Ashurst PEP falls 9 per cent as top of equity slumps below £1m

Ashurst has posted a 9 per cent drop in average profit per equity partner (PEP) for the 2012/13 financial year alongside a roughly flat global revenue figure.

Overall turnover for the year to 30 April was £323m, up by 0.3 per cent on the £322m figure for 2011/12.

James Collis
James Collis

PEP has fallen from £744,000 in 2011/12 to £680,000, while the value of each equity point has dropped 7.3 per cent from roughly £16,200 to £15,000.

This means equity partners’ earnings range from £375,000 at the bottom to £975,000 at the top, compared with £405,000 to £1,052,000 in 2011/12, with top of equity falling below the £1m mark for the first time since 2009/10 after breaking the seven-digit barrier in 2010/11 (7 July 2011).

Roughly 22 partners are on the 65-point super-plateau at the top of equity, with the modified lockstep starting at 25 equity points.

PEP dropped more sharply than the value of each point as the equity partnership has become younger, with more partners occupying the lower levels and six removed from the 65 peak (7 May 2013).

The firm’s net profit fell 6 per cent from £112m to £105m.

Last year’s results saw revenue rise 6 per cent and PEP creep up 3 per cent (4 July 2012).

Ashurst said the energy, transport and infrastructure and finance practices had been strong contributors, with the UK as a whole performing well, but finance director Nigel Morland said business on Continental Europe had been tough.

“In the circumstances, the Eurozone offices have actually done well – it’s pretty tough out there,” he commented.

Meanwhile, Morland said PEP was affected by expansion costs, which are shared between the UK LLP and Ashurst Australia.

Average full-time equivalent equity partner numbers across the year stood at 155, compared with 154 in 2011/12, while total partner numbers were up 7.5 per cent from 225 to 242.

Morland added: “The number of equity partners is essentially flat. A big factor is the investment we’ve been making in Asia. We shared in the cost with Australia – we expanded in Hong Kong and have seen increases in investment in a number of jurisdictions. We’ve also opened in Saudi Arabia.”

The cost of setting up an association in Jeddah (12 November 2012) was born entirely by the UK LLP, while the Beijing opening (20 March 2013) and Hong Kong expansion were shared by the two firms.

Efficiency moves such as Ashurst’s high-profile launch of a low-cost base in Glasgow for support staff and legal analysts later this year are part of an attempt to reverse the profitability slump next year (12 June 2013).

2012/13 results were not significantly affected by fluctuation in the value of the euro, with the firm’s 6 per cent revenue drop for the first half of the year partly due to the weakening of the euro (23 November 2012), but this balanced out over the second half.

The like-for-like figures exclude Ashurst Australia, the legacy Blake Dawson arm that will merge financially with the UK LLP later this year or early next year subject a vote in October (28 June 2013). The Australian business’s financial year runs to the end of June.

Managing partner James Collis said in a statement: “Market conditions remain challenging and this has inevitably impacted activity levels. That said, we are pleased to have achieved slightly better revenue than last year. The year was characterised by a difficult first half, a better second half and a strong last quarter. It’s encouraging to see continued strong performance in the beginning of the new financial year.

“In the last year, our non-UK revenue accounted for 41 per cent of the total. We have seen a notable improvement in performance in the last year in Asia, Middle East and the US. In the UK, activity in energy, transport and infrastructure and finance has been particularly robust. That said, market conditions in Continental Europe have continued to be challenging and the weakening in the euro has had a marked impact.”