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Listed status raises Gateley's profile

London's first listed law firm has been making changes to suit its new image
July 19, 2016

In a crowded legal marketplace, standing out from peers is a bonus. Gateley (GTLY) achieved this by becoming the first full-service law firm to list on the London Stock Exchange. Chief executive Michael Ward says this gives the group greater opportunities to "pitch for business", and these numbers support this positive reading.

IC TIP: Buy at 108p

Management has launched an incentive scheme designed to help retain and recruit new staff. The group has also used its plc status to acquire a business supplying services outside of the realms of traditional legal offering. Gateley Capitus, acquired in April, will provide surveying to supplement the group's property law expertise. Mr Ward hopes this will help attract new clients, and management is continuing to look for similar acquisitions. Organic growth is expected to be enhanced by the recent opening of a new office in Reading.

Operationally, things are continuing to chug along nicely, with adjusted cash profit up 13 per cent to £12.8m. Cash generation in the year was particularly strong, prompting management to propose a full-year dividend of 5.6p, representing around 70 per cent of profit after tax as set out at IPO.

Broker Cantor Fitzgerald expects 2017 adjusted pre-tax profit of £13.2m for the year to April 2017, giving adjusted EPS of 9.8p, up from £11.9m and 9p in FY2016.

 

GATELEY HOLDINGS (GTLY)

ORD PRICE:108pMARKET VALUE:£114m
TOUCH:105-110p12-MONTH HIGH:109pLOW: 95p
DIVIDEND YIELD:5.2%PE RATIO:13
NET ASSET VALUE:12p*NET DEBT:33%^

Year to 30 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201245.32.3nanil
201351.45.1nanil
201454.67.45.4nil
201560.99.87.7nil
201667.111.08.25.6
% change+10+13+11-

Ex-div: 1 Sep

Payment: 28 Sep

*Includes intangible assets of £2.5m, or 2.4p a share

**Adjusted pre-tax profit for 2012 and 2013, pro-forma figures for 2014 and 2015

^Includes £5.1m of loans from legacy partners