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Revenues at Allen & Overy (A&O) have risen by just 0.8 per cent at the 2012/13 year-end from £1.18bn to £1.19bn.
It is the first magic circle firm to post revenues for the year, with Linklaters and Freshfields Bruckhaus Deringer preparing to release their annual turnover tomorrow (5 July).
At A&O average profit per equity partner (PEP) failed to rise on last year, standing at £1.1m. Before tax, profit for the year hit £496.7m, up 2.2 per cent from £486m (3 July 2012). The firm has expanded the equity partnership over the last twelve months to 442 compared with 427 a year ago.
The results mark a pick up since the firm’s half-year results which were reported in November (12 November 2012), when A&O posted a 3 per cent revenue drop to £566m in the six months from 1 May.
Managing partner Wim Dejonghe admitted that the first 9 months of the 2012-13 financial year were slow, a pattern that, he said, had reversed in recent months.
He said: “From February onwards, overall activity levels picked up a bit and closed the gap. The first nine to ten months [of the financial year] were slow but the last two months have been very busy - there’s been a strong recovery of capital markets in the last three of four months.”
That said top of equity has fallen from £1.6m to £1.56m, while the bottom of equity has also dropped from £640,000 to £627,000. The firm is home to 442 ‘full partners’ who receive 20 profit sharing points upon promotion, rising by two points every year to a maximum of 50 points.
Dejonghe said the firm monitors performance on a five-year circle.
“In the last five years turnover at the firm has increased nine per cent and partner headcount seven per cent,” he commented. “This is the consequence of targeted investments abroad. The markets have been flat and quiet over the last five years, tougher than any time before.”
At the 2008/09 year-end, turnover at the firm stood at £1.09bn, while PEP for the 372 equity partners stood at £1.04m.
He continued: “Having secured a premium position in key high-growth markets around the world we have focused on consolidating those investments in FY13. As a result we have delivered strong performances against business plan, proving that our strategy continues to pay off.”
In the last year the firm has opened three new bases. The firm relocated London banking partner Charles Lindsay to Istanbul for an office launch with a focus on English law (5 December 2011). It followed this with the launch of two bases in Vietnam, opening in Hanoi in the third quarter following the hire of JSM’s Vietnam managing partner Dao Nguyen, to lead the offices (24 May 2012).
The firm said it had seen particularly strong growth in Central and Eastern Europe, the ASEAN markets and in Morocco. There had also been good performances in the traditional offices such as London and the Middle East, it added.
There have also been reductions at the firm, however. In June last year A&O reduced its Hong Kong partnership by four, letting the long-serving partners go after seeing a drop in demand in the market (11 June 2012).