TIDMGTLY
RNS Number : 6099F
Gateley (Holdings) PLC
16 July 2019
16 July 2019
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the
publication of this announcement via Regulatory Information Service
("RIS"), this inside information is now considered to be in the
public domain.
Gateley (Holdings) Plc
("Gateley", the "Group" or the "Company")
AUDITED PRELIMINARY RESULTS 2019
Strong results from an established, resilient and progressive
business
Gateley (AIM: GTLY), the legal and professional services group,
is pleased to announce its audited preliminary results for the year
ended 30 April 2019.
Financial Highlights
-- Revenue increased 20.2% to GBP103.5m (2018: GBP86.1m)
-- Adjusted EBITDA* increased 15.7% to GBP19.1m (2018: GBP16.5m)
-- Profit before tax increased 8.9% to GBP15.9m (2018: GBP14.6m)
-- Profit after tax increased 10.6% to GBP13.0m (2018: GBP11.8m)
-- Basic EPS increased 7.3% to 11.83p (2018: 11.03p), adjusted
fully diluted EPS increased 17.8% to 13.15p (2018: 11.16p)
**
-- Proposed final dividend of 5.4p per share (2018: 4.8p), representing
a full year dividend of 8.0p per share (2018: 7.0p) an increase
of 14.3%
-- Robust balance sheet with net assets increased to GBP30.6m
(2018: GBP23.0m) and net debt of GBP3.2m (2018: GBP0.7m)
-- Strong cash generation and continued investment for future
growth
-- New financial year has started well and the Group is well
positioned to make further progress
* Adjusted EBITDA excludes share based payment charges, depreciation,
amortisation and exceptional items
** 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
Operational Highlights
-- Record breaking revenue and staff numbers attained
-- Three acquisitions completed and fully integrated in the year:
- Strategic acquisition of housebuilder specialists GCL Solicitors
in May 2018
- Complementary acquisition of non-legal Human Capital consultancy
business, Kiddy & Partners, in July 2018
- Complementary acquisition of non-legal inward investment
consultancy business, International Investment Services, in
November 2018
-- Continued investment in fee earning staff with average numbers
up 19.8% to 610 (2018: 509). Average total staff numbers up
19.8% to 907 (2018: 757)
-- Increased levels of Partner recruitment, with organic growth
momentum maintained
-- Introduction of new Long Term Incentive Plan, to replace Stock
Appreciation Rights Scheme and to increase clarity on dilution.
LTIP to sit alongside existing CSOP and SAYE staff option schemes
-- New five year Orderly Market Agreement being finalised
Michael Ward, CEO of Gateley, said:
"I am delighted that our legal and professional services Group
has broken the GBP100m revenues barrier for the first time, as we
delivered another excellent financial performance whilst continuing
to take advantage of opportunities to diversify revenue streams
through complementary acquisitions.
"Our teamwork has, once again, enabled us to maintain strong
momentum. We have continued to invest in our people, with staff
numbers now approaching 1,000 employees, and had our most active
year to date on strategic acquisitions, all of which have been
successfully integrated.
"The new financial year has started very well and we continue to
look to the future with confidence."
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 20 7220 0575
Matt Goode / James Thompson (Corporate
Finance)
Andrew Burdis (ECM)
N+1 Singer - Joint broker Tel +44 20 7496 3000
Richard Lindley / 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
About us
Gateley is a professional and legal services group. Founded in
Birmingham in 1808, we have provided commercial legal services to
individuals and businesses over the last 200 years.
We have over 580 professional advisers and employ around 1,000
people across ten offices located in Belfast, Birmingham,
Guildford, Leeds, Leicester, London, Manchester, Nottingham,
Reading and Dubai.
In 2015, we were the first commercial UK law firm to list on the
London Stock Exchange's Alternative Investment Market (AIM). Our
strategy is to differentiate ourselves in a crowded market,
incentivise our people to retain and attract the best talent in the
industry and diversify by acquiring complementary business
services. These include:
Gateley Legal - services span commercial and corporate law,
dispute resolution, property, human resources, banking, litigation,
restructuring, pensions, regulatory, private wealth and more;
Gateley Capitus - a leading fiscal incentives consultancy
specialising in capital allowances on commercial property, land
remediation relief and tax incentives;
Gateley Hamer - a specialist property consultancy providing
straight talking advice relating to utilities and compensation, as
well as compulsory purchase;
Entrust - a leading professional independent trustee company
that helps companies run their pension scheme effectively;
International Investment Services - experts in international
business, helping clients expand into new offshore markets in the
most efficient way, and;
Kiddy & Partners - a global firm of experts in business
psychology and trusted advisers to a range of business leaders, HR
and talent directors.
For further details on Gateley Plc please visit
www.gateleyplc.com or follow us on Twitter
www.twitter.com/@GateleyPLC.
Chairman's Statement
We are delighted with the performance of the business in the 12
months to 30 April 2019. Revenues have increased by 20.2% to
GBP103.5m and earnings per share rose by 7.3% from 11.03p to
11.83p. We are particularly proud of delivering this strong growth
whilst at the same time enhancing our client offering and investing
significantly in the business for the future. The scale, breadth
and depth of our business continue to expand and our focus on
leveraging our service offering, for the benefit of our clients,
has been and will continue to be at the forefront of our strategic
thinking and operational focus.
Importantly, since we became an AIM quoted company in 2015, we
have seen an increase in the interest that existing and new
employees have in our plc structure, our listed status and equity
participation. During the year, we have increased our average
employee numbers by 19.8% from 757 to 907, with 966 total employees
at the year end. Employees from across the Group continue to
benefit as shareholders, with the majority now having some form of
equity stake in the business.
We added three strategic acquisitions to the Group during the
year: GCL Solicitors ("GCL"), Kiddy & Partners ("Kiddy") and
International Investment Services Limited ("IIS"). These
complementary but very different businesses have excellent
reputations of long-term client retention and high levels of
service delivery and the Board is delighted to welcome them to the
Group. Without our plc status, I do not believe that Gateley would
have appealed to these businesses in the same way. I am pleased to
report that these have been successfully integrated into the Group
and are performing as planned. Our target pipeline remains strong
for potential future acquisitions.
The opportunity that Gateley pioneered by being the first UK
commercial law firm to float four years ago has ignited increased
interest across our sector and several more law businesses have
followed us onto the public markets. As a Board, we very much
welcome the creation of a broader, larger listed company peer group
for investors to consider. As an established investment choice, I
continue to remain confident that Gateley has the right strategy
for the sustainable and profitable growth of the Group and to
deliver enhanced value for all our stakeholders. Our management
team remains steadfast in its vision to succeed with its stated
aims to differentiate (through our comprehensive service offering
and service ethic), to diversify (through organic growth and
acquisition of additional complementary non-legal businesses) and
to incentivise (offering wider and earlier equity participation to
staff).
The Board remains confident that the business is well placed to
deliver another year of growth, whilst at the same time continuing
to seek complementary service lines to enhance our customer
offering further. Accordingly, the Board looks to the future with
confidence and is pleased to propose an increased final dividend,
subject to shareholder approval at the Annual General Meeting on 19
September 2019, of 5.4 pence per share, making a total dividend of
8.0 pence per share for the year, and representing a 14.3% increase
on the prior year.
As announced on 10 July 2019, we are delighted that Rod Waldie
has agreed to lead the business when Michael Ward stands down as
CEO in April next year. We are also delighted that Michael's
commitment to the Group will continue both as an executive director
and as a significant shareholder.
Our choice of an internal appointment to succeed Michael and our
early addressing of succession allow for a smooth transition to a
highly successful and respected colleague, who already knows the
business, understands our collaborative culture, has excellent
client relationships and is committed to the Group's growth
strategy.
Finally, and certainly not least, I would like to pass on my
thanks to Michael, as well as to the Board, to the management team
and to all of the staff at Gateley for their hard work, support and
fantastic contribution this year in delivering a strong set of
results and making considerable further strategic progress.
Nigel Payne
Chairman
16 July 2019
Chief Executive Officer's Review
Introduction
I am delighted that our legal and professional services group
has broken the GBP100m revenue barrier for the first time and
delivered another excellent financial performance, whilst
continuing to take advantage of further opportunities to diversify
our revenue streams. Last year was our most active year to date for
acquisitions.
Our teamwork has once again delivered another year of strong
momentum and investment as we approach 1,000 employees and continue
to successfully integrate all our strategic acquisitions. GCL
Solicitors (GCL), Kiddy and Partners (Kiddy) and International
Investment Services (IIS) joined our growing Gateley Group in the
year under review. Our national reach, built on our already
well-balanced business, creates further exciting opportunities for
future expansion.
In the four years since the Group's IPO at 95p per share, we
have delivered revenue growth of 70%, adjusted EBITDA growth of 46%
and, including the proposed final dividend announced today,
provided shareholders with dividend income of 27.3 pence per share.
The Group has continued to achieve or exceed market forecasts,
which were raised for 2018/19 following our November 2018 trading
update, after a positive first half of the year performance and the
acquisitions made during the year.
We pride ourselves on being a forward-thinking business, which
provides straight talking advice to a wide range of clients and
delivers profitable growth to shareholders.
Financial Results
Our financial performance continues to demonstrate growth in
revenue, profit and cash generation. Our diverse revenue streams
have grown by 20.2% in the year, whilst profit after tax has grown
by 10.6%. Continued strategic investment in areas such as
recruitment, information technology and branding are enabling us to
meet growing client demand and provide a strong foundation upon
which to expand the business. This investment also ensures that we
are able to deliver on our promises to the management teams of the
businesses we acquire. We continue to strengthen and build our
teams, network and service lines with a national and strategic
focus to ensure we can meet client demand as we grow our market
share.
The strength in depth of our core legal business creates
appealing opportunities across many business types and sectors.
Whilst transactional activity levels across Corporate, Banking and
Property segments remain significant, our long-established
expertise in Restructuring and Business Services, such as dispute
resolution work, has produced significant returns once again. The
strength of our connections nationally, across board rooms and
intermediaries, and our reputation for quality teams with a genuine
focus on client service, result in continuing instructions across
many sectors, including the private equity and housebuilding
sectors.
The Board is committed to maintaining a progressive dividend
policy and is pleased to propose a further increase, ahead of
market expectations, of 12.5% in the level of the final dividend to
5.40 pence per ordinary share (2018: 4.80 pence). The dividend will
be paid in mid-October 2019 to shareholders on the register at the
close of business on 20 September 2019. The ex-dividend date will
be 19 September 2019.
Operational Review
It has been another very busy year with numerous opportunities
opening up for us, as a result of our different service offerings.
Our steadfast dedication towards client service continues to ensure
we deliver the services clients want, time and again. The passion
of our staff shines through in the work they perform and I am proud
to lead them through these exciting times. As we grow, we continue
to deliver on our promises to clients, employees and investors.
Four years on from our IPO, we remain focused on our vision to
create an exciting professional services Group. We continue to
diversify through our acquisition strategy and target non-legal
revenues totalling 20% of Group revenue. A new Long Term Incentive
Plan ("LTIP") has been introduced to replace our existing Stock
Appreciation Rights Scheme ("SARS"), creating greater alignment to
the profit performance of the Group and clarity over the impact of
dilution going forward. Our initial SARS scheme vested on 8 June
2018, resulting in over one million additional new shares being
awarded to staff. Our wider staff share ownership participation
will continue to realise rewards, as our first SAYE and CSOP
schemes vest later this year.
