Waldie: Platform strategy is developing
Rising income from listed law firm Gateley’s non-legal businesses almost made up for the loss in turnover from its core legal work during last year’s first lockdown, its interim results have shown.
In the six months to 31 October 2020, revenue overall dipped 2.6% to £50.5m, but underlying adjusted profit before tax jumped 13% to £7.5m.
Core legal services saw turnover drop 8.9% to £44.3m, but non-legal services almost doubled their income to £6.2m.
Consultancy revenues are anticipated to generate not less than 15% of annual revenue for the full year, compared to 10% of the last financial year.
Gateley has acquired six non-legal businesses since it listed in 2015, most recently property and construction consultancy Vinden Partnership [1] last March.
Finance director Neil Smith said the results bore “testament to our strategy since IPO, being to build sector, discipline and cyclical resilience into our group via diversification into complementary non-legal consultancy”.
Chief executive Rod Waldie added: “Our platform strategy is developing across the group. Legal and consultancy businesses are working closely together to attract new work, in a manner that differentiates Gateley and which is becoming increasingly attractive to clients.
“The acquisition pipeline is positive. Our strategy remains to continue to acquire complementary legal and consultancy services, to expand our diversified business and to reach deeper into our chosen markets, further enhancing the group’s resilience.”
But he said the firm was unlikely to make any acquisitions in the current financial year, even though “significant opportunities continue to arise”.
The results showed that Gateley has also generated significant liquidity, with net cash of £9.3m at the period end, compared to a net debt of £2.1m in the same period in 2019.
Mr Waldie said property work performed well during the six months, despite the pandemic affecting corporate, banking and financial services work.
This was “due to the long-term nature of client projects and buoyant demand in our most active sectors, such as logistics and housebuilding. Given our market leading positions, we see further opportunities in these sectors”.
Since November, he went on, Gateley has seen a “significant increase” in corporate transactions, while the international dispute resolution team has “a strong pipeline of work with particular focus on acting for overseas banks in cross-border asset recoveries”.
The firm is also consolidating and reducing space within a number of office locations and has reconfigured all offices with hot-desking facilities “in anticipation of a more flexible return to office working in the longer term”.
In November, Gateley’s all-staff annual SAYE option scheme attained record subscriptions, with around a third of staff signing up [2].
Mr Waldie said: “I was delighted by this because it followed a six-month period during which all-staff pay cuts were in place. It is a clear demonstration of our peoples’ belief in and commitment to our business.”
So long as trading remained robust for the remainder of the financial year, “the board will be in a position to, and intends to, award bonus payments to staff and make dividend payments to shareholders”, he said.
Gateley’s shares rose 7% to 162p on the back of the results. Our recent analysis [3] of the performance of the listed legal businesses in 2020 showed that it finishing the year on 146p, a 26% fall over the 12 months.