Gateley’s client activity levels improving

Some legal practice areas fared better than others. While the corporate division suffered from a slowdown in deal-making, the ‘employment, pensions and benefits’ business was busy advising clients on furlough arrangements.

Acquisitions helped bolster the top line. Gateley made four purchases during the year, including property and construction specialist The Vinden Partnership for £4.2m. But while the group’s underlying operating profit increased by 4 per cent to £18.7m, the amortisation of acquired intangible assets and share-based payments for previous acquisitions saw statutory operating profit fall by 3 per cent, to £15.4m.

Cash collections from clients were disrupted by the pandemic, although the impact on debtor days was a modest uptick from 100 days to 102 days. Cash generation remained strong and the group produced £11.7m of free cash flow. Benefiting from the deferral of payroll taxes and VAT, net debt (excluding lease liabilities) has come down from £3.2m to just £0.9m. Still, there is no final dividend, which follows the half-year payout being cancelled in March.

Panmure Gordon forecasts adjusted pre-tax profit of £20.6m in 2021 – up from £18.6m in 2020 – rising to £22.9m in 2022.