Gateley : Annual Report for the year ended 30 April 2022

Growth and resilience

through diversity

Annual Report

for the year ended 30 April 2022

Gateley (Holdings) Plc

Annual report and financial statements

Forward thinking

Straight talking

Why do we do what we do

Our purpose is to deliver results that delight our clients, inspire our people and support our communities.

How do we do this

We do this by:

being forward thinking about the services that we deliver to our clients and the working environment we provide for our people;

being straight talking about what matters, inside and outside of our business; and

thinking differently about what we do and how we do it.

What do we do

We deliver legal and professional services which enable our clients to solve the challenges

that they are facing or to maximise the opportunities they are pursuing, without ever losing sight of what makes us Gateley: our Gateley Team Spirit values.

"Our people and long- established culture are central to the Group's success."

Contents

Business overview

Highlights for the year	3
At a glance	5
Our story	6
Business overview	8
Our Platform strategy	10
Our people	12
Staying connected and engaging with our teams	14
Responsible Gateley	16
Five key reasons to invest	19

Strategic report

Chairman's statement	22
Chief Executive Officer's review	24
Chief Executive Officer's Q&A	30
Finance Director's review	32
Principal objectives, strategy and outlook	38
Principal risks and uncertainties	42
Section 172(1) statement	46
Environmental actions statement	47
Social matters	49

Corporate governance

Board of Directors	54
Statement on remuneration: voluntary disclosure	56
Directors' report	63

Our financials

Independent auditors' report to the members
of Gateley (Holdings) Plc.	68
Consolidated statement of profit and loss and other
comprehensive income	75
Consolidated statement of financial position	76
Consolidated statement of changes in equity	78
Consolidated cash flow statement	79
Notes to the consolidated financial statements	81
Parent company statement of financial position	121
Parent company statement of changes in equity	122
Parent company cash flow statement	123
Parent company notes to the financial statements	124
Notice of annual general meeting	136
Company information	147

Rod Waldie, Chief Executive Officer of Gateley, said:

Gateley (Holdings) Plc

Annual report and financial statements

Strong results, further growth and demonstrable resilience

Gateley (AIM: GTLY), the legal and professional services group, announces its audited preliminary results for the year ended 30 April 2022 ("FY22" or the "Period"), which continued the Group's pre and post IPO unbroken record of year-on-year revenue and profit growth, and out-performed market expectations set at the start of the year.

The Group delivered a strong financial performance in FY22, achieving significant organic growth and strengthening the business further through diversification and investment into new complementary service lines, while maintaining control on costs in the face of market specific and macro-economic headwinds. The balance sheet remains strong and the Group has significant headroom in its banking facilities to invest in further organic and acquisitive growth opportunities.

"

Business Overview

Strategic Report

Corporate Governance

Our Financials

Highlights for the year

13.0%	11.9%	22.9%
GROUP REVENUE	GROUP PROFIT BEFORE TAX	NET ASSETS
In FY22 our Group revenue was £137.2m, up by	In FY22 our Group profit before tax was £21.6m,	In FY22 net assets were £72.9m, up by 22.9%
13% compared to £121.4m in FY21	up by 11.9% compared to £19.3m in FY21	compared to £59.3m in FY21
			FY22	FY21	Change
Group revenue		£137.2m	£121.4m	+13.0%
Group underlying operating profit before tax1		£22.5m	£20.5m	+9.8%
Group underlying profit before tax1		£21.6m	£19.3m	+11.9%
Group profit before tax		£18.0m	£16.3m	+10.4%
Group profit after tax		£14.3m	£13.2m	+8.3%
Basic earnings per share ('EPS')		12.00p	11.18p	+7.3%
Adjusted fully diluted EPS2		14.31p	13.17p	+8.7%
Net assets		£72.9m	£59.3m	+22.9%
Net cash3		£10.4m	£19.6m	-9.2m

I am delighted with the Group's performance in FY22. We have delivered another set of strong revenue and profit growth figures whilst continuing to strengthen our balance sheet. Legal services generated solid organic revenue growth, comparing favourably with reported UK legal industry performance. Our consultancy service lines delivered impressive organic growth of 26.7% resulting in overall consolidated Group organic revenue growth of 10.9%.

"I am particularly pleased that we completed three exciting consultancy acquisitions in the Period and achieved annualised consultancy revenue of over c.£32m as we continue to grow our complementary services, diversifying our offering and deepening our connections with our clients.

"I thank our ever-expanding client base for their trust and support throughout FY22 and for giving us the opportunity to work with them on high quality mandates. We remain committed to our purpose of delivering results that delight our clients, inspire our people and support our communities. We have a good pipeline of work and maintain our expectations for growth in FY23, despite the well-reported inflationary pressures. We look forward to continuing to grow the Group, both organically and via acquisition."

Financial Highlights

• Group organic revenue growth was 10.9%, comprising 8.7% in legal services and 26.7% in consultancy services
• Total growth in consultancy revenues of 44.9%, as complementary consultancy services contributed £21.3m or 15.5% of total revenues (FY21: £14.7m or 11.5%)
• Adjusted underlying operating profit margin broadly maintained at 16.4% (FY21: 16.9%)
• Net assets increased by 22.9% to £72.9m
• "Gateley Agile" initiative, which builds on the flexible working introduced during the pandemic, continues to deliver cost savings, mitigating some inflationary pressure

• Personnel costs declined as a percentage of Group revenue to 63.0% (FY21: 63.8%)
• Proposed final dividend of 5.5p (FY21: 5.0p) taking total dividends for the Period to 8.5p (FY21: 7.5p)
• Group dividend policy remains to distribute up to 70% of our after-tax profits each year

