At just 34, Numerica finance director Adrian Colman is juggling a lot of hot potatoes. Not only is he the chief accountant in a business crawling with numbers crunchers – but his job is to help guide the business through the toughest financial twist in its short history, prepare for international reporting standards and ensure its newly modified business model runs smoothly.
Colman, a sports fanatic with a passion for snowboarding, thrives on the adrenaline rush of a new challenge and appears unfazed by the task at hand at the UK’s 15th largest firm with fee income approaching £50m.
Despite his relatively young years, Colman has already lived through turbulent times, having begun his career in relative obscurity at provincial firm Morley Scott.
After qualifying in 1994, he secured work at PricewaterhouseCoopers’ Reading office – then Coopers & Lybrand – but after four years he jetted off to the firm’s Bangkok office in search of overseas experience.
By that stage he had already decided that working in advisory roles was something ‘attractive and offered more variety than auditing’, although he was still unsure about entering the business world.
‘One of the reasons I joined PwC was to gain international experience. But I did not want to take the traditional route and go to the US – I didn’t want to become just an expert in US GAAP,’ he explains.
In all, Colman spent two-and-a-half years in Thailand as part of an expat team aimed at raising the accounting bar after the Asian Tiger economies crashed in the late 1990s.
The experience proved a good training ground for the upheaval at Numerica. Just days after arriving in south east Asia the PwC merger was announced and he was immediately thrust into the thick of things, helping to integrate the two firms in Thailand.
‘It was a mammoth task to merge the two businesses – just the kind of thing I was looking to get involved in. I found it challenging, but very rewarding professionally,’ he says.
After travelling in Asia and Australasia, Colman returned to PwC in London, followed by an 18-month stint at KPMG Consulting in the mergers and acquisitions integration team, a position which ultimately led him to join Numerica 2002. ‘This was a transitional move. I was not sure if I was ready to leave practice and get a real job,’ he says, roaring with laughter at the mention of ‘real job’.
But joining Numerica, just five months after the consolidator had been founded, Colman was certain he had done the right thing.
‘I had been hesitant about taking on a role in industry and commerce – but have never thought it wasn’t the right thing to do.’
Colman was impressed by the variety on offer at Numerica. ‘The firm is innovative in structure and not bureaucratic. It operates like a small, free-thinking company.
‘If you have a good idea, you can go out and do it. Numerica has given me the freedom (in my role) to think more widely than your average accounting job,’ Colman explains.
If excitement, change and adventure is what Colman was looking for, the last 18 months have been nothing short of a rollercoaster ride. He has witnessed profit warnings, high-profile resignations (particularly that of Tony Sarin, former chief executive and one of the firm’s founders) and two failed takeover bids culminating in June with disappointing financial results and a trading loss of nearly £5m.
The loss of Sarin catapulted Peter Jenkins, the former group FD, into the chief executive’s role and gave Colman his present position.
Colman admits it has not been easy. Being FD at Numerica, he plays to a tough audience and, as a result, finds himself ‘double-checking everything’. ‘These guys know what they are talking about. You have got to be certain of your facts when you present something here.’
Just a few months into the role, he helped the firm undergo a radical restructuring which saw the plc become one of 70 partners as Numerica introduced a traditional partnership element aimed at motivating staff while retaining its AIM-listing.
Colman defends the decision to adopt the new model but denies it is a rejection of the consolidator model, only a modification.
‘The new structure, with the LLP in the group, is somewhere in between the LLP model popular today and the plc model. It’s a model everyone can understand and be motivated by,’ he says.
Beginning something of a history lesson, Colman explains: ‘Accountancy firms as partnerships have existed as such for hundreds of years; everyone understands them. If I make an extra £1, X percent is mine. In terms of motivation and going the extra mile, this concept is more engrained in the industry.’
From an FD perspective, Colman also believes the model will bring about stability to earnings, something that is paramount given its plc status. Under the partnership model, earnings for the group are far less volatile, because rather than having salaries as a ‘huge amount of fixed costs, senior client services directors are now partners’.
In this way, directors’ pay goes up and down, depending on the fortunes of the firm, so they share in the gains but also the pains.
Colman downplays the poor set of results released in June and claims the firm performed well if the figures were converted to results under a traditional partnership model. Still, he has not been complacent, and says the cost reduction and the ‘realignment of staff capacity with expected levels of activity’ has been a ‘vigorous process’.
