PRESS RELEASE11 July 2005
Allen & Overy today announces its results for the year ended 30 April 2005. This is the first time that Allen & Overy has made a public announcement of its results and this change follows the transfer of most of the business of the general partnership of Allen & Overy to Allen & Overy LLP on 1 May 2004. Highlights are as follows:
· Turnover up 2% at £666 million
· Profit before tax up 8% to £244 million
· Profit per equity partner up 5% to £656,000Guy Beringer, Senior Partner of Allen & Overy, said:
"Our performance in the year ended 30 April 2005 was stronger than last year. Total income at £666 million was up by 2%, whilst total costs were down by 1%. The combined effect was that our profit available for distribution to partners increased by 8% to £244 million. Profit per equity partner, at £656,000 was up by 5% on last year. This result reflects our growth, continuing tight control of costs and improvements in productivity.
"After a fairly slow start in the first six months of the year, the second half showed a strong improvement, reflecting an upturn in activity in several of the key markets where we operate. This increase in activity levels has continued in the first two months of the new financial year
"Across the practice we have spent much of the year concentrating on lawyer productivity. Average lawyer numbers were down slightly from the prior year but the average productivity of each lawyer increased. We have also continued to exercise tight cost control in all areas, resulting in a 1% reduction in total costs from last year.
"As a practice we continue to share our success with our staff and our results include a provision for a staff bonus pool of £19 million, up from £16 million in the prior year. This will give each employee in the firm an annual bonus payment equal to six weeks' salary.
"We continue to invest in IT projects that will allow us to increase our efficiency and deliver an improved service to our clients. Omnia, our new virtual file system in which all documentation relevant to client matters is stored, was implemented during the year and is already showing significant benefits, particularly on multi-practice transactions.
"On 1 May 2004 the majority of the business previously carried on by the general partnership of Allen & Overy was transferred to a UK limited liability partnership (LLP). This was a major project which was managed entirely in-house by our lawyers and professional support staff. We have subsequently used the expertise that we gained during this project to advise several other professional services firms on their conversion to UK LLP status."
Our people
"We recognise that Allen & Overy must provide opportunity for our people to develop their skills and fulfil their potential. We aim to develop staff who are not only academically excellent but also capable of being independently minded and comfortable working in a team. We continued to take our normal worldwide graduate intake of approximately 250 people who, we believe, will stand us in good stead in the future."Community/Pro Bono
"We continue to support community and pro bono projects in every territory in which we operate. Our people are involved in many different initiatives, including providing pro bono legal services, acting as trustees to local charities, primary school numeracy and literacy projects and mentoring secondary school pupils. Our lawyers recorded 50,000 hours of pro bono activity, the equivalent of £12 million of fee income."
Looking forward
"We have made an encouraging start to the new financial year, but it is too early to predict whether this will be sustained throughout the year.
"In the well developed markets in which we operate we will continue to build deep relationships with clients. We will invest time in understanding their businesses so that we are well positioned to assist them as the economic landscape changes and their businesses develop. In our key growth markets of North America and China we will continue to develop our business in line with client demand.
"Overall we will concentrate on what makes Allen & Overy special – providing a quality service to our clients and bringing the best out of all of our people."
For more information, please contact Iain Rodger, Head of Public Relations (iain.rodger@allenovery.com) on +44 (0)2073304947 or +44 (0)7733124082.
Notes for Editors:
1. In this press release, 'Allen & Overy' is used as the collective name for the international legal practice comprising Allen & Overy LLP and its affiliated undertakings, working in 25 major centres worldwide.
2. Any reference to a partner means a member of Allen & Overy LLP or an employee or consultant with equivalent standing and qualifications or an individual with equivalent status in an affiliated undertaking of Allen & Overy LLP.
3. Allen & Overy LLP is a limited liability partnership registered in England and Wales with registered number OC306763. A list of members' names and of the non-members who are designated as partners is available for inspection at One New Change, London EC4M 9QQ, United Kingdom, which is also Allen & Overy LLP's principal place of business and registered office.
4. For more information about Allen & Overy LLP or any other part of the international legal practice Allen & Overy, visit our website at www.allenovery.com. Neither Allen & Overy nor any person accepts any duty of care or liability for any loss incurred by any person acting or refraining from acting as a result of any material in this document.
© Allen & Overy LLP 2005. All rights reserved.
2005
£'000 2004
£'000
Turnover 665,943 652,020
Operating costs
Staff costs (274,302) (279,111)
Depreciation and other amounts written off tangible fixed assets (17,219) (18,543)
Other operating charges (131,118) (129,068)
Operating profit 243,304 225,298
Net interest receivable 897 809
Loss on disposal of fixed assets (4) (35)
Profit on ordinary activities before taxation 244,197 226,072
Partners' share of profits2005
£'000 2004
£'000
Profit on ordinary activities before taxation 244,197 226,072
Profits to be allocated to partners who are not full partners (24,604) (25,406)
Profits available for division among full partners 219,593 200,666
Average number of full partners 335 321
Average profit per full partner 656 625
On becoming partners, the first two years' remuneration is very largely a fixed prior share of profits. Thereafter most partners, referred to as full partners, receive 20 profit sharing points, rising by two points every year to a maximum of 50 points. (Of the 95 partners in 2005 who are not yet full partners it is currently anticipated that 61 will become full partners within the next two years.)
2005
£'000 2004
£'000
Fixed assets
Tangible fixed assets 41,654 44,924
Investments 547 580
42,201 45,504
Current assets
Debtors 259,661 238,336
Amounts due from partners 67,937 57,522
Cash at bank and in hand 59,297 47,565
386,895 343,423
Creditors: amounts falling due within one year (136,181) (122,732)
Net current assets 250,714 220,691
Total assets less current liabilities 292,915 266,195
Creditors: amounts falling due after more than one year (1,965) (2,835)
Provisions for liabilities and charges (40,196) (40,486)
Net assets 250,754 222,874
Partners' other interests
Partners' capital 97,010 83,869
Other reserves 153,744 139,005
Total partners' other interests 250,754 222,874Amounts due from partners
Partners draw a proportion of their expected profit share during the year before the profits of the year have been divided and allocated to them. These amounts are shown in the Combined Balance Sheet as Amounts due from partners.
Partners' capital
Partners are required to provide capital in proportion to the number of profit sharing points allocated to them. The value of the capital unit is assessed annually with any changes being effective on 1 May.
Cash at bank and in hand
Our new London office at Bishops Square, Spitalfields will achieve practical completion this summer. We will then commence a 12 month fitting-out programme which will culminate in a move into the building in the second half of 2006. This is a major project for the firm and we have been accumulating cash over the past four years in order to fund a substantial part of the fit-out expense ourselves. This cash accumulation has been achieved to a substantial extent by capitalising part of the amounts which would ordinarily have been distributed to partners from their profit shares. We have now accumulated £42 million in this manner, £6 million of which has already been spent and the remaining £36 million is included in the Cash at bank and in hand figure shown in the Combined Balance Sheet. The remainder of the fit-out costs will be funded by arranged bank facilities.