              Investment income 
 
                                               2021     2020 
                                            GBP'000  GBP'000 
 
Income from sale of investment - Business 
 Collaborator Limited                             -      138 
                                            =======  ======= 
 
   6              Expenses and auditor's remuneration 

Included in operating profit are the following:

 
                                                    2021     2020 
                                                 GBP'000  GBP'000 
 
Depreciation on tangible assets (see note 
 13)                                               1,045    1,083 
Depreciation on right-of-use asset (see notes 
 13 and 27)                                        3,751    3,455 
Short term and low value lease payments (see 
 note 27)                                             40       63 
Operating lease costs on property (see note 
 27)                                                  26       21 
Other operating income - rent received               (2)    (216) 
Foreign exchange losses                               87     (29) 
Profit on sale of fixed assets                       (3)        - 
                                                 =======  ======= 
 
                                                    2021     2020 
                                                 GBP'000  GBP'000 
Non-underlying items 
Amortisation of intangible assets (see notes 
 15 and 16)                                        2,073    1,375 
Share based payment charges - Gateley Plc            956      821 
Share based payment charges - Kiddy & Partners         -      534 
 
                                                   3,029    2,730 
Exceptional items 
Acquisition costs                                      -      107 
Impairment of software development costs               -      463 
                                                 -------  ------- 
                                                       -      570 
 
Total non-underlying and exceptional items         3,029    3,300 
                                                 =======  ======= 
 

Acquisition costs in the 2020 financial year represent professional fees in respect of the acquisition of T-Three Consulting Limited and The Vinden Partnership Limited.

Share based payment charges in Gateley Plc represent charges in accordance with IFRS 2 in respect of unexercised SAYE, CSOP, SARS and LTIP schemes (See note 8).

Share based payment charges in Kiddy & Partners in the 2020 financial year represent bonuses awarded to staff based on profit related performance conditions settled 50% in cash and 50% in shares are the prevailing market value at the time of issue (See note 7 and 8)

Impairment of software development costs in the comparative year relates to internally generated costs capitalised in previous years, released due to the cessation of the related IT project to install a new practice management system. (See note 16)

Auditor's remuneration

 
                                                      2021     2020 
                                                   GBP'000  GBP'000 
 
Fees payable to the Company's Auditor in respect 
 of audit services: 
 Audit of these financial statements                    73      143 
 Audit of financial statements of subsidiaries 
  of the Company                                        15       15 
                                                   -------  ------- 
                                                        88      158 
                                                   =======  ======= 
 
Amounts receivable by the Company's auditor 
 and its associates in respect of: 
  Other assurance services                              44       33 
   Tax advisory services                                 -        7 
 Tax compliance services                                 -       45 
                                                   -------  ------- 
                                                        44       85 
                                                   =======  ======= 
 

Other assurance services in 2021 relate to Solicitors Accounts Rules review with associated reporting to legal regulators. This work is entirely assurance focused.

   7              Personnel costs 

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

 
                                          Number of employees 
                                          2021            2020 
 
Legal and professional staff               770             706 
Administrative staff                       343             341 
                               ---------------  -------------- 
                                         1,113           1,047 
                               ===============  ============== 
 

The aggregate payroll costs of these persons were as follows:

 
                                                    2021     2020 
                                                 GBP'000  GBP'000 
 
Wages and salaries                                68,020   55,696 
Social security costs                              7,736    6,280 
Pension costs                                      1,704    1,555 
                                                 -------  ------- 
                                                  77,460   63,531 
Non-underlying items (see note 7) 
Share based payment expense - Gateley Plc            956      821 
Share based payment expense - Kiddy & Partners         -      534 
                                                 -------  ------- 
                                                  78,416   64,886 
                                                 =======  ======= 
 
   8              Share-based payments 

Group

At the year end the Group has four share-based payment schemes in existence.

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 365,355 SAYE 17/18 options vested with 107,743 being exercised by 30 April 2021 leaving 257,612 options still to be exercised. New shares were issued to satisfy these options being 107,743 10p shares with a nominal value of GBP10,774. The accrued IFRS2 charge of GBP155,381 has been released against other reserves.

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.

During the year 428,145 CSOPS 17/18 options vested. None of these options had been exercised at the year end. The accrued IFRS2 charge of GBP95,780 has been released against other reserves.

