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The massive impact of sterling’s decline against the euro and the dollar has helped bolster Lovells’ 2008-09 financial results, with the firm posting a rise in revenue of 11 per cent over the past financial year.
Having reported a turnover figure of £479m at the end of the 2007-08 financial year, the 11 per cent rise translates into year-end revenues of £531m.
Just 42 per cent of the firm’s revenues are now generated in the UK, with Continental Europe contributing 43 per cent, the US 5 per cent and the Middle East and Asia 10 per cent.
According to firmwide managing partner David Harris (pictured) the impact of the pound’s decline in the latter half of the financial year was so severe that, if the currency effect was stripped out of the results, the firm’s turnover would have grown by between 1-2 per cent.
“As a business we report in sterling and our results are translated into sterling,” he said. “The majority of our revenues are now non-sterling and the weakening of the pound has distorted our results.
“Given that so much of our business is now coming from outside the UK, our revenue figure has been inflated, but our costs figure has also been inflated.”
That said, Harris added that he is still pleased with the firm’s performance over the past year.
“Give the scale of events since last October onwards I think we’ve had a reasonably good performance,” he said. “If you look at what’s happened in the markets over that period it shows a fairly resilient performance over the business as a whole.”
In addition to the increased costs associated with the currency fluctuations, the firm took the full financial hit of making 79 jobs redundant in the 2008-09 year. Harris said that overall profitability fell by 11 per cent, with a third of that drop attributable to redundancies and other partnership restructuring measures.
After taking home an average of £661,000 last year, the firm’s equity partners will this year receive an average of £585,000. This takes the average profit per equity partner (PEP) figure back below 2006-07 levels, when PEP stood at £599,000. Last year the firm saw PEP rise by 10.5 per cent (15 May 2008).
In terms of practice areas, corporate remains the largest contributor to revenues at 29 per cent, although Harris said that workflow remains at a much lower level than a year ago.