The Group is currently working with employee shareholders
towards a new five year orderly market agreement that will commence
at the end of the current five year agreement, due to end on 8 June
2020. We remain focused on investing in the right people to join
the Gateley team and our plc status supports this by providing an
attractive alternative to more traditional law firm models. We
welcomed 16 new Partner hires during the year. Average total staff
numbers grew by 19.8% from 757 to 907 in the period. We were
pleased to welcome 18 trainees to the Group in the year under
review and congratulate all those staff, both professional and
support, who were promoted. We have also expanded our non-legal
service lines, such that our legal team now works alongside 44
other professionals, including chartered surveyors, tax
consultants, business psychologists and chartered accountants.
With the acquisition of GCL on 23 May 2018, which created our
new Guildford office, we now have a trio of southern offices to
capitalise on the significant and sector diverse opportunities in
this region. Our Reading office has continued to establish wider
connections and obtain greater local recognition, culminating in
being named Law Firm of the Year at the Thames Valley Business
Awards this year. Our existing London base provides niche services
lines, creates opportunities for synergies, such as with Kiddy, and
remains a gateway for our national and international connections
that we are targeting through existing connections and our newly
acquired International Investment Services offering.
Acquisitions
Our acquisition strategy focuses on niche businesses which can
supplement our core legal services offering. Our plc status and
established reputation attract first class professionals to enhance
our core legal services. As our wide and diverse client base
continues to benefit from the added value services provided by
Gateley Capitus and Gateley Hamer, we have this year focused on
adding to one of our key strengths, the house building sector,
which resulted in the acquisition of GCL.
I am delighted to welcome GCL to the Group. The acquisition
further strengthened our leading position in the house building
sector nationally and provide us with an expanded presence in the
Southern market, which we see as critical in developing a full
service offering for our clients. There is an under supply of new
housing in the UK and we expect this market to remain strong. The
South East, in particular, will continue to be a significant engine
for housing growth for the foreseeable future. The acquisition
allows us to offer a wider geographical reach to our clients in the
residential development market. We can now match our national
office network to our residential development clients' regions,
with seven residential development teams operating across the
country. There are also many clear opportunities across the Group
from this strategic acquisition, not least for Gateley Hamer and
Gateley Capitus.
On 6 July 2018, we further expanded our suite of niche
businesses with the acquisition of Kiddy, which broadens and
strengthens our people services offering within our Employment,
Pensions and Benefits group. As a result, there will be clear
opportunities for us to collaborate and deliver integrated advice
and services to a broader set of large-scale employers across a
wide range of industries. Kiddy has made an excellent start and
demonstrated growth of almost 37% ahead of original expectations,
generating GBP3m of fees since acquisition. Kiddy represents our
first acquisition in the exciting Human Capital sector, which when
placed alongside Global Mobility and our Entrust pension trustee
operation, moves our business further forward, offering employers a
range of high class legal and consultancy services. This
acquisition is in line with our stated plan and follows on from
similar progress made in our Property group where high-value,
niche, Chartered Surveying services now sit alongside and
complement our core legal offering.
On 30 November 2018, we acquired IIS for a small initial
consideration, again using an earn-out mechanism in line with the
growth potential and cross selling opportunities such a business
can achieve. IIS advises overseas companies on the attractiveness
of the UK as a place in which to set up and do business.
All our businesses complement each other in service delivery and
enhance our go to market proposition.
Succession and Board Changes
As announced on 10 July 2019, I plan to step down from the role
of Chief Executive Officer ("CEO") on 30 April 2020. Rod Waldie,
who is currently the Senior Office Partner of the Manchester
office, as well as a key member of the Group's management board and
head of the national property team, will succeed me as the Group's
new CEO. I have full confidence in Rod who will lead a strong
management team to deliver our growth aspirations going forward. I
plan to remain on the main plc Board.
Other changes to the management team this year included Paul
Hayward, who stepped down from the Strategic Board, Richard Healey,
a restructuring litigation partner, and Thomas Durrant, a corporate
partner and head of UK corporate group, who were both appointed to
the existing Strategic Board on 1 May 2019.
Current trading and outlook
Following our fourth year, post float, of strong trading
momentum and delivery to all stakeholders in accordance with our
originally stated aims and objectives, the Board is confident that
the Group is well positioned to make even greater progress in the
current financial year. The Board strongly believes that the
opportunity remains to broaden our offering for our clients and
investors. We therefore continue to strive to enhance our offering
further for the benefit of all stakeholders and build upon a proven
reputation and track record for the delivery of a quality service,
strong revenue and profit growth and high levels of cash
generation.
At the same time, we aim to continue to build resilience into
our business model and feel confident that the business we have
built over many decades is now even better placed to capitalise on
the growing market opportunities that exist from a changing law
sector.
Michael Ward
CEO
16 July 2019
Finance Director's Review
Financial Highlights
The Group delivered another record performance in FY19, as total
reported revenues for the year increased by 20.2% to GBP103.5m
(2018: GBP86.1m). Revenue from core legal services grew organically
by 9.5% and through acquisitions by 10.7%. Revenues from
acquisitions made since IPO totalled GBP12.8m or 12.4% of total
revenue (2018: GBP3.3m or 3.9%). Complementary non-legal businesses
represented GBP7.0m or 6.7% of total revenue. The Group continues
to demonstrate annual revenue and profit growth, whilst actively
seeking opportunities for greater strategic expansion. Headcount
once again increased to meet client demand and we continue to
attract senior (revenue generating) hires. The strength of our
client relationships and the consistent delivery of the highest
levels of commercial professional advice serve the Group well
sitting at the heart of our organic growth. EBITDA margins reduced
in the short term due to continued investment in areas such as
information technology and branding. I expect margins to increase
in future financial years.
Group revenue was well spread across a growing number of clients
from many varied sectors. Our strong performance in transactional
led disciplines such as M&A and Property was complemented by
exceptional growth in our previously less established service
lines. With a focus on cross selling, all our business lines have
again generated growth this year. Specialist litigation service
lines continue to provide balance and resilience against our
opportunity rich transactional service lines. Our Property group
grew revenue this year by 28.9% (the GCL acquisition represented
17.5% of this growth). The UK's construction, property development
and housing markets continue to need the long-term specialist legal
support which Gateley offers at both a regional and national level.
Our housebuilding sector expertise demonstrates how our focus on
strategically key sectors and commercially focused nationally
capable teams help to maintain long standing client relationships
and trust. Our acquisition of the business and assets of GCL, which
specialises in legal advice for residential development clients,
has further enhanced our presence across Southern England from its
Guildford location. The Guildford office provides a good strategic
fit with our established London office and Reading offices. Our
house building legal team grew revenue from GBP8.3m in 2018 to
GBP15.3m in 2019.
Revenue and profits continue to grow across our complementary
non-legal professional service lines that have increased via the
acquisition of Kiddy, a leading firm of Human Capital Consultants
and Business Psychologists, to work alongside Lawyers, Accountants
and Chartered Surveyors, demonstrating the continued
diversification of our skills and service offerings. Kiddy was
acquired for an initial consideration of GBP0.9m rising to a
maximum GBP3.0m based on performance over the next three financial
years ending April 2020, 2021 and 2022. We acquired a further
non-legal business, International Investment Services (IIS), in
November 2018 for an initial consideration of GBP0.1m, rising to a
maximum of GBP0.7m based on performance over the next two financial
years. IIS advises overseas companies on the attractiveness of the
UK as a place in which to set up and do business.
Operating expenses rose by 22.9% to GBP87.9m (2018: GBP71.6m).
This growth in operating costs has been driven mainly by the
continued expansion of staff levels organically and from
acquisitions, to enable the Group to continue to meet growing
client demand. Average numbers of legal and professional staff rose
by 19.8% to 610 (2018: 509). Personnel costs, including increased
share-based payment charges, rose as a result by 20.5% from
GBP52.6m to GBP63.4m, thereby increasing this cost marginally to
61.3% of revenue from 61.1% in 2018. Excluding share base payment
changes, staff costs increased to 60.7% of revenue from 60.3% in
2018.
Despite the continued expansion of new staff numbers, overall
utilisation of staff performing chargeable work remained consistent
at 85% (2018: 85%).
Other operating expenses increased by 25.7% to GBP22.0m (2018:
GBP17.5m) and (before exceptional items) increased by 21.5% to
GBP22.0m from GBP18.0m. This increase was predominately due to
increased trading volumes arising from the introduction of a new
office location in Guildford, the acquisition of Kiddy and greater
expenditure on information technology.
Extract of UK statement of comprehensive income 2019 2018
GBP'000 GBP'000
Revenue 103,471 86,090
Operating profit 15,870 14,825
Operating profit margin (%) 15.34% 17.22%
Reconciliation to alternative performance
measure: Adjusted EBITDA
Operating profit 15,870 14,825
Depreciation 1,122 970
Non-underlying items
Share based payment charge 655 719
Amortisation 1,406 547
Exceptional items
One off acquisitions costs 61 -
Release of lease incentive _ (182)
Release of contingent consideration _ (362)
Adjusted EBITDA 19,114 16,517
======= =======
Adjusted EBITDA margin (%) 18.47% 19.19%
Adjusted EBITDA of GBP19.1m is up by 15.7% from GBP16.5m
reflecting an adjusted EBITDA margin of 18.5% (2018: 19.2%).
Operating profit before tax was up 7.0% to GBP15.9m (2018:
GBP14.8m).
Earnings Per Share
Basic earnings per share increased by 7.3% to 11.83p (2018:
11.03p). Basic earnings per share after non-underlying items
increased by 15.6% to 13.39p (2018: 11.58p). Diluted earnings per
share increased by 9.2% to 11.61p (2018: 10.63p). Diluted earnings
per share after non-underlying and exceptional items increased by
17.8% to 13.15p (2018: 11.16p).
Taxation
The effective rate of taxation on profit on ordinary activities
was 18.2% (2018: 19.5%), below the standard rate of tax, primarily
due to the inclusion of deferred tax assets arising during the year
from share based payment charges on unexercised share options. This
also follows cuts in the UK corporation tax rate that continue to
benefit limited companies trading in the UK. The deferred taxation
liability carried forward at 30 April 2019 was GBP0.4m (2018:
GBP0.1m), whilst the deferred tax asset on share-based payment
charges has been recognised for the first time this year and totals
GBP0.4m (2018: GBPnil).
Dividend
The Board has adopted a dividend policy which reflects the
strong long-term cash generation and earnings potential of the
Group, distributing up to 70% of profits after tax each year to
shareholders. Following the announcement of our interim dividend of
2.6p (2018: 2.2p) per share that was paid in March 2019, the Board
proposes to approve a full year final dividend at the Company's
Annual General Meeting on 19 September 2019 of 5.4p (2018: 4.8p)
per share, which if approved, will be paid in mid-October 2019 to
shareholders on the register at the close of business on 20
September 2019. The shares will go ex-dividend on 19 September
2019. This represents full year dividend growth in line with PAT
growth of 14.3% (2018: 6.1%).
