Audited Results 2024

Gateley (AIM: GTLY), the professional services group, announces its audited results for the year ended 30 April 2024 ("FY24" or the "Period").

The Group delivered a good financial performance in FY24, increasing revenue by 6.0% to £172.5m, extending Gateley's unbroken record of revenue growth since IPO in 2015. The board continued to invest for growth in line with its stated strategy and was pleased to deliver underlying profit before tax of £23.0m (FY23: £25.1m) after reinstating the payment of employee bonuses this year of £4.5m (FY23: £nil), in recognition of our people's contribution to a resilient outturn and our more positive outlook as we move into FY25.

The balance sheet remains strong, maintaining a net cash position. The Group has significant headroom in its banking facilities to enable further investment in organic and acquisitive opportunities.

Financial highlights

We present below our financial performance for the Period both on an underlying and statutory basis.

Rod Waldie, CEO of Gateley, said:

"I am pleased with our FY24 outturn given our cautious view of market conditions during the Period, particularly around the turn of the calendar year in H2. Our people have worked hard to deliver another year of growth via our increasingly diverse and resilient business model, combining complementary legal and consultancy services.

"During the Period we continued to make organic and acquisitive investments in both our legal and consultancy services and in related systems. RJA Consultants was acquired onto our Property Platform in July 2023, adding further expertise and capacity to our quantity surveying and project management offering. It is already performing ahead of the board's expectation.

"Our legal services class actions team, established in May 2023, launched its first case in late February 2024. Our investment in this team is a high-profile example of the type of investment that we are looking to make to enhance our returns over the medium to longer-term.

"Our M&A and lateral hire pipeline remains encouraging and we are committed to further enhancing each of our Platforms as suitable opportunities arise, aided by our net cash position and ample headroom in our banking facilities.

"Looking forward, we are encouraged by strengthening transactional activity levels, which began in Q4 FY24. Our immediate outlook is best characterised as cautiously optimistic. Our resilient and financially robust foundation, allied to our unbroken track-record of growth, underpins our confidence to continue our long-term strategy of investment in people and systems. This strategy has worked well for us since IPO in 2015 and through disciplined application of it, we ensure that the Group remains well-positioned for further growth and enhanced returns for all stakeholders."

I am delighted to present Gateley's audited final results for the year ended 30 April 2024, another successful year for the business and our ninth consecutive year of revenue growth since IPO in 2015. Group revenue increased by 6.0% to £172.5m (FY23: £162.7m) and we generated underlying profit before tax of £23.0m (FY23: £25.1m) after reinstating the payment of employee bonuses this year of £4.5m (FY23: £Nil). These results have been delivered against the unwelcome backdrop of challenging trading conditions for professional service firms allied to wage and cost inflation. The Group has again demonstrated the strength of its business model and the resilience created by its diversification strategy.

In FY23 we made the difficult decision not to make a provision for staff bonuses for that year. For a business such as ours, where staff retention and incentivisation are important considerations, this was not ideal. I am therefore delighted that, this year, we have been able to declare a bonus which reflects the contribution made by our people to delivering a strong underlying trading performance and our more positive outlook as we enter FY25. In doing so, we are moving back towards a more normalised staff bonus pool with clear intent that this remains a key component in overall reward to our employees whilst preserving a balanced return to all of our stakeholders. I would like to take this opportunity, on behalf of the board, to acknowledge and thank our staff across all levels of the Group. They have shown great adaptability to the constant changes throughout the past few years and their dedication towards the business, their colleagues and clients has been first class in what was a challenging year.

We continue our strategy to diversify the business, placing the Group in a stronger position to deliver further profitable growth in the coming years. To support our acquisition strategy, we retain a three-year revolving credit facility of up to £30m. This, combined with our strong balance sheet, places us in a good position to acquire further businesses in the future.

As we continue to grow and strengthen our business, the board remains committed to providing our people with the opportunity to own shares in the Company. We believe that employee share ownership secures a strong alignment with the Group's external shareholders, incentivises employees and is reflective of Gateley's long-established culture. We are delighted that at least 70% of current staff are existing share or option holders in the Company.

The board firmly believes that the use of equity as an incentive and means of extending share ownership through all levels of the Group, is a material point of positive differentiation for Gateley in an intensely competitive staffing environment. It is therefore an important component for our future growth ambitions. In particular, we have worked hard over the last 12 months to enhance our restricted share award scheme, principally to facilitate recirculation of internally held shares. This is our main equity incentive scheme for senior leaders in the Group. Our enhancements present an efficient means of maintaining significant equity at senior levels in the Group whilst minimising external market impacts. We believe this will help secure and enhance Gateley's position as an attractive and sought after employer.

Responsible Business

The board has made the further development of Gateley's Responsible Business commitment a key strategic priority this year.

In September 2023, we published our third annual Responsible Business report, for which we again received significant positive feedback. We were delighted to achieve all 15 of our internally set responsible business targets and are focused on reducing our CO2 emissions by 50% by 2030 and to become net zero by 2040.

Our Responsible Business actions focus on the wellbeing of our employees, on being a force for good in society and within the communities in which we operate, and by playing our part in protecting and repairing our planet. Measuring the value and the impact we are having in all these areas is as important as acting because it enables us to evaluate where we are effecting change and how we can continue to improve over time.

I am delighted with the progress we have made and how this important initiative has been embraced across the Group. We are committed to ensuring diversity, equality and inclusion and our goal is to foster a positive work ethic, whilst remaining results and client focused, and demonstrating our commitment to doing the right thing for our people, our planet and developing potential wherever we can.

We will publish our next Responsible Business Report covering objectives and activity for FY24 shortly.

Board changes

David Wilton was appointed to the board as a non-executive director and Chairman designate on 1 February 2024. The board and David subsequently agreed not to continue with David's appointment as Chairman and David has since stood down from the board.

The nomination committee has begun a process to recruit a new Chairman. In the meantime, I have been asked, and have agreed, to continue to chair the Group until a successor is appointed.

Dividends

We have maintained dividend to investors, recognising this is a key component of shareholder return. An interim dividend of 3.3p per share (FY23: 3.3p) was paid on 21 March 2024 to shareholders on the register at the close of business on 24 February 2024. The board is pleased to propose a final dividend of 6.2p per share (FY23: 6.2p), giving a total dividend for the year of 9.5p per share (FY23: 9.5p), subject to approval at the forthcoming Annual General Meeting, which will be held on 23 September 2024. If approved, this final dividend will be paid in October to shareholders on the register at the close of business on 11 October 2024. The shares will go ex-dividend on 10 October 2024.