Long Term Incentive Plan ('LTIP')

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

Performance conditions

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

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

Grant of equity share options under the LTIP

Certain senior employees and Executive Directors were initially granted options on 24 February 2020 based on performance conditions commencing on 1 May 2019. These options were cancelled on 17 July 2020 as a result of the impact of COVID-19 on the achievement of those performance conditions. The fair value of the cancelled options is deemed to be nil as a result of the impact of COVID-19 on the Group. The Committee subsequently reassessed the use of this incentive scheme and granted new options on the 22 July 2020 based on performance conditions commencing a year on 1 May 2020. The number of options granted were allocated to the same employees in the same proportions as the February issue however approximately 28% more awards were issued to those employees so as to enhance the incentivisation of these awards during the difficult and challenging economic conditions encountered due to the impact of COVID-19.

Stock Appreciation Rights Scheme ('SARS')

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

The awards vest after a three year performance period. On exercise, participants will receive an award of shares equal to the growth in value of the option between the date of grant and the date of exercise in excess of the hurdle rate calculated by reference to the number of reference options granted to each option holder. The hurdle rate is currently set at 115.765% of the market value of the underlying shares on the date of the grant.

No awards were granted under the SAR Scheme during the year ended 30 April 2021, 30 April 2020 or 30 April 2019.

During the year the final 6,750,000 SARS 17/18 options lapsed.

The annual awards granted under all schemes are summarised below:

 
                 Weighted    Weighted  Originally     Lapsed       At 1    Granted       Lapsed   Exercised      At 30 
                  average     average     granted      at 30        May     during       during      in the      April 
                remaining    exercise                  April       2020   the year         year        year       2021 
              contractual       price                   2020 
                     life 
                                           Number     Number     Number     Number       Number      Number     Number 
 
 
 
SAYE 
SAYE 17/18- 
 15 
 September 
 2017             0 years     GBP1.33     556,296  (140,878)    415,418          -     (50,063)   (107,743)    257,612 
SAYE 18/19 
 - 21 
 September 
 2018           0.4 years     GBP1.27     620,335   (73,411)    546,924          -     (94,955)           -    451,969 
SAYE 19/20 
 - 30 
 September 
 2019           1.4 years     GBP1.28     770,787          -    770,787          -     (73,964)           -    696,823 
SAYE 20/21 
 - 6 
 November 
 2020           2.5 years     GBP1.02           -          -          -  2,337,353     (72,700)           -  2,264,653 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
                                        1,947,418  (214,289)  1,733,129  2,337,353    (291,682)   (107,743)  3,671,057 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
CSOPS 
CSOPS 17/18 
 - 
 3 October 
 2017             0 years     GBP1.65     581,162  (125,444)    455,718          -     (27,573)           -    428,145 
CSOPS 18/19 
 - 
 24 October 
 2018           0.5 years     GBP1.44     812,131   (68,748)    743,383          -     (72,915)           -    670,468 
CSOPS 20/21 
 - 
 7 July 
 2020           2.2 years     GBP1.35           -          -          -    976,797     (57,411)           -    919,386 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
                                        1,393,293  (194,192)  1,199,101    976,797    (157,899)           -  2,017,999 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
LTIPS 
LTIPS 20/21 
 - 
 22 July 
 2020           2.7 years     GBP1.43           -          -          -  1,405,766     (38,339)           -  1,367,427 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
                                                -          -          -  1,405,766     (38,339)           -  1,367,427 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
SARS 
SARS 17/18 
 - 3 
 October 
 2017             0 years     GBP1.83   7,050,000  (300,000)  6,750,000          -  (6,750,000)           -          - 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
                                        7,050,000  (300,000)  6,750,000          -  (6,750,000)           -          - 
                                       ----------  ---------  ---------  ---------  -----------  ----------  --------- 
 

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. This model has been used as an approximation of the binomial model for valuing the SARS granted, the Directors consider the difference to be immaterial. The inputs to this model for awards granted during the financial year are detailed below:

 
                                 CSOP      CSOP      CSOP      SAYE      SAYE       SAYE      SAYE      SARS      LTIP 
 
Grant date                     7/7/20  24/10/18   15/9/17   6/11/20   30/9/19   21/12/18   3/10/17   3/10/17   22/7/21 
Share price at date of        GBP1.35  GBP1.44p  GBP1.65p   GBP1.22   GBP1.64  GBP1.585p  GBP1.66p  GBP1.58p  GBP1.41p 
grant 
Exercise price                GBP1.35  GBP1.44p  GBP1.65p   GBP1.02  GBP1.27p   GBP1.27p  GBP1.33p  GBP1.83p       n/a 
Volatility                        35%       24%       24%       35%       35%        24%       24%       24%       35% 
Expected life (years)             3.3       3.3       3.3       3.3       3.3        3.3       3.3       3.3       3.3 
Risk free rate                     1%        1%        1%        1%        1%         1%        1%        1%        1% 
Dividend yield                     4%      4.5%        4%        4%        4%       4.5%        4%        4%        5% 
 
Fair value per share 
Market based performance     GBP0.15p  GBP0.16p  GBP0.19p  GBP0.20p  GBP0.37p   GBP0.27p  GBP0.33p  GBP0.12p   GBP1.19 
 condition 
Non-market-based                              -         -         -         -          -         -         -         - 
 performance 
 condition/no performance 
 condition 
                             --------  --------  --------  --------  --------  ---------  --------  --------  -------- 
 

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 three and three and a half years, respectively.

