TOP TEN FIRM Baker Tilly has claimed that "low-balling" pricing competition is one of the factors behind its £8.6m reduction on pre-tax profits.
According to the firm's latest results, profit before tax was £7.2m for the year ended 31 March 2013, compared to £15.8m for the same period a year earlier. Profit after tax fell to £6.9m from £14.6m in 2012.
The directors report said: "While there were a significant number of important new client wins in the year, this was offset by not only normal attrition due to client sales, but also lost retenders against low-ball pricing."
The firm said that it believed high quality audit services at a "sensible and commercial rate" was more sustainable, and it would continue with this long-term vision.
The report said that considering the severe pricing pressured experienced across a number of service lines, the directors thought the financial result was broadly in line with expectations.
Group equity was also down £29.3m from £35.4m for the same period a year earlier, and the liquid resources group net cash position fell significantly - to £1.8m from £13.5m in 2012.
However, final dividends of 3.6p per share (under the employee incentive share scheme) increased 2.8% on the previous year.
The details in the financial report are for March 2013, but, firm included information on its acquisition of listed firm RSM Tenon on 2 September. The firm paid £30m for that acquisition, of which £1m cash consideration was paid towards the firm's shares; £22m was paid to settle the bank debt; plus a £7m working capital adjustment. It paid just £7 (seven) for the audit arm RSM Tenon Audit.
Baker Tilly had an unutilised banking facility of £14m for the year ended 31 March 2013. Its bank loans totalled £9.3m repayable by a mixture of quarterly and annual installments between April 2013 to May 2017.
The firm's accounts for its subsidiary Baker Tilly Group LLP, which essentially holds all remuneration for its staff, is currently overdue according to Companies House. It last published a report for the year ended 31 March 2012 on 18 December 2012, with the 2013 figures yet to be released.
However, the latest results do offer information on the employee share incentive scheme.
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