Summary and outlook

This year has been another strong one for Gateley. Our people have excelled in client delivery, they have continued to overcome every challenge presented to them, and have delivered further strategic progress for the business, combining to generate an excellent set of results.

As we focus on service line enhancing opportunities that meet our clients' needs and fulfil our strategy to build a broader professional services group, our acquisition pipeline remains strong, trading in the current year to date has been in line with the board's expectations and we look forward to the immediate future with cautious optimism.

Nigel Payne

Chairman

CHIEF EXECUTIVE OFFICER'S REVIEW

Introduction

I am pleased with the Group's performance in FY24. Our teams combined to maintain Gateley's unbroken record of year-on-year revenue growth. As always, I am grateful to our people for their hard work and commitment to delivering the best possible outcomes for our clients.

During the Period we continued to invest in people and systems to progress our strategy of building a diverse and resilient professional services business, delivered through each of our four Platforms of Business Services, Corporate, People and Property. This investment necessarily includes the need to match prevailing remuneration in a market in which there has been high pay inflation across professional services. Combined with the increase in our average headcount to 1,536 during the Period (FY23:1,439), this resulted in a 12.1% increase in personnel costs, including a resumption of staff bonus awards (£4.5m). This reflects the contribution made by our people in delivering a strong underlying trading performance and our more positive outlook as we move into FY25. In doing so, we are moving back towards a more normalised staff bonus pool with clear intent that this remains a key component in overall reward to our employees whilst preserving a balanced return to all of our stakeholders. Excluding this bonus provision, our personnel costs increased 7.4%.

Our ongoing M&A strategy saw us acquire RJA Consultants onto our Property Platform in July 2023, contributing to growth in non-legal revenue across the Group to £49.9m (FY23: £41.8m), or 28.9% (FY23: 25.7%) of Group revenue. Our proposition remains unique; the ability to deliver complementary legal and consultancy services to clients in our chosen markets. We continue to appraise acquisition opportunities on each of our Platforms. Whilst investment costs to some extent impact short-term margin as acquisition, integration and system costs are absorbed, we are confident that, in progressing our strategy, we will generate margin-enhancing returns in the long term.

As reported in April, we were pleased to support our EBT in purchasing 1,864,622 shares at £1.26, predominately from staff who were Partners at IPO. Those shares are warehoused by the EBT to, imminently, award to certain senior staff via our restricted share award scheme. This is a deliberate step in our controlled, non-dilutive recirculation of internally held shares. Our restricted share award scheme will become our sole equity incentive scheme for our senior leaders. We will continue to make controlled use of it, in a more meaningful way, because it is proving to be a valuable differentiator for us in attracting and retaining quality senior talent who are aligned with creating long-term value for the Group and its stakeholders.

On 15 September 2023, we published our third annual Responsible Business Report. Having achieved all 15 responsible business targets set in our prior report, our 2023/24 report, sets 15 new objectives in-line with our purpose-led agenda. We have a clear recognition that business is a key engine for change and our responsible business journey progresses with conviction. Our FY24 Responsible Business Report will be published shortly.

Finally, we are pleased to propose a final dividend of 6.2p at the Group's AGM on 23 September 2024, taking the total dividend for the Period to 9.5p (FY23: 9.5p).

Results overview

The Group performed well during FY24, building on the progress reported at the half year and delivering growth in revenue of 6.0% to £172.5m (FY23: £162.7m). Underlying profit before tax decreased by 8.1% to £23.0m (FY23: £25.1m), reflecting the board's decision, unlike last year, to make a provision of £4.5m for employee bonuses. Profit before tax decreased by 13.9% to £14.0m (FY23: £16.2m). Profit after tax decreased by 17.7% to £10.0m (FY23: £12.2m).

As a people business, our profit metrics are necessarily influenced by our personnel costs. Pay inflation across professional services of the type in the Group has been a continuous characteristic since the end of the pandemic. Our response has been a considered and deliberate attempt to balance the wider capital allocation needs of the Group with the competitive employment market in which our businesses operate. We take reasonable steps to match market pay rates as we continue to invest more widely in people and systems in line with our strategy to grow our currently unique business model. Our firm belief is that it is continual investment which will deliver and enhance our long-term objectives and returns.

Alongside the in-Period acquisition of RJA Consultants, strategic investments in new work streams, such as legal services class actions and international arbitration, are progressing well. We have also invested in AI and other new technology products, with ongoing capital allocation to maximise its use for margin improvement. Alongside all of this and more general cost inflation, our FY24 results delivered another year of solid profitability.

Once again, our outturn for the Period was underpinned by the range and quality of legal and consultancy services offered through our Platforms. Our stated strategic plan at IPO was to create resilience by diversifying our revenue streams. Nine years and 14 acquisitions later, the diversity of services we can offer helped us weather the impact of reduced transactional services activity throughout most of the Period, enabling us to maintain our unbroken record of year-on-year revenue growth.

Looking forward, we are pleased to see a continuation of the improvement we saw in transactional services activity in Q4 FY24. Layering that improvement onto our broader service line activity and strategic long-term investments made in the Period positions us well for FY25 and beyond.

Platform performance

Business Services Platform

Revenue on this Platform grew by 14.0% to £24.9m, underpinned by consistently good activity throughout the Period across the Platform's legal services dispute resolution teams, allied to strong performance from the Platform's patent and trademark attorney businesses.

In legal services, our regulatory and business defence team had a record year, which is reflective of clients' needs for specialist advice in an increasingly regulated environment across all sectors. In addition, the dispute resolution teams saw an increase in demand from both UK and overseas clients. Projects from overseas clients include a return of some activity in Central Europe alongside new mandates from clients in the Middle East and Africa. These are representative of new, strategically agile, steps to win specialist work in new regions.

Buoyed by recent success in growing dispute resolution services, we continue to make strategic investment in specialist service lines, predominantly in competition litigation, class actions and international arbitration where, in all cases, we see huge opportunity. Our recently recruited and highly regarded senior experts in international arbitration are winning new work and forging strong credentials for us. Alongside this, our recently formed specialist class action team has now launched its first case.

