AIM-listed law firm Gateley has moved underemployed staff to support counter-cyclical services that are “extremely busy”, it reassured investors yesterday.
In a trading update, the firm said that, despite the impact of Covid-19 in the final two months of its financial year, the audited results to 30 April 2020 should show annual revenues of not less than £108m, a 4.3% increase on the previous year.
It said this was in part because of “the further strengthening and diversification of the group’s service offering” through four acquisitions during the year – most recently property and construction consultancy the Vinden Partnership.
The update said: “The board believes that this solid revenue performance reflects the breadth and depth of the group’s legal and consulting service lines and the resilient revenue streams that they yield.
“Many of the group’s counter-cyclical service lines are presently extremely busy, including restructuring and dispute resolution, and staff from some of our transactional teams, who are less busy, have been redeployed to support this increased activity elsewhere in the group.”
The firm has also instituted “salary sacrifices” across all employees, furloughed a number of staff, cancelled or deferred all discretionary expenditure, and negotiated increased and extended working capital facilities of up to £20m.
In March, Gateley cancelled a dividend pay-out because of the coronavirus.
“The board is confident that the group has adequate resources to withstand the uncertainty created by the pandemic and believes that the business is well placed to benefit from organic and acquisitive growth opportunities as they arise.”
Rod Waldie, who recently took over from Michael Ward as chief executive, said: “The current trading environment is full of uncertainties. With a stable and experienced management team, a resilient and diversified business model and a strong balance sheet, however, we believe that Gateley is well placed to weather the storm that is affecting all businesses.”
Publication of the audited results has been delayed to September “to give the board additional time to assess the short to medium-term impact of the Covid-19 pandemic on the business and enable it to provide the clearest possible guidance to the group’s shareholders on likely future financial performance”.
Gateley’s share price hit a high of 218p in February, but fell to 117.5p in the early weeks of lockdown. It has since recovered somewhat to close yesterday at 148.5p.