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(Sharecast News) - Gateley said on Thursday that full-year revenue was set to come in ahead of market expectations, although profit remained in line as transactional activity was affected by weaker client sentiment late in the year.
The AIM-listed professional services group said it expected revenue for the year ended 30 April 2026 to be about 193m, up around 7% on the prior year and ahead of consensus forecasts.
Underlying operating profit was expected to be between 21m and 22m, in line with expectations.
Gateley said the adjusted operating margin was expected to be around 11.1%, down from 11.7% in the prior year, reflecting a change in business mix and higher-than-expected transactional deferment during the fourth quarter.
Net debt, excluding IFRS 16 leases, stood at 25.3m at year-end, compared with 6.6m a year earlier.
The group said the increase reflected the cash-weighted acquisition of Groom Wilkes & Wright, which has traded strongly and ahead of expectations since completion, as well as higher working capital.
The company said that, after a strong start to the year, certain transactional services activity slowed during the second quarter as uncertainty around the UK November Budget caused some clients to pause activity.
Although conditions partly normalised in the second half, recent developments in the Middle East and a worsening medium-term interest rate outlook further weighed on client sentiment.
That led to some transactional timelines being paused or pushed beyond the financial year-end in both the corporate and property platforms.
Gateley said a further feature of the year was strong growth in targeted contentious workstreams, which had led to a build-up of significant contingent unbilled time.
It said those workstreams were attractive from a margin perspective, although revenue and profit recognition remained dependent on successful outcomes.
The group said overall revenue performance was strong, supported by improved utilisation and the diversified nature of the business across its platforms.
Cost actions taken during the year left fee-earner headcount marginally lower than at the start of the period, while average team utilisation improved.
Gateley also continued selective hiring in higher-value areas, including contentious litigation.
Chief executive Rod Waldie said the fourth quarter had seen longer-than-expected transactional cycles due to the macroeconomic backdrop, but added that the group entered the new financial year with good activity levels across transactional and contentious workstreams.
"With the diversified nature of the group's business, strong expertise across excellent teams and numerous growth opportunities, we are well positioned to deliver future, profitable growth," he said.
Gateley said it remained focused on margin improvement, including through systems investments such as its Jylo AI platform, returns from selective hiring, cost control, higher utilisation and operational efficiencies in the 2027 financial year.
The group expected to publish its full-year results in mid-July.
At 1035 BST, shares in Gateley Holdings were down 12.65% at 58p.
Reporting by Josh White for Sharecast.com.
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