Zaha Hadid Architects sees profits eaten up by soaring staff costs

The AJ100 big hitter reported a profit before taxation of just £918,000 for the 12 months to 30 April 2022 – down from £9.5 million the previous year.

The sharp drop came despite a 7 per cent rise in revenue to £68.1 million – a record turnover for the company.

However the practice’s costs soared during the period, with swelling staff numbers appearing to account for a significant chunk of the lost profit. ZHA employed an average of 520 staff throughout the 2021/22 year, up from 440 in the previous 12 months.

Wages and salaries alone added £11 million to the practice’s outgoings, while social security and pension bills also grew. The practice said the increase included ‘salary increases and cost of living and other bonus payments’.

Directors’ pay increased by 58.3 per cent, although the highest paid individual – presumed to be principal Patrik Schumacher – saw their remuneration drop from £1.5 million in 2021 to £1.2 million in the latest year.

In a directors’ report accompanying the results, Schumacher said ZHA had ‘continued to perform strongly' and ‘invested in design excellence and research'.

The practice has ‘expanded its presence in new and established markets worldwide’, he added.

ZHA switched to an employee ownership model in late 2021. Schumacher said it had since ‘diversified its portfolio, developed award-winning innovations and enhanced its expertise’.

The practice has 32 buildings under construction across 17 countries. In December it unveiled a bid to make Odesa in Ukraine the first east European host of a World Expo.

A ZHA spokesperson told the AJ: ‘With record turnover in the year of £68 million, up from last year’s £63.5 million, we have invested significantly in our people, our business and our research.

‘Our studios, gallery and new workshops in Goswell Road have been extensively upgraded to accommodate our expanding headcount, which has grown by more than 80 architects.’

They added: ‘Salary increases and cost of living and other bonus payments have been awarded in the period, while our balance sheet has increased by more than £9 million to over £40 million with £34 million in cash reserves – an extremely healthy position for our employee-owned business.’