Although the frenzy of financial reporting season has begun to subside, this week saw Irwin Mitchell release its financial results for 2022/2023.
The report shows that the whole group’s overall revenue has remained steady at £276m since last year, while the group’s core businesses generated 2% more revenue than this time last year, rising from £266m to £271m.
The group’s gross profit has decreased by 3% from £144m in 2022 to £140m, with the gross profit of the group’s core businesses also down by 1% from £142m this time last year to £141m. In its report, the firm gave some context for the dip in profit: ‘The reduction to both measures reflects the impact of wage inflation and is a key operation focus for the group as we look to absorb inflation over the medium term, through growth in revenue and a sharper focus on our recruitment and retention activities.’
Furthermore, the drop in the group’s operating profit of 41% from £23.5m 12 months ago to £14m is substantial, which the firm blamed on ‘the impact of gross profit in addition to one-off costs related to property write-downs as we seek to optimise our office footprint to cater to the evolving needs of clients and colleagues, higher wage inflation as well as the planned investments in IT transformation, digital innovation, marketing and transaction-related professional fees.’
The core group’s underlying operating profit was down by 23% from £30m to £23m.
The firm’s net finance costs were recorded as up by 100% from £1m to £2m, which according to the firm is ‘due to the benefit of higher interest received on bank deposits, which increased from £0.4m to £4m.’
Group profit before tax was down to £15m from £21m, a decrease of 29%.
In terms of individual practice areas, Irwin Mitchell reported that its complex personal injury practice generated 53% of the firm’s group revenue, with its revenue growing marginally from £147m to £148m since last year.
Meanwhile, the firm’s life cycle legal services practice (LCLS), which covers commercial advisory and disputes, corporate and finance, family, property, private client and public law-related matters brought in 32% of the group’s revenue. The LCLS practice grew by a more significant 7% in revenue from £84m to £90m, with private client and family law performing the highest.
The firm’s third-largest contributing sector was its financial asset services (FAS) offering, generating 13% of the group’s overall revenue. The FAS practice revenue was down by 1% from £36m in 2022 to £35m, which it explained was ‘driven by the expected decline in revenue from our Ascent business,’ which is the firm’s arrears management outsourcing business that mostly services UK lenders.
Irwin Mitchell opened two new offices in Cardiff and Liverpool in 2022 and aims to expand its presence in the south and southeast of the UK. Over the past 12 months, the firm also acquired 18 new lateral partners as part of its investment into M&A in the financial services sector.
The group’s chair Glyn Barker said in a statement: ‘Global economic forecasts suggest that the coming financial year will be another challenging year as inflationary pressures, in combination with the high interest rate environment and general cost-of-living crisis will impact many consumers and businesses adversely. However, the quality of our people, combined with the breadth of services and ongoing investment, supported by the strength of our balance sheet, gives us the confidence that despite the considerable headwinds, we will deliver further strategic progress in FY24.’