Balance Sheet, Cash Flows and Financing
The Group's net asset position has increased by 33% to GBP30.6m
(2018: GBP23.0m), as a result of acquisitions being financed via a
c. 50:50 split of cash (and accompanying debt) and shares.
Total net debt increased to GBP3.2m at the year end (FY18:
GBP0.7m), as a result of the following movements:
- existing term loan facilities were restructured to accommodate
the borrowing of a further GBP3m in October 2018 to fund acquisitions
made during the period under review; GBP2.1m of repayments
to total term loans were made during the year;
- loans from former partners of GCL totalling GBP1.3m were acquired
on the acquisition of GCL Solicitors. GBP0.9m of loans were
repaid during the year;
- GBP1.9m of working capital resources were used to support
the purchase, by our Employee Benefit Trust, of shares resulting
from certain vesting SARS options; and
- cash at bank reduced from GBP4.3m to GBP2.9m, partly as a
result of funding given to the Employee Benefit Trust in order
for it to purchase shares from vesting SARS options.
Debt at the year end comprised GBP5.7m of remaining term bank
debt and GBP0.5m of loans to former partners of GCL and directors
of IIS.
Trade receivables totalled GBP33.9m compared to GBP28.5m at the
end of FY18. The additional GBP5.4m in trade debtors was partially
due to the expansion of legal services and the acquisitions of GCL
and Kiddy, as debtor days remained consistent with the previous
year. The collection of debts remains a continued focus of
management across the Group given the current economic climate.
Previously, the Group assessed debts on a case-by-case basis and
impairment losses against particular debts were recognised to the
extent that any risk of default was identified. The Group now
measures its loss allowances against trade and other receivables at
an amount equal to lifetime Expected Credit Losses ("ECL"), which
has resulted in the creation of a GBP0.1m additional ECL adjustment
to trade receivables and GBP0.3m additional ECL adjustment to
unbilled revenue. The Group is adept at benefiting from greater
operating cash generation in the second half of the year with
inflows of working capital following utilisation of unbilled time
built at the half year.
Cash generated during the year from operations was GBP12.1m
(2018: GBP12.2m) which represents 92.7% (2018: 103.3 %) of profit
after taxation. Capital expenditure increased to GBP1.3m (2018:
GBP0.8m) due to acquisitions in the year, which resulted in greater
office expansion and information technology outlays. The Group
deliberately continues to operate with a low level of gearing and
fixed term debt.
Capital Commitments
During the year, the Group signed a contract with a leading
service provider in the legal technology space in order to acquire
services for the deployment of a new practice management system,
LexisOne. LexisOne is an Enterprise Resource Planning (ERP) system
that brings together all aspects of professional business
operations. LexisOne combines both legal expertise and the power
and stability of the Microsoft Dynamics 365 platform into one
single, comprehensive interface and business wide platform more
suited to Gateley's growing information technology needs that can
be accessed from anywhere in the world. A dedicated internal team
is working towards full installation of this new system during the
calendar year of 2020. During the 2019 financial year, we have
capitalised GBP0.2m of development costs and incurred a further
GBP0.1m of operational expenses. In preparation for this change,
Gateley has successfully implemented a market leading customer
relationship system (CRM), Interaction, which is supplied by the
same suppler and will integrate with LexisOne whilst delivering
immediate benefits to the Group in facilitating cross selling and
the winning of new work.
Neil Smith
Finance Director
16 July 2019
Consolidated statement of profit and loss and other
comprehensive income
for the year ended 30 April 2019
Note 2019 2018
GBP'000 GBP'000
Revenue 2 103,471 86,090
Other operating income 3 313 357
Personnel costs 5 (63,412) (52,621)
Depreciation and amortisation 4 (2,528) (1,517)
Other operating expenses (21,974) (17,484)
-------- --------
Operating profit 4 15,870 14,825
Adjusted EBITDA 4 19,114 16,517
Depreciation 10 (1,122) (970)
Non-underlying items
Share-based payment charges 5 (655) (719)
Amortisation 11/12 (1,406) (547)
Exceptional items
Acquisition costs 4 (61) -
Release of lease incentive 4 - 182
Release of contingent consideration 4 - 362
----------------------------------------------- ----- -------- --------
Net financing income/(expense) 6 75 (179)
-------- --------
Profit before tax 15,945 14,646
Taxation 7 (2,904) (2,853)
-------- --------
Profit for the year after tax attributable
to equity holders of the parent 13,041 11,793
======== ========
Other comprehensive income
Items that are or may be reclassified
subsequently to profit or loss
Foreign exchange translation differences
- Exchange differences on foreign
branch (25) (58)
-------- --------
Profit for the financial year and
total comprehensive income all attributable
to equity holders of the parent 13,016 11,735
======== ========
Statutory earnings per share
Basic 811.83p 11.03p
Diluted 811.61p 10.63p
The results for the periods presented above are derived from
continuing operations.
Consolidated statement of financial position
at 30 April 2019
Note 2019 2018
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 10 2,017 1,935
Investment property 164 164
Intangible assets & goodwill 11 10,430 3,295
Other intangible assets 12 289 39
Other investments 85 85
-------- --------
Total non-current assets 12,985 5,518
Current assets
Trade and other receivables 13 47,206 41,417
Deferred tax asset 16 428 -
Cash and cash equivalents 2,887 4,301
-------- --------
Total current assets 50,521 45,718
-------- --------
Total assets 63,506 51,236
======== ========
Non-current liabilities
Other interest-bearing loans and
borrowings 14 (3,076) (2,982)
Other payables 15 (983) (121)
Deferred tax liability 16 (388) (128)
Provisions 17 (339) (405)
-------- --------
Total non-current liabilities (4,786) (3,636)
-------- --------
Current liabilities
Other interest-bearing loans and
borrowings 14 (3,044) (1,977)
Trade and other payables 15 (23,727) (20,978)
Provisions 17 (291) (200)
Current tax liabilities (1,074) (1,457)
-------- --------
Total current liabilities (28,136) (24,612)
-------- --------
Total liabilities (32,922) (28,248)
======== ========
NET ASSETS 30,584 22,988
======== ========
EQUITY
Share capital 19 11,086 10,688
Share premium 6,755 4,576
Merger reserve (9,950) (9,950)
Other reserve 1,770 1,547
Treasury reserve (1,057) (15)
Translation reserve (2) 23
Retained earnings 21,982 16,119
-------- --------
TOTAL EQUITY 30,584 22,988
======== ========
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 2017 10,688 4,332 (9,950) 1,547 (132) 10,864 81 17,430
Comprehensive income:
Profit for the year - - - - - 11,793 - 11,793
Exchange rate difference - - - - - - (58) (58)
--------- --------- --------- --------- --------- ---------- ------------- --------
Total comprehensive
income - - - - - 11,793 (58) 11,735
Transactions with
owners
recognised directly
in equity:
Purchase of treasury
shares - - - - (38) - - (38)
EBT reserves adjustment - - - - - 29 - 29
Reclassification
of gain on own shares - 244 - - - (244) - -
Sale of treasury
shares - - - - 155 - - 155
Dividend paid - - - - - (7,042) - (7,042)
Share based payment
transactions - - - - - 719 - 719
--------- --------- --------- --------- --------- ---------- ------------- --------
Total equity at 30
April 2018 10,688 4,576 (9,950) 1,547 (15) 16,119 23 22,988
========= ========= ========= ========= ========= ========== ============= ========
At 1 May 2018, as
previously reported 10,688 4,576 (9,950) 1,547 (15) 16,119 23 22,988
Adjustment from adoption
of IFRS 9 (net of
tax) - - - - - (353) - (353)
--------- --------- --------- --------- --------- ---------- ------------- --------
Restated balance
at 1 May 2018 10,688 4,576 (9,950) 1,547 (15) 15,766 23 22,635
Comprehensive income:
Profit for the year - - - - - 13,041 - 13,041
Exchange rate differences - - - - - (25) (25)
--------- --------- --------- --------- --------- ---------- ------------- --------
Total comprehensive
income - - - - - 13,041 (25) 13,016
Transactions with
owners
recognised directly
in equity:
Issue of share capital 398 2,151 - 223 - - - 2,772
Recognition of tax
benefit on gain from
equity settled share
options - - - - - 726 - 726
Purchase of own shares
at nominal value - - - - - (242) - (242)
Reclassification
of gain on own shares - 28 - - - (28) - -
Sale of treasury
shares - - - - 791 - - 791
Purchase of treasury
shares - - - - (1,833) - - (1,833)
Dividend paid - - - - - (8,118) - (8,118)
Share based payment
transactions - - - - 655 - 655
Deferred tax on equity
settled element of
share based payment
charge - - - - - 182 - 182
--------- --------- --------- --------- --------- ---------- ------------- --------
Total equity at 30
April 2019 11,086 6,755 (9,950) 1,770 (1,057) 21,982 (2) 30,584
========= ========= ========= ========= ========= ========== ============= ========
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.
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 the year ended 30 April 2019
Note 2019 2018
GBP'000 GBP'000
Cash flows from operating activities
Profit for the year after tax 13,041 11,793
Adjustments for:
Depreciation and amortisation 10/11/12 2,528 1,517
Financial income 6 (523) (233)
Financial expense 6 448 412
Release of contingent consideration - (362)
Equity settled share-based payments 655 719
Profit on disposal of property,
plant and equipment 4 (3) -
Tax expense 7 2,904 2,853
---------- --------
19,050 16,699
Increase in trade and other receivables (3,946) (2,330)
Increase in trade and other payables 37 851
Increase in provisions 25 14
---------- --------
Cash generated from operations 15,166 15,234
Tax paid (3,075) (3,051)
---------- --------
Net cash flows from operating activities 12,091 12,183
---------- --------
Investing activities
Acquisition of property, plant and
equipment 10 (1,010) (745)
Acquisition of other intangible
assets 12 (276) (46)
Cash received on disposal of property, 3 -
plant and equipment
Consideration paid on acquisition
of Kiddy & Partners 21 (426) -
Consideration paid on acquisition
of GCL Solicitors, net of cash acquired 21 (2,016) -
Consideration paid on acquisition
of IIS, net of cash acquired 21 (84) -
Deferred consideration paid - acquisition
of subsidiary (236) (179)
Net cash used in investing activities (4,045) (970)
---------- --------
Financing activities
Interest receivable 6 523 233
Interest and other financial income
paid 6 (448) (412)
Receipt of new bank loan 2,970
Repayment of term bank loans 14 (2,278) (1,980)
Repayment of loans from former members
of Gateley Heritage LLP 14 - (551)
Repayment of loans from former members
of GCL Solicitors & Directors of (904) -
IIS
Funding by EBT of SARS shares (1,863) -
Proceeds from sale of own shares 767 361
Acquisition of own shares (109) (217)
Dividends paid 9 (8,118) (7,042)
Net cash used in financing activities (9,460) (9,608)
---------- --------
Net increase in cash and cash equivalents (1,414) 1,605
Cash and cash equivalents at beginning
of year 4,301 2,696
---------- --------
Cash and cash equivalents at end
of year 18 2,887 4,301
========== ========
Notes to the financial statements
1 Basis of preparation and significant accounting policies
1.1 Corporate information and legal status
Gateley (Holdings) Plc ("the Company") was incorporated in
England and Wales on 13 November 2014. On 29 May 2015 the Company
acquired 100 per cent of the issued share capital of Gateley Plc
which had, on the same day, acquired the business assets and
liabilities of Gateley Heritage LLP, formerly the partnership of
Gateley LLP. Following this Group reorganisation, the financial
statements have been prepared on a merger accounting basis as
though this Group structure had always been in place and a full
twelve month set of results (for both the current and prior year)
is therefore presented. The first day of trading of the Group
included in this statement was 1 May 2015.