In consultancy services, activity in our growing patent and trademark attorney business was strong throughout the Period. Its outturn was enhanced by the first full year contribution from Symbiosis, specialising in the life sciences industry and adding to Adamson Jones' expertise in engineering, medical devices, pharmaceuticals and biotechnology. Both businesses are working well together and with related legal services across the Group and on shared opportunities. We will continue to build critical mass in these services where typical projects are long-dated and our expertise is highly valued by clients whose businesses are founded upon ideas and inventions that need to be protected to preserve value. More UK and international client opportunities exist here and will be realised as we progress our strategy to grow our business in this space.

In aggregate, consultancy revenue now represents 26.0% (FY23: 22.9%) of Business Services Platform revenue.

Corporate Platform

Currently, this Platform is dominated by legal services, some of which were challenged by lower volumes of transactional activity during most of FY24. As a result, the Platform's revenue decreased by 4.4% to £37.1m. However, it delivered a strong contribution margin.

It is likely that the Corporate Platform will always be legal services dominated, with the transactional teams on the Platform drawing support, particular to each transaction, from legal and consultancy services on other Platforms.

Whilst constrained for most of FY24, corporate transactional activity started to return strongly in Q4, particularly with our private equity clients and in wider M&A. The corporate team generated a pipeline in that period comprising an impressive list of complex, high-value transactions across a wide range of sectors, which utilised additional legal and consultancy services across the Group. Ultimately, the team had another good year and the corporate unit remains our biggest internal referrer of business, with most, if not all, other teams benefitting in some way. The pipeline into FY25 is good.

This pattern is also reflected in our banking team, which had a stronger Q4 following a subdued period due to reduced corporate transactions and bank lending. There was some offset in the form of an increase in loan covenant reset and refinancing work, which enabled the team to maintain revenue levels in Period in line with FY23. This is an excellent example of pro and counter-cyclical revenue opportunities which exist in almost all of our legal service lines.

Our restructuring and recovery teams are a natural counterweight to traditional transactional activity and following a sustained period of quiet trading conditions for some years now, revenue levels rose by 20.8% in FY24, as government pandemic support for companies unwound and inflationary pressures and interest rate increases impacted UK businesses. Activity remains strong in these teams. Mandates have been generated both in-market and internally, including working alongside experts in Gateley Vinden and our legal services construction unit in delivery of market-leading services to insurers who have bonded construction projects that have become distressed.

In consultancy services, the team at Gateley Global closed out a significant contract providing services to help public and private sector global clients realise their international expansion plans, inward and outward of the UK. In addition, the team is a consistent cross-referrer of revenue to other parts of the Group as clients require mixed services to implement expansion.

People Platform

Revenue on this Platform contracted by 4.3% due, in part, to a reduction in headcount and reorganisation of our legal services private client team and a drop-off in required support to transactional teams from our legal services employment team.

We saw strong off-set to the above from our legal services pension team and our pension trustee business Entrust which, together, grew revenue by 30.7%. These relatively predictable revenue streams are a further example of deliberately designed resilience in our model. This is a sector where we are keen to make further investment to service the increase in the number of pension schemes looking to complete all liability buy-outs, and/or out-source management of their pension schemes, working with Entrust.

t-three and Kiddy & Partners, our talent assessment, development and cultural change businesses, continue to attract significantly sized clients buying dual services, with particular focus on scalable products to high growth clients. They were pleased to maintain revenue at £6.0m (FY23: £6.2m) alongside a strong pipeline as organisations continue to develop their people and/or transform in some way.

In aggregate, consultancy revenue now represents 30.8% of People Platform revenue.

Property Platform

This remains our most diverse and mature Platform and we maintain our view that the range of expertise now housed on this Platform puts us in position to compete with well-established, multi-disciplinary property consultancies in the wider market. Despite a very challenging back drop for the property sector, revenue on our Property Platform grew by 11.4% to £91.0m during FY24 (FY23: £81.6m).

Whilst activity in the wider commercial property market eased in FY23 (and continued to be subdued throughout most of FY24), we saw and continue to see an increase in non-transactional advisory and dispute resolution services. This includes helping our wide range of residential development clients navigate regulation under the high-profile Building Safety Act (post-Grenfell) and advising on related remediation projects. This is long-dated, specialist work in which we continue to invest. Our construction team had a record year and continues to be very busy. Our real estate development team - a market leader in the warehousing and logistics sector had a slower start to the year before returning strongly to growth. Elsewhere, prevailing market conditions have resulted in an increase in work helping or opposing organisations seeking to exit commercially onerous contracts.

In our market-leading house-builder team, we continue to act for all of the top developers, many of whom have significantly reduced their panel of advisors in favour of larger providers who cover all bases, which describes Gateley both geographically and in service lines, and this should result in more work for the team. Our clients need to continue to build and sell and have other areas for which they require our services. This includes shared ownership framework agreements, bulk sales to housing associations and build-to-rent investors and housing-led urban regeneration. We act for all of the leading developers in this space and offer a unique combination of legal and consultancy services covering whole project life cycles.

In consultancy services, Gateley Smithers Purslow ("GSP"), who deliver specialist services to the property insurance complex claims market, contributed revenue of £17.6m (FY23: £13.7m), representing annualised growth for that business of 28.5%. We also saw strong revenue growth of 14.7% from Gateley Vinden's broad range of specialist services.

Our acquisition of surveyors Richard Julian and Associates Limited ("RJA") in July 2023 extends our reach to organisations that deliver affordable housing, a resilient sector underpinned by high levels of grant to support delivery of the Government's housing targets. The team also has specialists in major loss property claims, which enhances related expertise in both GSP and Gateley Vinden. RJA has had an excellent start in Group, exceeding expectation.

FY24 consultancy revenue represented 40.5% (FY23: 38.1%) of Property Platform revenue.

Operational review

Our operational focus has been aimed at current and future efficiency.

AI is at the top of our agenda and is a priority area for capital allocation, alongside investment in acquisitions and people. We are very aware that investment in suitably developed product will positively enhance the delivery of some of our services and realise efficiencies which help us improve our profitability. We have a cross-disciplinary steering group reporting directly to the board on product assessment, procurement and integration. Our investment in-Period included recruitment of a specialist in-house AI development team to create bespoke applications for both service delivery and internal uses. Our development program will provide applications for use on each of our client-facing Platforms and for our business support functions. The first of our internally designed applications has just been launched for use by the residential development team on our Property Platform. It significantly improves turnaround of the process that it is designed for and is verificatory of the value of the ongoing investment that we will continue to make in AI driven product.

