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Allen & Overy reveals first magic circle LLP accounts" />Allen & Overy (A&O) is the first of the magic circle firms to release its limited-liability partnership (LLP) accounts, a move that will almost inevitably be followed by Clifford Chance (a US LLP), Freshfields Bruckhaus Deringer and Linklaters.
The figures show a prudently run business that can now, with some certainty, call itself transparent. Here are the highlights.
1. Turnover is up by 2 per cent on the previous year. "The days of massive turnover growth are gone," says senior partner Guy Beringer. "I wouldn't expect the firm to grow dramatically. It's more a question of becoming more efficient, which means working smarter, recording better and better structuring of teams."
2. Costs were cut by £5m. This costs figure also includes the staff bonus pool. In 2005, that pool came to £19.1m, up from £16m the year before. This is equivalent to 11.5 per cent of salary for every member of staff, or an average of £4,600 per person.
3. A&O currently has 95 fixed-share partners. The average remuneration for those partners is £259,000.
4. Equity partners start at 20 points, moving up to 50 over 15 years. Average profit per point stands at £20,085. There are 24 partners at A&O who currently earn more than £1m. Mean for equity partner capital contributions is 33 points, which equates to £370,000.
5. Fixed assets: including IT, office interiors and furniture, but also £6m spent on the new building in Spitalfields.
6. Debtors: £191m of this figure is client debtors, representing 67 days of annual turnover. The £259,661 figure also includes £43m of deferred income, or unbilled revenue (formerly work in progress (WIP)) and £24m of other assorted debts. Not surprisingly for a firm that, as finance director Ian Dinwiddie puts it, "hitched itself to the GAAP wagon a few years ago", A&O has valued all the WIP in the accounts in accordance with Application Note G to FRS5 for two years. Consequently, there was no uplift this year. Last year, the uplift was brought in as a reserve and was not distributed as additional profit.
7. Amounts due from partners: this represents the total drawing distribution to partners on account of the current year.
8. Cash at bank and at hand: at 30 April 2005, partners had set aside £42m to fund the fit-out of the new building at Bishops Square, Spitalfields. That scheme of capitalising partner drawings began in 2000. A&O has also entered into separate banking facilities of up to £50m to finance the rest of the move.
9. Provisions for liabilities and charges: includes liabilities for annuities to retired partners, which have been taken onto the balance sheet and amount to £26m. This line also includes the 'soft landing' scheme, paying off partners who retire early.