Looking forward he says that the new structure will help the firm grow organically and via acquisitions.
‘With the LLP structure in place we can look for more hybrid acquisitions, something between an acquisition and a traditional partnership merger.’
Numerica will also look to bring new service lines into existing offices – like they have already done with the Northwest Manchester office, a general practice office, which has just added a financial services business and a tax consulting business.
‘We get the benefits of cross-selling as well as achieving critical mass in a key city like Manchester,’ Colman explains.
Besides Numerica’s well-stated strategy of targeting the SME market and ambitious entrepreneurial businesses, Colman says that it will also aim to provide services to the large private businesses, those floated on or looking to float on AIM.
The AIM market is of particular appeal to Numerica, given that it is in the ‘unusual position of being an AIM company itself’.
Colman explains further: ‘Within the organisation you have a lot of individuals who have empathy with those in the AIM market. It’s like that old adage: “Do our advisers understand our business?” We think we do.’
The firm is also keen to pick up work from the Big Four in cases where they are conflicted out, and Colman says business recovery is a good case example of this strategy.
‘We have invested heavily in the right people, seeing a gradual progression in increased quality of the work they are doing and the size of the engagements.’
As an accountant and finance director, Colman is in the position of having to tackle the issue of International Financial Reporting Standards from a compliance perspective. As a listed company, Numerica must use them in 2005.
Overall, he believes that they are a good thing and believes that international harmonisation is the right way to go.
From his days working in Thailand, Colman is only too well aware of the problems created by different reporting regimes and remembers the difficulty he experienced making the changes.
‘I went to work in Thailand initially with UK accounting standards and worked on US listings of overseas companies where we had to either convert Thai GAAP or some other kind of Asian GAAP to US GAAP, or convert Thai GAAP to international standards. In some cases, (I had to) provide a reconciliation to US GAAP for SEC filings.
He says that Numerica is on track with its IFRS readiness. ‘When the business was restructured, we considered the impact of existing and any future reporting we would have to do.’
But he adds confidently: ‘No other company has such a body of technical knowledge as a firm of accountants within the same four walls. As a firm of accountants, if we have problems, everyone will have problems.’
Sitting, then, in the plush interior of Numerica’s Wigmore Street offices, a stone’s throw from London’s Oxford Street, Colman has no grand career plans at present, but is enjoying the challenge of being an FD of a company in a state of flux.
‘I was never looking for a steady, stayed organisation,’ he says. ‘With all the best planning in the world, you never know what is around the next corner – that I find attractive.
So change, it seems, is what Colman thrives on, throwing up what he calls ‘interesting scenarios and problems’.
‘I prefer the excitement of business that changes all the time. If Numerica continues to provide me with that, then there will be plenty of opportunities here.’
How do they rank today?
Here’s a snapshot of how the UK’s three listed accountancy consolidators now rank in the Accountancy Age Top 50.
Tenon (ranked 10)
The pioneer of the consolidator model is undergoing a revival in fortunes after revealing positive trading figures – profits of £4.5m for the six months to 31 December 2003. This followed 12 months of poor results, a plummeting share price and the resignation in February 2003 of chairman Ian Buckley. Now Tenon is on the acquisition trail, having bought two firms in July in a £9m deal.
Numerica (ranked 15)
Troubles for Numerica began with profit warnings in March 2003, followed by the resignation of chief executive and founding partner Tony Sarin. The firm was then twice in takeover talks – with BDO Stoy Hayward and Robson Rhodes – both of which failed. The trend of poor results continued, culminating in a £4.6m reported loss in June and the restructuring of the company.
Vantis (ranked 21)
Vantis, the smallest consolidator, released excellent preliminary results for 2003/2004, with profits up 46% to £5.2m on the back of £23.7m revenue, an increase of 27% on 2003 earnings of £18.6m. Vantis has also been on the acquisition trail, buying Essex-based insolvency firm Redhead French in February and then in April the non-audit business of McBrides in Sidcup Kent.
Mazars has announced the appointment of Michael Tripp as the new head of financial services
A new leader, Darra Singh has been appointed to lead EY’s UK government and public sector practice
MHA MacIntyre Hudson has partnered with cloud accounting software provider Xero ahead of the government’s requirement for digital records
Revenue and profitability growth in on the rise for CPA firms, found a survey from the American Institute of CPA’s and its subsidiary CPA.com