PHIL VERITY is half-way through his term at the helm of Mazars.
Softly spoken and affable, he has presided over healthy growth since he took the top job in the UK.
Profits have risen 25%, while income has moved up 13% since 2012. In the year to 31 August 2014, the firm’s profit before tax increased to £26.2m compared to £22.2m in the previous year.
Overall fee income for the same period was up 8.6% to £130.9m, marking five successive years of growth and an overall increase in revenues of 28% during the same period.
Given those numbers, it’s little surprise when Verity professes to be “enjoying” himself.
“We’re in a really good place,” he tells Accountancy Age – true on both a metaphorical and literal level as we meet at the firm’s London office, overlooking the Tower of London and Tower Bridge.
“The margins have improved. We’ve invested in infrastructure, property and people-initiatives. Ultimately, profit attracts attention but it’s a metric for the underlying health of the business. The market we’re in is evolving, because of regulation, consolidation, price pressure and so we’re continually adapting to that,” he says.
“We review that each year – maybe more regularly than that – do see how we can be more efficient.”
But while the numbers have been healthy, there have been issues requiring surgery.
One issue, which substantially pre-dates Verity’s tenure saw the firm hit with a £2m settlement bill and severely reprimanded after failings in advice provided to the trustee of the First Quench Pension Fund and the conduct of its London managing partner Richard Karmel.
In the FRC tribunal on 25 July 2014, Mazars and Karmel admitted that their conduct “fell significantly short of the standards reasonably to be expected of a member firm and member” of the ICAEW.
The failings were in relation to advice given to the trustee of the First Quench Pension Fund regarding the proposed replacement of First Quench Retailing as the sponsoring employer of the fund. The FRC accepted the failings were neither dishonest nor deliberate. Karmel remains with the firm.
In particular, Verity is keen to ensure there is an emphasis on quality and “remedial action” following the episode’s conclusion.
“We learned from those mistakes, and put in remedial actions to deal with that,” he explains. “We have continued to put much more emphasis on quality, compliance and conduct in the last two years. We’ve done that through our code of conduct, our compliance team and through talking openly with our team about the importance of that.”
The last time Accountancy Age met Verity, his term as senior partner had just commenced. One area he was keen to improve on was gender diversity, and that statement is as true now as it was then.
In 2012, the number of female partners at the firm was hovering around the 9% mark. Today, it stands at 14%. Low levels, Verity admits, but he is keen to continue on the upward curve.
“We’re not as balanced in our gender diversity as we should be,” he acknowledges.
A review, or “outreach”, was launched last year to “understand the root causes holding people back” and what the firm can do to bring more women into leadership roles.
A mentoring programme to “proactively support” female managers, which has seen more than 100 women sign up, has 57 mentors providing support. Despite that, Verity stops short of setting a target for the initiative, warning “everyone wants to be treated on merit”.
“I think you have to be careful on diversity and inclusion not to just set targets,” he says. “I would hope that whether it’s 2016 or 2020 that a good mid-term target would be to breach 20%. Our Swedish firm has more than 25%, and as a UK firm we have some things to learn there.”
A significant portion of the work towards that end lies in culture, Verity says, something he is seeking to cultivate.
A code of conduct was launched in conjunction with 100 members of staff from across the firm, while a recognition scheme has this year been introduced to “highlight when people go above and beyond,” he says.
“Every single month, people are being nominated and appreciated for what they do. That’s important in terms of where I want to work and it’s important for others in the team too. We know we’ve got progress to make, but I think we’ve taken some steps.”
As far as service lines are concerned, Mazars’ advisory experienced growth of 22% to £34.4m from £28.2m, while audit and actuarial services remain Mazars’ principal generator of fee income: turnover increased by 8.3% to £52.3m from £48.3m.
The tax practice recorded a slight drop in fee income of 0.8%, to £24.3m from £24.5m. Turnover in insolvency and investigation services grew by 2.2% to £19.9m. The firm’s wealth management business saw funds under management grow by 27% to £376m over the year.
Phil Verity CV:
2012 to present: Appointed Mazars senior partner
2011 to present: Joined Mazars’ international board
1999: Appointed Mazars partner
1995: Rejoined Mazars
1990: Joined Coopers & Lybrand
1986: Joined Mazars predecessor Neville Russell
Mazars in numbers:
Offices: 20 in UK
Staff: 1,500, including 113 partners
Fee income: £131m up to August 2014
Service lines: Assurance & actuarial; accounting and advisory; tax and financial planning; insolvency & investigations
Bluffer’s Guide to Mazars: The only firm (as far as we know) to have played cricket with clients at Headingley, while Mazars became the principal partner of Yorkshire County Cricket Club in 2014. Yorkshire won the county championships last year, wearing Mazars shirts, they beat Nottinghamshire – who were wearing BDO-sponsored shirts
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