SJ Berwin revenue rises as firm prepares for 10 per cent PEP drop
17 June 2013 | By Joshua Freedman
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SJ Berwin has reported a 2.5 per cent rise in revenue for the latest financial year against an anticipated drop in average profit per equity partner (PEP) of roughly 10 per cent.
Turnover at the firm is up from £180.1m in 2011/12 to £184.6m in 2012/13, the third year running that fee income has grown. Revenue rose by 5 per cent and 0.6 per cent in 2010/11 (30 May 2011) and 2011/12 (20 June 2012) respectively.
The firm has not finalised profit figures, but expects a net profit increase of a small percentage on the 2011/12 figure of £49.7m.
This would result in PEP falling by around 10 per cent off the back of a similar increase in the size of its equity partnership.
While the firm does not release data on the proportion of equity partners to other partners, it said both levels had seen growth in headcount of roughly 10 per cent, with the overall partnership now standing at just over 170 compared with the 2011/12 average of 153.
SJ Berwin’s PEP increased over the course of the last four years from £410,000 in 2008/09 (20 July 2009) to £447,000 in 2009/10, £626,000 in 2010/11 and £635,000 in 2011/12.
The 2008/09 PEP figure represented a 49 per cent drop on the 2007/08 level of £801,000 as the firm suffered from its exposure to M&A, private equity and real estate during the financial downturn.
Alongside the recent hires, the firm has also seen a small number of key partner exits, especially in disputes, and pushed out some partners as part of a restructuring (25 September 2012).
Managing partner Rob Day commented: “We don’t manage our PEP figure, we only manage our business. [As we expand] we need to keep an eye on managing our business - we do that regularly. This year was no different to any other year.”
Day said corporate and funds had a strong year, while the recently launched energy and infrastructure practice and the Luxembourg operation both had solid starts. Funds, private equity transactions, real estate and finance were all among the practices to enjoy a revenue increase.
He also said the underlying business grew 6 per cent once currency conversions and the impact of contingent-fee mandates are taken into account, with the euro weakening against sterling over the course of 2012/13.
While recent recruitment focuses have been largely on energy and infrastructure and finance, the firm is now targeting expansion in disputes, corporate and its regulatory practice.
Senior partner Stephen Kon added in a statement: “We will also continue to invest in our platform ensuring we are where our clients need us, focusing on growing our emerging markets offering and further strengthening our corporate, litigation and energy and infrastructure practices.”
Offices outside London now contribute roughly 35 per cent of turnover, compared with 34 per cent in 2011/12, following expansion in jurisdictions including Germany, Belgium and Italy.
The results come amid merger talks between the City firm and Asia-Pacific giant King & Wood Mallesons (KWM), which have been continuing for several months and were discussed at SJ Berwin’s partner retreat in Marbella last weekend (7 June 2013).
The tie-up would not be a profit-sharing deal, with SJ Berwin poised to join KWM’s Swiss Verein if the deal goes ahead.
Separately, SJ Berwin has confirmed the permanent appointment of financial director Simon Gill, who joined the firm in 2010. Gill has been handling the role temporarily since predecessor Mike Giles left six months ago, later joining Field Fisher Waterhouse (23 May 2013).
For more financial results, click here.