Top 50 +50: Behind the numbers

THE THRESHOLD for hitting the big time and making it into the top half of the Top 50 +50 table has fallen for the second time in six years.

The cut-off point to make 50th was £11.6m in 2011, but this has fallen to £11.3m – where a three-way tie for the 50th position between Scott-Moncrieff, Henderson Loggie and Montpelier Professional saw the Top 50 comprised of 52 firms.

Six firms saw fee income reduce, while 42 reported growth. Strong growth from the Big Four seems to account for the bulk of revenue growth, with much more mixed performance across the rest of the Top 50 +50. However, there is a general trend of improvement, as 2011 saw 16 firms record a decline in fee income and 17 in 2010.

The top firms also collectively managed to break the £10bn barrier for the first time. The Big Four made up the majority of those revenues, with a collective fee income of £7.73bn, compared to £7.24bn in 2011. All of the Big Four saw their fee income increase, where last year only PwC flew the growth flag.

A handful of the Top 50 saw double-digit growth in the market. CCW’s fee income increased 13.75% to £59.3m. This is the second year in a row that the firm has posted double-digit growth, having grown 10.8% to £52.10m last year.

UHY Hacker Young predicted last year it would see growth of less than 5%, but managed to surpass that expectation with an 8.48% increase in 2012.

Many firms have swapped places with their rivals this year. Baker Tilly dropped one place to ninth after its fee income reduced 5%, and was succeeded into eighth by Smith & Williamson, which managed to grow its top-line fees 4%.

In seventh place is RSM Tenon, which earlier this year had to restate its financial statements. The firm is still way ahead of the curve with £234m as its fee income. It was followed by Smith & Williamson with £178m. Whether it can retain its position next year is moot, as Tenon looks to consolidate its offices.

PKF slipped out of the top ten for the first time in the Top 50 survey’s 13-year history. The firm ranked 12th, compared to tenth last year. In 1998, PKF ranked eighth – slipping to ninth in 2005 where it remained until 2009 when it slipped into the tenth spot.

However, its recent drop down the table to 12th has seen Moore Stephens move up to tenth from 11th, despite reporting it had not grown in the last year. Mazars also benefited from the decline, moving up to 11th from 12th with a 4.1% increase in fee income.

Francis Clark leapt five places to 28. This is the first time the firm has broken into the top 30 firms. When the survey began in 1998, it featured in 36th place. It failed to appear in 2002 and reappeared at 38 in 2003. However, it has steadily grown in size since then, moving up the ranking table.

Price Bailey also moved up four places to 30. In 1998, it entered the chart at 43, and was spurred into its latest position by 17.5% growth in the last 12 months.

SJD Accountancy moved up six places to 34, continuing its upward trend. The firm first appeared on the ranking in 2008 at 60, steadily climbing the table to 48 in 2010 and 40 last year.

Bishop Fleming is another firm to come powering through the Top 50, having previously sat at 58 last year but ranking 46 in the latest survey. It debuted at 49 in 1998 and didn’t appear again until 2003 when it just crept in at 50 – shifting in and out of the Top 50 over the last ten years.

Others to break through into the Top 50 include Barnes Roffe at 48, previously 51, Hillier Hopkins at 49, previously 53, and Henderson Loggie at 50, previously 52.

Last year’s biggest climber, Reeves – which moved up from 40 to 27 following the merger of Reeves & Neyland and FW Stephens – fell two places to 29 with modest growth of 1.5%. It was overtaken after strong growth from Francis Clark and the introduction of FRP Advisory, a new insolvency practice born out of the ashes of Vantis.

MCR is no longer ranked, as the firm merged with American company Duff & Phelps in the last 12 months and no longer produces UK-only figures.

For the first time ever, there was a three-way tie for the 50th spot between Scott-Moncrieff, Henderson Loggie and Montpelier Professional. Although Scott-Moncrieff and Montpelier both posted declines in revenues of 16.9% and 2.3%, respectively, Henderson Loggie broke into the chart with 2.7% growth.

Beever and Struthers slipped out of the top table, and features in the +50 part of our survey at 56.

Just four firms out of the 52 comprising the Top 50 table are yet to join an international network or association. Last year, 46 of 50 fims claimed to be part of a grouping of firms. This year, 16 firms claim to be part of an international association and 27 part of an international network. Just two (Ernst & Young and Mazars) claim to be an international firm.

In the +50 table, 13 firms said they have joined an international network, six an association, 16 neither and one (Howard Worth) a national network.

LLP was the structure of choice for 29 firms, compared with 28 last year. Three firms chose PLC status (Begbies, RSM Tenon, and Frank Hirth), the same number as in 2011. However, limited companies increased from one last year to three. Two firms claimed they used a mixture of structures while partnerships fell to ten firms, compared to 12 last year.

Some 22 of the Top 50 firms said they expect to increase partner numbers in 2012 (of 42 responses). However, 18 have reduced partner numbers in 2012 compared to the previous year, according to our survey, while 17 have increased their numbers and 13 remained the same.

Some 25 of the 35 respondents said they expected profits to increase in 2012/13, with just ten claiming it would remain the same and no firms expecting a decrease.

More than 70% of firms (31 out of 43 that answered the question) hope their graduate recruitment drive would remain the same, with 12 hoping it would increase in 2012/13.

Fee growth is expected from across the service lines. The most popular is audit and accounting, with 27 firms of the Top 50 claiming income would increase in this area. Tax revenues will increase, according to 24 firms; corporate finance, 20; consulting, 19; insolvency, 15; personal finance, 13; and assurance with 12.

Some 16 firms bought or sold a firm – or part of a firm – in the last financial year.