Waldie: Gateley benefiting from diverse range of services
Two of the profession’s AIM-listed law firms this week announced positive trading updates, with revenues up by 7% at Gateley and 6% at Knights.
Gateley, the country’s first listed firm, said it expected revenue for the six months to 31 October to hit at least £82m, with underlying profit before tax not less than £10m, a 4% increase.
While performance was in line with board expectations, investors heard that the board “remains mindful of current economic conditions and, therefore, maintains a cautious outlook”.
Gateley maintained a strong balance sheet with low net debt of £3.1m.
Chief executive Rod Waldie said: “Given the economic conditions during the Period, I am pleased with the Group’s performance in H1 24 and improving activity levels as the financial year progresses mean that we are carrying good momentum into H2.
“Whilst the macroeconomic and geopolitical outlook remains uncertain, the group continues to benefit from the resilience created by our strategy of investing in a diverse and complementary range of professional services.
“Our balance sheet provides a strong foundation from which to take a long-term view of potential opportunities to further invest in both legal and consultancy services.”
Knight expects revenue for the same period to top £75m, up 6% on last year, with underlying profit before tax of £12m, a 28% leap, with the margin increasing from 12.6% to 15.3%.
“This performance is supported by a return to low single-digit organic growth in the period, notwithstanding a challenging backdrop in the housing and M&A markets.”
Despite a continued focus on cash collection – with debtor days of 31 and total lock-up 10 days shorter than a year before at 93 – net debt rose from £29m at 30 April to £38m six months later, “after c.£7.5m of acquisition consideration, debt and related costs in the first half”.
But this provided “significant headroom” against the group’s recently increased £70m revolving credit facility.
Knights said recruitment and retention was strong, with 20 senior hires in the half year, compared to nine in the same period last year, and churn of 6%, down from 11%.
In May, the firm acquired St James Law in Newcastle and Baines Wilson in Carlisle.
Chief executive David Beech said: “We continue to execute our strategy successfully, delivering profitable, cash generative growth, while focusing on delivering a premium service.
“Entering the second half, we are encouraged by the group’s strong performance, as we continue to attract high quality, talented professionals, and monitor an attractive and growing pipeline of potential acquisitions for the group.”
Knights also recently announced the appointment of Dave Wilson as non-executive chair to replace Bal Johal, who has held the post since 2012.
Mr Wilson has held senior roles at various companies that have grown rapidly, including deputy chief executive of AIM-listed GB Group, during which time it grew organically and by completing 14 acquisitions, going from a market cap of £14m to £1.8bn.
He is also non-executive chair of AIM-listed media group LBG Media.
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