Ward: We continue to diversify through our acquisition strategy
Pioneering listed law firm Gateley is aiming to increase the non-legal services it offers substantially after recording records results.
In the year to 30 April 2019, revenues were up 20% to £104m, the increase split roughly equally between organic and acquisitive growth. Profit after tax increased 10.6% to £13m.
The year was Gateley’s most active for acquisitions, meaning that the deals it has done since listing made up £12.8m or 12.4% of total revenue – compared to £3.3m (3.9%) in the previous 12 months.
Complementary non-legal businesses represented £7m or 6.7% of total revenue.
Chief executive Michael Ward said: “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.”
During the year, Gateley bought Kiddy, a firm of human capital consultants and business psychologists, and inward investment consultancy International Investment Services.
It now employs 44 other professionals, including chartered surveyors, tax consultants, business psychologists and chartered accountants.
The third acquisition was housebuilder specialist law firm GCL Solicitors. In all, Gateley now employs nearly 1,000 people, up more than 20% on the previous year.
Chairman Nigel Payne told investors: “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.”
Mr Ward said that, in the four years since the listing 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.”
The shares opened up slightly on early trading today at 166p. It reached a peak of 195p in June 2017, before falling back to 120p at the start of this year.
Mr Ward – who it emerged last week is set to stand down next April – said a new long-term incentive plan has been introduced to replace the existing stock appreciation rights scheme for partners, “creating greater alignment to the profit performance of the group and clarity over the impact of dilution going forward”.
The initial scheme vested in June 2018, resulting in over a million additional new shares being awarded.
The wider staff share ownership participation “will continue to realise rewards, as our first SAYE and CSOP schemes vest later this year”.
“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,” Mr Ward added.
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