Ashurst’s latest LLP accounts show a spike in capital expenditure and a stark fall in operating profit defined a tough year for the Anglo-Australian firm in 2015/16, in which revenues fell for the second year in a row.
Operating profit dropped to £152m from £193m, a 21% percent decrease and turnover dipped by £28m, bringing the firm’s revenues down 10% to £505m. The drop followed 2014/15’s 4% decrease following its merger with Blake Dawson in 2013.
The firm’s consolidated cash flow statement shows the firm held a net debt of £14m at the end of last year, a swing from 2014/15 when it had net funds of £11m. Meanwhile, referring to a breakdown of bank loans and finance leases, which sit at just below £30m, the accounts state: ‘The terms of the bank loans restrict the group from making significant disposals of assets without the consent of the lender’.
Capital expenditure spiked to £37m in 2015/16, a significant jump on £16m the year previous. The firm pointed to increased investment in premises and IT infrastructure projects as reason for change, such as opening a new Sydney office in July 2016 that cost approximately A$40m (£23m).
Profits per equity partner also fell by 19%, down to £603,000 from £747,000 during the 2015/16 financial year. However, the highest-paid member received £1.09m in 2015/16, a £77,000 increase on the previous financial year. Meanwhile, the average number of members decreased by five on the previous year to 344 with the number of fee-earning staff also dropping by 2% to 1,368. The number of other staff, however, increased by 8% to 1,354. Staff costs fell to £217m from £220m.
Partners at Ashurst voted in favour of a single yearly profit payment in December to replace quarterly distributions after the firm halted quarterly distributions in August following the disappointing financial results.
The changes required a 50% vote to pass and as a result a £1m net increase in capital will be made by the partnership.
Earlier in the year Ashurst partners voted through fundamental changes to its remuneration system in a bid to retain star partners following a wave of exits, including stretching its lockstep and allocating equity share to salaried partners.
For more on the firm, see our LB100 focus ‘Don’t look back in anger: Ashurst leadership tries to rally partners but the drift continues’ (£)