Profits at all three CMS Cameron McKenna Nabarro Olswang legacy firms fell in the last financial year before their three-way union went live, LLP accounts for each firm reveal.
As the first evidence of the 2016/17 financial performance for Nabarro and Olswang in particular -which did not release their financials in the summer – the accounts also show revenue at Olswang plummeted 14% from £116.47m to £99.96m. The top line was marginally up 1% at Nabarro to £131.14m and up 4% to £273.2m at CMS Cameron McKenna.
Operating profits fell by an eye-catching 76% from £35.24m to £8.36m at Olswang before the tie-up went live on 1 May 2017, while Nabarro saw a more modest decrease from £47.9m to £42.6m and Cameron McKenna from £74.1m to £71.5m.
The accounts also show that legacy Nabarro had a £17.2m deficit in its pension scheme at the end of April 2017, up 41% from £12.2m the previous year. This means the firm’s pension deficit had started to increase again after falling 61% from £31.8m in 2014/15.
Speaking to Legal Business, CMS managing partner Stephen Millar stressed that merger costs played a significant role when when looking at the numbers.
‘These accounts were prepared on a different basis,’ he said. ‘We have merger costs that we knew about and we budgeted for. We wanted to have a fully integrated business on day one. None of this is a surprise and it does not affect what we are doing on a management level.’
He pointed to the fact that the accounts included onerous lease provisions for vacated office space as Olswang and Nabarro teams moved under one roof at CMS’ premises at Cannon Place .
The firms also incurred redundancy costs for staff who were let go as a result of the merger , the write off of furniture and IT equipment no longer required by the combined business and professional fees in preparation of the merger.
While the accounts for Olswang show costs of £8.6m for onerous lease provisions and £8.8m of fixed-asset impairments, the documents do not specify other exceptional costs costs at the three firms.
Millar also pointed to the fact that Olswang’s accounts could not be assessed on a like-for-like basis because the firm had a ‘quite discontinuous operation’ in the months leading up to the merger. Olswang lost several teams across Europe before the merger went live.
Millar concluded: ‘These are good, profitable businesses performing as we anticipated.’
For more on the CMS Cameron McKenna Nabarro Olswang merger in 2017, read ‘Sale of the century – Has Camerons picked up a bargain with Olswang and Nabarro?’