Market announcement / 18 Jan 2023

Half Year Results for the six months ended 31 October 2022

Gateley, the professional services group, is pleased to announce its unaudited results for the six months ended 31 October 2022 (the "Period" or "H1 23"), which show a strong performance as the Company continues to execute its diversification and growth strategy. 

Financial Highlights

  • Strong financial performance with revenue and profit before tax up 22.2% (H1 22: 23.5%) and 9.6% (H1 22: 19.5%) respectively
  • Group organic revenue growth of 9.8% (H1 22: 22.7%)
  • Legal services revenue grew entirely organically by 8.2% (H1 22: 21.9%)
  • Revenue from consultancy services grew substantially, increasing 104.5% to £18.2m (H1 22: £8.9m), of which organic revenue growth was 20.0%
  • Adjusted underlying profit margin decreased to 12.6% (H1 22: 13.7%) as certain operating costs, previously restricted by the pandemic, returned
  • Strong activity levels across the Group with utilisation up 2% to 86% (H1 22: 84%)
  • Ongoing M&A strategy reduces net cash to £1.1m (H1 22: £8.8m)
  • Strong balance sheet and significant headroom in revolving credit facility assisting our growth strategy
  • Proposed interim dividend of 3.3p per share, in line with progressive dividend policy (H1 22: 3.0p)
 

H1 23

H1 22

Change

Revenue

£76.1m

£62.3m

+22.2%

Underlying operating profit before tax

£10.1m

£9.0m

+12.2%

Underlying adjusted profit before tax1

£9.6m

£8.5m

+12.9%

Profit before tax

£8.0m

£7.3m

+9.6%

Profit after tax

£6.4m

£5.9m

+8.5%

Basic earnings per share ("EPS")

5.11p

5.00p

+2.2%

Underlying diluted EPS2

6.15p

5.76p

+6.8%

Net assets

£74.1m

£58.0m

+27.8%

Net cash3

£1.1m

£8.8m

-87.5%

Dividend

3.3p

3.0p

10.0%


1Underlying adjusted profit before tax excludes share-based payment charges, amortisation and exceptional items
2Underlying 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
3Net cash excludes IFRS 16 lease liabilities

Operational and post-Period highlights

  • Ongoing investment in capacity as average fee earner headcount increased to 1,000 in H1 23 (H1 22: 794)
  • Recent acquisitions integrating and performing in-line with expectations
  • Acquisition of Symbiosis, a chartered patent attorney firm specialising in IP services for the life sciences industry completed in October 2022
  • Investment in and on-going adoption of new business management system to support operational efficiencies and enhance management controls and decision making
  • Achieved 13 of the 16 first set of Responsible Business objectives and publication of our second annual Responsible Business Report
  • "One team" business culture continues to be demonstrated through 65% of staff either owning shares or currently participating in option schemes

Current trading and outlook

  • Growing, diversified and resilient business model, combined with a strong H1 23 performance, leaves the Group well-placed to navigate the more challenging economic environment that is beginning to emerge in the second half of the financial year
  • The Group maintains a strong balance sheet to deliver future investment to enhance returns from diverse but complementary workstreams and secure long-term, sustainable growth and results
  • The board proposes 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

Commenting, Rod Waldie, Chief Executive Officer of Gateley, said:

"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. 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.

"I'm proud of the progress that we are making against our 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, 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."

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