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27 November 2020

Gateley poised to defy pandemic pains with resilient first half financial results

AIM-listed firm says six-month revenue to the end of October will be roughly in line with 2019

By Ben Edwards

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AIM-listed UK law firm Gateley said it expects its revenue for the six months to the end of October to be broadly in line with last year, underscoring its resilience amid the coronavirus pandemic, according to a trading update.

The firm said it has generated revenue of at least £50m during the period, compared with just under £52m during the same period in 2019. It added that activity levels and revenue generation have continued to improve throughout the period, with September and October posting stronger performance than last year. The trading update comes ahead of the firm’s half-year results due to be released in January.

The firm said that cost-reduction measures taken at the start of the pandemic means that it is on course to post adjusted profit before tax of at least £7m for the period, up from £6.6m for the same period last year. It added that it has significant liquidity on hand, with a net cash position of almost £10m.

Rod Waldie, Gateley’s chief executive officer, said: “The group is successfully leveraging its breadth of diversified service lines that are increasingly important to our clients. Our revenue pipeline continues to strengthen and this, combined with the many operational efficiencies and cost reduction measures that we have introduced in 2020, leads me to be confident that despite the circumstances, the group is well positioned to deliver to all of its stakeholders a strong performance for the financial year.”

The firm is optimistic about the second half of the financial year, though it remains cautious about the path of the pandemic and the added uncertainty around Brexit.

Earlier this week, investment bank Liberum published a report looking at the UK legal industry, which recommended Gateley as its top stock market tip of all listed UK firms that it covers given that Gateley is expected to add further acquisitions of specialist businesses to build on strong growth and existing market leadership positions.

Liberum said: “The business has averaged organic growth of 9% over the last four years, has the second highest margins, the best cash flow, the second best lock up days, the highest average revenue per fee earner, but is trading on one of the lowest multiples.”

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