Wragge Lawrence Graham & Co’s 2014 move to new offices on Birmingham’s Snowhill and investment in London prompted the firm to take out £8.8m in new bank loans in the 2014/15 financial year, LLP accounts have revealed.
The first set of accounts for the merged firm since the 1 May 2014 tie-up between Wragge & Co and Lawrence Graham show it took out two unsecured term loans of £5.5m and £10m in the last financial year. Of those, £11.3m was due within the year with the balance due over a longer period.
That increase was offset against £6.75m in unsecured loans held by legacy Lawrence Graham, mostly due after one year.
Director of finance Paul Phayer said: “Our limited borrowing has been specifically to finance long-term investments in new premises including Snow Hill in Birmingham and More London.”
The increase in borrowings meant the firm moved from a position where legacy Wragges ended 2013/14 with £12.1m net cash to a net debt balance of £965,000 at the end of the last financial year. Cashflow improved by £2.5m during the course of 2014/15, leaving Wragge Lawrence Graham with £14.6m cash in the bank and in hand at the end of the year.
The merger with Lawrence Graham cost Wragges £19.9m in tangible and fixed assets, with Lawrence Graham members receiving equivalent interests in the combined LLP.
The accounts also show that Lawrence Graham partners introduced £10.5m in partner capital when the acquisition took place. Another £9.8m in loans and other debts due to members was introduced on the acquisition, meaning that total members’ interests increased from £40.4m for legacy Wragges at the end of 2013/14, to £63.1m last year.
The highest-paid LLP member of the combined firm received £736,000 last year, a decrease of almost 24 per cent compared to the £967,000 received by the highest-paid partner at legacy Wragges this previous year.
Meanwhile the average profit share per LLP member dropped 10.4 per cent, from £386,000 to £346,000.
The merger meant that Wragge Lawrence Graham’s turnover rose by 50 per cent, from £121.2m to £181m. Lawrence Graham’s turnover in 2013/14 was £50.7m, meaning underlying growth for the combined firm was 5.3 per cent.
Net profit rose from £42.6m for legacy Wragges to £55.4m. However the accounts show that legacy Lawrence Graham produced profit of £17.9m, meaning there was a drop in combined profitability of £5.1m or 8.5 per cent.
Operating costs rose from £78m at legacy Wragges and £32.6m at legacy Lawrence Graham to £124.7m for the combined firm. That included £62.6m in staff costs.