The total charge to the income statement for all schemes now in place, included within non-underlying items, is GBP956,000 (FY20: GBP821,000).

   9              Financial income and expense 

Recognised in profit and loss

 
                                                  2021     2020 
                                               GBP'000  GBP'000 
Financial income 
Interest income                                    176      523 
                                               -------  ------- 
Total finance income                               176      523 
                                               =======  ======= 
 
  Financial expense 
Interest expense on bank borrowings measured 
 at amortised cost                               (416)    (426) 
Interest on lease liability                      (957)    (840) 
                                               -------  ------- 
Total financial expense                        (1,373)  (1,266) 
                                               =======  ======= 
 
Net financial expense                          (1,197)    (743) 
                                               =======  ======= 
 
   10           Taxation 
 
                                                       2021     2020 
                                                    GBP'000  GBP'000 
Current tax expense 
Current tax on profits for the year                   3,749    3,121 
(Over)/under provision of taxation in previous 
 period                                                (43)      295 
                                                    -------  ------- 
Total current tax                                     3,706    3,416 
                                                    =======  ======= 
 
Deferred tax expense 
Origination and reversal of temporary differences     (436)    (234) 
Under provision on share-based payment charges        (119)    (149) 
                                                    -------  ------- 
Total deferred tax expense                            (555)    (383) 
                                                    =======  ======= 
 
Total tax expense                                     3,151    3,033 
                                                    =======  ======= 
 

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:

 
                                                    2021     2020 
                                                 GBP'000  GBP'000 
 
 Profit for the year (subject to corporation 
  tax)                                            16,308   14,756 
                                                 -------  ------- 
 
 Tax using the Company's domestic tax rate 
  of 19%                                           3,099    2,804 
 Expenses not deductible for tax purposes            214       83 
(Over)/under provision of taxation in previous 
 period                                             (43)      295 
Under provision on share-based payment charges     (119)    (149) 
                                                 -------  ------- 
 Total tax expense                                 3,151    3,033 
                                                 =======  ======= 
 

On 26 October 2015 the UK corporation tax rate was reduced to 19% (effective from 1 April 2017). As a result of the March 2020 Budget the UK corporation tax rate remains at 19% for the years beginning 1 April 2020 and 1 April 2021. The deferred tax liability at 30 April 2021 has been calculated based on these rates.

   11           Earnings per share 
 
Statutory earnings per share 
                                                                   2021         2020 
                                                                 Number       Number 
 
Weighted average number of ordinary shares in 
 issue, being weighted average number of shares 
 for calculating basic earnings per share                   117,685,265  113,404,283 
Shares deemed to be issued for no consideration 
 in respect of share based payments                             823,568    2,195,444 
 
Weighted average number of ordinary shares for 
 calculating diluted earnings per share                     118,508,833  115,599,727 
                                                            ===========  =========== 
 
                                                                   2021         2020 
                                                                GBP'000      GBP'000 
 
Profit for the year and basic earnings attributable 
 to ordinary equity shareholders                                 13,157       11,723 
 
Non-underlying and exceptional items (see note 
 7) 
Operating expenses                                                3,029        3,300 
Tax on non-underlying and exceptional items                       (576)        (627) 
                                                            -----------  ----------- 
Underlying earnings before non-underlying and 
 exceptional items                                               15,604       14,396 
 
Earnings per share is calculated as follows: 
                                                                   2021         2020 
                                                                  Pence        Pence 
 
Basic earnings per ordinary share                                 11.18        10.34 
Diluted earnings per ordinary share                               11.10        10.14 
 
Basic earnings per ordinary share before non-underlying 
 and exceptional items                                            13.26        12.69 
Diluted earnings per ordinary share before non-underlying 
 and exceptional items                                            13.17        12.45 
 
   12           Dividends 
 
                                                        2021     2020 
                                                     GBP'000  GBP'000 
Equity shares: 
Final dividend in respect of FY19 (5.4p per share) 
 - 15 October 2019                                         -    6,007 
                                                     =======  ======= 
 

The Board has paid an interim dividend in respect of the FY21 financial year of 2.5p per share on 28 June 2021.