On 8 June 2015, Gateley (Holdings) Plc was admitted to the
Alternative Investment Market ("AIM") of London Stock Exchange
Plc.
1.2 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 2019, 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 2019 will be
delivered to the Registrar of Companies following the Annual
General Meeting.
These condensed preliminary financial statements for the year
ended 30 April 2019 have been prepared on the basis of the
accounting policies adopted by the Group upon admission to AIM.
These are in accordance with the Group's accounting policies as set
out in the historical financial information included in the AIM
Admission Document.
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
1.3 Going concern
The Group financial statements are prepared on a going concern
basis as the Directors have a reasonable expectation that the Group
has adequate resources to continue in operational existence for the
foreseeable future. The Group remains cash generative, with a
positive ongoing trading performance. The Group is funded through
two unsecured term loans for GBP3.5m each repayable quarterly at
GBP0.65m until March 2020 then GBP0.15m per quarter until September
2023 together with unsecured overdraft facilities of up to GBP8m
(2018: GBP8m). All the Group's overdraft facilities are 12 months
in duration. The Group's forecasts and projections show that the
new facility provides adequate headroom for its current and future
anticipated cash requirements.
1.4 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.
1.5 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.
1.6 Classification of financial instruments issued by the Group
The Group has adopted IFRS 9 'Financial Instruments'. The
standard specifies how an entity should classify and measure
financial assets including some hybrid contracts. Financial assets
are to be classified on principle-based requirements dependent on
the assets contractual cash flow characteristics and the Group
business model for managing those assets.
The standard also introduces an impairment model that is to be
applied to debt instruments measured at amortised cost or fair
value through other comprehensive income, as well as trade
receivables and contract assets. Under the model, expected credit
losses are to be recognised against financial assets. Expected
credit losses have been calculated for the next 12 months in
relation to debt securities and over the lifetime of trade and
other receivables in line with the general approach provided within
the standard. The Group have based the assessment of the expected
credit losses on a number of factors including the credit risk of
the asset upon initial recognition as well as observed actual
losses against classes of financial assets and specific client and
industry knowledge held by fee earners. In adopting IFRS 9, the
Group has applied transitional relief and opted not to restate the
prior period.
Financial instruments issued by the Group are treated as equity
only to the extent that they meet the following two conditions:
(a) they include no contractual obligations upon the Group to
deliver cash or other financial assets or to exchange financial
assets or financial liabilities with another party under conditions
that are potentially unfavourable to the Group; and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
company's exchanging a fixed amount of cash or other financial
assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the financial
instruments (including members' capital) are classified as a
financial liability. Profit distributions relating to equity
instruments are debited direct to equity.
1.7 Non derivative financial instruments
Financial Assets
The Group's financial assets include cash and cash equivalents
and trade and other receivables. All financial assets are
recognised when the Group becomes party to the contractual
provisions of the instrument.
i) Investments
Other investments in debt and equity securities held by the
Group that were previously classified as being available-for-sale
and are stated at fair value under IAS 39, have been classified as
equity investments measured at fair value through other
comprehensive income under IFRS 9.
ii) Trade and other receivables
Trade and other receivables (except unbilled amounts for client
work) are recognised and carried at amortised cost under IFRS
9.
In line with the newly adopted IFRS 9, the Group recognises as
disclosed in note 15 an expected credit loss against trade
receivables in order to recognise the inherent risk that the Group
may not be able to collect all amounts due according to the
original terms of the receivable. The amount of the provision
recorded is based on a combination of historically observed
collection rates and the difference between the asset's carrying
amount and the present value of estimated future cash flows, and is
recognised in the statement of profit and loss in other operating
expenses.
iii) Unbilled amounts for client work (unbilled revenue)
Services provided to clients, which at the year-end date have
not been billed, are recognised as unbilled revenue and included in
trade and other receivables measured at amortised cost.
Unbilled revenue is valued at selling price less provision for
any foreseeable under recovery when the outcome of the matter can
be assessed with reasonable certainty. In respect of conditional or
contingent fee engagements unbilled revenue is only recognised once
the conditional or contingent event occurs.
iv) Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
at call with banks. For the purpose of the consolidated cash flow
statement, cash and cash equivalents includes bank overdrafts in
addition to the definition above.
v) Treasury shares
The Group operates an Employee Benefit Trust ("EBT") under which
ordinary shares have been issued and are held by the EBT. These are
treated as treasury shares and are added to the Treasury Share
Reserve.
Financial Liabilities
Financial liabilities and equity instruments are classified
according to the substance of the contractual arrangements entered
into. An equity instrument is any contract that evidences a
residual interest in the assets of the Group after deducting all
its liabilities.
The Group's financial liabilities comprise trade and other
payables, borrowings, contingent consideration, members' capital
and amounts due to members. All financial liabilities are
recognised initially at their fair value and subsequently measured
at amortised cost using the effective interest method with the
exception of contingent consideration that is measured at fair
value through profit or loss
i) Bank borrowings
All loans and borrowings are initially recognised at the fair
value of the consideration received net of issue costs associated
with the borrowing. Borrowings are subsequently stated at amortised
cost; any difference between the proceeds (net of transaction
costs) and the redemption value is recognised in the statement of
profit and loss over the period of the borrowings using the
effective interest method
Financial expenses comprise interest expense on borrowings.
ii) Trade and other payables
Trade payables are initially measured at fair value, and are
subsequently measured at amortised cost, using the effective
interest rate method.
The Group completed a number of complimentary acquisitions in
the year, as a result of these the Group now holds various loans
from former Partners or members of the acquired businesses. These
loans are measured and held at fair value.
1.8 Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items of
property, plant and equipment.
Leases in which the Group assumes substantially all the risks
and rewards of ownership of the leased asset are classified as
finance leases. Where land and buildings are held under leases, the
accounting treatment of the land is considered separately from that
of the buildings. Leased assets acquired by way of finance lease
are stated at an amount equal to the lower of their fair value and
the present value of the minimum lease payments at inception of the
lease, less accumulated depreciation and less accumulated
impairment losses.
Depreciation is charged to the consolidated statement of profit
and loss on a straight-line basis over the estimated useful lives
of each part of an item of property, plant and equipment. The
estimated useful lives are as follows:
Leasehold improvements over the term of the
lease
Equipment 33.3% straight line
Fixtures and fittings 20% straight line
Depreciation methods, useful lives and residual values are
reviewed at each statement of financial position date.
1.9 Business combinations
Subject to the transitional relief in IFRS 1, all business
combinations are accounted for by applying the acquisition method.
Business combinations are accounted for using the acquisition
method as at the acquisition date, which is the date on which
control is transferred to the Group.
Acquisitions on or after 1 January 2010
-- For acquisitions on or after 1 January 2010, the Group measures
goodwill at the acquisition date as:
-- the fair value of the consideration transferred; plus
-- the recognised amount of any non-controlling interests in
the acquiree; plus
-- the fair value of the existing equity interest in the acquiree;
less
-- the net recognised amount (generally fair value) of the identifiable
assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated
with the issue of debt or equity securities, are expensed as
incurred.
Any contingent consideration payable is recognised at fair value
at the acquisition date. If the contingent consideration is
classified as equity, it is not re-measured and settlement is
accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in profit
or loss.
On a transaction-by-transaction basis, the Group elects to
measure non-controlling interests, which have both present
ownership interests and are entitled to a proportionate share of
net assets of the acquiree in the event of liquidation, either at
its fair value or at its proportionate interest in the recognised
amount of the identifiable net assets of the acquiree at the
acquisition date. All other non-controlling interests are measured
at their fair value at the acquisition date.
1.10 Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment
losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment. In respect of
equity accounted investees, the carrying amount of goodwill is
included in the carrying amount of the investment in the
investee.
Other intangible assets
Other intangible assets, including software licences,
expenditure on internally generated goodwill, brands and software,
customer contracts and relationships are capitalised at cost and
amortised on a straight-line basis over their estimated useful
economic lives through operating expenses.
Other intangible assets that are acquired by the Group are
stated at cost less accumulated amortisation and accumulated
impairment losses.
Customer lists
Customer lists that are acquired by the Group as part of a
business combination are stated at cost less accumulated
amortisation and impairment losses (see accounting policy
'Impairment of assets'). Cost reflects management's judgement of
the fair value of the individual intangible asset calculated by
reference to the net present value of future benefits accruing to
the Group from the utilisation of the asset, discounted at an
appropriate discount rate.
Internally generated IT software
Costs associated with maintaining computer software programs are
recognised as an expense when incurred. Development costs that are
directly attributable to the design and testing of identifiable and
unique software products controlled by the group are recognised as
intangible assets where the following criteria are met:
- it is technically feasible to complete the software product so
that it will be available for use;
- management intends to complete the software product and use or
sell it;
- there is an ability to sell or use the software product;
- it can be demonstrated how the software product will generate
probable future economic benefits;
- adequate technical, financial and other resources to complete
the development and to use or sell software product are available;
and
- the expenditure attributable to the software product during
its development can be reliably measured.
Other development expenditures that do not meet these criteria
are recognised as an expense as incurred. Development costs
previously recognised as an expense are not recognised as an asset
in a subsequent period.
Computer software development costs recognised as assets are
amortised over their estimated useful lives, which does not exceed
five years. Computer software under development is not amortised.
Amortisation starts from the date on which the software is
available for use. If a decision is made to halt development then
the cost is immediately expensed.
Amortisation
Amortisation is charged to the income statement on a
straight-line basis over the estimated useful lives of intangible
assets unless such lives are indefinite. Intangible assets with an
indefinite useful life and goodwill are systematically tested for
impairment at each statement of financial position date. Other
intangible assets are amortised from the date they are available
for use. The estimated useful lives are as follows:
Customer lists 3 years
Computer software 3 years
1.11 Investment property
Investment properties are properties which are held either to
earn rental income or for capital appreciation or for both.
Investment properties are stated at fair value. Any gain or loss
arising from a change in fair value is recognised in profit or
loss.
1.12 Impairment excluding investment properties
Financial assets (including receivables)
A financial asset not carried at fair value through profit or
loss is assessed at each reporting date to determine whether there
is objective evidence that it is impaired. A financial asset is
impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the
loss event has a negative effect on the estimated future cash flows
of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at
amortised cost is calculated as the difference between its carrying
amount and the present value of the estimated future cash flows
discounted at the asset's original effective interest rate.
Interest on the impaired asset continues to be recognised through
the unwinding of the discount. When a subsequent event causes the
amount of impairment loss to decrease, the decrease in impairment
loss is reversed through profit or loss.
