Ward: well balanced and resilient business
Gateley is seeing the benefits of being the first UK-listed law firm, its chairman said today as it announced record turnover.
Revenue increased 10.2% to £67.1m in the year to 30 April 2016, with profit before tax up 12.2% to £11m. As a result shareholders are to see a final dividend of 3.764p, making a total over the year of 5.639p.
In today’s announcement to the stock exchange, chairman Nigel Payne said “our new and more flexible Plc structure” had enabled the AIM-listed firm to deliver on its three prong strategy: to differentiate – “through our comprehensive service offering and service ethic” – diversify, with the acquisition of tax incentives advisory business Capitus earlier this year, and incentivise staff by offering wider and earlier equity.
“These strong results, together with the successful IPO and the encouraging start the group has made in its journey have also helped raise our profile and enhance our brand, differentiating us from our competitors and attracting quality staff who are interested in benefiting from the opportunities provided by a structure which we believe is far better suited to the legal landscape of today.”
Other developments during the year included opening a new office in Reading and 12 lateral partner hires. The firm also said that utilisation of fee-generating staff rose from 85% to 89%, staff numbers increased 5.3% from 606 to 638, and that it advised on 212 corporate deals with an aggregate value in excess of £1.76bn (last year, 237 deals worth £1.6bn).
CEO Michael Ward said: “In a market that continues to be challenging, the board has remained focused on the execution of our stated strategy of long term organic and acquisitive growth. The group has made excellent progress since our successful AIM admission, all of which has been made possible by the positive reaction to our flotation by our diversified client base and excellent staff…
“Trading in the second half of the financial year ended 30 April 2016 was robust and we are pleased to report that trading in the first two months of the current financial year has been encouraging.
“We are confident that our business is well balanced and resilient and we remain focused on delivering another year of growth in our core services, whilst continuing to look for complementary acquisitions.
In a research note sent out following the results, analyst Cantor Fitzgerald advised investors to buy Gateley, with a target of 125p, describing the firm as “well positioned to grow across the economic cycle” given a mix of cyclical and counter-cyclical parts of its business.
The note said the size of the legal market and Gateley’s “relatively” small share of it provided “scope to grow by expanding its footprint and hiring new teams”.
It said Cantor’s forecast of 8% annual organic growth did not allow for the “likely positive impact of Brexit as companies review their contractual arrangements”.
Gateley’s shares went up nearly 5% on the back of the results, reaching 107.5p, near the 108.5p high achieved since listing in June 2015 at 95p.
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