In Period, we acquired new systems to support the on-boarding of a legal services team to run class action claims. This is specialist, long-term, high value work which requires a bespoke technology platform, in which we have invested £0.5m so far for current and future benefit.

We have previously reported planned rationalisation of some of our office space. This is an on-going exercise, including the post-Period surrender of our lease for office space in Leicester as part of consolidation of some of our teams in the East Midlands to our Nottingham office.

On-going integration of recently acquired businesses is proceeding as planned, including positive enhancements to our Group integration processes. In parallel, phase two of adoption of our new, market-leading business management, productivity, and financial management system (3E) is proceeding throughout FY24 and into FY25.

People and Culture

Attracting, developing and motivating talent, at all levels across the Group, is a key objective every year. In FY24, overall average headcount in the Group increased by 6.7% to 1,536 (FY23: 1,439). Legal services average headcount growth was 1.2% to 1091 employees (FY23: 1,078). Average consultancy headcount increased by 25.4% to 445 (FY23: 355), primarily as a result of acquisitions and investment in GSP.

The Gateley offering remains differentiated and our broad range of career opportunities is attractive. We continue to evolve our people strategies to drive a stimulating, purposeful and rewarding environment in which our people can progress their careers. We recently announced a total of 159 internal promotions and celebrated these across the Group.

The ability for all of our people to participate in share ownership is attractive and represents a recruitment differentiator. During FY24 we issued circa 3.4m shares to participants across our various share schemes. All of this is in line with our strategy of creating wider equity participation for more of our people. Currently circa 70% of our people either hold shares or participate in share schemes.

Once again, we owe the success of our business to the quality and dedication of our people at all levels. Clients come to us for our broad specialist knowledge and experience and our determination to deliver results for them. As we extend our range of services, our strong client relationships enable more cross-selling opportunities, which remains a key focus for us in generating further organic growth.

Responsible Business

Being a Responsible Business remains an integral part of our Purpose Statement;

We were pleased to achieve all 15 of our internally-set responsible business targets in 2022/2023 and, in-Period, we published our third annual Responsible Business Report outlining actions taken and setting targets for 2023/2024. Our next report will be published imminently.

Highlights from the last report include:

• A carbon reduction plan including a commitment to achieve net zero emissions by 2040, with interim targets set by 2030;
• A new strategic partnership with Alzheimer's Research UK; and
• The launch of an internal volunteering policy which provides opportunities for our people to volunteer with the charity, sustainability and education partners we work with.

Current trading and outlook

Looking forward, we are encouraged by strengthening levels of activity across our transactional services teams, which began during the Spring. This is matched by improving pipelines for those teams. Alongside this, we continue to see good non-transactional and consultancy business activity. Therefore, our immediate outlook is cautiously optimistic at the beginning of a new political dawn for the UK.

From a long-term perspective, we remain positive as our increasingly resilient model continues to deliver for us and gives us confidence to continue our investment strategy for enhanced returns.

The group enters FY25 with positive mindset and belief in strategy.

Rod Waldie

Chief Executive Officer

CHIEF FINANCIAL OFFICER'S REVIEW

Financial overview

The Group has again grown revenue both organically and through acquisition, despite the challenging economic backdrop of FY24 that resulted in decreasing activity levels throughout the year until Q4.

This year's increase in costs, driven through a combination of inflation and investment, alongside a return of bonuses, have checked our progression on both profit and margin. Following strong activity levels in transactional areas in Q4 alongside the reorganisation of specific areas of the Group, we enter FY25 feeling confident of improving profitability in FY25.

Our dividend yield is 6.4% using the average share price across FY24 and, even in an environment of higher interest rates, remains at a level which we believe is attractive for all shareholders.

Our revolving credit facility has significant headroom and with a closing net cash position of £3.8 million we are well-placed to capitalise on current market conditions, as we have done previously, to enable further expansion and growth.

Revenue and activity levels

Group total revenue grew by 6.0% (FY23: 18.6%) to £172.5m (FY23: £162.7m), including 2.8% organically. Revenue from core legal service lines grew organically by 0.8% (FY23: 4.9%), while organic revenue growth from consultancy businesses was 9.1% (FY23: 15.2%). Consultancy revenues of £49.9m (FY23: £41.8m) now represent 28.9% (FY23: 25.7%) of total revenue, demonstrating our strategy to build and diversify into a broader professional services group, and further enhance our unique offering to clients.

Fee earner utilisation levels during FY24 returned to FY22 levels at 83%, after FY23's increase to 89%. Alongside a static conversion of time into fees, this has contributed to the Group's decrease in profitability. Activity in Q4 of FY24 was 92% compared to an average of 81% in the first three quarters. This Q4 FY24 utilisation average was 1% higher than Q4 in FY23. We fully expect this improvement to continue as we experience increased instructions from new areas of investments and transactional activity continuing to build ahead of the recent UK general elections.

During this period of reduced activity levels, a number of key areas of the Group have been unable to pass on the recent market-driven staff cost increases of the last few years, whilst lead generation has remained extremely competitive. As activity levels improve and the mix of work changes towards recent new areas of investment, we are starting to see rate increases work through into improved recoveries.

However, activity in a number of our consultancy businesses is driven by alternative factors. Gateley Smithers Purslow ("GSP") and Gateley RJA are examples of two such areas of the Group that have seen activity increase significantly as a result of the rise in adverse economic climate change and government policy in social/affordable housing, respectively. Both businesses have experienced impressive organic growth since joining the Group of 28.3% and 26.0% respectively.

Costs and margins

The bridge in personnel costs from £96.8m in FY23 to £108.5m in FY24 of £11.7m arises due to a £4.5m bonus, growth in head count and wage inflation of £4.4m, £2.4m of new payroll costs following the July 2023 acquisition of RJA and £0.4m of full year Symbiosis costs acquired in October 2022, both of which were covered by revenue introduced. Average staff headcount has increased by 6.7% from 1,439 to 1,536 total staff. Average professional staff within this period have increased by 6.8% from 1,000 to 1,068.

