Financial results for the year ended 30 April 2020 (FY20)
· Revenues of GBP 1,803 million, representing growth of 6% year on year
- Partnership profit GBP 666 million, an increase of 5% year on year
- Profit per equity partner GBP 1.69 million, an increase of 5% year on year
· All regions and practices saw robust income and profit growth
· In U.S. Dollars, these figures are equivalent to revenues of USD 2,290 million, profit USD 846 million, profit per equity partner USD 2.15 million
· In Euros, these figures are equivalent to revenues of EUR 2,055 million, profit EUR 759 million, profit per equity partner EUR 1.93 million
Clifford Chance recorded a fifth consecutive year of revenue and profit growth during the year ended 30 April 2020. Reflecting the firm's continued progress against its strategy, the results were the strongest Clifford Chance has recorded to date, despite the last quarter of the year being marked by the impact of the spread of the coronavirus across the globe.
At the year end, the firm continued to benefit from a strong balance sheet, with no net borrowings. In April, Clifford Chance also successfully completed the scheduled renewal of its five year revolving credit facility.
Given the ongoing and unpredictable consequences of the pandemic at the financial year end, the firm's leadership has decided it is prudent to take a provision against the FY20 profits distributable to partners. The provision recognizes the continuing uncertain market conditions and anticipates financial impacts including the additional expenditure necessary to facilitate remote and flexible working and preparing offices across the firm's global network for a safe return.
Matthew Layton, Clifford Chance Global Managing Partner comments:
"In 2015 we put our vision1 to be the global law firm of choice at the core of all we do. Since then, we have made excellent progress against our goals by taking a long term view and making strategic investments in our business while remaining agile and adaptable.
I am very pleased that, over the five year period of our strategy, we have seen strong profitable growth across all our regions.
Sustained growth in the Americas
The continued development of our Americas practice, which now generates over USD 330 million of profitable revenues, demonstrates the success of our focused approach and sustained investment. Over the past five years we have successfully integrated over 40 new partners, and seen revenues grow by 70%. The scale and quality of our firm in the US, and the strong alignment with the rest of our practice globally, presents a highly compelling proposition for our clients who turn to us for support on their most business-critical and complex matters. The Americas remains an absolute strategic priority for the firm and is an area where we are extremely well-placed for ever greater success.
Meeting the needs of Financial Investors
The ability to bring wraparound, integrated support and insight to clients has also underpinned the continued success our Financial Investors business. While this is a broad and diverse set of clients, Financial Investors are united by ambitious strategies and, with over USD 90 trillion in assets under management, they play a role that will be fundamental to the rebuilding of the global economy. This is an important client segment for us, so I am delighted that, over five years, revenues from these clients have grown by nearly 70%.
Focused investment for growth of our leading global Litigation and Dispute Resolution team
Our highly successful and fast-growing Litigation and Dispute Resolution global team also enjoyed another stellar year. In a world that is increasingly complex and more highly regulated, our team is in great demand as clients seek trusted advice on some of their most challenging situations. This is a group that is getting so many of the fundamentals right: a fantastic pipeline of talent, targeted lateral hiring, a focus on the matters where we can make the most difference, excellent service, and enthusiastically embracing new ways of working that deliver value to our clients. A key priority of our strategy has been to support the growth of this important area and I am delighted to see the rapid results, with 21% revenue growth over the past two years.
Working together to manage the impacts of COVID-19
Investment is not only about growth, it is also about ensuring we remain resilient. Our strategic emphasis on enhancing our IT systems and driving our Innovation and Best Delivery agenda have been critical over the past year. Our investments in these capabilities have enabled us to embrace the challenge of this enforced global experiment in remote working without any substantive disruption to the high standards that our clients expect from us. I am immensely proud of how our teams have continued to support clients seamlessly during this extraordinary period, closing massively complex, multinational matters such as the recent GBP 31 billion Telefónica merger of O2 with Virgin Media, or working alongside clients dealing with a deluge of strategic and legal challenges as a result of the pandemic. From recapitalizations, restructurings and eventual re-openings through to embedding ESG principles in light of shifting stakeholder expectations, we have been at our clients' side throughout.
This is a time when many organizations want to move quickly and work differently, especially to help address the human tragedy and impact of the pandemic. I am particularly proud of the role we have played in helping to establish government support schemes and ground-breaking, cross-industry collaborations, such as pharma companies coming together to develop a potential vaccine. Beyond our fee-paying work, it is also deeply rewarding to see the legal expertise, knowledge, and time of our people being provided pro bono to help individuals who are suffering from injustice as a result of the pandemic, and to assist institutions that are providing a lifeline to the most vulnerable members of society.
Investing in culture at the heart of our success
I passionately believe that our agility is founded on a strong, inclusive and collaborative culture. It is our fantastic teams that have seen the firm through the past year, and who will see us through the year ahead. I have been humbled to witness the adaptability, flexibility, sense of community and spirit of togetherness shown by our people, especially over recent months. As well as owing them a debt of gratitude, we also owe it to them – and to society – to keep up the momentum around forging a culture in our firm and in our sector which is truly inclusive, and stronger for it. This is why our new inclusion targets are so important.
