Gateley (holdings) Share Discussion Threads

[tomps2] 07/7/2015 14:40

Video link should be hxxp://www.piworld.co.uk/mello-monday-june-15-2015

[tomps2] 07/7/2015 14:39

Here's Leon Boros talking about GTLY at the recent Mello Monday 15.6.15 hxxp://www.piworld.co.uk/mello-monday-june-15-2015 (Two videos, one panel discussion about investing - and another suggestions of interesting companies for more research).

Interesting my GTLY purchases today at 98.9 coming up as sells ...

[jonwig] 12/6/2015 09:45

Yes, I bought some below mid-price as well.

All ADVFN's algorithm does is guess, as the LSE doesn't stamp deals as B/S.

[paulturner006] 12/6/2015 09:29

Strange, my buy of 979 shows up as sell

[jonwig] 09/6/2015 08:58

Hi darryn.

Yes, strange price action yesterday.
Maybe shaking out some weak holders around 95p-100p is no bad thing; and they can't be insiders, who have a lock-in.

Judging by the profits growth rate in the prospectus, we could be due almost £8m after tax in the year just ended, with a PER of around 12x and a yield between 5.5% and 6%.
We should know within a few weeks.

Another important factor is the quality and commitment of management, which I think are high.

And both Schroders and Miton have taken decent stakes: neither would be sold a pup!

[darryn1] 09/6/2015 08:45

Hi jonwig, I see that Gateley raised £30m from the placing of 31.6m shares, with £5m going to the company and £25m going to the selling shareholders. According to the company 10% of the shares that were placed were acquired by existing clients.

Some people paid as much as 114p after admission yesterday morning. They must be rather disappointed at the fall since then with the current price at 96.5p and slipping.

[jonwig] 08/6/2015 20:10

Boros -

The firm also plans to use the IPO to create a more flexible career structure, aligning its shares with employee goals in a bid to maintain staff retention. The firm's current partners, who are selling the shares, will all move to become salaried employees but will retain 50.1% of the firm's share capital in aggregate. They have also all undertaken not to dispose of any shares for the first year while more senior partners are facing a five-year lock in with claw-back provisions for cash received and retained shares.

[ramridge] 08/6/2015 14:58

Thanks Boros. I bought some this morning @ 102p within my SIPP fund. Rationale being high dividend yield with steady and boring capital growth prospects. Buy and forget basis.

[boros10] 08/6/2015 14:29

The admission document is as good as useless. The risk warnings miss the obvious one - that the interests of the "partners" and shareholders may diverge over time. Also not clear whether part of the remuneration to "partners" will continue to be performance linked. Also, the proforma numbers should include one for EPS. That said I did buy some shares this morning at £1.10, having missed my chance of buying during the IPO process. High cash conversion allows for a high payout ratio and so high dividends - which is reflected in the very high prospective yield. There is also scope to grow earnings. In recent years sales have been growing at over 14% p.a.It should trade on a higher multiple than corporate brokers such as Cenkos as 1) revenues and profits should be less volatile as there is less reliance on performance fees and 2) revenues and profits are less reliant on the performance of the Stock Market. I have since added more at £1.01

[ramridge] 08/6/2015 10:14

hi jonwig -
Yes I see that now. What they haven't done in the admission doc is give good pro format historical data on a plc basis as opposed to partnership basis (and forecasts for YE 2015 & 16). Unless I have missed it.

[jonwig] 08/6/2015 10:05

ramridge re post #4 -

Retained profit is after dividends; that's not the figure used to calculate PER.
Also, it was a partnership, meaning that essentially all the profit was divvied up.

It looks as though H1 (May to Oct) is consistently less profitable that H2 (Nov to Apr).

[jonwig] 08/6/2015 09:53

Boros - so a forward dividend yield of 6.7% and a forward PER of 11x.

I'd have thought law firms would command a higher rating!

I had to pay 109.75p at open, and I see some small selling sent it back. The existing shareholders are locked in for one year, and some key personnel partially for five years.

[ramridge] 08/6/2015 09:37

Hi Boros - have you invested?

[boros10] 08/6/2015 09:29

I have seen the IPO note. Forecasting profit after tax of £10m in y/e 2017 and a dividend of £7m.