   13           Property, plant and equipment 
 
                                    Leasehold  Equipment   Fixtures  Right-of-use    Total 
                                 improvements                   and        assets 
                                                           Fittings 
                                      GBP'000    GBP'000    GBP'000       GBP'000  GBP'000 
Cost 
As at 30 April 2019                       231      5,275      4,984             -   10,490 
IFRS 16 Right-of-use asset                  -          -          -        24,360   24,360 
                                -------------  ---------  ---------  ------------  ------- 
Balance at 1 May 2019                     231      5,275      4,984        24,360   34,850 
Additions                                   -        745        112         4,831    5,688 
Arising on acquisition 
 after fair value adjustments             231        187        130             -      548 
Disposal                                    -          -          -       (3,045)  (3,045) 
                                -------------  ---------  ---------  ------------  ------- 
As at 30 April 2020                       462      6,207      5,226        26,146   38,041 
Balance at 1 May 2020                     462      6,207      5,226        26,146   38,041 
Additions                                   -        302        201         9,238    9,741 
Disposal                                (145)       (16)       (31)       (1,359)  (1,551) 
                                -------------  ---------  ---------  ------------  ------- 
As at 30 April 2021                       317      6,493      5,396        34,025   46,231 
                                -------------  ---------  ---------  ------------  ------- 
 
Depreciation and impairment 
Balance at 1 May 2019                     104      4,331      4,038             -    8,473 
Depreciation charge for 
 the year                                  10        687        386         3,455    4,538 
Arising on acquisition 
 after fair value adjustments             213        139        114             -      466 
Eliminated on disposal                      -          -          -         (188)    (188) 
                                -------------  ---------  ---------  ------------  ------- 
Balance at 30 April 2020                  327      5,157      4,538         3,267   13,289 
                                -------------  ---------  ---------  ------------  ------- 
Balance at 1 May 2020                     327      5,157      4,538         3,267   13,289 
Depreciation charge for 
 the year                                  23        670        352         3,751    4,796 
Eliminated on disposal                  (141)       (13)       (30)             -    (184) 
Balance at 30 April 2021                  209      5,814      4,860         7,018   17,901 
                                -------------  ---------  ---------  ------------  ------- 
 
  Net book value 
                                -------------  ---------  ---------  ------------  ------- 
At 30 April 2020                          135      1,050        688        22,879   24,752 
                                -------------  ---------  ---------  ------------  ------- 
At 30 April 2021                          108        679        536        27,007   28,330 
                                -------------  ---------  ---------  ------------  ------- 
 
   14           Investment property 
 
                                          GBP'000 
Fair value 
Balance at 1 May 2019 and 30 April 2020       164 
                                          ======= 
 
Balance at 1 May 2020 and 30 April 2021       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 2021 at GBP164,000 (FY20: GBP164,000) 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 GBPnil (FY20: GBPnil) was received during the year. Services charges of GBP3,089 (FY20: GBP3,000) where incurred during the year.

   15           Intangible assets and goodwill 
 
                                        Goodwill    Customer    Total 
                                                   lists and 
                                                      brands 
                                         GBP'000     GBP'000  GBP'000 
Deemed cost 
At 1 May 2019                              8,405       4,424   12,829 
Arising through business combinations      4,543       5,426    9,969 
Adjustment - Kiddy & Partners              (619)           -    (619) 
At 30 April 2020                          12,329       9,850   22,179 
Adjustment                                 (631)           -    (631) 
At 30 April 2021                          11,698       9,850   21,548 
 
Amortisation 
At 1 May2019                                   -       2,399    2,399 
Charge for the year                            -       1,342    1,342 
                                        --------  ----------  ------- 
At 30 April 2020                               -       3,741    3,741 
Charge for the year                            -       2,042    2,042 
                                        --------  ----------  ------- 
At 30 April 2021                               -       5,783    5,783 
                                        ========  ==========  ======= 
 
  Carrying amounts 
At 30 April 2020                          12,329       6,109   18,438 
                                        ========  ==========  ======= 
At 30 April 2021                          11,698       4,067   15,765 
                                        ========  ==========  ======= 
 

Goodwill is allocated to the following cash generating units:

 
                                                      2021     2020 
                                                   GBP'000  GBP'000 
Property Group 
Gateley Capitus Limited                              1,515    1,515 
Gateley Hamer Limited                                1,161    1,161 
GCL Solicitors (acquisition of trade and assets)     2,900    2,900 
Persona Associates Limited                              40       40 
Gateley Vinden Limited                               2,259    1,972 
                                                   -------  ------- 
                                                     7,875    7,588 
Employment , Pensions and Benefits Group 
Kiddy & Partners Limited                             1,600    1,872 
International Investment Services Limited              338      338 
T-three Consulting Limited                             309      955 
                                                   -------  ------- 
                                                     2,247    3,165 
Business services Group 
Gateley Tweed (acquisition of goodwill)              1,576    1,576 
                                                    11,698   12,329 
                                                   =======  ======= 
 

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. Management have considered the likely impact of the COVID 19 pandemic on future cashflows in their assessment of impairment.