Personnel costs (before bonus) to revenue in FY24 increased to 60.3% (FY23: 59.5%) which rises to 62.9%, as a result of the Group awarding £4.5m of bonuses for exceptional performers during FY24. We continue to sensibly manage this key metric as market conditions improve. The reinstatement of a bonus and the increase in investment income from trade related interest have both impacted our adjusted profit before tax margin this year, which has decreased to 13.4% (FY23: 15.4%). The bonus reinstatement has reduced margin by 2.6%, whilst the additional £2.7m of net interest income has increased this margin by 1.6%.

Operating expenses have increased by £2.7m or 7.6% to £38.8m (FY23: £36.1m) due mainly to the investment in new IT systems (£0.5m) supporting new areas of work such as Class Actions, and the additional cost of the acquisition of RJA (£0.6m). Overall, operating overheads have increased slightly as a percentage of revenue from 22.2% in FY23 to 22.5% in FY24 as predicted.

The table below represents Platform performance over the last two reported years along with each Platform's direct contribution towards our Group's performance.

Underlying operating profit before tax

The Group has recorded £20.3m of underlying operating profit before tax (FY23: £25.0m). Whilst we have continued to strategically invest across the business in our legal and consultancy teams, a particular focus has been on headcount investment in GSP to meet significant demand. The reinstatement of a Group bonus (£4.5m) is the key difference between the two years.

Our underlying trading margins have decreased to 11.7% (FY23: 15.4%) as a factor of continued investment for growth and ongoing inflationary pressure in our people costs despite decreased levels of activity in certain parts of the Group due to macro-economic factors. Nevertheless, we are confident that our strategy of ongoing investment made by us will result in short term margin stability followed by long term improvement.

Underlying operating profit before tax excludes amortisation of acquisition related intangibles, all share-based charges and exceptional acquisition related items, including the acquisition accounting treatment of consideration payments on acquisitions being reclassified as employment costs in the income statement, as well as gains on bargain purchases arising from the related acquisition accounting. Underlying operating profit before tax has been calculated as an alternative performance measure in order to provide a more meaningful measure and year-on-year comparison of the profitability of the underlying business.

Reconciliation to alternative performance measure: underlying operating profit before tax

Earnings Per Share (EPS)

Basic EPS decreased by 20.8% to 7.74p (FY23: 49.5% to 9.77p). Basic EPS before non-underlying and exceptional items decreased by 13.7% to 14.42p (FY23: increased by 12.1% to 16.71p). Diluted EPS decreased by 19.9% to 7.63p (FY23: increased by 49.6% to 9.52p). Diluted EPS before non-underlying and exceptional items decreased by 12.8% to 14.20p (FY23: increased by 12.0% to 16.28p).

Share option schemes

Over 70% of our people are existing share or option holders in the Group. The board remains committed to providing its people with the opportunity to own shares in the Company primarily through the continued issuance of restricted shares awards (RSAs) across senior leaders within the Group and our Save As You Earn ("SAYE") all staff share scheme. Such share ownership promotes strong alignment with the Group's external shareholders, improves our attraction to like-minded recruits and is reflective of Gateley's culture of long-term ownership. The RSAs, which vest on receipt, are subject to a five-year non-dealing restriction and are forfeited should employment cease within that period.

On 14 September 2023, Long-Term Incentive Plan awards ("LTIP") over 727,790 Ordinary Shares vested and were exercised on 21 September 2023 by 77 partners and PDMR's following the conclusion of LTIP awards vested at the end of a three-year period, with vesting and exercise dependent upon the achievement of profit related performance conditions and continuous employment. Profit performance during the conditional period resulted in 68% of the total award being made.

Profits used to calculate underlying EPS each year are disclosed below:

Taxation

The Group's tax charge for the Period was £3.9m (FY23: £4.0m) which comprised a corporation tax charge of £4.4m (FY23: £5.0m) and a deferred tax credit of £0.5m (FY23: credit of £1.0m).

The deferred tax charge arises due to a combination of credits in respect of the share schemes that have vested in past years and the release of deferred tax on brands. The total effective rate of tax is 27.8% (FY23: 24.5%) based on reported profits before tax. The increase in the effective rate of tax is as a result of the increase in UK corporation tax rates and change in earn-out related consideration remuneration charges and gains on bargain purchase from FY23 to FY24, the net effect of which is not allowable for corporation tax purposes.

The net deferred taxation liability has increased to £2.6m (FY23: £2.1m) as a result of the decreased deferred tax asset recognised on share-based payment schemes yet to vest driven by a decrease in the Group's share price.

Dividend

The Group paid an interim dividend of 3.3p share on 21 March 2024 and proposes a final dividend at the Company's Annual General Meeting on 23 September 2024 of 6.2p (FY23: 6.2p) per share, which if approved, will be paid in October to shareholders on the register at the close of business on 11 October 2024. The shares will go ex-dividend on 10 October 2024.

Balance sheet

The Group's net asset position has increased by £2.2m (FY23: £3.0m) to £80.3m (FY23: £78.1m), due to the following movements:

There was a £17.9m increase in total current assets, resulting from £4.7m additional trade and other receivables through acquired businesses and the strong organic growth of the Group. Contract assets ("unbilled revenue") increased by £3.2m and cash at bank increased by £5.6m as improvements were made in the collection of cash during this year.

Non-current assets decreased by £3.5m, resulting predominantly from a decrease of £3.5m from a change in property use and right of use asset values as no new leases were entered into during FY24 as amortisation of right of use assets were the only key movements.

The board has carefully considered the impact of macro-economic uncertainties, on the future forecasts used in assessing the value in use of the cash generating units to which the goodwill and intangibles relate and determined that, despite short term reductions, such forecasts are more than sufficient to justify the carrying value of goodwill. Therefore, as at 30 April 2024, the board concluded that the goodwill and intangible assets do not require impairment.

Total liabilities increased by £12.3m, due to the reintroduction of accrued bonuses together with increased lending from the Group's Revolving Credit Facility following the acquisition of RJA and the payment of earn out consideration to the vendors of GSP, offset by a reduction of £3.4m in lease liabilities.

Cash flow

During the year, the Group increased its usage of its Revolving Credit Facility from £6.8m to £12.9m. The facility provides total committed funding of £30m until April 2025 (supported by a letter of comfort for its extension to Oct 2025), split equally between Bank of Scotland and HSBC UK, that is specifically earmarked to fund growth and expansion via acquisition. Interest is payable on the loan at a margin of 1.95% above the SONIA reference rate.

