Staff miss out on bonuses as listed firm’s pre-tax profits slide

Listed law firm Gateley has hailed another strong trading year, despite a near 40% fall in reported pre-tax profits.

The group pointed to the continuation of an unbroken record of achieving revenue and underlying profit growth during the year ended 30 April, adding this constituted a ‘strong financial performance’.

Revenue rose 18.6% to £162.7m and underling profit – excluding exceptionals – increased 11% to £25m. Group profit before tax fell 39.6% to £16.2m. This steep decline was attributed to a change in accounting policy relating to acquisitions that led to the 2022 results being restated. Basic earnings per share fell by almost 50% to 9.77p. The group’s net assets increased by 4% to £78.1m.

Gateley said its results had delivered on market expectations, amid a challenging economic backdrop, but performance fell below the threshold triggering discretionary staff bonuses.

Gateley said it achieved organic revenue growth despite ‘macro-economic headwinds which created challenging market conditions in the second half of the year’. The group retains ‘significant headroom’ in its banking facilities to enable investment in acquisitions.

Chief executive Rod Waldie said: ‘Looking forward, we are mindful of ongoing macro-uncertainty and it is difficult to predict market conditions for the rest of FY24. However, our diverse and resilient business model, combined with our proven and consistent track record of delivering strong growth across all economic cycles, means that we have entered FY24 with a positive mindset and cautious optimism.’

The group’s total headcount at 30 April was 1,455 (up from 1,368 a year before), with a 6% increase in professional staff from 948 to 1,005.

To support the company’s growth strategy, Gateley has committed to a three-year revolving credit facility of up to £30m to assist with acquisitions.

Gateley was the first commercial law firm to list on the London Stock Exchange when it was admitted to the AIM in 2015. The board’s dividend policy remains to distribute up to 70% of specifically adjusted profit after tax to shareholders. Currently around 65% of staff hold shares or participate in share schemes. The share price was stable today at 153.5p. A year ago Gateley shares were trading at 190p.

Gateley has proposed a full-year dividend of 9.5p (2022 8.5p), a 12% rise.