Pioneering listed law firm unveils strong results

Ward: continued expansion

Listed law firm Gateley has announced strong results for its last financial year, with revenue up 16% to £78m and profit before tax jumping 19% to £13m, alongside increased equity participation among staff.

Shareholders at the first listed alternative business structure are set to receive a final dividend of 4.4p, on top of 2.2p already received this year, a penny more overall than in 2016.

Gateley’s share price has been rising steeply since last December. Having floated at 95p in June 2015, it was 112p at the end of November, but closed yesterday on 182p.

Adjusting for revenues from Gateley’s two non-legal acquisitions since April 2016, the firm achieved organic revenue growth of 12.7% in the year to 30 April, with the corporate and property departments the main contributors; its employee benefits and pensions department was the only one to record a slight dip in revenue over the year.

Chairman Nigel Payne said he was “not only delighted with the financial performance of the business this year, but also the significant progress we have made from being an LLP to a plc”.

He explained: “This is evidenced in part by the equity participation we now have within the company where staff have continued to build upon their equity interests in the business and by the addition of new external shareholders to our register.”

Three staff share schemes now in place – an all-staff save-as-you-earn share scheme (staff numbers are at a record high of 717); a company share option plan for associates, senior associates, legal directors and their equivalent levels within the support services team; and a stock appreciation rights scheme for partners.

The latter 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.

When it floated, the firm put seven million shares into the scheme, and a further 10.85m shares were added last 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.

The expanding shareholder base followed the sale of former partner shares last October, which increased the proportion of the firm now available in shares from 30% to 34%.

The firm has also strengthened its balance sheet, with net assets increasing from £13m to £17m.

CEO Michael Ward said: “This represents another year of continued expansion for us where we have both grown the business and invested further in it to support our future expansion.

“This has been possible due to the strength of our service offering, the depth of our client relationships and the growth in our teams of skilled professionals.

“Trading in the second half of the financial year ended 30 April 2017 was excellent and we are pleased to report that trading in the first two months of the current financial year has continued well.

“We are confident that our business is well balanced and resilient and we remain focused on delivering another year of growth in our core services, whilst continuing to look for complementary acquisitions.”

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