Gateley (holdings) Plc · LSE:GTLY
Gateley (holdings) — FY2019 Earnings Presentation
30 slides from Gateley (holdings)'s earnings presentation, July 2019
Slide 1: Preliminary Results Year Ended 30 April 2019
Preliminary Results Year Ended 30 April 2019
Slide 2: Presentation team
Presentation team Michael Ward Neil Smith FCCA Rod Waldie CEO Finance Director Partner • 14 years audit experience with Grant • CEO from 1 May 2020 • Instrumental in the development of Gateley Thornton • Member of the management board since • Joined Gateley in 1987 • Joined Gateley in 2008 2010 • El
Slide 3: Financial highlights
Financial highlights Group revenue Organic revenue Acquired revenue Adjusted fully diluted EPS increased increased increased Adjusted EBITDA PAT H2 19 FY 19 total increased increased dividend increased dividend increased 3
Slide 4: Overview
Overview • Record year with fees of +£103m and profits after tax of £13m • Approaching 1,000 staff, almost doubling since IPO 4 years ago • Record dividend at 8.0p per share and 27.3p in total in the 4 years since IPO (share price at IPO 95p) • Integrated 5 acquisitions since IPO – 3 in FY19 • Acqui
Slide 5: Succession planning
Succession planning • CEO succession – introduction to Rod Waldie • Smooth transition - Shadowing - Joining Plc Board 1 May 2020 - Gradual client work handover - National presence • New 5 year Orderly Market Agreement in progress* • New LTIPs to replace SARs scheme* - Clear dilution impact - Aligned
Slide 6: Financial Review
Financial Review Gateley
Slide 7: Continued strong growth since IPO
Continued strong growth since IPO We have provided investors with: • Continued strong growth in fees, profits and EPS REVENUE (£m) 103.5 • A focused dividend strategy rising at least in line 86.1 with PAT 77.6 67.1 60.9 54.6 In our first four full years, since IPO: FY14 FY15 FY16 FY17 FY18 FY19 • Re
Slide 8: FY19 highlights
FY19 highlights Strong revenue: • Up 20.2% to £103.5m 20% • Legal £96.5m (93.3%) target of FY19 FY 18 GROWTH non-legal • Non-legal £7.0m (6.7%) revenue Revenue £103.5m £86.1m +20.2% Strong trading profit: Adjusted EBITDA £19.1m £16.5m +15.7% • Adjusted EBITDA Up 15.7% to £19.1m Strong cash generatio
Slide 9: Segmental analysis
Segmental analysis Sustainable growth through macro economic resilience due to well balanced service lines 2019 2018 Increase Drivers for growth Banking and financial £17.0m £15.5m 9.7% • Increased bank panel representation increasing across services challenger banks • Restructuring expertise across
Slide 10: Adjusted EBITDA Growth
Adjusted EBITDA Growth Adjusted EBITDA 15.7% up EBITDA BRIDGE (£m) • Average headcount growth 19.8% • 56 organically (7.4%) 9.5 (10.8) • 94 acquired (12.4%) (4.0) • Opex cost increase 7.9 19.1 • £1.5m organic • £2.5m from GCL, Kiddy, International 16.5 Investment Services • Continued investment led
Slide 11: Driving EPS growth and increasing dividend
Driving EPS growth and increasing dividend • PAT up 10.6% • Adjusted fully diluted EPS up 17.8% to 13.15p 13.15 • Dividend up 14.3% - 27.3p (6.83p pa) over 4 years 11.16 - 12.4% CAGR 9.35 8.0 8.98 7.0 • Dividend tracking ahead of PAT 6.6 5.6 • Ex-div Sept 19, payment Oct 19 £m FY19 FY18 Operating pr
Slide 12: Financing and cash flow
Financing and cash flow Cash generation on operating activities • 92.7% (FY18 103.3%) of PAT CASH GENERATION FROM • 106.6% average cash generation rate since OPERATIONS (£m) IPO • FCF used selectively on investing activities 14.3 following acquisitions and capex 12.2 12.1 Net debt as predicted £(3.2
Slide 13: Outlook and Strategy
Outlook and Strategy Gateley
Slide 14: Drivers for growth
Drivers for growth Sustainable Strong acquisition Greater cross-selling: - Recent Gateley/Hamer/Capitus win growth strategy pipeline - Kiddy & Partners success - Geographical leverage - International Investment Services opportunity Continued headcount growth – people want to work for Gateley Target
Slide 15: Sustainable growth strategy
Sustainable growth strategy • As yet no visible Brexit or macro-economic negative impact • Caution amongst law firm managers, however….. • Merger activity continues • 2019 generates more investment in legal-tech development than ever before but transformational “mechanisation” of commercial law rema
Slide 16: Strong acquisition pipeline