Intangibles and property, plant and equipment
The carrying amount of the Group's assets including property,
plant and equipment and intangibles other than goodwill is reviewed
at each year end date to determine whether there is any indication
of impairment. If any such indication exists, the asset's
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in profit or loss. Where
an impairment loss subsequently reverses, the carrying amount of
the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset (or cash-generating unit) in prior years. A reversal of an
impairment loss is recognised in profit or loss where it relates to
an amount charged to profit or loss.
Goodwill
Goodwill is capitalised as an intangible asset and is not
amortised but tested for impairment annually and when there are any
indications that its carrying value is not recoverable. As such,
goodwill is stated at cost less any provision for impairment in
value. For impairment testing purposes, goodwill is allocated to
cash-generating units. If a subsidiary undertaking is subsequently
sold, goodwill arising on acquisition is taken into account in
determining the profit or loss on sale.
1.13 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which the company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
statement of profit and loss in the periods during which services
are rendered by employees.
Short-term benefits
Short-term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognised for the amount expected to be
paid under short-term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
Share-based payment transactions
The Group operates an equity settled share based compensation
plan.
The grant date fair value of share-based payment awards made to
employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The fair
value of the options granted is measured using an option valuation
model, taking into account the terms and conditions upon which the
options were granted.
The amount recognised as an expense is adjusted to reflect the
actual number of awards for which the related service and
non-market vesting conditions are expected to be met, such that the
amount ultimately recognised as an expense is based on the number
of awards that meet the related service and non-market performance
conditions at the vesting date, measured at the grant date fair
value of the award.
At each reporting date, the group revises its estimates of the
number of share incentives which are expected to vest. The impact
of the revision of original estimates is recognised in the income
statement with a corresponding adjustment to equity.
1.14 Own shares held by EBT trust (treasury reserve)
Transactions of the group-sponsored EBT trust are included in
the Group financial statements. In particular, the trust's
purchases and sales of shares in the Company are recognised
directly within equity.
1.15 Professional indemnity provisions
A provision is recognised in the statement of financial position
when the Group has a present legal or constructive obligation as a
result of a past event, that can be reliably measured and it is
probable that an outflow of economic benefits will be required to
settle the obligation. Where material, the impact of the time value
of money is taken into account by discounting the expected future
cash flow at a pre-tax rate, which reflects risks specific to the
liability.
Insurance cover is maintained in respect of professional
negligence claims. This cover is principally written through
insurance companies with coverage of up to GBP150 million for each
claim. Premiums are expensed as they fall due with prepayments or
accruals being recognised accordingly.
In the event the insurance companies cannot settle the full
liability, the liability will revert to the Group.
1.16 Revenue recognition
Revenue represents the fair value of the consideration
receivable in respect of professional services provided during the
year, inclusive of recoverable expenses incurred on client
assignments, but excluding value added tax. Where the outcome of a
transaction can be estimated reliably, revenue associated with the
transaction is recognised in the income statement by reference to
the stage of completion at the year end, provided that a right to
consideration has been obtained through performance. Consideration
accrues as contract activity progresses by reference to the value
of work performed.
Where the outcome of a transaction cannot be estimated reliably,
revenue is recognised only to the extent that the costs of
providing the service are recoverable. No revenue is recognised
where there are significant uncertainties regarding recovery of the
consideration due or where the right to receive payment is
contingent on events outside the control of the group. Amounts
deemed to be recoverable on the engagement (on the basis above) are
recognised in unbilled revenue and form part of Trade and other
receivables.
The Group has adopted IFRS 15 Revenue from contracts with
customers. Under the standard, revenue is to be recognised either
over time or at a point in time. The model uses a contract based
five-step analysis of transactions to determine when, and how much,
revenue is recognised; this includes the matching of stand-alone
process for services provided to the satisfaction of performance
obligations.
The Group considers that there are two contract types in issue
in the performance of professional services, being non-contingent
and contingent contracts. Non-contingent work is typically
recognised over the duration of the contract in line with the
number of hours charged to the engagement at a pre-established
rate. Under IFRS 15 the hours worked on these engagements are
considered to be the satisfaction of the performance obligation,
therefore where collection of revenue is considered probable, it is
recognised in line with the hours performed. Contingent work is
typically recognised at a point in time, once the pre-agreed stages
of the contract performance are reached or concluded as a result of
an event linked to each work type performance. In line with IFRS 15
the Group recognises revenue on these contracts at a point in time
once the uncertainty over the contingent event has been satisfied.
In some cases, though the contingent event is satisfied, there may
a delay or continued doubt over the collection of revenue. In these
cases, revenue is billed at the point of conclusion; where there is
considerable cause to doubt the recoverability of the revenue an
appropriate provision is recognised.
The adoption of the standard has also resulted in both contract
assets and liabilities being recognised. Under IFRS 15, unbilled
revenue recognised by the Group meets the qualifying criteria for a
contract asset as the amounts are derived from the existence of a
contract, however have not yet been billed and therefore are not
included within trade receivables. The Group have also recognised a
contract liability under the standard that represents the amount of
income that has been invoiced in advance of the service being
performed.
IFRS 15 includes a choice of transitional adjustments on initial
application. As the impact of the new standard is not considered to
be significant to the Groups revenue recognition policy, Management
have elected to use the 'modified retrospective adoption', which is
to retrospectively apply the standard with the cumulative effect of
application being made to the opening balance of retained earnings
on 1 May 2018. Implementation of this standard has therefore not
resulted in a restatement of comparative period results.
Recoverable expenses and disbursements represent charges from
other professional service firms, sub-contractors and out of pocket
expenses incurred in respect of assignments and expected to be
recovered from clients.
Rental income is recognised on a straight line basis over the
lease term.
1.17 Operating lease payments
Payments made under operating leases are recognised in the
statement of profit and loss on a straight-line basis over the term
of the lease. Lease incentives received are recognised in the
statement of profit and loss over the term of the lease as an
integral part of the total lease expense.
1.18 Financial income and expenses
Financial expenses comprise interest payable and exchange losses
that are recognised in the statement of profit and loss. Financial
income comprises interest receivable on funds invested and exchange
gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method.
1.19 Taxation
Tax on the profit or loss for the year comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, using tax rates and laws
enacted or substantively enacted at the statement of financial
position date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates and laws
enacted or substantively enacted at the statement of financial
position date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
1.20 Non-underlying and exceptional items
Non-underlying items
Non-underlying items are non-trading and or non-cash items
disclosed separately in the Consolidated Income Statement where the
quantum, nature or volatility of such items would otherwise distort
the underlying trading performance of the Group. The following are
included by the Group in its assessment of non-underlying
items:
-- Share based payment charges: such charges are treated as
non-underlying as the gain realised on the options granted is
settled in shares not cash and therefore does not impact the income
statement. The IFRS 2 charge is taken to the income statement, as
this is not a true cash expense it is treated as non-underlying as
it may distort the true performance of the Group.
-- Amortisation and Impairment charges in respect of intangible
fixed assets: these costs are treated and non-underlying as they
are non-cash items.
The tax effect of the above is also included if considered
significant.
Exceptional items
Exceptional items are one off transactions, unrelated to the
underlying trading performance of the Group disclosed separately in
the Consolidated Income Statement where the quantum, nature or
volatility of such items would otherwise distort the underlying
trading performance of the Group.
The following are included by the Group in its assessment of
exceptional items:
-- Gains or losses arising on disposal, closure, restructuring
or reorganisation of businesses that do not meet the definition of
discontinued operations.
-- Non-typical expenses associated with acquisitions.
-- Costs incurred as part of significant refinancing activities.
The tax effect of the above is also included if considered
significant.
Details in respect of the non-underlying items recognised in the
current and prior year are set out in note 4 to the Financial
Statements.
1.21 Ordinary dividends
Dividends are recognised as a liability in the period in which
they are approved by the Company's shareholders.
1.22 Adopted IFRS not yet applied
At the date of authorisation of these financial statements, a
number of new standards, amendments and interpretations to existing
standards have been published by the IASB that are not yet
effective and have not been applied early by the Group. The Group
anticipates that the following pronouncements relevant to the
Group's operations will be adopted in the Group's accounting
policies for the first period beginning on or after the effective
date, once adopted by the EU:
-- IFRS 16 Leases (IASB effective 1 January 2019, EU endorsed)
-- Amendments to IFRS 9 Prepayment features with negative
compensation (IASB effective 1 January 2019, EU endorsed)
Prepayment features with negative compensation (amendments
to IFRS 9)
-- Annual Improvement to IFRS 2014-2016 Cycle relating to
IFRS 12 Disclosure of interests in other entities (IASB
effective 1 January 2017, not yet EU endorsed)
-- Annual Improvements to IFRS 2015-2017 Cycle (IASB effective
1 January 2019, not yet EU endorsed)
-- Amendments to IAS 19 Plan Amendment, Curtailment or Settlement
(IASB effective 1 January 2019, not yet EU endorsed)
-- Amendments to IFRS 3 Business Combinations (IASB effective
1 January 2019, not yet EU endorsed)
-- Amendments to IAS 28 Long term interests in associates
and joint ventures (IASB effective 1 January 2019, not
yet EU endorsed)
-- Amendments to references to the conceptual framework
in IFRS standards (IASB effective 1 January 2020, not
yet EU endorsed)
With the exception of IFRS 16, the Group does not expect the
adoption of any of these standards to have a material effect on the
financial statements.
New standards and interpretations not yet applied
IFRS 16 'Leases'
IFRS 16 replaces the existing leasing accounting guidance, which
includes IAS 17 'Leases' and IFRIC 4 'Determining Whether an
Arrangement Contains a Lease'. The standard is effective for
periods beginning on or after 1 January 2019.
The standard requires lessees to account for most contracts
using an on-balance sheet model, with the distinction between
operating and finance leases being removed. There is no change to
the revenue recognition methodology for lessor operating leases.
The standard provides certain exemptions from recognising leases on
the balance sheet, including where the asset is of low value or the
lease term is twelve months or less. In addition, the standard
makes changes to the definition of a lease to focus on, amongst
other things, which party has the right to direct the use of the
asset.
Under the new standard, the Group will be required to recognise
right of use lease assets and lease liabilities on the balance
sheet. The right of use asset is initially measured at cost and
subsequently measured at cost (subject to certain exceptions) less
accumulated depreciation and impairment losses, adjusted for any
re-measurement of the lease liability. Liabilities are measured
based on the present value of future lease payments over the lease
term. Subsequently, the lease liability is adjusted for interest
and lease payments, as well as the impact of lease modifications,
amongst others.
The recognition of the depreciation of right of use lease assets
and interest on lease liabilities over the lease term will have no
overall impact on profit before tax over the life of the lease;
however, the result in any individual year will be impacted and the
change in presentation of costs will likely be material to the
Group's key financial metrics. Under IAS 17, the charge is booked
in full to operating profit. Metrics which will therefore be
affected will include operating profit and operating margin,
interest and interest cover, EBITDA and operating cash flow.
Furthermore, the principal amount of cash paid and interest in
the cash flow statement will be presented separately as a financing
activity. Operating lease payments under IAS 17 would have been
presented as operating cash flows. There will be no overall net
cash flow impact.
