Two of the few remaining listed law firms have shone a positive light on public ownership, with each reporting half-year profits.
Floating on the London Stock Exchange has been fraught with difficulties for legal businesses, with Rosenblatt owner RBG Holdings going through boardroom upheaval and DWF withdrawing altogether.
But Gateley and Knights both accentuated the positives when their results were announced this week for the six months ending 31 October.
Professional services group Gateley reported that underlying adjusted profit before tax increased by 6% to £10.6m, based on group revenue rising by 5.3% to £86.3m. The group’s profit before tax fell by almost 55% to £3.3m, largely due to the £3.6m spent acquiring chartered quantity surveyor RJA for £3.6m during the period.
The company proposed an interim dividend of 3.3p per share – the same as paid out the previous year. Shares in Gateley (Holdings) rose marginally today to 131.5p. While the Gateley group is still dominated by its legal division, almost 30% of revenue now comes through other professional services. The company said its diversity had been the ‘cornerstone’ of its year-on-year growth since listing in 2015.
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Chief executive Rod Waldie said: ‘The group continues to benefit from the resilience created by our strategy of investing in a diverse and complementary range of professional services. We are pleased that our more recent organic investments are beginning to generate positive returns alongside the strong performance from our recently acquired businesses. Our balance sheet provides a strong foundation from which to take a long-term view of potential opportunities to further invest in both legal and consultancy services.’
The average fee earner headcount increased by 4.4% to 1,081 in the first half of last year, with 10 new legal services partners hired during the period.
Meanwhile, national firm Knights, which listed in 2018, has confirmed in its half-year results that reported profit before tax increased by 30.4% to £9m on the back on revenue up 5.4% to £79.4m.
The Gazette reported last year that net debt had surged past £50m, and the company confirmed this was largely the result of spending £8.9m on initial and deferred acquisition costs. The half-year results confirm that in November, Knights extended its existing revolving credit facility with HSBC UK, AIB (GB) and NatWest to provide total committed funding of £100m until November 2027.
Kate Lewis, chief financial officer, added: ‘With these extended facilities the group is in a strong financial position with sufficient headroom and flexibility within our financing arrangements to enable us to continue to execute our growth strategy.’
The Knights board declared an interim dividend of 1.76p per share, up from 1.61p in the first half of the previous year. Shares in Knights Group Holdings remained unchanged at 121p.
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