The Group also has in place a litigation funding facility for an initial £20m of funding towards significant litigation cases, which has the ability to increase to £50m if required. To date the Group has not yet utilised this facility but has a number of large assignments currently being assessed for consideration in FY25.

Cash generation remained strong with net cash inflows from operating activities increasing to £14.0m (from £9.7m in FY23) representing 138.8% (FY23: 79.6%) of profit after tax. The Group ended the year with net cash of £3.8m (FY23: £4.3m), as less cash was consumed during the financial year on creditors together with management's sustained focus on debt collection resulting in an improvement in debtor days.

Adjusted free cashflow during the year from operations (after adjusting for IFRS 16 and IFRS 3 specific items noted in the table below) was £17.7m (FY23: £6.0m), which represents an increase to 175.9% (FY23: 48.6%) of profit after taxation ("PAT") and an increase to 92.5% (FY23: 28.2%) of underlying PAT due to improved operational cash collection, significant increases in interest income and the adjustments from acquisition related activity this year being more significant.

Overall, working capital levels have increased on the previous year, as unbilled revenue represented 61 days of pro-forma net revenue compared to 53 days last year, and Group debtor days have decreased to 111 days of pro-forma net revenue from 113 days last year, which includes revenue from acquisitions on a full year pro-forma basis. I am pleased we have made good progress in debt collection with a strong finish to the year that resulted in a pleasing net cash position. We have made a good start to collections in FY25. Unbilled revenue recognised in the Group's statutory accounts, from time recorded on non-contingent work, remains low as a percentage of revenue and totalled just £23.5m or 13.6% of revenue recognised over the year (FY23: £20.4m or 12.5%).

Summary

FY24 continued our unbroken record of revenue growth since IPO in 2015. Our recent acquisitions have settled into the Group well and activity levels that were subdued at the start of the Period, recovered strongly in Q4 and into FY25. There is no doubt that reduced activity at a time of continued inflation has remained a challenge to our trading margin but I am pleased to return a bonus to staff for exceptional performance this year alongside £23.0m of underlying profit before tax and a 9.5p dividend to shareholders.

We remain confident that the investments we have made, alongside an improving market, will support our medium to longer-term growth strategy and a margin improvement. We have maintained rigid control of costs and improved our working capital position that supports the Group's growth ambitions and its healthy net cash position within a strong balance sheet with significant bank facility headroom.

Share ownership rewards for our staff continue to play a significant part in our vision of wider, long-term connectivity across the Group and will deliver a significant opportunity to all staff in FY25 and beyond.

Neil Smith

Chief Financial Officer

CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

for the year ended 30 April 2024

Other comprehensive income

Items that are or may be reclassified subsequently to profit or loss

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30 APRIL 2024

The following describes the nature and purpose of each reserve within equity:

Share premium - Amount subscribed for share capital in excess of nominal value together with gains on the sale of own shares and the difference between actual and nominal value of shares issued by the Company in the acquisition of trade and assets.

Treasury reserve - Represents the repurchase of shares for future distribution by Group's Employee Benefit Trust.

CONSOLIDATED CASH FLOW STATEMENT FOR YEAR ENDED 30 APRIL 2024

NOTES TO THE FINANCIAL STATEMENTS

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 2024, 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 2024 will be delivered to the Registrar of Companies following the Annual General Meeting.

These condensed preliminary financial statements for the year ended 30 April 2024 have been prepared on the basis of the accounting policies as set out in the 2024 financial statements.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards, this announcement does not itself contain sufficient information to comply with those standards. The Group expects to publish full financial statements that comply with International Financial Reporting Standards in September 2024.

1.1 Statement of Directors responsibilities

1.2 Cautionary statement

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

Going concern

Having reviewed the Group's forecasts, which includes an analysis of both short term cash flow forecasts and longer term cash flow forecasts, the risk and uncertainties surrounding the current and future demand for legal services, and other reasonably possible variations in trading performance, mitigating actions available to management the Group expects to be able to operate within the Group's financing facilities.

The Group's revolving credit facility expires in April 2025 however, discussions are underway with the Group's banks to provide a new facility, with terms anticipated to be agreed well ahead of expiry of the current facility. Furthermore, the Group's supportive banks have provided a comfort letter that expresses their willingness to extend the current facility to October 2025, should it be required.

Sensitivity analysis has been performed in respect of specific scenarios which could negatively impact our future performance such as lower levels of revenue growth, lower than forecast receipts of cash, and reduced levels of gross margin expansion. In addition, the Directors have also considered further mitigating actions such as lower capital expenditure and other short-term cash management activities within the Group's control. On this basis, the Directors have a reasonable basis to conclude that the Group is forecast to continue to trade in line with existing financing facilities for the foreseeable future and at least 12 months from the approval of these financial statements.

Accordingly, the Directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Revenue and operating segments

The Chief Operating Decision Maker ("CODM") is the Strategic Board. The Group have the following four strategic divisions, comprising both legal and consultancy services, which are its reportable segments and referred to as it's Platforms.

The following summary describes the operations of each reportable segment as reported up to 30 April 2024:

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

The Group has no individual customers that represent more than 10% of revenue in either the 2024 or 2023 financial year. The Group's assets and costs are predominately located in the UK save for those assets and costs located in the United Arab Emirates (UAE) via its Dubai subsidiary. Net Group assets of £0.09m (2023: Net Group assets of £0.08m) are located in the Group's Dubai subsidiary. Revenue generated by the Group's Dubai subsidiary to customers in the UAE totalled £1.80m (2023: £2.39m) as disclosed above as due from the customers in the Middle East

2024

Group entities may be engaged on a contingent basis; in such cases the Group considers the satisfaction of the contingent event as the sole performance obligation within the contract. Fees are only billed once the contingent event has been satisfied. The initial financing of these engagements is met by the Group. Due to the nature and timing of the billing, such engagements influence the contract asset balance held in the balance sheet at year end. In the majority of cases the contingent event is expected to be concluded within one year of the engagement date. The Group operates standard payment terms of 30 days. £11.4 million (2023: £16.4m) of the current period revenue is derived from services satisfied, in part, in the previous period.

Services transferred over time

For non-contingent engagements, fee earners' hourly rates are determined at the point of engagement with all hours attributed to the engagement fully and accurately recorded. The recorded hours are then translated into fees to be billed and invoiced on a monthly basis. The Group typically operates on 30 days credit terms, in line with IFRS 15 the performance obligations are fulfilled over time with revenue being recognised in line with the hours worked.

