Waldie: Opportunities undoubtedly exist
Pioneering listed law firm Gateley expects to continue growing both organically and by acquisition as it emerges from the Covid-19 crisis, it told investors yesterday.
The UK’s first listed law firm announced a 6% increase in revenue to £110m in the year to 30 April, of which 3.5% was organic and 2.5% from the four acquisitions of complementary non-legal businesses it made during the year.
Revenue from these consultancy businesses represented 10% of revenue – up from 6.7% last year – as Gateley diversification strategy took hold.
The firm’s corporate and employment, pensions and benefits businesses saw the biggest revenue increases, of 17% and 23% respectively.
Underlying profit before tax stayed static at £18m.
Chief executive Rod Waldie said: “Opportunities undoubtedly exist to broaden our client offering and platforms further and deliver strong returns to investors.”
The acquisition strategy is primarily focused on consultancy services that supplement the core legal services offering.
It has so far combined its legal and non-legal operations in ‘platforms’ for property and HR clients.
“Ultimately, our business will offer a balanced range of legal and related professional services, which will make us indispensable to our clients, create more opportunity for our people, differentiate us from our competitors and make us more attractive to our investors,” Mr Waldie said.
Gateley recorded a 16% increase in legal and professional staff to 706, with support staff numbers up 15% to 341. The majority of staff now have some form of equity stake in the business.
Certain senior employees and executive directors were initially granted share options in February but these were cancelled in July because of the impact of Covid-19 on achieving the performance conditions attached to them.
Gateley granted new options soon after with new performance conditions. The accounts said: “The number of options granted were allocated to the same employees in the same proportions as the February issue; however, approximately 28% more awards were issued to those employees so as to enhance the incentivisation of these awards during the difficult and challenging economic conditions encountered due to the impact of Covid-19.”
Mr Waldie said the firm has benefitted from cost savings resulting from new ways of working introduced during lockdown, “and we will capitalise on these and other operational gearing potential to improve margins in the longer term, and to strengthen further the resilience of our business”.
To cope with the impact of lockdown, the firm cancelled bonuses and instituted board and staff salary cuts for the first six months of the current financial year of between 15% and 20%. It will return to full salaries from 1 November.
It also deferred £12m of tax payments, furloughed a number of staff, reduced discretionary expenditure, extended its working capital facilities and cancelled the interim and final dividends for the last financial year.
The first three months of the 2020/21 financial years saw activity levels down 9% year on year,
Mr Waldie continued: “The board is confident that the group has more than sufficient resources to withstand the pandemic, to return to prior levels of profitability and to grow from there.
“We fully expect Gateley to emerge from this crisis in a strong position, well placed to capitalise on both organic and acquisition opportunities, as we continue to focus on long term growth that rewards our people and delivers attractive returns to our investors.”
Gateley has almost doubled in size, both in headcount and revenue, since joining AIM in June 2015. It listed at 95p and reached an all-time high of 218p in February before slumping after lockdown. The shares closed yesterday at 125p.
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