Listed law firm Gateley hit by £3m ‘pre-Budget inertia’ as profits fall 10.8% despite revenue growth to £94.3m

Listed commercial outfit Gateley today revealed it took a £3m hit from what it called ‘pre-budget inertia’ over the past six months. The firm reported that while group revenue increased by 9.3% to £94.3m in the six months to 31 October, underlying profit before tax fell 10.8% to £9.5m.

In a statement to the London Stock Exchange, the firm said it had been affected by a slowdown in transactional services in the period of uncertainty leading up to last month’s budget. 

Chief executive Rod Waldie said the firm’s organic growth had resulted from focusing on higher value work alongside enhanced conversion-to-fees policy. He added: ‘These strong organic improvements validate our ongoing patient investment in new systems and service lines and underpins our confidence in delivering margin expansion despite the shorter-term impact of pre-budget inertia.’

The dividend was unchanged from last year at 3.3p per share. Shares in Gateley Holdings plc rose by over 4% to 107.5p this morning.

Gateley is one of small number of law firms still trading on the stock market, after the delisting of the likes of DWF and Rosenblatt in recent years. In September, it completed the acquisition of boutique firm Groom Wilkes & Wright for an initial payment of £5.73m. That firm is said to be performing ahead of initial expectations.

Gateley said the professional services sector remains fragmented and it sees ‘significant opportunities’ for further organic growth and selective acquisitions, aided by the group’s undrawn headroom of £49.5m in its credit facility.

The firm reported that ‘deliberate management of churn’ resulted in average fee-earner headcount reducing from 1,081 to 1,062. Redundancy costs rose during the year from £702,000 to almost £1.4m.

Total lock-up increased from 162 to 170 days, mainly as a result of debtor days increasing to 97 from 91 as debt recovery slowed: Gateley said this was a result of client sentiment stemming from the UK economy’s loss of growth momentum in the run-in to the autumn budget.

‘We are carrying good momentum into H2 and expect continuing strong activity across our broad and diverse services which exist on each of our platforms,’ the firm added. ‘We do anticipate a resumption in H2 26 of business-as-usual activity in transactional services as pent-up pipelines unwind, post Budget.’

Debt increased during the first six months of 2025/26 from £19m to £30.2m as a result of extra money spent on acquisitions, service line investments, IT systems and internal employee payments. Net debt is now £19.2m, a change from net cash of £1.2m one year ago.