The Group has performed work to assess the impact of the new
standard. Such work has included a detailed review of all lease
contracts to establish lease classification, assessment of
transition options, the quantification of financial impacts, design
of future processes and the related systems changes, the assessment
of the related impacts on the Group's regulatory and commercial
reporting requirements, and the impact on the Group's long-term
incentive schemes. The Group continues to assess the impact and
implementation of the new standard, ensuring the correct treatment
of leases going through a process of renegotiation.
Information on the undiscounted amount of the Group's operating
lease commitments under IAS 17 'Leases', the current leasing
standard, is disclosed in the Group's annual financial statements.
The leases substantially relate to property leases used to perform
professional activities as an operating lease lessor.
2 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 different
products and services and are managed separately because they
report different specialisms from the legal teams in those
divisions.
The following summary describes the operations of each
reportable segment:
Reportable segment Operations
Banking and Financial Services Provision of legal advice in respect
of asset finance, banking and restructuring
services
Corporate Provision of legal advice in respect
of corporate, family, private client
and taxation services
Business Services Provision of legal advice in respect
of commercial, commercial dispute resolution,
litigation, regulatory, shipping, transport
and insurance services
Employees, Pensions and Provision of legal advice in respect
Benefits of employment and pension services,
including Entrust Pension Limited's
trustee services and global mobility
consultancy. Also includes Kiddy &
Partners Human Capital consultancy,
providing assessment, talent management
and leadership development and International
Investment Services Limited, providing
consultancy services to potential UK
investors.
Property Provision of legal advice in respect
of construction, planning, real estate
and residential development services.
Also includes Gateley Capitus Limited's
property related tax incentive services
together with Gateley Hamer Limited's
easement and wayleave and compulsory
purchase order services.
The revenue and operating profit are attributable to the
principal activities of the Group. A geographical analysis of
revenue is given below:
2019 2018
GBP'000 GBP'000
United Kingdom 95,319 80,515
Europe 3,351 3,149
Middle East 547 670
North and South America 3,457 1,258
Asia 206 138
Other 591 360
------- -------
103,471 86,090
======= =======
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 assets of GBP0.20m (2018:
GBP0.46m) together with costs of GBP0.9m (2018: GBP0.8m) are
located in the Group's Dubai subsidiary. Revenue generated by the
Group's Dubai subsidiary to customers in the UAE totalled GBP0.7m
(2018: GBP0.9m) as disclosed above as due from the customers in the
Middle East.
The Group has no individual customers that represent more than
10% of revenue in either the 2019 or 2018 financial year.
Operating segments 2019
Banking Corporate Business Employee Property Total Other Total
and Services Pensions segments expense
Financial and and
Services Benefits movement
in
unbilled
revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 16,979 16,912 13,436 11,092 43,425 101,844 1,627 103,471
---------- --------- --------- --------- -------- --------- ---------- --------
Segment contribution
(as reported internally) 6,447 4,994 5,987 3,994 19,810 41,232 1,627 42,859
Costs not allocated
to segments:
Other operating income 313
Personnel costs (7,006)
Depreciation and amortisation (2,528)
Other operating expenses (17,048)
Net financial expense 75
Exceptional costs (61)
Share based payment
charge (655)
--------
Profit for the financial
year before taxation 15,949
--------
Timing of revenue recognition
Services transferred
at a point in time 32,326
Services transferred
over time 71,145
--------
103,471
========
Operating segments 2018
Banking Corporate Business Employee Property Total Other Total
and Services Pensions segments expenses
Financial and and
Services Benefits movement
in
unbilled
revenue
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Segment revenue 15,489 16,019 12,225 7,516 33,694 84,943 1,147 86,090
---------- --------- --------- --------- -------- --------- ---------- --------
Segment contribution
(as reported internally) 5,755 4,338 5,062 2,819 15,769 33,743 1,147 34,890
Costs not allocated
to segments:
Other operating income 719
Personnel costs (5,209)
Depreciation and amortisation (1,517)
Other operating expenses (14,058)
Net financial expense (179)
--------
Profit for the financial
year before taxation 14,646
Timing of revenue recognition
Services transferred
at a point in time 23,883
Services transferred
over time 62,207
--------
86,090
========
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. GBP11.7 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 is required to recognise contract assets
based on the costs incurred in delivering the performance
obligations stipulated in the contracts held with customers. 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 revenue has not
been recognised and the amounts not yet 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.
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 as a result of their billing structure.
The amounts recognised by Kiddy & Partners 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 by Kiddy & Partners, 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.
3 Other operating income
2019 2018
GBP'000 GBP'000
Rental and service charge income 313 357
4 Expenses and auditor's remuneration
Included in profit are the following:
2019 2018
GBP'000 GBP'000
Depreciation on tangible assets 1,122 970
Amortisation of intangible assets 1,406 547
Operating lease costs 116 132
Operating lease costs on property 3,313 2,981
Other operating income - rent received (258) (295)
Foreign exchange losses 25 66
Profit on sale of fixed assets (3) -
======= =======
Exceptional items
2019 2018
GBP'000 GBP'000
Release of lease incentive income - (182)
Release of contingent consideration income - (362)
Corporate finance structured expense paid
on acquisition 61 -
------- -------
61 (544)
======= =======
Exceptional items represent the acquisition cost in respect of
the acquisition of GCL Solicitors LLP.
Auditor's remuneration
2019 2018
GBP'000 GBP'000
Fees payable to the Companies Auditors in respect
of audit services:
Audit of these financial statements 68 52
Audit of financial statements of subsidiaries
of the Company 22 19
------- -------
90 71
======= =======
Amounts receivable by the Company's auditor
and its associates in respect of:
Other assurance services 33 27
Tax compliance services 11 11
------- -------
44 38
======= =======
5 Employees
The average number of persons employed by the Group during the
year, analysed by category, was as follows:
Number of employees
2019 2018
Legal and professional staff 610 509
Administrative staff 297 248
---------- ---------
907 757
========== =========
The aggregate payroll costs of these persons were as
follows:
2019 2018
GBP'000 GBP'000
Wages and salaries 54,341 45,825
Share based payment expense 655 719
Social security costs 7,289 5,283
Pension costs 1,127 794
------- -------
63,412 52,621
======= =======
6 Financial income and expense
Recognised in profit and loss
2019 2018
GBP'000 GBP'000
Financial income
Interest income 523 233
------- -------
Total finance income 523 233
======= =======
Financial expense
Interest expense on bank borrowings measured
at amortised cost (448) (412)
------- -------
Total financial expense (448) (412)
======= =======
Net financial income/(expense) 75 (179)
======= =======
7 Taxation
2019 2018
GBP'000 GBP'000
Current tax expense
Current tax on profits for the year 3,297 2,926
Under provision of taxation in previous period 121 38
------- -------
Total current tax 3,418 2,964
======= =======
Deferred tax expense
Origination and reversal of temporary differences (268) (111)
Under provision on share-based payment charges (246) -
------- -------
Total deferred tax expense (514) (111)
======= =======
Total tax expense 2,904 2,853
======= =======
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:
2019 2018
GBP'000 GBP'000
Profit for the year (subject to corporation
tax) 15,945 14,646
------- -------
Tax using the Company's domestic tax rate
of 19% 3,030 2,783
Expenses not deductible for tax purposes (1) 32
Under provision of taxation in previous period 121 38
Deferred tax expense (246) -
------- -------
Total tax expense 2,904 2,853
======= =======
On 26 October 2015 the UK corporation tax rate was reduced to
19% (effective from 1 April 2017) and then further to 18%
(effective 1 April 2020). The deferred tax liability at 30 April
2019 has been calculated based on these rates. An additional
reduction to 17% (effective from 1 April 2020) was announced in the
Budget on 16 March 2016. This will reduce the Company's future
current tax charge accordingly.
8 Earnings per share
Statutory earnings per share
2019 2018
Number Number
Weighted average number of ordinary shares
in issue, being weighted average number of
shares for calculating basic earnings per
share 110,207,707 106,881,953
Shares deemed to be issued for no consideration
in respect of share based payments 2,072,862 4,074,859
Weighted average number of ordinary shares
for calculating diluted earnings per share 112,280,569 110,956,812
=========== ===========
2019 2018
GBP'000 GBP'000
Profit for the year and basic earnings attributable
to ordinary equity shareholders 13,041 11,793
Non-underlying and exceptional items (see
note 4)
Operating expenses 2,122 722
Tax on non-underlying and exceptional items (403) (137)
----------- -----------
Underlying earnings before non-underlying
and exceptional items 14,760 12,378
Earnings per share is calculated as follows:
2019 2018
Pence Pence
Basic earnings per ordinary share 11.83 11.03
Diluted earnings per ordinary share 11.61 10.63
Basic earnings per ordinary share after non-underlying
and exceptional items 13.39 11.58
Diluted earnings per ordinary share after
non-underlying and exceptional items 13.15 11.16
For the year ended 30 April 2019 the Group has elected to
calculate earnings per share before non-underlying and exceptional
items based after taxation thereof. This election has been made to
provide a more reflective representation of adjusted profits. The
prior year corresponding values have been presented on the same
basis above (underlying earnings per the 30 April 2018 accounts
were GBP11.35m).
Prior year earnings per share have been further amended to
reflect the recalculation of shares deemed to be issued for no
consideration.
Shares issued for no consideration
Under IAS 8, the Group has re-calculated the shares deemed to be
issued for no consideration in respect of share based payments it
anticipates will vest under the various SARS schemes. This has
resulted in an increase in 2018 weighted average number of ordinary
shares from 110,830,394 to 110,956,812.
The impact of the recalculation above has reduced diluted
earnings per share from 10.64p to 10.63p in 2018.
9 Dividends
2019 2018
GBP'000 GBP'000
Equity shares:
Final dividend in respect of 2017 (4.4p per
share) - 4 October 2017 - 4,691
Interim dividend in respect of 2018 (2.2p
per share) - 16 March 2018 - 2,351
Final dividend in respect of 2018 (4.8p per
share) - 3 October 2018 5,264 -
Interim dividend in respect of 2019 (2.6p
per share) - 15 March 2019 2,854 -
------- -------
8,118 7,042
======= =======
The Board proposes to recommend a final dividend of 5.4p (2018:
4.8p) per share at the AGM. If approved, this dividend will be paid
in mid-October 2018 to shareholders on the register at the close of
business on 20 September 2019. The shares will go ex-dividend on 19
September 2019. This dividend has not been recognised as a
liability in these final statements.
