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Addleshaw Goddard has stormed through the £300,000 average profits per equity partner (PEP) barrier in its first full year as a merged firm.
Last year, the firm reported a combined PEP figure of £266,000, based on £268,000 at Theodore Goddard and £255,000 at Addleshaw Booth & Co. This year average PEP stands at £321,000.
The profits figure does not include any element for accelerated revenue recognition, an issue all firms are wrestling with in reporting figures since last November’s introduction of application note G to FRS5. Addleshaws managing partner Mark Jones said that the figure was also calculated after capital expenditure depreciation and investment and was pre-merger costs. Last year, Addleshaws saved around £2m through back-office headcount reductions alone.
The 21 per cent rise was not matched by revenues, which were just 3 per cent up compared with last year, to £125.2m. The combined turnover of the two firms at the time of the merger on 1 May 2003 was £130m, but that included the fee income from the bulk conveyancing arm Enact, which was sold off in July 2003. The 2002-03 reported turnover was £122m.
Despite the sluggish revenues growth, Jones said that he was pleased with the financial performance, not least in relation to the firm’s borrowings. “On 30 April 2003 we had total borrowings of £11.2m,” he said. “The budget target reduction was to £5.5m, but we actually achieved £1.8m, a first-year reduction of £10m. We also paid out all of the partners’ quarterly profits draws, although we split the February draw into two – 28 February and 31 March – to incentivise year-end billings. It worked.”