Audited Preliminary Results 2020
Gateley , the legal and professional services group, is pleased to announce its audited preliminary results for the year ended 30 April 2020, which show a strong and resilient performance in a year of macro-economic uncertainty, caused by Brexit negotiations, a General Election and the COVID-19 pandemic.
Rod Waldie, CEO of Gateley, said:
"We are delighted with the performance of the Group for the Year and that the business has continued to trade profitably and remain cash positive throughout the new financial year. This would not have been possible without the commitment, dedication and understanding of all of our colleagues, whose wellbeing remains our highest priority.
"In FY20 we continued to invest in the growth of the Group through strategic headcount increases and four diversification acquisitions. 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.
"As a people business with a cost structure aligned to forecast revenue, and with little time before the end of the year for cost mitigation measures to take effect, this reduction in revenue, during our critical Q4, immediately impacted our profitability. We took swift action to mitigate this, whilst taking great care to protect the long-term growth prospects of the Group, which are of utmost importance to all our stakeholders. We believe that it is crucial to the sustainability and future success of our business that we maintain capability and capacity, even if this impacts our profitability in the short term.
"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.
"On a gradually improved trajectory, year to date activity levels are circa 7% down on the previous year. The Group has traded profitably and cash positive throughout the new financial year."
Financial Highlights
| Â | FY20 | FY19 | Change |
|---|---|---|---|
| Revenue | £109.8m | £103.5m | +6.1% |
| Underlying operating profit before tax* | £18.7m | £18.0m | +3.9% |
| Underlying profit before tax* | £18.1m | £18.1m | -% |
| Profit before tax | £14.8m | £15.9m | -6.9% |
| Profit after tax | £11.7m | £13.0m | -10.0% |
| Underlying basic earnings per share ('EPS') | 10.34p | 11.83p | -12.6% |
| Adjusted fully diluted EPS** | 12.45p | 13.15p | -5.3% |
| Net assets | £44.8m | £30.6m | +46.4% |
| Net debt*** | £0.9m | £3.2m | -71.9% |
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* Underlying profit before tax and underlying operating profit before tax excludes share based payment charges, amortisation and exceptional items
** Adjusted fully diluted EPS excludes share based payment charges, amortisation and exceptional items. It also adjusts for the future weighted average number of expected unissued shares from granted but unexercised share option schemes in issue based on a share price at the end of the financial year
*** Net debt excludes IFRS 16 liabilities
COVID-19 Impact Update
- Swift action taken to enable the Group to continue trading profitably through the pandemic with ample financial liquidity
- Group benefitting from cost savings, as a result of new ways of working
Operational Highlights
- Further strategic diversification of the Group's service offering, through acquisitions of Persona Associates, t-three, Gateley Tweed and Gateley Vinden
- Successful and seamless move to home-working, testament to ongoing investment in technology and systems to support the Group's growth ambitions
- New five-year Orderly Market Agreement in place and new Long-Term Incentive Plan introduced
Current Trading and Outlook
- Group trading profitably and cash positive in Q1 of the new financial year ending 30 April 2021 ("FY21")
- Q1 FY21 activity levels down approximately 9% year-on-year
- FY21 activity levels down 7% at the end of August 2020 year-on-year
- Operational gearing opportunities, resulting from new ways of working, being explored further
- Strong balance sheet, disciplined working capital management and conservative levels of debt
- Diversified and resilient business model supporting the Board's confidence in the future performance of the business
- The current macro-economic outlook remains, however, too uncertain for the Board to be prescriptive on FY21 outlook at this stage
Rod Waldie, continued:
"Gateley is a resilient, diversified business that has a demonstrable track record of growth, delivered through numerous economic cycles. The business has a strong management team, a collegiate culture and a clear strategy to expand the breadth and depth of its service lines, via our "Platforms", which are sector focused and bring together our increasing range of complementary legal and consultancy services.
"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.
"We embrace the future with confidence."
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