Market announcement / 12 Jan 2022

Half Year Results for the six months ended 31 October 2021

18 January 2022    

The following amendment has been made to the 'Half Year Results for the six months ended 31 October 2021' announcement released on 12 January 2022 at 07:00 under RNS No 1364Y. 
Aggregate payroll costs in Note 3 for the 12 months to 30 April 2021 should have read as below:

  12 months to
30 April 2021
£’000
 
Wages and salaries 68,020
Social security costs 7,736
Pension costs 1,704
  77,460


All other details remain unchanged. The full amended text is shown below.

Gateley, the legal and professional services group, is pleased to announce its unaudited results for the six months ended 31 October 2021 (the "Period" or "H1 22"), which show strong growth and continued trading momentum placing the Group in a strong position to deliver market expectations for the full year.

Financial Highlights

  • Strong financial performance with revenue and profit before tax up 23.5% and 19.5% respectively
  • Organic growth of 23.0%
  • Revenue from consultancy (non-legal revenue services) grew substantially, increasing 33.9% to £8.3m (H1 21: £6.2m)
  • Trading margins ahead of pre-pandemic levels with adjusted underlying profit margin of 13.7% (H1 20: 13.3%, H1 19: 13.2%)
  • Strong activity levels across the Group with utilisation up 5ppts to 84% (H1 21 79%)
  • Operating costs remain lower than pre-pandemic levels
  • Interim dividend of 3.0p per share, in line with progressive dividend policy (H1 21: 2.5p)
  H1 22 H1 21 Change
Revenue £62.3m £50.5m +23.5%
Underlying operating profit before tax £9.0m £8.1m +10.8%
Underlying adjusted profit before tax 1 £8.5m £7.5m +14.1%
Profit before tax

£7.3m

 £6.1m +19.5%
Profit after tax £5.9m £4.8m +24.7%
Basic earnings per share ("EPS") 5.00p 4.04p +23.7%
Underlying diluted EPS 2 5.76p

4.92p

 +17.1%
Net assets £58.0m £49.7m +16.6%
Net cash 3 £8.8m £9.3m -4.9%
Dividend 3.0p 2.5p 4 +20%


1. Underlying adjusted profit before tax excludes share based payment charges, amortisation and exceptional items - See note 1.2
2. Underlying diluted EPS excludes share based payment charges, amortisation and exceptional items. It also adjusts for the future weighted average number of expected unissued shares from granted but unexercised share option schemes in issue based on a share price at the end of the financial period
3. Net cash/(debt) excludes IFRS 16 lease liabilities
4. Declared as an interim dividend in June 2021

Operational and post-Period highlights

  • M&A strategy recommenced, following a pause resulting from the COVID-19 pandemic, with the acquisitions of:
    • Tozer Gallagher - adding quantity surveyors to our Property Platform; and
    • Adamson Jones - adding patent and trade mark attorneys to our Business Services Platform
  • Average fee earner headcount stable at 794 in H1 22 (H1 21: 785), in line with our FY21 strategic decision to maintain capacity to service returning demand.  Now further enhancing capacity with 75 new roles at all levels mandated for H2 22
  • Platforms established as the growth vectors of the business and our financial reporting is now aligned to these. Each Platform delivering in excess of 20% like-for-like growth in the Period
  • Growth of staff ownership continues to strengthen with 72% of staff either share or option holders

Current trading and outlook

  • Strong trading in H1 22 is expected to continue in H2 22, as demand for our combined legal and consultancy services remains high. H2 22 is also expected to reflect the normal second-half weighting of revenues
  • On track to meet market expectations for the year ending 30 April 2022 ("FY22")
  • The Group's well-diversified and resilient business model, combined with considerable opportunities (both organic and acquisitive) to develop our Platforms further, gives the Board confidence in the continued future growth of the business

Rod Waldie, Chief Executive Officer of Gateley, said:

"I would like to thank all of my colleagues for this excellent performance in H1 22.  We have delivered strong, predominately organic, revenue and profit growth on a like-for-like basis and have returned the Group to pre-pandemic profit margins.

"The aggregation of complementary legal and consultancy services on our four market-facing Platforms of Corporate, Business Services, People and Property continues to differentiate Gateley, strengthen our appeal to clients and enhance our resilience.  Our first segmental reporting on this basis shows strong like-for-like revenue growth in each Platform.

"Our balance sheet remains strong, and we are committed to investing in our Platform strategy, to seize attractive growth opportunities.  Our post period end acquisition of Adamson Jones is very recent evidence of this.  Our acquisition pipeline is strong, and we are actively engaging with opportunities for further growth across each of the Platforms.

"Current levels of activity are expected to continue throughout H2 22.  We are therefore well positioned to deliver market expectations for the full year."

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