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% (FY20: 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. Weighted average cost of capital has been applied at the 2020 financial year rate as no dividend was paid in the 2021 financial year artificially increasing the rate.

-- 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 -25% to 10% (FY20: 5-18%) 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 nil%. 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.

Sensitivities

The Group attributes a monetary value to the acquired goodwill based primarily on the anticipated future cash flows generated by the customers. Whilst the Group accounts for customer attrition and direct costs the main driver of this value is the estimated revenue resulting from the customers on the list. Management have estimated a year on year growth rate which has been applied to the model. The below table shows the Group's sensitivity to growth rates on the customer list valuation:

 
                                  Increase/(decrease) 
                                          in value of 
                                             goodwill 
                                              GBP'000 
 +1 % increase in growth rates                    657 
 -1 % decrease in growth rates                  (643) 
 
   16           Other intangible assets 
 
                                   IT development   Computer 
                                            costs   software      Total 
                                          GBP'000    GBP'000    GBP'000 
Cost 
Balance at 1 May 2019                         237         85        322 
Additions                                     303         26        329 
Disposals and write-offs                    (282)          -      (282) 
                                   --------------  ---------  --------- 
At 30 April 2020                              258        111        369 
Additions                                       -         10         10 
 
At 30 April 2021                              258        121        379 
                                   ==============  =========  ========= 
 
Amortisation 
Balance at 1 May 2019                           -         33         33 
Charge for the year                             -         33         33 
                                   --------------  ---------  --------- 
At 30 April 2020                                -         66         66 
Charge for the year                             -         31         31 
                                   --------------  ---------  --------- 
At 30 April 2021                                -         97         97 
                                   ==============  =========  ========= 
 
Net book amount at 30 April 2020              258         45        303 
                                   --------------  ---------  --------- 
Net book amount at 30 April 2021              258         24        282 
                                   ==============  =========  ========= 
 

The Group's amortisation policy is to amortise other intangible assets from the date they are made available for use. As at 30 April 2021 the software relating to the IT development costs was not available for use, therefore no amortisation has been recognised. The software is expected to be available for use in the 2022 financial year.

   17           Other investments 

The Group holds other investment interests in the following third party investments:

 
                           GBP'000 
Fair value 
Balance at 1 May 2019           85 
Additions                      214 
Disposals                     (70) 
                           ------- 
Balance at 30 April 2020       229 
Additions                      134 
Balance at 30 April 2021       363 
                           ======= 
 

GBP15,000 - Gateley Investments Limited holds a 1.9% investment in the ordinary shares of Manchester Biotech Limited (formerly PeptiGelDesign Ltd).

GBP347,734 - Gateley Plc holds a 3.0% investment in the ordinary shares in Incanthera Plc, acquired on 26 February 2020 (GBP213,733) and 29 July 2020 (GBP133,999).

   18           Contract assets and liabilities 
 
                      Contract         Trade      Contract 
                        assets   receivables   liabilities 
                       GBP'000       GBP'000       GBP'000 
 
 
As at 30 April 2021     13,900        36,680       (1,243) 
                      ========  ============  ============ 
 
As at 30 April 2020     11,684        36,848          (70) 
                      ========  ============  ============ 
 

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 GBPnil (FY20: GBP212,000) were acquired in business combinations.

An impairment gain of GBP89,000 has been recognised in relation to contract assets in the year (FY20: GBP69,000). This is based on the expected credit loss under IFRS 9 of these types of assets. The contract asset gain is estimated at 0.6% (FY20: 0.6%) of the balance.

Contract assets recognised under IFRS 15

Under IFRS 15 the Group is required to recognise contract assets, as detailed in note 1.16.

 
                                                  2021       2020 
                                               GBP'000    GBP'000 
 Contract asset value at 1 May 2020             11,684     10,671 
 Contract assets arising on acquisition              -        212 
 Contract asset value added in the year         17,452     13,528 
 Contract asset value realised in the year    (15,236)   (12,727) 
                                             ---------  --------- 
 Contract asset value at 30 April 2021          13,900     11,684 
                                             =========  ========= 
 

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.