Looking ahead
In common with nearly all businesses, the progress of the virus and the associated lockdown measures, have had a material impact on activity levels in some areas of the firm. This was especially marked from March onwards and continues to be the case. This year remains extremely difficult to map: some geographies are starting to see green shoots, while others are still very much in the eye of the storm. The risk of a second wave of the virus, and the potential implications as government support measures are eased, also need to be factored in. The lack of clarity is exacerbated by the potential reshaping of global trade and investment flows in the light of increasing geopolitical tensions. Beyond this, there is the unquantifiable human cost of the pandemic that will leave a permanent scar on many businesses, economies and, most importantly, communities globally.
Focusing on our vision and strategy
In this environment, more than ever, clients need our unstinting support. To achieve their goals, they need access to trusted global insight and expertise paired with efficient and innovative service delivery. As a result, we must intensify our focus on our long-standing strategic priorities and accelerate our work to evolve our client offer and operating model. Through the pandemic, we have all experienced first-hand the benefits of technology, streamlined processes and a truly integrated and collaborative global platform. We now need to ensure that we use this knowledge, embed our positive new habits and maximize the potential that already exists within the firm to drive a step-change in how we work and deliver our services.
Doubling down on our strategy, acting as a trusted adviser to our clients, and remaining agile and adaptable will be our focus for this year. Not only will that secure our own success but it will also mean that – by working alongside our stakeholders – we will contribute to shaping the sustainable markets, economies, and communities that are essential to the future success of each of us."
Selected client work highlights
During FY20, Clifford Chance advised:
· Pfizer on its agreement to co-develop a potential COVID-19 vaccine
· German state development bank KfW on the implementation of a German Government emergency financing package to mitigate the impact of the coronavirus pandemic as part of the biggest rescue package in the country, and also the German Federal Ministry of Health on its COVID-19 warning app
· Clifford Chance advised the joint lead managers on the Republic of Indonesia's USD 4.3 billion bond issuance to help fund COVID-19 relief and recovery efforts. Clients included Citigroup, Deutsche Bank, Goldman Sachs, HSBC and Standard Chartered Bank; this was the largest ever issuance of dollar-denominated bonds by Indonesia
· Fair Trials on its COVID-19 Justice project, tracking how justice systems and trial rights are being affected by the virus and associated government measures
· The Hong Kong Government on Cathay Pacific's USD 5 billion recapitalization plan
· Nordic Aviation Capital, the world's largest airline lessor, on restructuring its USD 5.6 billion debt
· The lenders in connection with Glencore's USD 9.975 billion revolving credit facilities
· PIF and SABIC on the USD 69.1 billion sale of PIF’s shareholding in SABIC to Saudi Aramco, the largest ever M&A deal in the Middle East
· Telefónica on the GBP 31 billion merger of O2 with Liberty Global's Virgin Media
· Mondelēz International on the IPO and listing of JDE Peet's shares on Euronext Amsterdam – at a valuation of EUR 15.6bn, then the biggest IPO since COVID-19
· GE in obtaining U.S. and global merger clearance in connection with the USD 21.4 billion sale of its biopharma business to Danaher
· easyJet on its plans to offset its carbon emissions from fuel for every flight
· Canary Wharf on a successful defense in the European Medicines Agency Brexit lease dispute
· Former Alstom executive Lawrence Hoskins, successfully obtaining a post-trial acquittal of all U.S. Foreign Corrupt Practices Act charges in relation to a scheme to bribe Indonesian officials to win a power contract
· The Swedbank AB Board of Directors, on whose behalf we conducted a multi-jurisdictional internal investigation into historical AML and OFAC sanctions compliance and prepared a Report of the results, which Swedbank publicly disclosed at a press conference in March 2020, with continuing support of Swedbank in connection with pending investigations by U.S. authorities
· Deloitte in relation to four proceedings arising from the 2016 collapse of the major Australian retailer Dick Smith Group, which entered administration with over AUD 400 million debt; also for Deloitte in relation to a class action arising from the 2012 collapse of construction conglomerate Hastie Group, with debts of more than AUD 1 billion.
· Macquarie Infrastructure and Real Assets on the EUR 3.5 billion acquisition of Currenta from Bayer and Lanxess
· Másmóvil on the friendly EUR 5 billion takeover bid from KKR, Cinven and Providence
· Permira on the buyout of Topcast, the largest independent aircraft parts distributor in Asia Pacific
· KIRKBI and the Consortium consisting of KIRKBI, Blackstone and CPPIB on the GBP 4.77 billion take-private of Merlin Entertainments plc
· KKR/Regeborgh-owned Deutsche Glasfaser on the EUR 1.8bn refinancing and subsequent sale to EQT/OMERS
· A consortium led by China Harbour Engineering Company on Colombia's first private investment made by a Chinese construction company under Colombia's 4G highway infrastructure program
· Huatai Securities on its historic London GDR listing under the new Shanghai-London Stock Connect scheme. Then advising the joint global co-ordinators on China Pacific Insurance's USD 1.8 billion offering and London GDR listing – the second using the Stock Connect scheme.