(Bloomberg) -- Allen & Overy's pretax profit dropped 1.4 percent to 562 million pounds ($734 million) last year as the specter of the U.K.'s exit from the European Union began to slow deals and profits months before the vote actually took place.
Revenue increased 2.3 percent to 1.31 billion pounds while profit per equity partner was little changed at 1.2 million pounds in the 12 months ended April 30, the London-based law firm said Wednesday in a statement. The firm had pretax profit of 570 million pounds in the year-earlier period.
The U.K. voted to quit the EU less than two weeks ago, causing the pound to tumble to a 31-year low against the dollar and cutting the value of some key British stocks. But the Brexit effect began to inhibit deal activity in the second half of the year, the firm said in a statement, also citing the collapse of commodity prices and a slowdown in China. The firm advised on $155.3 billion of mergers in the same time period, down 9 percent on the previous year, according to data compiled by Bloomberg.
"There's definitely been a slowdown in transaction rates" since the U.K. voted to leave the EU, an Allen & Overy spokesman said. "We've seen some deals pulled. The stock market and the exchange rate have stabilized a bit -- although there probably will be more volatility over the year."
Well Hedged
"Our business is well hedged as it reflects the global economy and the resilience we have built into the business over the years should stand us in good stead," he said.
The firm, the first of the London law firms known as the Magic Circle to announce its annual results, was the top performer of the elite group in 2015 when it recorded a 4 percent rise in revenue.
Allen & Overy advised Worldpay Group Plc on its 2.16 billion pound London listing in October, the largest of the year in the U.K. at the time. The firm also advised a syndicate of 20 lenders on the $75 billion loan facility for Anheuser-Busch InBev NV's bid for SABMiller Plc.
To contact the reporters on this story: Thomas Seal in London at tseal@bloomberg.net, Jeremy Hodges in London at jhodges17@bloomberg.net. To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Christopher Elser
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