Contract assets

Under IFRS 15 the Group recognises any goods or services transferred to the customer before the customer pays consideration, or before payment is due, as a contract asset. These assets differ from accounts receivables. Accounts receivable are the amounts that have been billed to the client and the revenue recognised, whereas these contract assets are amounts of work in progress where work has been performed, yet the amounts have not yet been billed to the client. Due to the nature of the services delivered by the Group the significant component of the cost of delivery is staff costs. As a result, there is little to no judgement exercised in determining the costs incurred as they are driven by the time recorded by fee earners. Contract assets are subject to impairment under IFRS 9.

Contract Liabilities

Under IFRS 15 the Group is required to recognise contract liabilities based on those amounts recognised against contracts for which the satisfaction of performance obligations has not yet been met. These liabilities relate to the deferred income recognised within Kiddy & Partners, T-three Consulting Limited and GEG Services Limited as a result of their billing structure. The amounts recognised reflect the agreed cost of the services to be performed and are realised in line with the ongoing cost of delivery. Due to the nature of the services provided, the main component of this cost of delivery is staff costs, as a result there is little to no judgement exercised in determining the value of the liability held at year end.

Practical expedients under IFRS 15

Under IFRS 15 companies are required to disclose the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period. However, only a small proportion of revenue contracts in issuance are for fixed amounts, rather the company has a right to consideration from the customer in an amount that corresponds directly with the value to the customer of the business' performance completed to date. Therefore, the Group considers it impractical to estimate the potential value of unsatisfied performance obligations and has elected to apply the practical expedient available under IFRS 15.

Expenses and auditor's remuneration

Included in operating profit are the following:

Acquisition costs relate to third-party professional fees in connection with prospecting and completing acquisitions during the period.

Share based payment charges in Gateley Plc represent charges in accordance with IFRS 2 in respect of unexercised SAYE, CSOP, LTIP and RSA schemes (See note 6).

Share based payment charges in Gateley RJA Limited represent shares awarded to staff following the successful acquisition of the Company (See notes 5 and 6).

Reorganisation costs relate to restructuring and integration projects around the group.

Auditor's remuneration

Amounts receivable by the Company's auditor and its associates in respect of:

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

Personnel costs

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

Number of employees

The aggregate payroll costs of these persons were as follows:

Share based payments

Group

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

Save As You Earn scheme ('SAYE')

During the year 1,766,571 SAYE 19/20 options vested with 1,395,589 being exercised by 30 April 2024 leaving 370,982 options still to be exercised. New shares were issued to satisfy these options being 1,395,589 10p shares with a nominal value of £139,559.

Company Share Option Plan ('CSOP')

The Group operates an HMRC approved CSOP scheme for associates, senior associates, legal directors, equivalent positions in Gateley Group subsidiary companies and Senior Management positions in our support teams. Options under this scheme will vest if the participant remains employed for the agreed vesting period of three years. Upon vesting, each option allows the holder to purchase the allocated ordinary shares at the price on the date of grant.

Long Term Incentive Plan ('LTIP')

Performance conditions

During the year 742,998 LTIP 2020 options vested with 727,790 being exercised by 30 April 2024. New shares were issued to satisfy these options being 727,790 10p shares with a nominal value of £72,779.

Restricted Share Award Plan ('RSA')

The annual awards granted under all schemes are summarised below:

The total charge to the income statement for all schemes now in place, included within non-underlying items, is £1,686,000 (2023: £1,984,000).

Financial income and expense

Recognised in profit and loss

The Finance Act 2021 increased the main rate of corporation tax to 25% from 1 April 2024.

Earnings per share

Statutory earnings per share

The board proposes to recommend a final dividend of 6.2p (2023: 6.2p) per share at the AGM. If approved, this dividend will be paid in October 2024 to shareholders on the register at the close of business on 11 October 2024. The shares will go ex-dividend on 10 October 2024. This dividend has not been recognised as a liability in these final statements.

Property, plant and equipment

Within intangible assets includes a Gateley Smithers Purslow customer list asset of £4m (2023: £4.5m) which has a remaining life of 9 years, and a Gateley RJA customer list asset of £3m (2023: £nil) which has a remaining useful life of 4 years and 3 months. The entirety of the brand intangible relates to Gateley Smithers Purslow and has a remaining life of 13 years.

Goodwill is allocated to the following cash generating units:

Impairment testing

The Group tests goodwill annually for impairment. The impairment test involves determining the recoverable amount of the cash generating unit (CGU) to which the goodwill has been allocated. The Directors believe that each operating segment represents a cash generating unit for the business and as a result, impairment is tested for each segment, and all the assets of each segment are considered.

The recoverable amount is based on the present value of expected future cash flows (value in use) which was determined to be higher than the carrying amount of goodwill so no impairment loss was recognised.

Value in use was determined by discounting the future cash flows generated from the continuing operation of the Group and was based on the following key assumptions:

Acquisitions

During the year ended 30 April 2024 the Group completed one acquisition:

Acquisition of Gateley RJA Limited

On 19 July 2023 Gateley (Holdings) Plc acquired the entire issued share capital of Richard Julian and Associates Limited ('RJA'). RJA specialises in the provision of quantity surveying and project management services to organisations in the affordable housing sector.

The primary reason for the business combination is discussed within the CEO's review.

The amounts recognised in respect of identifiable assets acquired and liabilities assumed are as set out in the table below:

A contingent consideration arrangement was entered into as part of the acquisition. A further £2.1 million could be payable with any payment subject to RJA achieving at least £4 million of revenue over the first 12 months post-acquisition, and not less than £5 million of revenue for the following 12 months. Such payment is to be split in shares and cash as agreed between the Sellers and the Company, providing no Seller is entitled to receive more than 50% of their total consideration in cash.

The negative goodwill of £3,609,000 has been recognised immediately in the statement of profit and loss and included within non-underlying expenses.

From the date of acquisition Gateley RJA Limited has contributed £4.2m of revenue to the Group's Statement of Comprehensive Income together with after tax profit of £0.7m. If the acquisition had been completed on the first day of the financial year, Group revenue and profit after tax would have been higher by £1.1m and £0.2m respectively.

Other intangible assets

The Group's amortisation policy is to amortise other intangible assets from the date they are made available for use.

Contract assets and liabilities

Contract assets

Contract assets consist of unbilled revenue in respect of professional services performed to date.

