Annual Report & Accounts 2026
13
STRATEGIC REPORT
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses have increased by 18.3% to £15.3m (2026: £12.9m). Staff costs increased by 17.0% to £6.3m (2026: £5.4m), driven by the investment in the additional personnel needed (2026: 81, 2026: 69) to ensure that the services provided to our lawyers remain a differentiating factor, together with pay rises and promotions reflective of the competitive market environment. Other administrative costs (per note 5) increased by 19.3% to £9.0m (2026: £7.5m), most significantly driven by an increased cost in lawyer recruitment fees (up £0.5m year on year) as a number of lawyers with large practices joined this year via recruitment agencies. The other main contributory factors to this increase were the increased investment in IT, costs associated with the brand refresh and the 13.5% increase in the average number of fee earners supported by the business.
FINANCE INCOME AND COSTS
During the first half of this year, we successfully renegotiated with our bank to receive enhanced interest rates on funds held. This, in conjunction with the continued slow pace in the reduction of base rates has meant that we have seen a substantial increase in the net finance income received (2026: £2.4m, 2026: £1.1m).
PBT, ADJUSTED PBT AND PBT MARGINS
Adjusted PBT is calculated as follows:
2026 £
2026 £
Profit before tax
14,671,612
11,684,999
Gain in respect of investment held at fair value
(184,388)
–
Amortisation of intangible assets
–
248,543
Share-based payments
851,320
780,662
Adjusted PBT 15,338,544
12,714,204
Net finance income
2,408,050
1,111,203
Adjusted PBIT
12,930,474
11,603,001
PBT margin 12.7%
12.0%
Adjusted PBIT margin
11.2%
11.9%
Adjusted PBT margin 13.3%
13.0%
The Board consider adjusted PBT and adjusted PBIT to be better measures of performance than PBT or PBIT, as the adjustments made exclude items which are either not a result of the underlying performance of the business (as is the case for the unrealised gain on the investment held at fair value or the amortisation, in the prior years, which arose from the structuring of the 2014 private equity investment in the business) or where the cost represents neither a cash impact to the business, nor is it a reflection of the value received by the recipient (as is the case with share-based payment costs). The decline in the adjusted PBIT margin is, predominantly the result of the lower gross margin, with the full year impact of depreciation of the office fit out causing much of the remainder.
4 Enhanced GM% delivered by central office employed lawyers and those lawyers based on the Isle of Man.
STRATEGIC REPORT
OTHER ADMINISTRATIVE EXPENSES
Other administrative expenses have increased by 18.3% to £15.3m (2026: £12.9m). Staff costs increased by 17.0% to £6.3m (2026: £5.4m), driven by the investment in the additional personnel needed (2026: 81, 2026: 69) to ensure that the services provided to our lawyers remain a differentiating factor, together with pay rises and promotions reflective of the competitive market environment. Other administrative costs (per note 5) increased by 19.3% to £9.0m (2026: £7.5m), most significantly driven by an increased cost in lawyer recruitment fees (up £0.5m year on year) as a number of lawyers with large practices joined this year via recruitment agencies. The other main contributory factors to this increase were the increased investment in IT, costs associated with the brand refresh and the 13.5% increase in the average number of fee earners supported by the business.
FINANCE INCOME AND COSTS
During the first half of this year, we successfully renegotiated with our bank to receive enhanced interest rates on funds held. This, in conjunction with the continued slow pace in the reduction of base rates has meant that we have seen a substantial increase in the net finance income received (2026: £2.4m, 2026: £1.1m).
PBT, ADJUSTED PBT AND PBT MARGINS
Adjusted PBT is calculated as follows:
2026 £
2026 £
Profit before tax
14,671,612
11,684,999
Gain in respect of investment held at fair value
(184,388)
–
Amortisation of intangible assets
–
248,543
Share-based payments
851,320
780,662
Adjusted PBT 15,338,544
12,714,204
Net finance income
2,408,050
1,111,203
Adjusted PBIT
12,930,474
11,603,001
PBT margin 12.7%
12.0%
Adjusted PBIT margin
11.2%
11.9%
Adjusted PBT margin 13.3%
13.0%
The Board consider adjusted PBT and adjusted PBIT to be better measures of performance than PBT or PBIT, as the adjustments made exclude items which are either not a result of the underlying performance of the business (as is the case for the unrealised gain on the investment held at fair value or the amortisation, in the prior years, which arose from the structuring of the 2014 private equity investment in the business) or where the cost represents neither a cash impact to the business, nor is it a reflection of the value received by the recipient (as is the case with share-based payment costs). The decline in the adjusted PBIT margin is, predominantly the result of the lower gross margin, with the full year impact of depreciation of the office fit out causing much of the remainder.
4 Enhanced GM% delivered by central office employed lawyers and those lawyers based on the Isle of Man.