Profits down at Gateley but recent confidence is up
Gateley is seeing a “gradually improved trajectory” in activity levels as the law firm looks to improve its margins after implementing cost savings across the group.
It said it is currently operating about 7% below last year, but has “traded profitably and cash positive” in the first five months of its financial year.
Rod Waldie, who had been the senior partner in Manchester and became chief executive in May, said: “The group is benefitting 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.”
The Birmingham-headquartered firm employs 1,100 people in its offices around the UK, including Manchester, Leeds, Leicester and Nottingham, and Dubai.
It has published its financial results for the year to April, which showed a 6% increase in revenue, to £109.8m, but a 7% fall in pre-tax profits, to £14.8m.
Waldie said: “The group performed well and in line with market expectations until Covid-19 impacted at the end of February 2020. When country-wide restrictions were introduced in early March, many of the Group’s mandates were put on hold and, like most businesses, we experienced an unexpected and sudden reduction in revenue.”
This left “little time before the end of the year for cost mitigation measures”, he said, which impacted on the group’s profitability.
The professional services group made four acquisitions – Persona Associates, t-three, Gateley Tweed and Gateley Vinden – during the year to further diversify its offer.
The deals maintained its strategic momentum, having added GCL Solicitors and two non-legal consultancy businesses Kiddy & Partners and International Investment Services in the previous year.
Gateley was the first law firm to go public, listing in 2015. Its share price has struggled since February, when it peaked at 222p, falling by nearly half during lockdown. Despite a couple of short-lived recoveries, it closed last night at 126p, valuing the group at £150m.
But it remains confident of its resilience and its prospects.
Waldie added: “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.”