[jonwig] 08/6/2015 09:06

ram - hadn't read the prospectus when I first posted: found it later after getting my numbers from the intention to float RNS.

Will come back to you on profits, etc. Seasonality is maybe part of it?

[ramridge] 08/6/2015 08:26

hi jonwig - But the admission doc also says that retained profit was only £1.7m which makes FY14 PE multiple of 58.
Another thing I don't understand is HY14 PBT = 1m and FY14 PBT = 7.6m. Huge imbalance from 1 half to the next. Why?
I'd like to invest but numbers do not make sense to me.

[jonwig] 08/6/2015 07:16

Hi, darryn. Have been interested in this for the past month or so.

From what I can see the MCap of £100m and PBT of £7.6m (last full year) gives a PER of about 16.4x on a normal tax charge. Let's say 15x on current year ended 31 April.
Initial dividend yield about 4.7%.

A bit of enthusiasm at open could see this rise above 120p. I don't know whether I'd want to pay that, but the IPO price does look attractive.

Prospectus:

[darryn1] 31/5/2015 11:37

Schroder and Miton are both investors in the Gateley IPO at an issue price of 95 pence.



Shares will commence trading on Monday 8th June.

[darryn1] 31/5/2015 11:27

Gateley is a leading national commercial law firm that provides legal services in the UK and has a presence in Dubai. The Group has over 380 fee earners including over 340 solicitors and employs over 600 people including administration and support staff across six UK offices in Birmingham, Leeds, Leicester, London, Manchester and Nottingham as well as an office in Dubai. The existing LLP business has 100 partners in its English offices. Gateley is also affiliated with a Scottish practice, HBJ Gateley, which has three offices in Aberdeen, Edinburgh and Glasgow, although this business is independent of Gateley and excluded from the proposed IPO.

Founded in Birmingham in the 19th Century, Gateley provides a comprehensive offering of commercial legal services to over 4,000 corporate and 1,500 private clients. The Group prides itself as a national firm with a strong regional emphasis, providing a high quality, integrated partner-led, client focused service across its five core groups (i) Banking and Financial Services; (ii) Corporate; (iii) Business Services; (iv) Employment and Pensions; and (v) Property.
Gateley has established a strong brand and standing of the business having won numerous awards since 2010. In both 2011 and 2012 the firm was ranked as the leading national firm for service delivery and partner relationships in the Legal Week Client Satisfaction Survey. The independent survey was conducted by Legal Week amongst 1,200 senior in-house legal professionals and across 14 industry sectors as well as the public sector. It was ranked third by deal volume in the UK in the Experian Corpfin Deal Review League 2014 and in the Q1 2015 rankings Gateley is currently retaining its first place position in the Midlands while breaking into the top 10 in the South East for the first time. 94 of the Company's lawyers are ranked as 'Leading Individuals' in the 2015 edition of Chambers (a leading industry directory).

Company Strategy

The Group's strategy is to continue to develop its business by way of organic growth, but also by acquisition.

Organic growth

The UK legal services market continues to exhibit growth and clear opportunities exist for Gateley to grow organically, in particular from:

· The retention of existing partners and fee earners and their commitment to Gateley and opportunities it provides, as demonstrated by the extended five year lock-in arrangements the existing partners have entered into

· Attracting new talent wishing to be a part of a progressive legal services business

· Enhanced cross-selling opportunities afforded by the adoption of an ABS. Whilst legal services will always remain at the heart of the business, the Directors believe there is a compelling logic to adding complementary business services, such as regulatory advice, compliance and professional training, alongside Gateley's existing legal service offerings

· Improving Gateley's bank panel representation and "own account" work for banks

· Extending Gateley's relationships with the UK's leading house builders and in particular in those divisions and regions where Gateley does not currently act for them

· Obtaining instructions from the Pension Protection Fund to act as independent trustee on large schemes with deficits

· Expansion of specialist areas such as regulatory into other geographical areas

· Growing Gateley's corporate teams in each region, in particular Yorkshire and the North West

· Developing Gateley's project litigation offering and taking advantage of the offshore work this generates.

