City firm CMS Cameron McKenna Nabarro Olswang has published its first set of accounts since its three-way mega-merger in 2017, revealing financial details of the tie up as well as a substantial rise in profits.
CMS combined with Nabarro and Olswang on 1 May 2017. The latest accounts are for the 12 months ending April 2018 and are the first to include figures for the combined firm.
In a document published on Companies House this week the firm reported a pre-tax profit of £159.9m, 89% up on the financial year 2016-17 when, as CMS Cameron McKenna, it reported profit of £71.5m.
The accounts also confirm figures previously published by Nabarro and Olswang detailing their financial performance for the financial year 2016/17 when they were two separate firms and which showed a fall profit. Profits fell by 78% (from £35.2m to £7.5m) at Olswang and by 10% at Nabarro (from £46.6m to £41.8m).
According to the Companies House document the ‘total cost of acquisition’ in the merger was £66m (£51.3m for Nabarro and £15.4m for Olswang). In a statement accompanying its accounts the firm said £28.8m had been charged to the group profit and loss account in 'respect of costs incurred in reorganising, restructuring and integrating’ the acquisition.
The firm also reported a rise in the amount paid to its highest paid partner, up 37% from £798,000 to £1.1m. ‘Key management personal’ received a total of £3.9m, up from £2.7m (44%).
A spokesperson for CMS Cameron McKenna Nabarro Olswang stressed that the 'cost of acquisition' did not reflect monies paid. 'Although we merged, accounting rules require us to treat the transactions as "acquisitions". This means the LLP bought the accumulated assets of the two businesses (their fixed assets, their client debts, their cash in the bank, etc) but also assumed their liabilities (their debts to vendors, tax authorities, banks, etc).
'At the transaction date, Nabarro had net assets of approx. £51m and Olswang approx. £15m. As the first paragraph of the LLP note says, “The LLP (CMS) acquired the assets and liabilities of Nabarro and Olswang in return for which the members of Nabarro and Olswang became members of the LLP. The note goes on to say “that there was no goodwill as a result of the acquisition” ie. the “cost” of the acquisition was equal to the £67m value of the assets.'