Contract assets in relation to non-contingent work are recognised at appropriate intervals, normally on a monthly basis in arrears, in line with the performance of the services and engagement obligations. Where such matters remain unbilled at the period end the asset is valued on a contract-by-contract basis at its expected recoverable amount.

Contract assets in relation to contingent work are recognised at a point in time once the uncertainty over the contingent event has been satisfied and all performance obligations satisfied, such that it is no longer contingent, these matters are valued based on the expected recoverable amount. Due to the complex nature of these matters, they can take a considerable time to be finalised therefore performance obligations may be settled in one period but the matter not billed until a later financial period. Until the performance obligations have been performed the Group does not recognise any contract asset value at the year end.

During the year, contract assets of £nil (2023: £nil) were acquired in business combinations.

An impairment loss of £656,000 has been recognised in relation to contract assets in the year (2023: loss £542,000). This is based on the expected credit loss under IFRS 9 of these types of assets. The contract asset loss is estimated at 2.8% (2023: loss 2.7%) of the balance.

Contract assets recognised under IFRS 15

Under IFRS 15 the Group is required to recognise contract assets.

The Group have applied ECLs to unbilled revenue in order to account for the potential default on amounts not yet billed to the client. The ECLs have been calculated on the same basis as those applied to trade receivables.

Contract liabilities

Contract liabilities recognised under IFRS 15

Under IFRS 15 the Group is required to recognise contract liabilities.

Trade receivables

Trade receivables are recognised when a bill has been issued to the client, as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. Trade receivables also include disbursements.

Bills are payable within thirty days unless otherwise agreed with the client.

All trade receivables are repayable within one year.

Movement in loss allowance

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

The carrying amount of financial assets (including contract assets but not including equity investments) recorded in the financial statements, which is net of any impairment losses, represents the Group's maximum expected exposure to credit risk. Financial assets include client and other receivables and cash. The Group does not hold collateral over these balances.

All the Group's trade and other receivables have been reviewed for indicators of impairment. The specifically impaired trade receivables are mostly due to customers experiencing financial difficulties.

An impairment loss of £1,062,000 has been recognised in relation to trade receivables in the year (2023: £984,000). This is based on the expected credit loss under IFRS 9 of these types of assets. The trade receivables loss is estimated at 1.7% (2023: 1.7%) of the balance.

Other interest-bearing loans and borrowings

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

On 18 April 2022, the Company entered into a revolving credit facility which provides total committed funding of £30m until April 2025. Interest is payable at a margin of 1.95% above the SONIA reference rate. A commitment fee of one third of the applicable margin is payable on the undrawn amounts.

As at 30 April 2024, the Group's non-derivative financial liabilities have contractual maturities (including interest payments where applicable) as summarised below:

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

Deferred tax

Deferred tax assets and liabilities are summarised below:

Deferred tax asset

The deferred tax asset recognised in the consolidated statement of financial position represents the future tax impact of issued share based payments schemes that are yet to vest.

Share-based payments

£'000

Deferred tax liability

The deferred tax liability recognised in the Consolidated Statement of Financial Position represents the future tax impact of the Group's benefit from customer lists obtained through acquisitions.

Customer lists

£'000

The Group from time to time receives claims in respect of alleged professional negligence which it defends where appropriate but makes provision for the best estimate of probable amounts considered likely to be payable as set out above. Inevitably, these estimates depend on the outcome and timing of future events and may need to be revised as circumstances change. A different assessment of the likely outcome in each case or of the probable cost involved may result in a different level of provision recognised. Professional indemnity Insurance cover is maintained in respect of professional negligence claims.

Dilapidations provision

On 19 July 2023 the Company acquired the entire issued share capital of Richard Julian and Associates Limited in part for the issue of 1,192,163 10p ordinary shares.

On 2 November 2023 the Company issued 1,661,790 10p ordinary shares to satisfy the contingent consideration on the acquisition of Gateley Smithers Purslow Limited.

Between 1 May 2023 and 30 April 2024 1,591,555 10p ordinary shares were issued upon vesting of the 2019/2020 SAYE schemes to participants.

On 27 September 2023 727,790 10p ordinary shares were issued upon vesting of the 2020 LTIP scheme to participants.

On 21 September 2023 790,131 10p ordinary shares were issued upon issue of the FY24 RSA scheme to participants.

Leases liabilities - IFRS 16

The Group has leases for offices, vehicles and some IT equipment, with the exception of short-term leases and leases of low-value assets each lease is held on the balance sheet as a right-of-use asset and corresponding lease liability. Property leases have a remaining term of one to ten years. Leases of vehicles and IT equipment have a term of three to five years. Lease payments on all those recognised on the balance sheet are fixed. Unless there is a contractual right for the Group to sublet the asset to a third party, the right of use asset can only be used by the Group.

The table below provides additional information on the right-of-use assets by class of assets:

* Where properties within the same building are leased on a floor by floor basis on the same contractual terms, the Group has elected to treat these as a portfolio and are counted as a single leased asset within the table

Lease liabilities are presented in the statement of financial position as follows:

A number of property leases held by the Group include break or termination options. The lease liability has been calculated based on the likelihood of such option being exercised. An option would only be exercised when in line with the Groups wider strategy.

In line with IFRS 16 Leases the Group has elected not to recognise a lease liability for leases with a term of 12 months or less, or for leases of low value assets. The payments made under such leases are expensed to the profit and loss on a straight-line basis. Any variable lease payments incurred are expensed as incurred.

The table below shows amounts recognised in the Statement of Comprehensive Income for short term and low value leases as at 30 April 2023:

The total minimum undiscounted lease payments at 30 April 2024 under non-cancellable operating lease rentals were:

Subsequent events

The Directors are not aware of any material post balance sheet events.

Alternative performance measures

Underlying profit before tax

The adjustment for share-based payments relates to the impact of the accounting standard for share-based compensation. The cost of all share-based schemes is settled entirely by the issue of shares where the proportions can vary from one year to another based on events outside of the businesses control e.g., share price. Under IFRS the anticipated future share cost is expensed to the income statement over the vesting period. The adjustment above addresses this by adding to profit the IFRS 2 charge in relation to outstanding share awards. This adjustment is made so that non-cash expenses are removed from profit.

Underlying operating profit

The Annual report and financial statements will be posted to shareholders in due course. Further copies will be available from the Company's website: www.gateleyplc.com.