Acquisitive growth

In addition to organic growth, Gateley intends to take advantage of becoming the first law firm to be listed on AIM as well as having an ABS and being at the forefront of anticipated consolidation within the UK legal services sector.

Acquisition growth will be achieved through the acquisition of:

· Legal teams or firms offering niche services, sector specialism or geographic expansion

· Complementary business services businesses (now permitted under the ABS).

A broader set of services will increase the potential for cross-selling to existing clients and represent a stronger sales proposition for potential new clients.

Lock-in and orderly market agreement

All of the selling partners are becoming salaried employees and on Admission will be the holders of Gateley ordinary shares ("Ordinary Shares") in aggregate, representing 50.1 per cent. of the enlarged share capital of Gateley (Holdings) Plc. All have (pursuant to the Cantor Fitzgerald Europe Lock-in Agreement) undertaken to Gateley and Cantor Fitzgerald Europe not to dispose of any interests in Ordinary Shares for a period of 12 months from Admission and for a further 12 months thereafter (limited to certain limited expectations) to deal in their Ordinary Shares only through Cantor Fitzgerald Europe, for so long as they are broker to Gateley, with regard to maintaining an orderly market.

In addition to the Cantor Fitzgerald Europe Lock-in Agreement and to ensure retention of its more senior staff, Gateley has agreed with the locked-in shareholders to enter into enhanced lock-in arrangements. These include five year lock-in arrangements with claw-back provisions for both cash received and Ordinary Shares retained on Admission:

· Cash will be clawed back on the basis of 100 per cent. in the first year, 66 per cent. in the second year and 33 per cent. in the third year if a Locked-in Shareholder is a "Bad Leaver" or "Retiree"

· Ordinary Shares will be clawed back at 100 per cent. discount to market price in the three years from Admission if a locked-in shareholder is a "Bad Leaver" or "Retiree" or at a 75 per cent. discount in the fourth year and a 50 per cent. discount in the fifth year in those circumstances

· Sales of Ordinary Shares by locked-in shareholders who are not "Bad Leavers" or "Retirees" in the first and second years after Admission will not be permitted and thereafter will be restricted to 10 per cent. in any given year subject to a minimum hold

Dividend Policy

The Board intends to adopt a progressive dividend policy to reflect the expectation of future cash flow generation and long-term earnings potential of the Group.

Based on the above expectations, the Directors intend that the Group will pay an interim dividend and a final dividend to be announced at the time of the interim and preliminary results in approximate proportions of one-third and two-thirds, respectively, of the total annual dividend. It is expected that the first dividend payment will be announced with the interim results for the six months ending 31 October 2015.

It is the intention, subject to the availability of distributable reserves and where the cash flow requirements of Gateley mean it is prudent to do so, to pay as dividends up to 70 per cent. of adjusted profits after tax. The Board may however revise the Group's dividend policy from time to time in line with the actual results of the Group.

[darryn1] 31/5/2015 11:22

First law firm to publicly list in the UK.

Gateley (Holdings) plc, a leading national commercial law firm, today announces its intention to launch an initial public offering ("IPO") and application for admission of its ordinary shares to trading on AIM ("Admission"). Cantor Fitzgerald Europe is acting as financial adviser, nominated adviser and broker to Gateley.

Gateley was established in the 19th Century, and has over 380 fee earners across six offices in England and an office in Dubai. Gateley provides high quality, integrated partner-led, client-focussed legal services across five core groups to over 4,000 corporate and 1,500 private clients. These core areas are Banking and Financial Services, Corporate, Business Services, Employment and Pensions and Property. Over the last ten years Gateley has grown its revenue by a compound annual growth rate ("CAGR") of 14.3% and operating profit by 14.8%, with strong cash generation and a typical cash conversion of 95% every year over the last three years supporting both growth aspirations and an attractive dividend policy.

In 2014 Gateley took advantage of changes to the law in England and Wales to adopt an Alternative Business Structure ("ABS") allowing non-lawyers to own and invest in law firms. The Board believes the combination of the new ABS, the transition from an LLP to a PLC and first mover advantage through the proposed AIM listing, will provide a platform to expand and diversify its business