Gateley reports resilient first-half, appoints its next chairman

Professional services group Gateley reported a resilient first-half financial performance on Wednesday, with a 7.6% increase in revenue and a 4.6% rise in underlying profit before tax compared to the first six months of the 2023 financial year.

The AIM-traded firm said it achieved organic growth of 5.1% at the group level in the six months ended 31 October, with legal services revenue experiencing 2.4% organic growth.

Consultancy services contributed significantly, representing 27.6% of total revenue at £22.6m, showing a 13.5% organic growth rate.

However, the underlying profit margin decreased slightly to 12.2% due to investments in future growth, including a 3.5% increase in fee earners, technology improvements, and continued merger and acquisition activities.

Activity levels across the group decreased, with utilisation at 83%, down from 86% in the first half of 2023.

Nevertheless, Gateley said it maintained a strong balance sheet, with net debt of £2.2m at the end of the period.

The board proposed an interim dividend of 3.3p per share, in line with the half-year distribution a year earlier.

In terms of strategic developments, Gateley said it successfully integrated prior-year acquisitions, increased its fee earner headcount to 1,035, and made strategic hires onto its business services platform.

The company continued its merger and acquisition strategy, with the acquisition of Richard Julian and Associates, a chartered surveying practice.

Gateley also said it achieved all 15 responsible business objectives set in its 2022-2023 responsible business report and launched 15 new objectives in its third annual report.

Moreover, the company focussed on aligning stakeholders, with 70% of staff either owning shares or participating in option schemes.

In terms of leadership, Gateley also announced the appointment of David Wilton as chair designate and a non-executive director, effective from 1 February.

It said Wilton, a seasoned finance professional, would bring extensive experience in publicly quoted companies, with previous roles including chief financial officer of Sumo Group and chair of Frontier Developments.

He would also join various committees within the company.

Current chairman Nigel Payne was set to step down at the 2024 annual general meeting, with David Wilton poised to take over leadership.

Gateley said its current trading and outlook reflected ongoing macroeconomic uncertainty and varying activity levels across the group.

While the third quarter had seen subdued activity for some legal services transactional teams, consultancy services were still performing strongly.

The company said it expected full-year results to be broadly in line with market consensus.

“Given macro-economic conditions during the period, I am pleased with the group's resilient first-half performance,” said chief executive officer Rod Waldie.

“This is testament to, firstly, our strong client relationships, sustained by the excellent service delivered by our people and, secondly, our strategy working in practice as we continue to differentiate Gateley and enhance resilience via the aggregation of, and continued investment in, complementary legal and consultancy services on each of our platforms.”

Waldie said Gateley’s second-half outlook reflected its cautious view on the market conditions it was currently experiencing.

“That said, I am confident in the ability of our excellent teams to continue to rise to the challenge for the remainder of this year, and beyond.

“We continue to invest in the business and remain confident and well-positioned to deliver our long-term ambitions.”

At 1417 GMT, shares in Gateley Holdings were down 8.83% at 144.5p.

Reporting by Josh White for Sharecast.com.