Legal services provider Gateley (LON: GTLY) generated organic growth of 10% and improved profit by 12% in the first half. Trading is getting tougher, but the wide spread of activities will help to insulate against weakness in parts of the group.
In the six months to October 2022, group revenues were 22% ahead at £76.1m, helped by contributions from the new patent activities, while pre-tax profit improved from £8.5m to £9.6m. The dividend has been raised by 10% to 3.3p a share.
Consultancy generates nearly one-quarter of total revenues. Fee rates were raised under some mandates. The people division revenues were flat, but consultancy revenues increased. The contributions from patent business offset the loss of work relating to Ukraine.
Corporate transaction volumes have reduced, but the activity at the lower end of the market remains steady. Property is another area that is holding up, but the market could become tougher.
Liberum has maintained its full year pre-tax profit forecast at £26.1m, up from £21.6m the previous year. At 191p, the shares are trading on less than 12 times prospective 2022-23 earnings and the forecast yield is 5%.
Net cash could be £10m at the end of April 2023. There could be further acquisitions, though.
Gateley has a good track record and the multiple is relatively modest given that record.
