Ward: encouraging reception
AIM-listed law firm Gateley is keen to explore acquisitions of further non-legal businesses, it said yesterday as it announced that the revenue in the six months to the end of October was up by almost 19% on the same period last year.
It has also poured millions of shares into an incentive scheme for partners and unveiled plans to introduce a share option plan for middle managers.
Announcing the alternative business structure’s results for the six months ending on 31 October 2016 to the London Stock Exchange, chief executive Michael Ward said integration of surveyors Hamer Associates, purchased in September this year [1], and tax advisory business Capitus, bought in April, was “progressing well”.
In the six weeks of its ownership of Hamer covered by the results, it added £300,000 to Gateley’s revenues and £100,000 to profits.
Mr Ward said the firm’s client base had started to benefit from its “complementary business service lines”.
He went on: “The reception from the marketplace to our enlarged service offering has been encouraging. We continue to explore acquisitions of further businesses providing complementary professional services to enable us to further diversify our income streams going forward.”
Gateley reported that revenue for the six months to October increased by 18.9% to £35.2m, compared to 2015, with profit before tax increasing almost 45% from £2.9m to £4.2m. Total staff numbers at Gateley rose by almost 13% to 701.
“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,” Mr Ward said.
Mr Ward said Gateley would be “looking to enter into new arrangements with another firm in Scotland in the first half of next year”, after receiving notice of termination of its affiliation agreement with HBJ Gateley north of the border. Addleshaw Goddard is merging with HBJ Gateley.
The accounts showed that the firm recently made a significant addition to the stock appreciation rights scheme for partners.
This is a discretionary executive reward plan which allows Gateley to grant conditional share awards or nil-cost options to selected executives at the discretion of the remuneration committee. The awards vest after a three-year period, subject to the achievement of performance measures based on increase in the share price.
Seven million shares were put in the scheme when the firm floated in June 2015, and a further 10.85m shares were added in October. The share price was 120p in October and the exercise price is 139p, meaning that if the price is higher than that at the time of exercise, the partners in the scheme will benefit financially. The 2015 shares were 95p, with an exercise price of 110p.
We reported recently [2] that Gateley had introduced a ‘save as you earn’ share scheme for all staff and Mr Ward said that by the end of 2016 a company share option plan would be in place for middle management too.
Gateley said it would be increasing its interim dividend from 1.89p in October 2015 to 2.2p this year.