 
                                                    2021      2020 
                                                 GBP'000   GBP'000 
 Contract liabilities at 1 May 2020                   70       147 
 Contract liabilities gained in the year           1,207       447 
 Contract liabilities credited to P&L in year       (34)     (524) 
                                                --------  -------- 
 Contract liabilities at 30 April 2021            1,243)        70 
                                                ========  ======== 
 
   19           Trade and other receivables 
 
                                                       2021     2020 
                                                    GBP'000  GBP'000 
 
Trade receivables                                    36,680   36,874 
Prepayments                                           5,699    2,941 
Other receivables including insurance receivables       714      182 
                                                     43,093   39,997 
                                                    =======  ======= 
 

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

 
                                             2021     2020 
                                          GBP'000  GBP'000 
 
Brought forward provision                 (2,967)  (2,785) 
Brought forward on acquisition                  -     (94) 
Provision utilised                            719      474 
Charged to statement of profit and loss   (2,391)    (961) 
Provisions released                           468      399 
                                          (4,171)  (2,967) 
                                          =======  ======= 
 

The Group applies the simplified approach to providing for the expected credit losses under IFRS 9. Management have also elected to apply an uplift to the IFRS 9 provision in the current year to account for the specific risks in the subsidiary entities where the application of IFRS 9 alone is not considered appropriate. The provision uplift is based on Management's assessment of specific clients and related debts, this is presented separately to the ECL provision detailed below:

 
                                                                   Past due 
                                                                    greater 
                         Not passed     Past due       Past due    than 120 
                                due    0-30 days    31-120 days        days    Total 
 Expected credit 
  loss rate                   3.60%        4.45%          4.24%      25.11% 
 Estimated total 
  gross carrying 
  amount GBP'000             24,922        3,442          4,223       8,264   40,851 
                        -----------  -----------  -------------  ----------  ------- 
 Lifetime ECL GBP'000           898          153            179       2,075    3,305 
 Specific provision 
  uplift                                                                         866 
                                                                             ------- 
 Total provision                                                               4,171 
                                                                             ======= 
 

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 GBP1,525,000 has been recognised in relation to trade receivables in the year (FY20: GBP562,000). This is based on the expected credit loss under IFRS 9 of these types of assets. The trade receivables loss is estimated at 3.7% (FY20: 1.2%) of the balance.

   20           Other interest-bearing loans and borrowings 

The contractual terms of the Group's interest-bearing loans and borrowings, which are measured at amortised cost, with the exception of loans to members that are held at fair value, are described below.

 
                                       2021               2020 
                                       Fair  Carrying     Fair  Carrying 
                                      value    amount    value    amount 
                                    GBP'000   GBP'000  GBP'000   GBP'000 
Non-Current liabilities 
Unsecured bank loan                       -         -    2,369     2,369 
                                    =======  ========  =======  ======== 
 
Current liabilities 
Unsecured bank loan                       -         -      708       708 
Loans from former members of GCL 
 Solicitors LLP                           -         -       68        68 
Loans from director of IIS                -         -        -         - 
Loans due to former partners of 
 Gateley Tweed LLP (formerly Paul 
 Tweed LLP)                               -         -      661       661 
                                          -         -    1,437     1,437 
                                    =======  ========  =======  ======== 
 

On 8 June 2015, Gateley Plc entered into two new loan agreements of GBP5m each, GBP10m in total. On 28 October 2018 these existing loans were re-negotiated and additional loans totalling GBP3 million were entered into. The balance of these loans was repaid in full by Gateley Plc in April 2021.

As at 30 April 2021, the Group's non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:

 
30 April 2021                      Current               Non-current 
                           Within 6  6 to 12 months    1 - 5  Later than 
                             months                    years     5 years 
                            GBP'000         GBP'000  GBP'000     GBP'000 
 
Trade and other payables      8,130               -      120           - 
                           --------  --------------  -------  ---------- 
Total                         8,130               -      120           - 
                           ========  ==============  =======  ========== 
 

This compares to the maturity of the Group's non-derivative financial liabilities in the previous reporting period as follows:

 
30 April 2020                                  Current               Non-current 
                                       Within 6  6 to 12 months    1 - 5  Later than 
                                         months                    years     5 years 
                                        GBP'000         GBP'000  GBP'000     GBP'000 
 
Unsecured bank loans                        234             474    2,369           - 
Loans from former owners of acquired 
 businesses                                 699               -        -           - 
Trade and other payables                  5,583               -        -         133 
                                       --------  --------------  -------  ---------- 
Total                                     6,516             474    2,369         133 
                                       ========  ==============  =======  ========== 
 

The above amounts reflect the contractual undiscounted cash flows, which may differ to the carrying values of the liabilities at the reporting date.

