Gateley (GTLY) sustained its earnings momentum in 2019, unveiling a 16 per cent increase in adjusted cash profits to £19m. The law firm continued to invest in fee-earning staff, as average numbers increased by a fifth to 610, with 16 new partner hires. Overall utilisation of staff performing chargeable work held firm at 85 per cent. Such expansion did come at a cost, however, with operating expenses rising by over a fifth to £87.9m.
Acquisitions boosted revenue from core legal services, with the purchase and integration of housebuilder specialist GCL Solicitors (one of three acquisitions made during the period) contributing more than half of the 28.5 per cent surge in property revenue.
Extending its legal services did push trade debtors up by £5.4m, but debtor days remained consistent. Although net debt has increased from £0.7m to £3.2m, cash generated from operations is steady at £15.2m.
House broker FinnCap expects pre-tax profits of £19.5m and EPS of 13.9p in 2020, rising to £20.9m and 14.8p in 2021.
| GATELEY (GTLY) | ||||
| ORD PRICE: | 165p | MARKET VALUE: | £183m | |
| TOUCH: | 163-167p | 12-MONTH HIGH: | 177p | LOW: 120p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 28p* | NET DEBT: | 10% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2015 | 60.9 | 9.8 | 7.7 | nil |
| 2016 | 67.1 | 11.0 | 8.2 | 5.6 |
| 2017 | 77.6 | 13.1 | 9.4 | 6.6 |
| 2018 | 86.1 | 14.6 | 11.0 | 7.0 |
| 2019 | 103 | 15.9 | 11.8 | 8.0 |
| % change | +20 | +9 | +8 | +14 |
| Ex-div: | 19 Sep | |||
| Payment: | TBC mid-Oct | |||
| *Includes intangible assets of £10.6m, or 10p a share | ||||
