Nicola Foulston, chief executive, Rosenblatt
A cautious business environment, prompted in part by Brexit, is holding back corporate work and its own acquisition activity, listed law firm Rosenblatt said yesterday.
However, with litigation work strong, it told investors that the first dividend they will receive should be more than was expected at the time of its float last May.
In a trading update ahead of the publication of its 2018 results in April, the firm said the figures should be in line with market expectations.
“The company has continued to maintain high net margins on the work it undertakes, consistent with the levels the group aims to deliver, and the highest of its peer group.”
Rosenblatt is predominantly a contentious practice, and it said there has been an increase in the number of litigation cases it was working on, with many being undertaken under either a conditional fee or damages-based agreement, “from which the group will receive a high rate of return if successful”.
The update said: “This growing demand for litigation reflects the uncertain economic environment, as businesses look to legal action to resolve issues.”
The corporate division, by contrast, “has been impacted by the cautious business environment in part caused by Brexit uncertainty.
“The board believes that, as this uncertainty reduces during the year, there will be an increase in transactions, which have been delayed, including large-scale M&A transactions. The group is well-positioned to benefit from this.”
Rosenblatt said that its confidence in the future was such that it intended to pay a dividend for the six months to 31 December 2018 of 2.8p per share, “ahead of expectations set at the time of the company’s IPO”.
Around £5m of the proceeds of the listing were put aside for acquisitions, and the update said the firm continued to assess potential acquisition opportunities. However, “the number of acquisition or lateral hire opportunities available reflected the cautious business environment”.
It continued: “The board has remained disciplined and will only pursue transactions that can demonstrate clear benefits for shareholders.
“With the UK experiencing a fast-changing economic backdrop, the board believes that the group is well placed to move quickly and capitalise on opportunities as and when they arise this year.”
Chief executive Nicola Foulston said: “Rosenblatt has performed well since our flotation last year, with revenue growing and net margins remaining high. I am pleased to announce our first interim dividend to shareholders reflecting the strength of the group and this will remain a key metric for us…
“We expect to take part in the consolidation of the industry as and when acquisitions meet our strategic and valuation criteria. This will be our first full year as a public company and we look forward to delivering growth for shareholders.”
Rosenblatt listed at 105p and reached a high of 135p a few weeks later, but its share price has declined steadily since then, for no obvious reason, although trading volumes are quite low.
It closed 2018 on 74p – the worst performing of any of the listed law firms – although it has recovered somewhat and today closed at 82p.
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