Gateley (AIM: GTLY), the legal and professional services group, is pleased to announce a trading update ahead of the publication of its audited results for the financial year ended 30 April 2020 ("FY20").
Following a solid trading performance in the first half of the financial year and the further strengthening and diversification of the Group's service offering through the completion of four earnings enhancing acquisitions, the COVID-19 disruption to trading constrained the pace of the Group's growth in the final two months of FY20. Despite this, the Board is pleased to report that revenue for FY20 will be not less than £108.0 million (FY19: £103.5 million).
The Board believes that this solid revenue performance reflects the breadth and depth of the Group's legal and consulting service lines and the resilient revenue streams that they yield. Many of the Group's counter-cyclical service lines are presently extremely busy, including Restructuring and Dispute Resolution, and staff from some of our transactional teams, who are less busy, have been redeployed to support this increased activity elsewhere in the Group.
The Group's audited FY20 results are expected to be announced in September 2020 and a Notice of Results announcement will be issued in due course. This is intentionally later than in previous years to give the Board additional time to assess the short to medium-term impact of the COVID-19 pandemic on the business and enable it to provide the clearest possible guidance to the Group's shareholders on likely future financial performance.
Working capital position
The Board has reviewed the Group's cash position and its operating expenses and has taken swift and decisive action to minimise the financial impact caused by the COVID-19 pandemic. Alongside our careful stewardship of the Group's cash resources and low debt levels, the measures taken so far include salary sacrifices across all employees, the furloughing of a number of staff and the cancellation or deferral of all discretionary expenditure. The Board has also negotiated increased and extended working capital facilities of up to £20 million with the Group's banking partners should such facilities prove to be necessary.
As a result of these actions, the Board is confident that the Group's balance sheet is robust and able to withstand the financial impact of the pandemic and that there are sufficient working capital facilities available to the Group to withstand the financial impact of the COVID-19 pandemic.
The Board will provide an update on future dividend payments to shareholders in the FY20 results announcement.
Gateley has a long history of delivering growth throughout the economic cycle. Swift action has been taken to mitigate the effect of any likely reductions in revenue, in the short to medium term, whilst keeping teams intact and ready to take full advantage of new workstreams as the UK economy moves into and out of recession. The Board is confident that the Group has adequate resources to withstand the uncertainty created by the pandemic and believes that the business is well placed to benefit from organic and acquisitive growth opportunities as they arise.
Rod Waldie, Chief Executive Officer of Gateley, said:
"The wellbeing of our staff remains our highest priority and I am delighted that our people are staying healthy and that the transition to remote working has gone smoothly. Our enforced, sudden move in March to operating the entire business on a remote platform was swiftly and seamlessly executed and this is a testament to the dedication and quality of the Gateley team, who have adjusted to this new way of working very well. I thank all my colleagues for their understanding during these difficult times.
"The current trading environment is full of uncertainties. With a stable and experienced management team, a resilient and diversified business model and a strong balance sheet, however, we believe that Gateley is well placed to weather the storm that is affecting all businesses. We continue to service our clients to the highest standard and expect to emerge, from the COVID-19 pandemic, in a strong position to capitalise on the opportunities to grow the business further which are likely to arise."