Waldie: Cautious confidence
Pioneering listed law firm Gateley produced another strong set of results yesterday, with revenue and profit before tax up 22% and 9.6% respectively in the first half of its current financial year.
The first UK listed firm recorded turnover of £76m and profit of £8m in the six months to 31 October 2022.
Legal services revenue – accounting for £58m of the whole – grew 8.2% entirely organically and was down to two of the firm’s four ‘platforms’, property and corporate.
The people and business services platforms plateaued, with the latter actually contracting a little compared to a year earlier.
“A significant factor here is much reduced activity in our legal services’ complex international recoveries litigation team, which continues to adjust to global events, particularly the war in Ukraine, where it holds a number of paused mandates,” the stock exchange announcement said.
More than half of the overall group growth was fuelled by acquisitions, particularly the £20m deal to buy chartered surveyors Smithers Purslow last April, its largest since listing.
Revenue from Gateley’s increasingly varied consultancy services more than doubled to £18m, of which organic revenue growth was 20%.
At the same time, the adjusted underlying profit margin decreased from 13.7% a year earlier to 12.6% “as certain operating costs, previously restricted by the pandemic, returned”, investors were told. But utilisation grew by two percentage points to 86%.
Since listing in 2015, 10 of the 13 acquisitions Gateley has made were non-legal services businesses; speaking at last year’s Legal Futures Innovation Conference, chief executive Rod Waldie described it as now a law-led professional services business.
The growth meant the firm’s fee-earner count hit 1,000, with a further 431 support staff, both figures up by more than a quarter in a year.
The board proposed an interim dividend of 3.3p per share, “reflecting the stated policy of paying an interim dividend that is one third of the targeted full-year dividend”.
Mr Waldie said: “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, we continue to invest in our offering and in our people so that our business remains fully equipped to deliver as positions settle in our target markets.
“The combined legal and consultancy offering on our platforms remains unique and the outlook on each of the platforms is positive. We look forward to 2023 with a degree of cautious confidence.”
The half-year report also said it looked like the wage inflation “experienced across the global legal industry over the last two years, resulting from strong client demand, looks like it is beginning to settle”.
Our annual analysis of listed legal businesses’ share prices earlier this month showed that Gateley closed 2022 on 175p, having been 231.5p a year earlier.
There was no obvious reason for this fall but it has been on the rise over the last fortnight and closed yesterday on 191p.
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