   21           Trade and other payables 
 
                                                2021     2020 
                                             GBP'000  GBP'000 
Current 
Trade payables                                 6,086    5,490 
Other taxation and social security payable     9,641   12,352 
Other payables                                   582       93 
Contingent consideration                         135      360 
Accruals                                      11,345    1,804 
Deferred income                                1,243       70 
                                             -------  ------- 
                                              29,032   20,169 
                                             =======  ======= 
 
 
Non-current                GBP'000  GBP'000 
Other payables                 120      133 
Contingent consideration         -      789 
                           -------  ------- 
                               120      922 
                           =======  ======= 
 

GBP135,000 of current contingent consideration represents the earn-out sums payable to the sellers of International Investment Services Limited.

All contingent consideration is Level Three in the fair value hierarchy as there are no observable inputs. Amounts have been calculated based on the Group's expectation of what it will pay in relation to the earn-out clause of the relevant sale and purchase agreement discounted to present value. The earn-out targets are based on the annual results, or in the case of Persona a relocation of staff, of the acquired business. The fair value of the earn-out consideration is calculated based on the forecasted results, using EBIT growth rate ranges from 2-10%, to give an estimate of the final obligation capped at the maximum earn-out amount stated in the purchase agreement. Where contingent consideration is due over a period of more than one year the value of the consideration is discounted and recorded at the present value. The discount rate applied in determining the present value of contingent consideration is 17.3%.

   22           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 
                                                            GBP'000 
 At 1 May 2020                                                   19 
 Debited during the year to retained earnings                     - 
 Credited during the year in the Consolidated income 
  statement                                                     119 
                                                       ------------ 
 At 30 April 2021                                               138 
                                                       ============ 
 

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 
                                                                                                        GBP'000 
 
At 1 May 2019                                                                                               388 
Arising through business combinations - T-Three Consultancy Limited and Gateley Vinden Limited            1,031 
Credited during the year in the Consolidated income statement                                             (211) 
                                                                                                 -------------- 
At 30 April 2020                                                                                          1,208 
Credited during the year in the Consolidated income statement                                             (436) 
 
At 30 April 2021                                                                                            772 
                                                                                                 ============== 
 
   23           Provisions 
 
                                                    2021      2020 
                                                 GBP'000   GBP'000 
 Current provision 
 Professional indemnity provision                    176       252 
                                                --------  -------- 
 Total current provision                             176       252 
                                                --------  -------- 
 
 Non-current provision 
 Professional indemnity provision                    549       461 
 Dilapidations provision                             214         - 
                                                --------  -------- 
 Total non-current provision                         763       461 
                                                --------  -------- 
 
 Total provisions                                    939       713 
                                                ========  ======== 
 
 
  Professional indemnity estimated claim cost 
                                                    2021         2020 
                                                 GBP'000      GBP'000 
 
Brought forward                                      713          630 
Provisions made during the year                      385          542 
Provisions reversed during the year                (373)        (459) 
                                                --------  ----------- 
At end of year                                       725          713 
                                                ========  =========== 
 
Non-current                                          549          461 
Current                                              176          252 
                                                --------  ----------- 
                                                     725          713 
                                                ========  =========== 
 
 

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.

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.

 
                               Dilapidations 
                                   provision 
                                     GBP'000 
 Brought forward provision                 - 
 Provision made in the year              214 
                              -------------- 
 At 30 April 2021                        214 
                              ============== 
 
   24           Net debt 
 
                                             2021      2020 
                                          GBP'000   GBP'000 
 
Cash and cash equivalents                  19,605     2,923 
 
  Debt 
Total loans brought forward              (29,262)   (6,120) 
Loans from former members                       -     (661) 
New lease liability in the year           (9,385)  (25,456) 
Repayment of loans from former members        729       402 
Repayment of term loans                     3,077     2,573 
Termination of lease                        1,359         - 
Repayment of lease liability                3,037         - 
                                         --------  -------- 
Total loan carried forward               (30,445)  (29,262) 
 
Brought forward from previous year       (26,339)   (3,233) 
Movement during year                       15,499  (23,173) 
                                         --------  -------- 
Net debt at the year end                 (10,840)  (26,339) 
                                         ========  ======== 
 

The changes in the Group's liabilities arising from financing activities can be classified as follows:

 
                                    Long term   Short term  Lease liabilities    Total 
                                   borrowings   borrowings 
                                      GBP'000      GBP'000            GBP'000  GBP'000 
 
