Stock exchange: Gateley’s turnover is three times that of 2015
Gateley has marked the 10th anniversary of becoming the first listed law firm in the UK with another year of growth in revenue, which is now three times that of its pre-float level.
The national firm’s turnover went up by 4.1% in the year to 30 April, including 2.8% organic growth, to reach just under £180m.
Gateley floated on 8 June 2015 – revenue had been £61m in the previous financial year.
While headline profit before tax fell 54% to £6.4m, underlying operating profit grew 3.3% in the last 12 months to £21m, with underlying profit before tax 1.2% higher at £23m (£9.8m in 2015).
The firm’s underlying operating profit margin remained steady at 11.7%, although its “key near-term priority” is to get this to 13.5%.
Since listing, Gateley has made 14 acquisitions, of which 11 have been non-legal businesses, and 29% of its revenue now comes from those other professional services.
In April, it announced a new £80m revolving credit facility as it eyes further acquisitions alongside organic growth.
Chief executive Rod Waldie told investors yesterday: “The professional services sector remains fragmented and of increasing interest to private equity backed buyers, which has resulted in a more competitive M&A landscape during FY25.
“However, we continue to see and appraise significant opportunities for further growth on each of our platforms, via selective acquisitions across both legal and consultancy services, aided by the group’s strong balance sheet and recently renewed revolving credit facility of £80m with an accordion option of £20m.”
Gateley operates on four platforms – or divisions – of which property is by far the largest, accounting for more than half of the firm’s turnover. Despite the “challenging” commercial property market, turnover rose by 3.9%, helped by the specialist consultancy practices Gateley owns.
The business services platform recorded the biggest rise in turnover (14%), “underpinned by strong performances in both the legal services complex international dispute resolution team and the patent and trademark attorney businesses”. Corporate saw a rise of 5.3%.
The smallest platform, people, fell by 10% to £17.5m “mainly due to a deliberate significant contraction in our legal services private client team, where we have reduced scale and re-focused on core services to high-net-worth clients”.
Mr Waldie said the key components in the margin improvement push were pricing, WIP (work in progress) management and conversion into fees, and enhanced cross-selling.
“For those parts of the group that record time, our WIP to fees conversion rate was 81% in FY25 (FY24: 82%). Each 1% improvement in conversion generates circa £2m of additional fees and this is therefore a key focus for us in FY26.”
The firm has developed a new metric to help measure the value of cross-sell activity and will be used to incentivise and reward staff.
Mr Waldie said trading to date in the current financial year was in line with market expectations, which were for revenues of £187m and underlying profit before tax of £23.6m.
These reflected “good activity levels as we enter FY26, the resilience across all four platforms and the increasing visibility of our historic growth investments coming through”.
He continued: “This gives us confidence as we move through FY26, however, the board is conscious that macro indicators continue to point to ongoing volatile market conditions, at least in the near term, which we will monitor and adjust for as appropriate…
“Our uniquely diverse business model has proved its designed resilience consistently since its inception in 2015.
“Looking forward, we remain committed to further accelerating our growth both organically and in-organically through appropriately flexed investment in-line with strategy and disciplined active management, all focused upon enhancing returns to our key stakeholders.”
Gateley proposed a final dividend of 6.2p, making 9.5p for the year, the same as in 2024.
In 2015, Gateley had 617 legal and administrative staff; the figure is now 1,571. Nearly two-thirds of its staff either own shares or currently participate in the group’s restricted share awards plan and ‘save as you earn’ scheme.
Gateley’s shares have been slipping over the past three years, down another 10% in 2024 to 139p, but there’s been no obvious reason for this as it has continued to perform well. They closed at 132p yesterday. Gateley listed at 95p a decade ago.
Leave a Comment