A&O adds £21m to war chest after cashflow drive

Allen & Overy (A&O) strengthened its cash position by £21m in the financial year 2010-11 thanks to a seven-day reduction in lockup, the gap between starting work for a client and being paid.

Allen & Overy (A&O) strengthened its cash position by £21m in the financial year 2010-11 thanks to a seven-day reduction in lockup, the gap between starting work for a client and being paid.

Finance director Jason Haines, writing in A&O’s annual review published this week, highlighted the firm’s more efficient working capital position. Haines said the improved cashflow position was the result of a reduction in lockup from 138 to 131 days.

“That seven-day difference has an important impact,” stated Haines. “It means we have something like an extra £21m of cash in the bank. That is cash we can use to make further investments in our future.”

A&O’s lockup is one of several revelations contained in its annual report, not all of which were investment related.

They include a £3m provision for the cost of redundancies related to the firm’s new support function in Belfast. In total, the new Belfast outpost cost A&O £4m last year.

Overall total costs rose by 6 per cent to £675m while one-off costs totalled £29m.

Profit before taxation remained broadly flat at £431m but profit available for division among the firm’s members dropped from £328.6m to £298m.