Strong acquisition pipeline • In the past twelve months multiple discussions under all five groups • Our focus remains: - Strength of business line fit (cross-selling potential and realistic new channel to market) - Strength of cultural fit (integration and sustainability) - Viability of transaction
Slide 17: Market opportunities
Market opportunities Housebuilding activity “Output continued to rise, and we have now seen an unprecedented 78% increase in housing supply in the past 5 years; unlike the second hand market, new homes sales generally remain robust, despite the wider political and economic uncertainty; and planning
Slide 18: Summary
Summary • 4 years of strong growth since IPO • People attraction/investment continues • Client expansion/penetration continues • Large long term projects remain priority • Further diversification via acquisitions • Planning complete for succession • New Orderly Market Agreement to be finalised 18
Slide 19: Appendices
Appendices 19 Gateley
Slide 20: Orderly Market Agreement
Orderly Market Agreement • Current Lock-In Agreement expires June 2020 • New Orderly Market Agreement to be effective for a 5 year period commencing June 2020 • IPO Partners’ annual sales capped at 10% of shares acquired at IPO • All Partners subject to minimum capital investment so long as employed
Slide 21: LTIPs
LTIPs • Replaces SARs • 3 year vesting period • Hurdle-compounded annual growth rate in Fully Diluted EPS - below 5% growth – 0% of award vests - 5% growth – 25% of award vests - 5-10% growth – straight-line vesting - 10% (and above) – 100% vesting 21
Slide 22: Acquisition activity and cross-selling
Acquisition activity and cross-selling • 5 completed to date typically 50:50 cash and shares • Capitus (acquired April 2016) - £2.9m • Hamer (acquired Sept 2016) - £2m • GCL (acquired May 2018) - £4.15m • Kiddy (acquired July 2018) – £0.9m + up to £2.1m deferred • International Investment Services (
Slide 23: Technology investments
Technology investments • Integration LexisOne – new fully integrated ERP system installation underway • Cross Selling Interaction CRM system installed, new intranet implemented to enhance cross- selling between teams and offices • Take on efficiency Intapp – signed contract to install regulatory sys
Slide 24: People investment
People investment The key to our success Attracting the best talent Our culture is inclusive, it empowers people and builds trust and we have fun along the way. All of which helps drive performance. Our people are straight-talking, collaborative and they are ambitious for success. We had first mover
Slide 25: Attraction of new legal partners
Attraction of new legal partners 18/19 17/18 16/17 15/16 14/15 13/14 12/13 11/12 10/11 Joiners 10* 9 8 13 3 4 2 4 1 Promotions 7 6 3 2 1 3 1 0 0 Leavers (4) (5) (1) (4) (8) (4) (9) (2) (4) Net 19 10 10 11 (4) 3 (6) 2 (3) * Excludes 6 Partners acquired on acquisition of GCL Solicitors 25
Slide 26: Recognition
Recognition Award wins • May 2019: Corporate Law Firm of the Year and Deal of the Year - East Midlands Insider Dealmaker Awards. • April 2019: Young Dealmaker of the Year (Sarah Souter, Reading) – Thames Valley Deal Awards • September 2018: Corporate Law Firm of the Year, International Deal of the Y
Slide 27: Revenue growth through economic downturns
Revenue growth through economic downturns REVENUE (£m) • Revenue growth every 103.5* year since 1986 • Evidence of resilience during 86.1 downward point of past 77.6 economic cycles 67.1 60.9 • 2010 best value transaction – 53.8 Manchester office 50.7 44.9 43.2 • Firepower during a downturn 33.3 29
Slide 28: Net Promoter Score
Net Promoter Score Clients were asked how likely they would be to recommend Gateley to peers and colleagues. Clients were asked to provide a rating on a scale from zero to 10, with zero equating to not being at all likely to recommend through to 10 being very likely to recommend. 5 Detractors NPS +
Slide 29: Financial calendar
Financial calendar Full year results ended AGM FY18 Full year results ended 19 September July 2018 2019 Full year results 30 April 2019 ended July 2019 FY17 July 2017 Final dividend Half year Ex-div results ended 19 September Admission to AIM 31 October 2018 2019 June 2015 January 2019 2015 2016 201
Slide 30: gateleyplc.com
gateleyplc.com