REG - Gateley (Holdings) - FY22 Trading Update - Ahead of Expectations

Gateley (Holdings)Announcement

13/06/2022 07:00

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RNS Number : 6048O  Gateley (Holdings) PLC  13 June 2022

13 June 2022

GATELEY (HOLDINGS) PLC

("Gateley" or the "Group")

 

FY22 Trading Update

Strong performance ahead of market expectations

 

The Board of Gateley (AIM: GTLY), the legal and professional services group,
is pleased to announce details of the Group's trading for the year ended 30
April 2022 ("FY22"), ahead of the publication of its audited results, which
will be announced in September 2022, showing strong growth in revenue and
adjusted profit before tax ahead of consensus market expectations(1).

 

Trading at the start of the new financial year is in line with the Board's
expectations, with the Group continuing to meet the challenges of the
well-reported and ongoing inflationary headwinds. The considerable organic and
acquisitive opportunities to develop the Group's Platforms further, combined
with Gateley's diversified and resilient business model, underpin the Board's
confidence in the prospects and the continuing growth of the business in line
with current market expectations.

 

Financial highlights

 

 ●    Revenue increased to not less than £137m (FY21: £121.4m) - up c.13%
 ●    Organic revenue growth of c.10% (FY21 6.5%)
 ●    Consultancy revenue not less than £20m (FY21 £14m) - up c.43%
 ●    Underlying adjusted profit before tax(2) of not less than £21.5m (FY21
      £19.3m) - up c.11%
 ●    Profit before tax ("PBT") of not less than £18m (FY21 £16.3m) - up c.10%
 ●    Adjusted weighted average EPS of not less than c14.10p (FY21 13.17p) - up
      c.7%
 ●    Strong operating cashflow with £16.1m of cash at bank and £10.4m of net cash
      (FY21 net cash £19.6m)
 ●    Net assets of not less than c.£70m (FY21 £59.3m)
 ●    Proposed final ordinary dividend of 5.5p (FY21: 5.0p) taking annual dividend
      to 8.5p (FY21: 7.5p)

 

Strategic highlights

 

 ●    Three earnings-enhancing acquisitions, Tozer Gallagher in July 2021, Adamson
      Jones in January 2022 and Smithers Purslow in April 2022, enhancing the
      Group's core Platforms
 ●    New Revolving Credit Facility of £30m agreed in April 2022, providing
      increased funding flexibility to support the Group's acquisition strategy
 ●    Total headcount at 30 April 2022 of 1,368.  Average number of professional
      staff increased by 3.8% from 770 to 799.

 

 (1)  Consensus market expectations/estimates per FactSet - Revenue £133.5m;
      Adjusted PBT £20.9m
 (2)  Underlying adjusted profit before tax excludes share based payment charges,
      amortisation and exceptional items

 

Business review

 

The Group enjoyed strong activity levels during FY22, with revenue expected to
be not less than £137m. This represents growth of c.13% on the prior year.
 Organic revenue growth from legal service lines was c.9% alongside
exceptional organic growth of c.24% from consultancy service lines, which
including acquisitions made during the year are expected to represent £20m of
fees in FY22.  Following the three acquisitions completed during the year,
which are integrating well, annualised consultancy fees now total c.£32m.

 

Compared to the very strong second half of FY21, activity levels remained
strong across the Corporate Platform, which grew by c.18%, buoyed by the
continuing strength of the UK M&A and Private Equity markets.  The
Property Platform grew by c.15%, enhanced by greater market share and larger
transactions. The People Platform saw a return to significant growth across
both its legal and consultancy service lines, where combined revenue grew by
c.40%.  The Business Services Platform contracted by c.10%, as some long-term
litigation projects stalled alongside new instructions not yet reaching
billing thresholds. This reflects the timing of ongoing and new projects and
the Group remains appropriately staffed for an improved FY23.

 

Underlying adjusted profit before tax(2) is ahead of market expectations(1)
and c.11% ahead of a strong prior year.  This represents an underlying
adjusted PBT margin of c.15.7%, broadly in line with FY21.

 

FY22 saw a return to more familiar recruitment levels as headcount increased
by 100 during the year, together with a further 150 new colleagues joining as
a result of the three completed acquisitions.  After a pause in recruitment
in the initial stages of the Covid 19 pandemic, the market has hardened with
many factors now influencing peoples' decisions.  The Gateley offering
remains differentiated and attractive across a growing range of companies
within the Group.  As the Group continues to expand, it is able to offer
numerous career opportunities across the professional service Platforms, which
are underpinned by a unique identity and strong team culture.

 

Announcement of FY22 Audited Results

 

As previously announced, the Group has delayed the audit process to
accommodate the implementation of a new financial accounting system and
expects to announce its audited results for FY22 in September 2022.

 

The Board is pleased to report that the transfer to the new financial
accounting system is progressing to plan and is on track to complete later
this month.

 

Rod Waldie, Chief Executive Officer of Gateley, said:

 

"We have delivered another year of strong revenue and profit growth and I am
delighted with our overall performance.  Our successful return to recruitment
generated strong organic revenue growth of over 10%, which, allied to the
completion of three exciting acquisitions, is delivering annualised
consultancy revenue of over c.£32m.

 

"I thank our ever-expanding client base for their trust and support throughout
FY22 and for giving us the opportunity to work on high quality mandates.  We
remain committed to our purpose of delivering results that delight our
clients, inspire our people and support our communities.  We have a strong
pipeline of work and leave our financial performance guidance unchanged,
despite the inflationary challenges, as we look forward to continuing to grow
the Group, both organically and via acquisition."

 

Enquiries:

 

 Gateley (Holdings) Plc
 Neil Smith, Finance Director                                      Tel: +44 (0) 121 234 0196
 Nick Smith, Acquisitions Director and Head of Investor Relations  Tel: +44 (0) 20 7653 1665
 Cara Zachariou, Head of Corporate Communications                  Tel: +44 (0) 121 234 0074 Mob: +44 (0) 7703 684 946

 Liberum - Nominated Adviser and Broker

 Richard Lindley/Ben Cryer/Cara Murphy                             Tel: +44 (0) 20 3100 2000

 Belvedere Communications Limited - Financial PR
 Cat Valentine                                                     Mob: +44 (0) 7715 769 078
 Keeley Clarke                                                     Mob: +44 (0) 7967 816 525
 Llew Angus                                                        Mob: +44 (0) 7407 023 147
                                                                   gateleypr@belvederepr.com (mailto:gateleypr@belvederepr.com)

 

 

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