Gateley (holdings) Share Discussion Threads

[jonwig] 20/7/2016 06:37

IC summarises the results and includes:

Broker Cantor Fitzgerald expects 2017 adjusted pre-tax profit of £13.2m for the year to April 2017, giving adjusted EPS of 9.8p, up from £11.9m and 9p in FY2016.

Conclusion:

Management has confirmed it will continue to return the same proportion of after-tax earnings. With profitability expected to grow, we continue to see the shares as a good income buy.

Last IC view: Buy, 105p, 15 Dec 2015

[jonwig] 19/7/2016 10:00

ganthorpe - yes: their typo and my straight copy.

Get out more? I've been out in the midday sun too often lately.

[ganthorpe] 19/7/2016 09:06

I reckon the total divi for the year adds up to 5.659P not 5.639P but maybe I should get out more.
Nobody bothers to check such boring detailsthese days ?

[penpont] 19/7/2016 06:51

Adjusted eps stated as 8.98p. Would have liked at least a passing comment re Brexit.

[jonwig] 19/7/2016 06:46

tsmith - I was assuming the forecasts were up-to-date and included Capitus - not sure how that is consolidated after just a couple of weeks' contribution.

As I said, I'm not fussed about that.

[jonwig] 19/7/2016 06:26

FY results:



It's possible they were just short of the forecasts in Digital Look of eps 8.95p and div 5.69p - actual numbers 8.18p, 5.639p. That doesn't really trouble me as the outlook statement is pretty confident. Their emphasis on construction and real estate might hold the share back until the outlook gets clearer: dunno.

[speedsgh] 19/5/2016 09:56

Dividend Policy -

"Gateley, (AIM:GTLY) a national commercial law firm, announces that the Board has formalised its dividend policy and is adopting a traditional twice yearly approach, paying in aggregate, up to 70 per cent. of profits after tax."

in today's rns they state EBITDA not less than £12.6m which equates to earnings of c£10m (assuming full tax charge) or EPS 9.47p. If they were to pay the full 70% of EPS, this would indicate DPS 6.6p. However their policy only states "up to 70%" so they have plenty of wriggle room. DPS 5.75p would represent a payout ratio of c60% of earnings based on above figures.

All speculation for now, we will of course find out in due course when they release the finals.

[imranawan] 19/5/2016 09:28

Stocko are forecasting a total dividend of 5.75p for 2016. Given that they paid an interim of 1.895p, I've therefore assumed that the final dividend will be 3.85p. They are expected to grow the dividend by 20% for 2017.

[speedsgh] 19/5/2016 08:40

"The Board expects to recommend a dividend in line with market expectations in the Group's results for the year ended 30 April 2016, which will be announced in July 2016."

What are market expectations? I had 6.30p pencilled in from somewhere but note that Digital Look is showing a consensus DPS of 5.73p for the year ending Apr 2016, rising to 6.83p in the current FY. TIA

[eezymunny] 19/5/2016 08:19

Indeed jonwig. It's hard to be bullish on house prices when they're insane but one wonders if they'll just get more and more insane. As you say it's volumes that matter and they should remain OK given housing shortage etc but in a real meltdown volumes could drop off. We can only guess....

My numbers earlier were bunkum. Sharescope is showing the numbers to Apr 2015 as a forecast for some reason, so I got the year wrong. Apr 2016 revenue was f/c at £64.5m so actuals are coming in 2-3% above forecast rather than 8-9% as I suggested. imranawan's numbers look right.

[jonwig] 19/5/2016 07:53

Eezy - yes, housebuilders' volumes are the key, not house prices themselves. And the government is keen (desperate!) to get more homes built.

[imranawan] 19/5/2016 07:44

Yep PE just under 12 for 2016, and dropping to 11 for 2017, based on EPS estimates (8.95p for 2016 and 9.75 for 2017 according to Stocko). I've held since just after the IPO last spring.

[eezymunny] 19/5/2016 07:24

Yes, looks a good update IMO. Sharescope is showing a revenue forecast of £60.88m so apparently 8-9% above forecast. I reckon P/E c. 12, with a decent balance sheet and yielding 5-6% here, so pretty good value. Need good volumes in the housing market to continue presumably.

I've had a few for the very boring EEZY3 portfolio FWIW.

[jonwig] 19/5/2016 06:56

Trading statement very positive -

Revenue at least £66m (H1 £30m),
EBITDA at least £12.6m (H1 £4.5m).

Second-half bias has been pointed out before, so are these just in-line?

[darryn1] 14/5/2016 06:24

Looking good and I'm anticipating a 7% annual yield here.

[jonwig] 04/5/2016 08:25

81 percent of private practice lawyers say lack of capital to invest back into the firm is a major challenge—an obstacle faced in large part due to the unique capital structure of the partnership-based law firm business model



Of course, a law firm can now go public. And maybe the easiest way to do that would be a reverse takeover of GTLY. Just musing.

[thomasthetank1] 15/4/2016 10:28

Read Arden Partner's note on Gately (GTLY), out this morning, by visiting hxxps://www.research-tree.com/companies/uk/support_services/gateley_holdings_plc …
“Gateley is a national scale legal practice ranked number 45 in the UK 100 by size of law firm (source: The Lawyer, 25 October 2015). Earnings are generated from five operating segments: Banking & Finance, Corporate, Business Services, Employee, Pensions & Benefits and Property… Further to the acquisition of Capitus last week, we have published new forecasts… An FY17 rating of just over 10x is undemanding given anticipated earnings growth in FY16 and the prospect of sustainable trends in FY17 alongside the possibility of further earnings enhancing acquisitions. With no direct peer comparator, the shares possibly exhibit a “first-mover discount”; delivery of double-digit earnings growth for FY16 will, we believe, be a catalyst for a re-rating from current levels and the shares remain particularly attractive for income funds given the 6.7% prospective yield…”

[imranawan] 11/4/2016 06:42

Cheers jonwig. Looks like a nice fit to Gateley's core business, and they also allude to opportunities to cross-sell other services.

[jonwig] 11/4/2016 06:38

I've applied a 20% tax charge to the operating profit.

"net working capital neutral" ... I'm not sure - it may mean that there will be no adjustment of the purchase price between starting and closing the deal even if the wc of Capitus changes in the interval.

[imranawan] 11/4/2016 06:23

I make the acquisition priced at 4.6x earnings jonwig.

I'm a little unclear about when they say the "The acquisition is being made on a net working capital neutral basis."

Does this mean based net working capital of Gateley will be neutral after the acquisition?

[jonwig] 11/4/2016 06:12

Acquisition of Capitus:



Bought, it seems, for 5.7x earnings and - as they said - "earnings enhancing".

[speedsgh] 15/2/2016 12:08

I'd certainly be happy with 6.30p

[jonwig] 15/2/2016 11:17

If they make £11.8m pre-tax (already mentioned a few times) and take a full tax charge (unlikely, I think?) that would be earnings of £9.44m, or 9p/sh. A 6.3p dividend is the sort of figure which has also been mentioned.

It's good to see the share price didn't stay for long down at 96p!