Listed law firm Gateley has withheld more than £3m in shareholder payouts to keep hold of cash with activity dented by the Covid-19 pandemic.
The firm said today (24 March) it would cancel its interim dividend of 2.9 pence a share, which was due to be paid at the end of this month, in order to ‘maximise the group’s short-term liquidity’. The total interim dividend due to shareholders, including the firm’s partners, was about £3.4m, up more than 11% on last year.
That dividend was announced following a 12% increase in revenue to £51.8m for the six months to 31 October 2019. It also followed Gateley surpassing £100m in turnover for the first time in the previous financial year, up an impressive 67% from when it became the UK’s first listed law firm in 2015.
In a trading update released to the London Stock Exchange, the firm said that demand had grown in the second half of the year due to improvements in the economic backdrop and Brexit clarity, with trading until the end of February in line with expectations. But as a result of the disruption caused by the coronavirus pandemic, activity has since reduced. Because of the uncertainty, the board said it was ‘presently impossible to predict the group’s likely trading performance in the short term’, and as such suspended financial guidance for the meantime.
Chief executive Michael Ward (pictured) said: ‘We consider these measures to be in the best interests of all our stakeholders. Gateley is a resilient and well-balanced business and our economic and geographically diversified business model is well-placed to withstand difficult economic conditions.’
Gateley had on 6 March announced the acquisition of advisory, dispute resolution and consultancy business The Vinden Partnership for £6.75m, the firm’s ninth post-IPO acquisition. Ward is due to step down as chief executive from 1 May this year, replaced by the firm’s Manchester office head and leader of its national property team, Rod Waldie.
Shares in Gateley have, like the majority of the market, plummeted in the wake of the unfolding Covid- 19 crisis. Its share price has fallen more than 30% from a March high of 195.5p to 122p.
DWF, the largest law firm to list to date, has similarly dropped from 140p to 102p, and high-flier Keystone from 550p to 370p.