Shoosmiths’ debt levels rise as Charles Russell, Flint Bishop and MMS reduce borrowings, LLPs show

Shoosmiths paid £1.5m in cash for Scottish firm Archibald Campbell & Harley, the firm’s inaugural LLP accounts have revealed.

The acquisition saw Shoosmiths acquire £1.77m of net assets when it merged with Archibald Campbell on 1 October 2012 (21 June 2012), of which £1.47m was paid as a cash consideration. The outstanding £300,000 was accrued by the end of the financial year.

Shoosmiths incorporated as an LLP on 4 May 2012 and the business of the firm’s general partnership was transferred to the LLP on 6 August that year, making its 2012/13 LLP accounts the first set filed with Companies House. The audited accounts show a 3.4 per cent increase in turnover between 2011/12 and 2012/13, from £84m to £86.9m, but a 11.2 per cent drop in net profit, from £12.5m to £11m – greater than that originally reported by the firm (9 July 2013).

As a result the amount distributed to the highest-paid partner at the firm also dropped, from £375,000 in 2011/12 to £281,000 last year – a 25 per cent fall. Shoosmiths also saw a rise in its borrowings, with bank loans increasing from £6.5m in 2011/12 to £7.7m last year and other loans increasing from £1.7m to £2.6m.

However the firm was alone among the latest batch of LLPs to have filed accounts to have increased its borrowings. Charles Russell, Derby firm Flint Bishop and Scottish firm Maclay Murray & Spens all reduced their bank debt in 2012/13.

Maclays’ reduction in borrowings came despite a tough year in which turnover and profit both fell. Revenue dropped from £46.7m in 2011/12 to £40.8m last year, a 12.6 per cent drop, with profit down 21.8 per cent from £13.3m to £10.4m. The firm reported a reduction in headcount of 33 fee-earners and staff and staff costs were cut by 7.2 per cent, from £18m to £16.7m.

The average remuneration per LLP member fell from £233,000 to £190,000 last year, with a fall of 26.4 per cent in the amount paid to the highest-earning partner. That person took home £292,000, compared to £397,000 the previous year.

The August 2012 management buyout of employment and health and safety firm Law at Work (17 August 2012) brought in £252,000 for the firm. Maclays reduced its bank loans from just under £2m in 2011/12 to £1.3m last year.

Charles Russell continues to pay off a term loan of £11m taken out in 2009 to pay for the fit-out of its Fleet Street offices, and outstanding borrowings last year were down to £6.6m, according to the firm’s LLP accounts. The firm also said it had a £5m overdraft facility which it did not use last year owing to positive bank balances.

Turnover and profit both rose marginally, but the amount due to the highest-paid partner rocketed from £366,000 in 2011/12 to £600,000 last year. Chief operating officer Andy Staite said the rise was due to a one-off retirement arrangement.

Flint Bishop also reported an increase in turnover and profit. The former rose form £9m to £10.7m and the latter from £1.2m to £1.4m between 2011/12 and 2012/13. An increase in headcount of 19 lawyers and staff, from 177 people to 196 people was accompanied by an increase in staff costs of 10.9 per cent from £4.6m to £5.1m.

The average members’ remuneration during the year, of £264,000, is the same as the amount of profit due to the highest-paid LLP member. The figure rose from £209,000 the previous year. Although Flint Bishop had 21 partners last year, only five were members of the LLP.

In 2011/12 Flint Bishop reported bank loans and overdrafts of £345,000 but this had reduced to nil last year and the firm ended the year with £209,000 cash in the bank.