Gateley full-year results: Revenue rises, but debt and dividend reset demand attention

Gateley's growth story continues, but the quality is mixed

Gateley has delivered an eleventh consecutive year of revenue growth since its 2015 IPO, with full-year revenue rising 8.2% to a record £194.3 million.

That is a solid top-line result in an uncertain market, particularly as organic revenue growth, which excludes acquisitions, was 6.2%. Contribution also grew faster than revenue, increasing 11.6% to £67.7 million as fee levels improved and activity remained healthy despite a 4.0% reduction in closing fee-earner headcount.

However, investors need to look beyond the revenue record. Adjusted profit before tax and adjusted earnings per share both declined, net debt rose sharply, and the annual dividend was cut by 44.2%.

This is a set of results showing commercial resilience, but also a business that needs to turn revenue growth into better margins and stronger cash generation.

Gateley's FY26 results at a glance

Metric	FY26	FY25	Change
Revenue	£194.3 million	£179.5 million	8.2%
Contribution	£67.7 million	£60.7 million	11.6%
Adjusted operating profit	£21.5 million	£20.9 million	2.7%
Adjusted operating margin	11.1%	11.7%	Down 60 basis points
Adjusted profit before tax	£21.6 million	£23.3 million	Down 7.1%
Adjusted EPS	11.48p	12.77p	Down 10.1%
Statutory profit before tax	£7.7 million	£6.4 million	20.4%
Net debt	£25.3 million	£6.6 million	Up £18.7 million
Total dividend per share	5.3p	9.5p	Down 44.2%

A basis point is one-hundredth of a percentage point, so the 60-basis-point margin decline means adjusted operating margin fell from 11.7% to 11.1%.

Why did adjusted earnings fall?

Adjusted operating profit increased 2.7% to £21.5 million, but this was comfortably behind the rate of revenue growth. The adjusted operating margin consequently narrowed to 11.1%.

Gateley said this reflected targeted investment in administrative support teams and systems, alongside other operating cost increases. Expenses not allocated to its operating Platforms rose by £6.3 million to £40.6 million, including additional support roles, technology spending, insurance premiums and professional fees.

The Group's contribution margin moved in the opposite direction, improving from 33.8% to 34.9%. Contribution means revenue less direct Platform-related costs, including fee-earner employment costs and certain direct operating expenses.

That improvement is encouraging because it suggests better pricing and careful fee-earner management are having an effect. The problem is that higher central and support costs absorbed much of the benefit.

Adjusted profit before tax fell 7.1% to £21.6 million, primarily because net finance income dropped from £2.4 million to £0.2 million. Higher borrowing and lease interest costs were accompanied by lower interest retained from client money balances.

Adjusted earnings per share fell 10.1% to 11.48p.

Statutory profit improved, but there is an important adjustment

Statutory operating profit rose 88.4% to £7.5 million, while statutory profit before tax increased 20.4% to £7.7 million.

This looks considerably stronger than the adjusted performance, largely because adjusting items fell from £16.9 million to £14.0 million. The current year included a £3.0 million gain on bargain purchase connected with the acquisition of Groom Wilkes & Wright.

Adjusted measures exclude items such as acquisition-related costs, acquisition consideration treated as remuneration, reorganisation charges and share-based payments. They can help investors understand underlying trading, but the £14.0 million gap between adjusted and statutory operating profit remains significant.

The balance sheet is now a bigger issue

Net debt increased from £6.6 million to £25.3 million. Gateley's revolving credit facility drawings rose to £33.3 million, compared with £18.7 million a year earlier.

The increase reflected higher working capital, acquisition consideration payments, dividends and purchases of shares through the employee benefit trust.

Cash generated from operations fell to £11.1 million from £13.4 million. Trade receivables rose by £4.8 million, while debtor days edged up from 110 to 111 days. Unbilled revenue increased by £2.6 million to £27.5 million, equivalent to 62 days of pro-forma net revenue, compared with 58 days previously.

Some of this relates to contentious legal work, where the timing of billing and successful outcomes can create lumpier cash flows. Even so, management is right to make collections and working capital efficiency a priority for FY27.

The Group said it retained adequate liquidity and complied with its borrowing covenants under both its base case and downside scenarios.

Dividend cut creates room for debt reduction

The proposed final dividend is 2.0p per share, down from 6.2p. Together with the unchanged 3.3p interim payment, that takes the total FY26 dividend to 5.3p, versus 9.5p last year.

The Board has rebased the policy to distribute up to around 45% of adjusted profits. Its stated goal is a sustainable, fully covered and progressive dividend, while retaining flexibility for investment and other shareholder returns.

For income investors, the immediate reduction is clearly negative. From a financial discipline perspective, however, retaining more cash appears sensible when net debt has increased by £18.7 million and management wants to invest in margin improvement.

Subject to shareholder approval, the final dividend will be paid on 13 November 2026 to shareholders on the register at the close of business on 16 October 2026.

Property and Business Services led the performance

Gateley's largest Platform, Property, grew revenue by 7.9% to £100.6 million. Its contribution increased 18.3% to £35.7 million, with the margin improving from 32.3% to 35.4%.

Business Services was the standout growth area. Revenue rose 23.2% to £34.8 million, including 10.2% organic growth, while contribution increased 48.1% to £12.5 million. The acquired Groom Wilkes & Wright business traded ahead of initial expectations.

Results were weaker elsewhere. Corporate revenue rose 3.3% to £40.4 million, but contribution fell 13.2% as transactional activity faced delays and Gateley continued investing in Dubai. People revenue declined 2.3% to £18.5 million and contribution fell 6.6%.

The diversified model helped offset pressure in corporate transactions and people consultancy, but the differences between Platforms show where management attention is needed.

Margin recovery is the central FY27 test

Trading in the early weeks of FY27 is in line with the Board's expectations, with good activity across all four Platforms.

Gateley continues to target an adjusted operating margin of at least 13.5%, compared with 11.1% in FY26. Its main levers are higher fee levels, tighter pricing discipline, active cost management and returns from earlier investments in areas such as class actions and Dubai.

The Group is rolling out Cosine pricing software and investing in targeted artificial intelligence workflows. A consultation is also underway over the proposed reduction of up to around 40 support roles.

Leadership adds another moving part. Rod Waldie will step down as chief executive on 1 August 2026 for personal, health-related reasons. Martin Pike will become interim chief executive while the search for a permanent successor continues.

What investors should watch next

Gateley enters FY27 with record revenue, better direct contribution margins and several growth investments beginning to mature. Those are genuine positives.

The next phase needs to produce more than revenue growth, though. Investors will want evidence that the 13.5% margin ambition is getting closer, working capital is being converted into cash, and net debt is moving down.

The dividend reset lowers the immediate shareholder payout, but gives Gateley more financial flexibility. Whether that trade-off proves worthwhile will depend on management delivering visible margin and cash-flow progress during FY27.