Strategic Highlights

• Three earnings-enhancing acquisitions completed in the Period, expanding the Group's Property and Business Services Platforms
• Total headcount at 30 April 2022
  of 1,368 (FY21: 1,081). Total headcount of professional staff increased by 23.6% from 767 to 948
• New Revolving Credit Facility of £30m agreed in April 2022, providing increased funding flexibility to support the Group's growth strategy

1. Underlying operating profit before tax and underlying profit before tax excludes share based payment charges, amortisation and exceptional items
2. Adjusted fully diluted EPS excludes share based payment charges, amortisation and exceptional items. It also adjusts for the future weighted average number of expected unissued shares from granted but unexercised share option schemes in issue based on a share price at the end of the financial year
3. Net cash excludes IFRS 16 liabilities

2

3

Gateley (Holdings) Plc

Annual report and financial statements

Business Overview

Strategic Report

Corporate Governance

Our Financials

How we support clients

Property		People		Corporate		Business
Platform		Platform		Platform		Services Platform

T W E E D

V I N D E N

incorporating Tozer Gallagher

We like the way you always become an extended part of our team. It's not an easy thing to do and I admire how you do it. You just get the work done and it's brilliant. I would definitely say this is your USP. I don't know other firms who do this as well as you do."

You need to know that everything is on the same page and it's a trusted relationship piece. I do feel that Gateley are very strong in that."

NEWCASTLE

Where you need us to be

BELFAST

At a glance

What makes us

forward thinking?

The first UK commercial law firm to list on the London Stock Exchange in 2015

A legal and professional services group which combines legal advice with consultancy expertise through our market facing Business Services, Corporate, People and Property Platforms.

Forward thinking about the services that we deliver, helping our clients to solve challenges and to maximise opportunities

A responsible business committed to levelling up the world in which we work

Being straight talking about what matters, inside and outside of our business: supporting diversity and inclusion, encouraging potential and ensuring a sustainable future

Delivering results without ever losing sight of our Gateley Team Spirit values

Working together

Proud that 45% of colleagues participate in our Save As You Earn share scheme vs. a 25% UK average and at least 75% of colleagues are existing share or option holders in the Group

Investors in People accredited

A Levelling Up Partner and member of the Levelling Up Measurement TaskForce

Signatory to the Better Business Act The only UK legal business to

Trusted to do

FY22 key client account management programme:

67% of clients in the programme increased their fees in FY22

c£17m of fees generated across our account management programme last year

350 new client relationships were nurtured

Rated 5 star/excellent on independent legal review platform, Review Solicitors.

Excellent 170 reviews on

Room to breathe

Stonewall Diversity Champions and Law Society Gold Standard for our Diversity and Inclusion Charter

Active wellbeing programme and proud to be a signatory to the Mindful Business Charter

Engaged staff networks to support diversity and inclusion including Women in Leadership and Working Parents programmes

A Halo Code workplace

Sustainable working practices including paperlite, recycling and use of virtual technology

Disability confident employer

Ambitious for success

Double digit revenue growth in the last 7 years.

With offices in 15 UK locations, and another in Dubai, we have the regional network to provide our clients with the advice they need on their doorstep. Often face to face meetings are the quickest way to overcome difficulties and resolve misunderstandings, and we will always travel to get the job done.

LEEDS

BOLTON

MANCHESTER

CHESTER

LLANDUDNO

NOTTINGHAMRUTLAND

BIRMINGHAMLEICESTER

READING LONDON

GUILDFORD

EXETER

be ranked in the Glassdoor top 25 best companies for senior leadership

Revenue	2022
compound annual	£137.2m
(CAGR)
growth rate

12.3%

4

5

Gateley (Holdings) Plc

Annual report and financial statements

Gateley: the legal and professional services group

Our story

Our story starts in Victorian Birmingham - the then workshop of the world. Solicitors Stephen Gateley

• Sons was founded to help forward thinking Victorians prosper.

Two centuries later, and our approach is still about thinking ahead. Looking to the future to ensure the success of our clients, our business and our people.

Business Overview

Strategic Report

Corporate Governance

Our Financials

			2022	In January we acquired Patent and Trade
			Mark Attorneys, Adamson Jones, adding
				breadth and depth to the intellectual
				property services we offer through our
				Business Services Platform. In April we
				added the team from Smithers Purslow to our
				Property Platform. Gateley Smithers Purslow is a
				multi-disciplinary practice of building and quantity
				surveyors, principally in the insurance industry.
		2021	In July 2021 we acquired Tozer Gallagher, a leading
		practice of chartered quantity surveyors and construction
			consultants. Tozer Gallagher now sits within Gateley Vinden.
			Our decades of growth are recognised at the Birmingham
			Post Business Awards where we are named Professional
			Services Firm of the Year.
	2020	We rank number 1 in the UK for M&A activity by deal volume. We
	acquire brand and reputation management experts Tweed Law,
		and built environment consultancy, The Vinden Partnership.
	2019	We're UK Law Firm of the Year at the British Legal Awards;
	we acquire land referencing experts, Persona Associates and
		leadership development specialists, t-three.
2018	We acquire three more businesses; GCL Solicitors, specialists in legal
advice on residential developments; business psychologists, Kiddy &
	Partners and inward investment and international expansion experts,
	International Investment Services.
2016	We acquire our first complementary businesses: tax incentive
specialists Capitus Ltd and property consultants Hamer
	Associates, forming Gateley Capitus and Gateley Hamer.
2015	We enter a new chapter with a UK law firm first: we put aside
the traditional equity partnership model and go Plc.

6

7