Net profit after tax for the business advisory firm was $7 million for the 12 months to 30 June 2013 – down 31 per cent on the previous year.
Normalised earnings before interest, tax and amortisation were $26.5 million for 2012/2013 – down from $36.6 million in the previous year.
In a statement on the Australian Securities Exchange (ASX), Crowe Horwath managing director John Lombard said difficult trading conditions throughout the year put a dampener on business confidence, which in turn meant clients were unwilling to commit to discretionary spending.
Business services revenue was down three per cent to $311.3 million as a result of the decrease in business advisory work, and overall group operating revenue was down two per cent to $405.9 million, said Mr Lombard.
The overall decrease in business revenue was also affected by the repositioning of Crowe Horwath’s Melbourne and Sydney offices, following the departure of several principals during the financial year, he added.
But on the bright side, financial services revenue was up three per cent to $94.6 million – with “good momentum gained in the second half”.
“It is worth noting this positive result in an environment where global economic conditions remain uncertain,” said Mr Lombard.
Crowe Horwath completed a number of “transformation projects” in 2013 that were initiated over the last two years.
“These include a restructured and aligned leadership team, new remuneration model for principals, business efficiency project, group shared services environment and a successful move to one brand during July 2013,” said Mr Lombard.
As part the transformation, Crowe Horwath also incurred non-recurring redundancy and other costs of $7.2 million ($5.1 million net of tax) in 2012/2013.
“New principals have been appointed to re-focus these businesses on end-to-end business advisory capability. The group expects the benefits from these changes to be recognised over time, as the new principals build their revenue capability,” said Mr Lombard.
Net debt for the firm increased to $52.6 million in 2012/2013 (up from $40.9 million in the previous year) as a result of the costs associated with the prior year transformation projects.
But Mr Lombard stressed that the company remains “conservatively and appropriately geared” at 20 per cent – compared to 15 per cent in 2011/2012 – “with a sound balance sheet maintained”.
“The group extended the term of its bank facilities during the year and has significant unused facilities under long-term arrangements that expire in July 2016, which leaves it well placed to fund future growth,” he said.