10 Property, plant and equipment
Leasehold Equipment Fixtures Total
improvements and
Fittings
GBP'000 GBP'000 GBP'000 GBP'000
Cost
Balance at 1 May 2017 226 3,798 4,186 8,210
Additions - 634 111 745
Balance at 30 April 2018 226 4,432 4,297 8,955
------------- --------- --------- -------
Balance at 1 May 2018 226 4,432 4,297 8,955
Additions 5 643 362 1,010
Arising on acquisition - 325 334 659
Fair value adjustment on
acquisition - (117) (9) (126)
Disposal - (8) - (8)
------------- --------- --------- -------
Balance at 30 April 2019 231 5,275 4,984 10,490
------------- --------- --------- -------
Depreciation and impairment
Balance at 1 May 2017 59 2,842 3,149 6,050
Depreciation charge for
the year 23 596 351 970
Balance at 30 April 2018 82 3,438 3,500 7,020
------------- --------- --------- -------
Balance at 1 May 2018 82 3,438 3,500 7,020
Depreciation charge for
the year 22 728 372 1,122
Arising on acquisition - 200 174 374
Fair value adjustment on
acquisition (27) (8) (35)
Eliminated on disposal - (8) - (8)
Balance at 30 April 2019 104 4,331 4,038 8,473
------------- --------- --------- -------
Net book value
At 30 April 2018 144 994 797 1,935
------------- --------- --------- -------
At 30 April 2019 127 944 946 2,017
------------- --------- --------- -------
11 Intangible assets and goodwill
Goodwill Customer Total
lists
GBP'000 GBP'000 GBP'000
Deemed cost
At 1 May 2017 and 30 April 2018 2,676 1,638 4,314
Acquisitions through business combinations 5,729 2,786 8,515
-------- -------- -------
At 30 April 2019 8,405 4,424 12,829
Amortisation
At 1 May 2017 - 472 472
Charge for the year - 547 547
-------- -------- -------
At 30 April 2018 - 1,019 1,019
Charge for the year - 1,380 1,380
-------- -------- -------
At 30 April 2019 - 2,399 2,399
======== ======== =======
Carrying amounts
At 30 April 2018 2,676 619 3,295
======== ======== =======
At 30 April 2019 8,405 2,025 10,430
======== ======== =======
Sensitivities
The Group attributes a monetary value to the acquired customer
lists 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 customer
list
GBP'000
+1 % movement in growth rates 80
-1 % movement in growth rates (80)
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. Of the goodwill balance held GBP7.13m is attributable
to the property CGU and GBP3.30m is attributable to the employee
benefits and pensions CGU. The recoverable amount is based on the
present value of expected future cash flows (value in use) which
was determined to be higher than the carrying amount of goodwill so
no impairment loss was recognised. Value in use was determined by
discounting the future cash flows generated from the continuing
operation of the Group and was based on the following key
assumptions:
-- A pre-tax discount rate of 10% was applied in determining the
recoverable amount. The discount rate is based on the Group's
average weighted cost of capital
-- 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 internal sources (existing management knowledge, track record
and an in-depth understanding of the work types being
performed).
o Growth rates of between 10-20% are based on management's
understanding of the market opportunities for services provided
pertaining to the industry concerned.
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 expected level of fees from
existing clients as a percentage of total forecast fees
o Cash flows have been assessed over a five-year period which
management consider to be the correct average life of clients'
relationships
-- 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. The analysis performed by management indicates
that the discounted forecasts for the Property CGU would need to
decrease by 47% and 41% within the Employee benefits and pension
CGU in order to trigger an impairment charge.
12 Other intangible assets
IT Development costs Computer Computer
GBP'000 software software
GBP'000 GBP'000
Cost
Balance at 1 May 2017 - - -
Additions - 46 46
-------------------- --------- ---------
At 30 April 2018 - 46 46
Additions 237 39 276
-------------------- --------- ---------
At 30 April 2019 237 85 322
==================== ========= =========
Amortisation
Balance at 1 May 2017 - - -
Charge for the year - 7 7
-------------------- --------- ---------
At 30 April 2018 - 7 7
Charge for the year - 26 26
-------------------- --------- ---------
At 30 April 2019 - 33 33
Net book amount at 30 April 2018 - 39 39
-------------------- --------- ---------
Net book amount at 30 April 2019 237 52 289
==================== ========= =========
13 Trade and other receivables
Impact of IFRS 9 Transition
IFRS 9 specifies the classification and measurement of financial
assets and liabilities. the adoption of the standard has
principally impacted how the Group measures the following financial
assets: trade receivables and unbilled revenue.
Under IAS 39 the Group held debts at selling price less any
specific provision. Such provision was assessed on a debt-by-debt
basis, representing the extent of any risk of default identified.
Under IFRS 9, the Group now measures debts at selling price less
any lifetime expected credit losses (ECL's). The Group have applied
these calculated ECL's to all debts held.
The Group have applied ECL's to unbilled revenue in order to
account for the potential default on amounts not yet billed to the
client. The ECL's have been calculated on the same basis as those
applied to trade receivables.
On adoption of IFRS 9 the Group has applied transitional relief
and opted not to restate prior periods and has calculated an
opening adjustment to reserves at 1 May 2018.
The adoption of the standard has not impacted the recoverability
of the Group's debts.
GBP'000
Recognition of lifetime expected credit losses on trade
receivables 58
Recognition of lifetime expected credit losses on unbilled
revenue 295
--------
Impact of IFRS 9 Transition 353
========
The impact of the transition to IFRS 9 has been recognised
within the opening reserves.
2019 2018
GBP'000 GBP'000
Trade receivables 33,909 28,512
Unbilled revenue 10,671 10,672
Prepayments 2,584 2,233
Other receivables 42 -
-------
47,206 41,417
======= =======
All trade receivables are repayable within one year.
Movement in the allowance for doubtful receivables
2019 2018
GBP'000 GBP'000
Brought forward provision (2,212) (2,011)
Brought forward on acquisition (14) -
Provision utilised 450 264
Charged to income (1,147) (1,296)
Provisions released 196 831
IFRS 9 Provision (58) -
------- -------
(2,785) (2,212)
======= =======
Receivables not impaired, past due
2019 2018
GBP'000 GBP'000
Not past due 21,250 18,220
Past due 0-30 days 4,120 3,246
Past due 31-120 days 4,030 4,363
Past due greater than 120 days 7,294 4,895
------- -------
36,694 30,724
======= =======
The carrying amount of financial assets recorded in the
financial statements, which is net of any impairment losses,
represents the Group's maximum 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 impaired trade receivables are
mostly due from customers experiencing financial difficulties.
Contract assets recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract
assets, as detailed in note 2.
2019
GBP'000
Contract asset value at 1 May 2018 10,672
Contract assets arising on acquisition 152
Contract asset value added in the year 32,185
Contract asset value realised in the year (32,338)
---------
Contract asset value at 30 April 2019 10,671
=========
14 Other interest-bearing loans and borrowings
The contractual terms of the Group's interest-bearing loans and
borrowings, which are measured at amortised cost, are described
below. For more information about the Group's exposure to interest
rate and foreign currency risk, see note 22.
2019 2018
Fair Carrying Fair Carrying
value amount value amount
GBP'000 GBP'000 GBP'000 GBP'000
Non-Current liabilities
Unsecured bank loan 3,076 3,076 2,982 2,982
======= ======== ======= ========
Current liabilities
Unsecured bank loan 2,574 2,574 1,977 1,977
Loans from former members of GCL
Solicitors LLP 425 425 - -
Loans from director of IIS 45 45 - -
3,044 3,044 1,977 1,977
======= ======== ======= ========
The unsecured overdraft facilities totalling GBP8m (2018: GBP8m)
are repayable on demand.
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 an additional GBP3 million of new
loans were entered into. The new total term loans are repayable
quarterly at GBP0.65m per quarter until March 2020 followed by
quarterly repayments of GBP0.15m until September 2023. Interest is
chargeable at 2.25% over LIBOR. On the acquisition of GCL
Solicitors LLP GBP1.28m of amounts relating to individual members
capital classified as a liability together with amounts due to
members were converted into Loans from former members. Loans were
repayable quarterly over a period of not less than two years
subject to adequate working capital facilities, in the opinion of
the board of directors, within the Group being available to
accommodate such payments. Repayment of these liabilities are
forecast to be made in full by December 2019. On the acquisition of
IIS GBP0.09m of amounts relating to an individual IIS directors'
loan was repayable in monthly instalments commencing December 2018
and concluding in April 2020.
15 Trade and other payables
2019 2018
GBP'000 GBP'000
Current
Trade payables 4,769 5,204
Other taxation and social security payable 6,437 6,355
Other payables 167 188
Contingent consideration 1,428 470
Accruals 10,779 8,761
Deferred income 147 -
23,727 20,978
======= =======
Contingent consideration relates to estimated earn out payments
due to the vendors of Kiddy and Partners LLP (2018: Gateley Hamer
Limited) that will be settled 50:50 in cash and shares.
Non-current GBP'000 GBP'000
Other payables 128 121
Contingent consideration 855 -
------- -------
983 121
======= =======
During the year GBP0.239m was paid to Gateley Hamer Limited in
accordance with the term of the acquisition. Contingent
consideration of GBP0.72m relates to estimated earn out payments
due to the vendors of Kiddy and Partners LLP that will be settled
50:50 in cash and shares together with GBP0.14m relating to
estimated earn out payments due to the vendor of IIS that will be
settled 15% in cash and 85% in shares.
Contract liabilities recognised under IFRS 15
Under IFRS 15 the Group is required to recognise contract
assets, as detailed in note 2.
2019
GBP'000
Contract liabilities at 1 May 2018 -
Contract liabilities arising on acquisition 294
Contract liabilities gained in the year 2,757
Contract liabilities credited to P&L in year (2,904)
--------
Contract liabilities at 30 April 2019 147
========
16 Deferred tax
Deferred tax assets and liabilities are summarised below:
Deferred tax asset
The deferred tax asset recognised in the Consolidated accounts
represents the future tax impact of issued share based payments
schemes that are yet to vest.
Share-based
payments
GBP'000
At 1 May 2017 and 1 May 2018 -
Credited during the year to retained earnings 182
Credited during the year in the Consolidated
income statement 246
------------
At 30 April 2019 428
============
Deferred tax liability
The deferred tax liability recognised in the Consolidation
represents the future tax impact of the Group's benefit from
customer lists obtained through acquisitions.
Customer lists
GBP'000
At 1 May 2017 239
Credited during the year in the Consolidated income statement (111)
--------------
At 30 April 2018 128
Arising through business combinations - Kiddy & Partners and GCL Solicitors 529
Credited during the year in the Consolidated income statement (269)
At 30 April 2019 388
==============
17 Provisions
Professional indemnity
2019 2018
GBP'000 GBP'000
Brought forward 605 591
Provisions made during the year 100 210
Provisions released during the year (75) 4
Provisions reversed during the year - (200)
------- -------
At end of year 630 605
======= =======
Non-current 339 405
Current 291 200
------- -------
630 605
======= =======
The professional indemnity provision represents amounts equal to
the insurance excesses payable on outstanding claims against the
Group which are covered by the Company's professional indemnity
insurance policy. The amount or timing of amounts payable in these
cases is uncertain as the resolution of the cases are unknown at
the year end.
