Sullivan & Worcester UK LLP is a limited liability partnership incorporated in England and Wales. The registered office is Level 36B Tower 42, 25 Old Broad Street, London, EC2N 1HQ.
The limited liability partnership's principal activities are disclosed in the Members' Report.
These financial statements have been prepared in accordance with the Statement of Recommended Practice "Accounting by Limited Liability Partnerships" issued in December 2021, together with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006 as applied to Limited Liability Partnerships. The disclosure requirements of section 1A of FRS 102 have been applied other than where additional disclosure is required to show a true and fair view.
The financial statements are prepared in sterling, which is the functional currency of the limited liability partnership. Monetary amounts in these financial statements are rounded to the nearest pound.
The limited liability partnership made a loss for the financial year after members' remuneration and profit shares of £657,545 (2023: £340,521 loss) and had net liabilities of £9,647,305 (2023: £9,113,853) at the balance sheet date. The US law firm Sullivan & Worcester LLP have confirmed their continued financial support for the limited liability partnership with a new line of credit confirmed until 31 March 2027 for $18,000,000. The LLP has reviewed its budget for the 12 months from the date of approval of these financial statements and is confident that it will remain within the new line of credit. The members of the limited liability partnership consider that sufficient cash resources will be available to finance the LLP's trading and enable it to meet its liabilities as they fall due for at least this period and therefore the financial statements have been prepared on the going concern basis.
Fee income represents revenue earned for work undertaken by fee earners in the UK under a wide variety of contracts to provide professional services. Revenue is recognised as earned when, and to the extent that, the firm obtains the right to consideration in exchange for its performance under these contracts. It is measured at the fair value of the right to consideration, which represents amounts chargeable to clients, including expenses and disbursements but excluding value added tax.
Revenue is generally recognised as contract activity progresses so that for incomplete contracts it reflects the partial performance of the contractual obligations. For such contracts the amount of revenue reflects the accrual of the right to consideration by reference to the value of work performed. Revenue not billed to clients is included in debtors and payments on account in excess of the relevant amount of revenue are included in creditors.
Fee income that is contingent on events outside the control of the firm is recognised when the contingent event occurs.
Members' participation rights are the rights of a member against the LLP that arise under the members' agreement (for example, in respect of amounts subscribed or otherwise contributed remuneration and profits).
Members' participation rights in the earnings or assets of the LLP are analysed between those that are, from the LLP's perspective, either a financial liability or equity, in accordance with section 22 of FRS 102. A member's participation rights including amounts subscribed or otherwise contributed by members, for example members' capital, are classed as liabilities unless the LLP has an unconditional right to refuse payment to members, in which case they are classified as equity.
All amounts due to members that are classified as liabilities are presented within 'Loans and other debts due to members' and, where such an amount relates to current year profits, they are recognised within ‘Members' remuneration charged as an expense’ in arriving at the relevant year’s result. Undivided amounts that are classified as equity are shown within ‘Members' other interests’. Amounts recoverable from members are presented as debtors and shown as amounts due from members within members’ interests.
Once an unavoidable obligation has been created in favour of members through allocation of profits or other means, any undrawn profits remaining at the reporting date are shown as ‘Loans and other debts due to members’ to the extent they exceed debts due from a specific member.
Other amounts applied to members, for example remuneration paid under an employment contract and interest on capital balances, are treated in the same way as all other divisions of profits, as described above, according to whether the LLP has, in each case, an unconditional right to refuse payment. Amounts payable to members under employment contracts are charged to “members remuneration charged as an expense” in the relevant year.
Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the Statement of Comprehensive Income.
Cash and cash equivalents include cash in hand and deposits held at call with banks.
The limited liability partnership has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the limited liability partnership's statement of financial position when the limited liability partnership becomes party to the contractual provisions of the instrument.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method. Financial assets classified as receivable within one year are not amortised.
Financial assets are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss, and any subsequent reversal, is recognised in the Statement of Comprehensive Income.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the limited liability partnership transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
Basic financial liabilities, including trade creditors, and loans from related undertakings, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments classified as payable in more than one year are subsequently carried at amortised cost, using the effective interest rate method.
Financial liabilities are derecognised when the limited liability partnership’s obligations expire or are discharged or cancelled.
The costs of short-term employee benefits are recognised as a liability and an expense.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the limited liability partnership is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.
Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation are included in the Statement of Comprehensive Income for the period.
In the application of the limited liability partnership’s accounting policies, the members are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
Revenue from legal services is assessed on an individual basis with revenue earned being ascertained based on time spent to date. Time costs incurred on a particular matter are assessed regularly and subject to management review.
The LLP makes an estimate of the recoverable value of trade debtors and other debtors. When assessing impairments of trade and other debtors, management considers factors including the ageing profile of debtors and historical experience.
The average number of persons (excluding members) employed by the partnership during the year was:
Included within other creditors are unpaid pension contributions amounting to £368 (2023: £5,004).
On 25 November 2020 the LLP provided a joint and several guarantee against the bank borrowings of Sullivan & Worcester LLP, including a floating charge over the assets of Sullivan & Worcester UK LLP.
In the event of a winding up, the amounts included in "Loans and other debts due to members" will rank equally with unsecured creditors.
The financial statements were audited by Moore Kingston Smith LLP. The audit report was unqualified and signed by John Staniforth as senior statutory auditor.
Included in creditors: amounts falling due after more than one year is £11,836,399 (2023: £10,959,739) owed to Sullivan & Worcester LLP, a US LLP in which J Carpenter, M Sullivan, W Curry and G Wynne are members. The amount has been loaned from Sullivan & Worcester LLP in order to finance the setup of the UK LLP. The loan carried a rate of interest of 4.80% from 1 July 2023 and increased to 5.06% from 1 July 2024, and is to be repaid no later than 31 March 2027. The interest charged on the loan for the year ended 31 December 2024 was £555,904 (2023: £335,709). In the year a management charge of £680,968 (2023: £633,103) was charged by Sullivan & Worcester LLP to Sullivan & Worcester UK LLP.