If you thought that 2009 had been a tough year for the UK’s top accounting
firms, it’s got nothing on 2010.
The picture emerging from the 2010 Accountancy Age Top 50 + 50 survey is that
the going has become even harder over the last 12 months, despite the UK economy
emerging from recession.
Turnover for the largest 50 firms grew just 3% over the past year, and the
situation was even worse for the next 50 practices in our survey (see page 16).
But even this nominal growth figure fails to tell the whole story of what has
been an incredibly difficult time for almost all firms.
Of the 29 firms that managed to register any rise in turnover this year, only
seven posted double-digit percentage growth on the last twelve months. More
worryingly, two firms saw revenues stagnate while 17 experienced falls – double
the the number of firms that registered negative growth in 2009.
Among the Big Four the situation was no better. Last year’s combined turnover
of £7.16bn was surpassed by just 1%, growing to £7.23bn, largely down to a
strong performance by Ernst & Young. The smallest of the Big Four grew fee
income by nearly 8% to £1.38bn.
By comparison, the country’s second largest firm, Deloitte, saw revenues slip
back below the magic £2bn mark, down 2% to £1.97bn, following big drops in its
take from tax and corporate finance services. The fall has given leading firm
PwC some breathing space at the top of the table, much needed as PwC could only
manage growth of 0.2% to £2.25bn. KPMG could soon see E&Y snapping at its
heels after dropping 1.6% to £1.63bn.
There were some positive stories to emerge from the Top 50. RSM Tenon,
following the acquisition of Bentley Jennison, overtook Baker Tilly and Smith
& Williamson to place 7th in our table. Figures provided by the firm show a
huge 49% growth in turnover to £225m, although this is 6.5% lower than the
combined totals of the two businesses from last year’s survey.
Moore Stephens in 11th position also saw strong growth, up 10% to £139m.
Impressive upswings in tax and audit more than made up for some big falls in
consultancy and corporate finance fees.
Insolvency specialists Begbies Traynor (14th) also thrived as the number of
administrations skyrocketed over the last year, growing turnover by 13% to £70m.
Reeves + Neylan also performed admirably, jumping five places in the table to
40th on 14.5% growth and revenues of £14.8m.
Undoubtedly one of the biggest success stories from this year’s Top 50 is the
continued rapid rise of London-based Frank Hirth. Just two years ago, the listed
accounting company languished at number 56 in our table. Having broken into the
Top 50 last year following 12% growth, it has now jumped again to 39th with an
impressive income rise of 31% to £15.6m. The firm has continued to capitalise on
serving US financial services expats now working in the City.
There have also been some new entrants into the Top 50. After several years
of knocking on the door, SJD Accountancy has finally made it into the big
league, registering revenues of £12m, 9% up on last year. Turnaround specialists
MCR and tax advisers TaxAssist Accountants are new participants and have entered
the table at 27th and 34th respectively. Both posted strong double-digit growth
in their first appearance in the table. Others have had a much tougher time.
Haslers just managed to cling on to its Top 50 status. Last year, the firm
placed 38th in the table, but could only manage 49th this year following a 19%
drop in revenue to £11.9m. Large falls in income from tax and corporate finance
were to blame, while audit also suffered.
Baker Tilly (8th) also suffered drops in the same service lines, with
revenues overall down 7% to £190m, while Armstrong Watson (31st) saw falls of
8.5% to £17.3m
Across the service lines, the story was all too predictable. From the figures
provided by the firms, both consultancy and corporate finance saw overall drops
– down on average 0.6% and 6.8% respectively. Insolvency, unsurprisingly, saw an
average boost of 6.7% while audit held up well (3.8%) and tax was largely
There is still hope among the firms, however. Most believe credit facilities
have not worsened over the last year, few expect there to be a double-dip
recession, and more than half expect partnership profits to improve next year.
Next week’s Budget could easily change those views, but for now the firms are
cautiously optimistic about the future.
Best of the rest
It’s been a hard year for the +50 firms, with many struggling to grow and
most aren’t expecting improvement any time soon.
While the Top 50 accountancy firms have been struggling to cope with the
tough economic conditions, things are even worse for the firms below them. Our
second annual +50 table shows that growth for those firms ranked from 51 to 100
has virtually ground to a halt. The average growth rate for those that responded
to the survey was just 0.3%. Just 21 firms managed to record revenue rises over
the last twelve months while 23 saw their income fall.
Many expect little to change in the coming months. When asked for their
outlook on the next twelve months, most believed the economic situation remained
“challenging” with others saying they expect “another tough year ahead”. As a
result, most anticipate the number of professional and support staff to remain
broadly the same during the next twelve months. However, only two respondents
actually expect their revenue figures to fall, while 24 hope to see some growth.
The situation may also be worse than the table shows. There are a few new
faces in the +50 and several of those that featured last year declined to
complete the survey. Some were quite open in their reason for not participating
– their results had been very poor and they didn’t want to make their figures
By contrast, the new members of the +50 recorded some of the most impressive
ASE only just failed to make the Top 50 as a new entrant, ranking 51st with
growth of 17% and revenues of 11.1m. Moore and Smalley debut in 59th position
with revenues of £10.2m and growth of 2% while Montpelier Chartered Accountants
make their mark in 62nd position, growing 13% to £9.7m. A massive income rise of
29% meant that Cumbrian accountants Lamont Pridmore also sneaked into the +50
table at 97 with revenues of £2.1m.
Others haven’t been so fortunate this year. Rothman Pantall, based in the
South of England, dropped 10 places to 67th after turnover fell 14.5% to £8.8m.
Big falls in its tax and consultancy lines were at the heart of the problem.
Critchleys fell six places to 74th after bringing in £7.4m, 9% below its 2009
figures. Jeffreys Henry also slid down the table to 80th place. Its £5.5m fee
income was 10% lower than last year.
Given the economic pressure heaped on the firms and their smaller size, other
issues such as the environment and diversity have taken a back seat for now.
Only five of the +50 admitted to having a dedicated diversity director at the
firm, while just 12 have a company wide policy on reducing their corporate
Another tough year ahead is predicted, and while many in our +50 table will
be hoping to move up into the big league, most will simply be happy to keep
their heads above water.
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