18 Net debt
2019 2018
GBP'000 GBP'000
Cash and cash equivalents 2,887 4,301
Debt
Total loans brought forward (4,959) (7,489)
Loans from former members (469) -
Extension to term loans in the year (2,970) -
Repayment of loans from former members 171 -
Repayment of term loans 2,107 2,530
------- -------
Total loan carried forward (6,120) (4,959)
Net debt (3,233) (658)
======= =======
As at 1 On acquisition New loans taken out during Cash flows As at 30
May 2018 year April
2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Term loans (4,959) - (2,970) 2,279 (5,650)
Loans from former members of
GCL - (1,280) - 855 (425)
Loans from former director of
IIS - (94) - 49 (45)
---------- --------------- ------------------------------- ----------- ---------
(4,959) (1,374) (2,970) 3,183 (6,120)
========== =============== =============================== =========== =========
19 Share capital
Authorised, issued and fully paid
2019 2019 2018 2018
Number GBP Number GBP
Ordinary shares of 10p each
Brought forward 106,881,953 10,688,195 106,881,953 10,688,195
Issued on acquisition of GCL
solicitors 1,164,276 116,428 - -
Issued on acquisition of Kiddy
& Partners 251,207 25,121 - -
Issued on vesting of SARS 2,425,024 242,502 - -
Issued as part of deferred
consideration of Gateley Hamer
Limited 138,330 13,833 - -
----------- ---------- ----------- ----------
At 30 April 2019 110,860,790 11,086,079 106,881,953 10,688,195
=========== ========== =========== ==========
On 22 May 2018 Gateley Plc acquired the business and assets of
GCL Solicitors LLP in part for the issue of 1,164,276 10p ordinary
shares.
On 22 June 2018 138,329 10p ordinary shares were issued as
deferred consideration to Gateley Hamer Limited.
On 9 July 2018 the Group acquired the business and assets of
Kiddy & Partners LLP in part for the issue of 251,207 10p
ordinary shares.
On 18 July 2018 2,425,024 10p ordinary shares were issues upon
vesting of the 2015 SARS scheme to participants.
20 Share based payments
Group
At the year end the Group has three share based payment scheme
in operation.
Stock Appreciation Rights Scheme ('SARS')
This SARS is a discretionary executive reward plan which allows
the Group to grant conditional share awards or nil cost options to
selected executives at the discretion of the Remuneration
Committee.
The awards vest after a 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.
During the year the first issue of SARS vested. Of the 7.2
million reference shares issued in 2015, 6.7 million were held at
the exercise date, the resultant number of shares granted is
detailed below:
Reference
shares in Number
issue at Price at of shares
exercise Price at exercise Growth at exercise
date grant date date Growth value price
Number GBP GBP GBP GBP'000 Number
SARS 15/16 6,650,000 1.10 1.72 0.62 4,123 2,397,093
The below table shows the estimated number of shares to be
issued under the further two SARS scheme in issue based on the
Company's share price at the balance sheet date of GBP1.60:
Reference
shares Number
in issue Share price Price at Estimated of shares
at 30 April at 30 April 30 April Estimated growth at exercise
2019 2019 2019 growth value price
Number GBP GBP GBP GBP'000 Number
SARS 16/17 10,275,000 GBP1.39 GBP1.60 GBP0.21 2,158 1,348,594
SARS 17/18 6,750,000 GBP1.83 GBP1.60 (GBP0.23) - -
Weighted Weighted Originally Lapsed at 30 At 1 May Granted Lapsed At 30 April
average average granted April 2018 20187 during during year 2019
remaining exercise the year
contractual price
life
Number Number Number Number Number
SARS
SARS 16/17 -
7 October
2016 0.4 years GBP1.39 10,850,000 (425,000) 10,425,000 - (150,000) 10,275,000
SARS 17/18 -
3 October
2017 1.4 years GBP1.83 7,050,000 (175,000) 6,875,000 - (125000) 6,750,000
------------ ------------ ---------- --------- ------------ ------------
17,900,000 (600,000) 17,300,000 - (275,000) 17,025,000
------------ ------------ ---------- --------- ------------ ------------
Save As You Earn scheme ('SAYE')
The Group operates a HMRC approved SAYE scheme for all staff.
Options under this scheme will vest if the participant remains
employed for the agreed vesting period of three years. Upon
vesting, each option allows the holder to purchase the allocated
ordinary shares at a discount of 20% of the market price determined
at the grant date.
Company Share Option Plan ('CSOP')
The Group operates 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.
The annual awards granted under SAYE and CSOP schemes are
summarised below:
SAYE
SAYE 16/17- 1 September 2016 0.3 years GBP0.95 1,166,779 (216,947) 949,832 - (39,865) 909,967
SAYE 17/18- 15 September 2017 1.4 years GBP1.33 556,296 (24,361) 531,935 - (36,271) 495,664
SAYE 18/19 - 21 September 2018 2.4 years GBP1.35 - - - 620,335 (19,874) 600,461
--------- --------- --------- ------- --------- ---------
1,723,075 (241308) 1,481,767 620,335 (96,010) 2,006,092
--------- --------- --------- ------- --------- ---------
CSOPS
CSOPS 16/17 - 20 December 2016 0.6 years GBP1.31 940,685 (151,737) 788,948 - (68,205) 720,743
CSOPS 17/18 - 3 October 2017 1.4 years GBP1.65 581,162 (39,390) 541,772 - (52,724) 489,048
CSOPS 18/19 - 24 October 2018 2.5 years GBP1.44 - - - 812,131 (22,916) 789,215
--------- --------- --------- ------- --------- ---------
1,521,847 (191,127) 1,330,720 812,131 (143,845) 1,999,006
--------- --------- --------- ------- --------- ---------
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 SAYE SAYE SARS SARS SARS
Grant date 15/9/17 20/12/16 3/10/17 1/10/16 3/10/17 7/10/16 8/6/15
Share price at date of grant GBP1.65p GBP1.305p GBP1.66p GBP1.18p GBP1.58p GBP1.20p GBP0.95p
Exercise price GBP1.65p GBP1.305p GBP1.33p GBP0.95p GBP1.83p GBP1.39p GBP1.10p
Volatility 24% 24% 24% 24% 24% 24% 24%
Expected life (years) 3.3 3.3 3.3 3.3 3.3 3.3 3.3
Risk free rate 1% 1% 1% 1% 1% 1% 1%
Dividend yield 4% 4% 4% 4% 4% 4% 6%
Fair value per share
Market based performance condition GBP0.19p GBP0.15p GBP0.33p GBP0.25p GBP0.12p GBP0.06p GBP0.05p
Non-market based performance - - - - - - -
condition/no performance condition
-------- --------- -------- -------- -------- -------- --------
As the Group had only limited share price history at the date of
grant, expected volatility was based on a proxy volatility
determined from the median volatility of a group of appropriate
comparator companies. For the same reason, a similar approach was
followed to derive the dividend yield. Expected life has been taken
to be between the minimum and maximum exercise period of three and
three and a half years, respectively.
The total charge to the income statement for all schemes now in
place, included within personnel costs, is GBP655,000 (2018:
GBP719,000).
21 Business combinations
Acquisition of GCL Solicitors LLP
On 23 May 2018 Gateley Plc acquired the business and assets of
GCL Solicitors LLP, a specialist in legal advice on residential
developments. GCL works with some of the UK's top housebuilders as
well as promotors and landowners. GCL is also one of the leading
law firms who act for overseas private investors buying new build
residential properties in the UK, primarily in and around
London:
Pre-acquisition Policy alignment
carrying and fair
amount value adjustments Total
GBP'000 GBP'000 GBP'000
Property, plant and equipment 278 (91) 187
Work in progress 522 (370) 152
Intangible asset relating to customer
list and brand - 2,120 2,120
Cash and short term deposits 266 - 266
Trade receivables 981 - 981
Prepayments and accrued income 284 - 284
---------------- ------------------- ---------
Total assets 2,331 1,659 3,990
---------------- ------------------- ---------
Loans from former Partners - Partners
current and tax liabilities (1,280) - (1,280)
Trade payables (534) - (534)
Accruals and other payables (517) (17) (534)
Deferred tax - (403) (403)
---------------- ------------------- ---------
Total liabilities (2,331) (420) (2,751)
---------------- ------------------- ---------
Total identifiable net assets at fair
value - 1,239 1,239
Goodwill arising on acquisition 2,900
---------
Total acquisition cost 4,139
---------
Analysed as follows:
Initial cash consideration paid 2,282
Issue of new 10p ordinary shares in Gateley
(Holdings) Plc 1,857
---------
4,139
---------
Cash outflow on acquisition
Cash paid (2,282)
Acquisition costs -
Net cash acquired with subsidiary (included
in cash flows from investing activities) 266
---------
Net cash outflow (2,016)
---------
From the date of acquisition GCL has contributed GBP5.9 million
to revenue and GBP0.8m million to Group profit for the period after
taxation.
Acquisition of Kiddy & Partners Limited ('Kiddy')
On 9 July 2018 the Company acquired the business and assets of
Kiddy, a leader in its field delivering a comprehensive set of
Human Capital consultancy services to businesses looking to improve
the performance of their leaders and senior managers:
Pre-acquisition Policy alignment
carrying and fair
amount value adjustments Total
GBP'000 GBP'000 GBP'000
Property, plant and equipment 7 - 7
Intangible asset relating to customer
list and brand - 666 666
Trade receivables 340 - 340
Prepayments and accrued income 78 - 78
---------------- ------------------- ---------
Total assets 425 666 1091
---------------- ------------------- ---------
Trade payables (66) - (66)
Other taxation & social security payable (22) - (22)
Accruals and other payables (368) - (368)
Deferred tax - (126) (126)
---------------- ------------------- ---------
Total liabilities (456) (126) (582)
---------------- ------------------- ---------
Total identifiable net liabilities at
fair value (31) 540 509
Goodwill arising on acquisition 2,491
---------
Total acquisition cost 3,000
---------
Analysed as follows:
Initial cash consideration paid 426
Issue of new 10p ordinary shares in Gateley
(Holdings) Plc 424
Deferred cash consideration payable 1,428
Deferred share consideration payable 722
---------
3,000
---------
Cash outflow on acquisition
Cash paid (426)
Acquisition costs -
Net cash acquired with subsidiary (included
in cash flows from investing activities) -
---------
Net cash outflow (426)
---------
From the date of acquisition, Kiddy has contributed GBP3.1
million to revenue and GBP0.8 million to Group profit for the
period after taxation.
Acquisition of International Investment Services Limited
('IIS)
On 30 November 2018 Gateley (Holdings) Plc acquired all issued
share capital in International Investments Services Limited
(formerly Sirius London Limited) a specialist in supporting
businesses expanding internationally, advising companies investing
in the UK on all aspects of the UK finance landscape and developing
a competitive business environment.
Pre-acquisition Policy alignment
carrying and fair
amount value adjustments Total
GBP'000 GBP'000 GBP'000
Cash and short term deposits 2 - 2
Tax receivable 6 - 6
---------------- ------------------- ---------
Total assets 8 - 8
================ =================== =========
Other taxation & social security payable (2) - (2)
Directors loan (94) - (94)
---------------- ------------------- ---------
(96) - (96)
================ =================== =========
`
Total identifiable net liabilities at
fair value (88) - (88)
Goodwill arising on acquisition 338
---------
Total acquisition costs 250
=========
Analysed as follows
Initial cash consideration paid 86
Shares issued as consideration 30
Deferred consideration payable 134
---------
250
=========
Cash outflow on acquisition
Cash paid (86)
Acquisition costs -
Net cash acquired on subsidiary 2
(Included in cash flows from investing
activities) -
---------
Net cash outflow (84)
=========
From the date of acquisition, IIS has contributed GBP0.1 million
to revenue and GBPnil to Group profit for the period.
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.
END
FR CKPDNBBKBAOD
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