1 May 2020                              3,077          729             25,456   29,262 
Cashflows: 
Repayments                            (3,077)        (729)            (3,037)  (6,843) 
Non-cash 
Fair value on acquisition                   -            -                  -        - 
Termination of lease                        -            -                  -        - 
New lease liability in the year             -            -              8,026    8,026 
30 April 2021                               -            -             30,445   30,445 
                                  ===========  ===========  =================  ======= 
 
 
                                    Long term   Short term  Lease liabilities    Total 
                                   borrowings   borrowings 
                                      GBP'000      GBP'000            GBP'000  GBP'000 
 
1 May 2019                              5,650          470                326    6,446 
Adoption of IFRS 16                         -            -             27,210   27,210 
Revised 1 May 2019                      5,650          470             27,536   33,656 
Cashflows: 
Repayments                            (2,573)        (402)            (3,615)  (6,591) 
Non-cash 
Fair value on acquisition                   -          661                         662 
Termination of lease                        -            -            (3,046)  (3,046) 
New lease liability in the year             -            -              4,581    4,581 
                                  -----------  -----------  -----------------  ------- 
30 April 2020                           3,077          729             25,456   29,262 
                                  ===========  ===========  =================  ======= 
 
   25           Share capital 

Authorised, issued and fully paid

 
                                            2021        2021         2020        2020 
                                          Number         GBP       Number         GBP 
Ordinary shares of 10p each 
Brought forward                      117,609,094  11,760,909  110,860,789  11,086,079 
Issued on acquisition of Persona 
 Associates Limited                            -           -       94,312       9,431 
Issues on acquisition of T-Three 
 Consulting Limited                            -           -      944,855      94,486 
Issued as part of contingent 
 consideration of Kiddy & Partners 
 Limited                                       -           -      389,608      38,961 
Issued on acquisition of Gateley 
 Tweed LLP                                     -           -      529,520      52,952 
Issued on acquisition of Gateley 
 Vinden Limited                                -           -    1,602,564     160,256 
Issues as part of contingent 
 consideration of Gateley Vinden 
 Limited                                 197,368      19,737            -           - 
Issued on vesting of SARS                      -           -    1,631,588     163,159 
Issued on vesting of SAYE                107,743      10,774      844,695      84,470 
Issued on vesting of CSOPS                                        711,163      71,116 
                                     -----------  ----------  -----------  ---------- 
At 30 April 2021                     117,914,205  11,791,420  117,609,094  11,760,909 
                                     ===========  ==========  ===========  ========== 
 
 

On 4 February 2021 the Company issued 197,368 10p ordinary shares as contingent consideration in the acquisition of Gateley Vinden Limited (formerly The Vinden Partnership Limited).

Between 14 December 2020 and 19 April 2021 107,743 10p ordinary shares were issued upon vesting of the 2017 SAYE schemes to participants.

   26        Capital commitments 

In 2020 the Group entered a contract with a provider of legal technology for the development of a new practice management system, with Thomson Reuters for the installation of their market leading practice management system. The estimated cost of the contractual capital commitment is GBP1.1million and is expected to be incurred across the calendar years 2021 and 2022.

   27        Leases 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      Average        Opening   Net additions   Depreciation        Closing 
                  of leased       length    lease asset         GBP'000        GBP'000    lease asset 
                    assets*     of lease        GBP'000                                       GBP'000 
                               remaining 
 Office 
  buildings              11    5.3 years         22,828           7,879        (3,736)         26,971 
 IT equipment             1    1.5 years             51               -           (15)             36 
 

* 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:

 
                                    2021       2020 
                                 GBP'000    GBP'000 
 Current lease liability           2,743      3,347 
 Non-current lease liability      27,702     22,109 
 

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 Groups wider strategy.

As at 30 April 2021 the Group had committed to leases which had not yet commenced. Total future expected cash flows are GBP8.37 million over a 10 year period. Committed leases includes a reversionary lease on the London property which included a GBP200k capital contribution.

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 2021:

 
                                           Property  Equipment    Total 
                                            GBP'000    GBP'000  GBP'000 
 
Expenses relating to short-term leases           26         23       49 
Expenses relating to leases of low-value 
 assets, excluding short-term leases 
 of low value assets                              -         17       17 
                                           --------  ---------  ------- 
                                                 26         40       66 
                                           ========  =========  ======= 
 

The total minimum undiscounted lease payments at 30 April 2021 under non-cancellable operating lease rentals were:

 
                                        30 April 2021  30 April 
                                              GBP'000      2020 
                                                        GBP'000 
 
Within one year                                 3,024     3,409 
In the second to fifth year inclusive          15,921    10,799 
After five years                               13,822     9,433 
                                               32,767    28,775 
                                        =============  ======== 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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