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A mixed bag for Simmons & Simmons as firm posts record turnover but tumbling PEP

Results season has proved something of a mixed bag for Simmons & Simmons, with turnover up 2% in 2015/16 to hit a record £295.1m but partners suffered a sharp fall in profits as its cost base soared.

Growth slowed last year after something of a revival for the City stalwart in 2014/15, when revenue rose 8% to £290.1m and profits per equity partner (PEP) leapt 17% to £649,000.

Revenue was up £5m to £295.1m in the 12 months to 30 April 2016, which while far from impressive on a year-on-year basis, gives the firm its strongest showing since 2008/09 when turnover hit £291.3m. It is also in sharp contrast to the dismal results posted by City peers Ashurst, which saw revenue plummet 10% £505m, and Berwin Leighton Paisner, which saw revenue drop 2% to £254m.

Nonetheless, the costs associated with closing down its offices in Rome and Abu Dhabi, combined with rising rent and salary costs, hit Simmons & Simmons’ bottom line. Net profit decreased 6% to £88.8m, with PEP dropped back below the £600,000 barrier to £585,000.

This means the average take home pay across the firm’s partnership is £64,000 lower than in 2014/15, when PEP hit a record high of £649,000.

Simmons & Simmons managing partner Jeremy Hoyland (pictured) told Legal Business: ‘It’s slightly disappointing but it’s good that we got income growth. Net profit down as revenue had not risen sharply enough to meet an increasing cost base and that’s a story you will hear across a lot of firms. We held costs quite tight in the previous year and it just built up the pressure.

He added: ‘At some point you’ve got to release the pressure, and it was necessary for the business, to increase salaries and make investments across our network, with expansion in Munich, Singapore and Bristol. It all comes as a cost. It was a declining picture, which is never good, but everybody understood in the partnership that investing in the business was the right thing to do and we all knew it would take a big rise in revenue to cover those.’

While the firm’s London office had a flat year, mainly due to less transactional activity and a ‘tailing off after Christmas’ due to market unease over the EU referendum that resulted in a Brexit result, Hoyland said that the firm had a ‘better performance in continental Europe and in Asia’. France was a standout performer, with the firm’s offices in the Netherlands and Luxembourg putting in strong revenue increases.

The firm was flat across its corporate and banking groups, with strong showings across its contentious practices, particularly in financial services litigation.