Legal and professional services firm Gateley (GTLY:AIM) delivers a strong set of results for the year to 30 April, as outlined in its pre-close trading update, and reports a solid start to the new financial year.
Revenues were up 20% to £103.5m, a new record, while profit before tax grew by 9% to £15.9m. Fully diluted earnings per share (EPS) were 13.15p, up 17.8%, while dividends for the year have been raised by 14% to 8p or just over 60% of net profits, in line with guidance.
As well as healthy organic growth from new clients and new fee-earning hires, Gateley has made three acquisitions during the course of the year which have all contributed to its results.
The most significant of these looks to be Kiddy, the ‘human capital’ consulting business which it bought in July last year and which has contributed considerably more than originally forecast.
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Staff numbers grew by almost 20% last year to 907 as the firm increased the breadth and scale of the services it offers. The majority of staff have some form of equity stake in the business.
As the firm grows so it is attracting bigger clients and bigger workloads. The sectors which have been the major drivers in the last year are property, banking and financial services, and employee pensions and benefits, the latter helped by the inclusion of Kiddy.
A pick-up in insolvency work, including Jamie’s Restaurants and Patisserie Valerie, has led to an increase in working capital and net debt but this is expected to normalise during the course of this financial year.
The group continues to generate strong cash flows and has a robust balance sheet with net debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) of just 0.2 times.
The shares trade sideways at 165p following the results, valuing the business at £180m.
