Waldie: Platforms make us more indispensable to clients
Pioneering listed law firm Gateley is to return to the acquisition trail after its growing multi-disciplinary offering contributed to strong annual results.
Meanwhile, DWF – the first law firm to list on the main London Stock Exchange – has pledged to continue using acquisition to fuel its multi-disciplinary growth as well.
Gateley’s revenue for the year to 30 April 2020 grew by 11% to £121m – most came from core legal services (up 5.5% organically) but income from its complementary consultancy businesses grew 27% to £14m. Profit before tax also increased 11% to £16.3m.
Chief executive Ron Waldie said the firm took a “conscious decision” not to make any acquisitions during the financial year, focusing instead on integrating the four acquisitions made in the previous 12 months.
“However, our strong performance during FY21 and our confidence in our strategy to build a broader professional services group means that we now intend to resume acquisition activity to further strengthen and diversify our services.”
Mr Waldie explained that the firm’s strategy of combining legal and consultancy services in dedicated platforms differentiated it from “‘single discipline’ competition”.
“To this point we have successfully established our ‘Property Platform’ and our ‘People Platform’, on which we have previously reported.
“During FY21 we won a significant mandate to our ‘Corporate Platform’ via our international investment services (IIS) business. After a competitive tender process, IIS were appointed project manager and inward investment advisor for Cambridge & Peterborough Combined Authority’s ‘new economic growth programme’, a programme designed to identify and attract 1,000 innovative and high-growth SMEs and 125 new inward investors to the region.
“We have also undertaken significant research across our ‘Business Services Platform’ in preparation for its expansion in FY22.”
Mr Waldie said the platforms made Gateley “more indispensable to our existing clients and more attractive to potential new clients”.
He added that corporate transactional activity returned in the second half of the year “and has since been relentless, as business owners and private equity reassessed the impact of the pandemic and their appetite for deal-making”.
Gateley has reinstated dividend payments on the back of its financial performance, paying 5p on top of the 2.5p interim dividend paid last month.
DWF announced a 12% increase in revenue for the year to 30 April to £401m, with net revenue up 14% to £338m.
But profit before tax of £18m last year turned into a loss of £31m due to “significant, largely non-cash, acquisition and closure/scale back related expenses”; adjusted profit before tax, by contrast, more than doubled to £34m.
Gross profit margin went up three percentage points to 51%, while the firm reduced lock-up by 10% to 186 days.
Chief executive Sir Nigel Knowles said the results reflected a return to pre-Covid activity levels, “but they also evidence the importance of the decisive actions we took throughout the year as we focused on driving greater operational efficiency, profitability and strategic alignment”.
Since 1 May, DWF now operates with three global divisions: legal advisory, connected services and Mindcrest, its managed services arm.
“We believe this is an important step forward in our strategy and will help us to fulfil our vision of becoming the leading global provider of integrated legal and business services,” Sir Nigel said.
“Together, the three divisions will support our integrated legal management approach through which we can seamlessly combine any number of these services to deliver bespoke solutions to our clients with greater efficiency, price certainty and transparency.
“We see it as the next natural step in the development of our modern, global business and it is a cornerstone of the three-year business plan we have developed since my appointment.”
Sir Nigel put M&A activity on hold when he took over last year but that is now at an end.
He said: “We drove a lot of improvements to improve the business in FY2020/21 and now, as we see the external market start to stabilise, I’m pleased to say that we have resumed M&A and in May 2021 we announced the acquisition of two businesses to complement our connected services offering.
“M&A will remain an important element of our growth strategy and I am confident that we will be an active participant in a market that we believe will continue to consolidate.”
The May acquisitions were compliance training business Zing 365 Holdings and BCA Claims & Consulting, a Canadian insurance claims and loss adjusting business.
Separately, a trading update from RBG Holdings plc – which owns London law firms Rosenblatt and, since May, Memery Crystal – said integration of the latter was “progressing well”, even though the pair were retaining their own brand identities.
“Opportunities have been identified to leverage both firms’ skills, resources, and reputation to enhance the group’s offering to its combined client base.
“Looking ahead, the group plans to integrate all support functions, including technology platforms, and implement other changes to deliver further synergies while retaining the client facing brands of ‘Rosenblatt’ for contentious legal services and ‘Memery Crystal’ for non-contentious legal services.”
NAHL plc, which owns National Accident Law (NAL) and co-owns two joint venture alternative business structures, said it expected revenue for the first half of 2021 to be just shy of £20m, 3% down on last year, but with a profit of £600,000, compared to a loss of £400,000 for the same period in 2020.
Its trading update said: “Performance of its personal injury small claims proposition launched on 31 May 2021 has been pleasing, and since then, NAL has processed all RTA enquiries in-house. From 1 July, as planned, NAL has begun to increase the volume of non-RTA claims it processes. This should ensure a higher return from those claims.”
NAHL added that, since announcing in May that it intended to investigate a possible sale of its residential property business, “the board has been encouraged by the level of interest received”.
Meanwhile, Frenkel Topping, whose attempted reverse takeover of NAHL was called off at the start of this year, has sold its 6.1% shareholding in the company to Harwood Capital, whose stake is now 19.4%, making it NAHL’s largest shareholder.
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