Gateley confident after strong first-half

18th Jan 2023 14:29

(Sharecast News) - Legal and professional services group Gateley reported a "strong performance" in its half-year results on Wednesday, as it executed its diversification and growth strategy.

The AIM-traded firm said revenue and profit before tax rose a respective 22.2% to £76.1m and 9.6% to £8m.

Group organic revenue growth for the six months ended 31 October was 9.8%, down from 22.7% year-on-year, while legal services revenue grew entirely organically by 8.2%, slowing from 21.9%.

The board said revenue from consultancy services grew "substantially", increasing 104.5% to £18.2m, of which organic revenue growth was 20%.

Gateley's adjusted underlying profit margin decreased to 12.6% from 13.7%, as certain operating costs previously restricted by the Covid-19 pandemic returned.

There were "strong" activity levels across the group, with utilisation up 2% to 86%, while the company's ongoing merger and acquisition strategy reduced net cash to £1.1m, from £8.8m a year earlier.

Gateley described a "strong" balance sheet and "significant" headroom in its revolving credit facility, assisting its growth strategy.

The board proposed an interim dividend of 3.3p per share, up from 3p and in line with its progressive dividend policy.

Looking ahead, Gateley said its "growing, diversified and resilient" business model, combined with a strong first half performance, left it well-placed to navigate the "more challenging" economic environment that was emerging in its second half.

The group said it maintained a strong balance sheet to deliver future investment to enhance returns from "diverse but complementary workstreams", and to secure long-term, sustainable growth and results.

"We are delighted to report further growth derived from the increasing diversity of services on our platforms, which now house over 1,000 fee earners," said chief executive officer Rod Waldie.

"Our group revenue and profit grew strongly, increasing by 22.2% and 9.6% respectively, within which revenue from our consultancy services grew, including by acquisition, by 104.5%.

"I thank our clients for the opportunity to work with them on a broad range of important mandates and our people for their hard work and dedication to deliver results."

Waldie said he was "proud" of the progress Gateley was making against its 'responsible business' strategy.

"In particular, supporting our communities is an important part of our purpose as a business and we will further connect our exceptionally talented people with organisations who provide community support in the regions in which we operate, recognising that business is a key engine of change.

"During the period, we saw political and economic instability manifesting in uncertainty and temporary paralysis in a number of sectors.

"This is an ongoing situation and the economy is approaching a fork in the road where in all likelihood there is a wide range of possible outcomes across different sectors."

In the meantime, Rod Waldie said Gateley would continue to invest in its offering and its people, so that the business remained "fully equipped" to deliver as positions settled in its target markets.

"The combined legal and consultancy offering on our platforms remains unique, and the outlook on each of the platforms is positive."

At 1410 GMT, shares in Gateley Holdings were up 1.06% at 191p.

Reporting by Josh White for Sharecast.com.