Grant Thornton fees hit by restructuring downturn

Mid-tier firm Grant Thornton (GT) has reported largely unchanged revenue of £521m for the financial year ending 30 June 2015, a 1.6% increase on the 2014 figure of £512m, in results which were dented by a sharp drop in the restructuring and recovery income stream down by nearly a quarter year on year.

GT reported profit before tax of £82m, up marginally from £81.2m year on year. Distributable profit per partner rose by 3.4% to £398,000, up from £385,000 the year before.

The audit service line was up 5% to £142m (2014: £135.2m), compared to a 4% increase in 2014, while tax revenue was up 5.5% to £96.3m (2014: £91.3m), having remained broadly flat last year.

The overall results were pulled down by a sharp decline in the restructuring business, reported under advisory.

The general downturn in restructuring business has been reflected across the results of all accounting firms this year and underlines the recovery in the UK economy which saw the number of cases of corporate failures decline.

Advisory reported a 1.3% decline to £282.3m (2014: £285.9m), driven by a 24% drop in the firm’s recovery and reorganisation business. Recovery and restructuring revenue was down £27.84m year on year with reported revenues of £88.96m in 2015, against £116.8m in 2014. When recovery is extracted from the results, the remainder of the firm’s advisory business grew by 13%.

Simon Jones, partner and member of the strategic leadership team at Grant Thornton, said: ‘The decline in restructuring is partly a reflection of the market – the recovery in the UK economy – and some one-off specific pieces of work which by their nature were not repeated. But it is a tougher market.’

Corporate finance bucked the trend in advisory, reporting a 40% rise in revenue to £50.12m (2014: £35.8m). ‘Within corporate finance we did quite a lot of investment in 2013-14, so we have seen strong growth from that investment. That was a big growth area for us,’ he  said.

Jones sees the clampdown on the percentage of non-audit services that statutory auditors provide as a positive for firms outside the Big Four. ‘We already work with 40% of FTSE companies and there are more opportunities to work with those firms, not necessarily as auditors but providing other services.

‘Most of the tenders have just rotated around the Big Four. We are mindful of that but competition and choice is not just about audit, it is also about non-audit services. We are seeing more opportunities to tender but we need to have honest, realistic conversations about whether it makes sense to tender.’

Sacha Romanovitch, who took over as CEO during the year, said the results reflected a year when the firm had achieved ‘stable turnover and profit over the course of a period of significant investment’.

The firm will announce a strategic plan in December following discussions with partners and staff, as part of the employee engagement scheme.

Romanovitch said: ‘One of the commitments we made to the team was that in a month’s time [November] we will release the growth plan and then make detailed announcements in December.’

The long-term plan will build on the employee engagement scheme, which Romanovitch sees as a cornerstone of the firm’s ambitions to create ‘the vibrant firm of growth’.

ICAEW awards 100th ABS probate licence

One year after it was given power to regulate firms wishing to conduct probate and form alternative business structures (ABS), the ICAEW has issued its 100th licence to a five-director Essex practice, Tiffin Green Ltd.

Director Stephen Mitchell said: ‘Having significant experience in inheritance tax planning, trusts and estates already, it was a logical step for the business to apply for a probate licence.’

Despite passing this landmark, the ICAEW is urging bodies and companies to review their guidance and procedures to recognise this change.

Peter James, head of ICAEW regulatory policy said: ‘The ICAEW became a regulator and licensing authority for probate and ABS in the hope it would give more choice to the consumer, who might want their accountant to handle their legal services too.

‘It is disappointing that some organisations have failed to recognise this change in the market place and not updated their guidance accordingly.’

He added that ‘it is a positive step that firms are developing a strategy to go beyond traditional accountancy service and offer their clients a holistic approach

to probate services.’

The ICAEW has 100 firms licensed as ABSs and 147 accredited to perform probate.

Bishop Fleming reports 5% rise in fee income

West country firm Bishop Fleming, ranked at 37 in the 2015 Accountancy Top 75 table, has reported fee income of £17.5m, up 5% year on year.

The firm also appointed two new partners during the year, taking the total to 28, and made 80 new staff appointments.

CIMA and AICPA mull global tie-up to extend reach

Members of the Chartered Institute of Management Accountants (CIMA) and the American Institute of CPAs (AICPA) are considering proposals to collaborate more closely and possibly create a third accounting association, representing both CIMA and AICPA members, which would come into effect next year.

CIMA and AICPA signed their first joint venture in 2011 and set up a new designation for members, the Chartered Global Management Accountant (CGMA).

The latest proposal would see the two organisations integrate their strategies, management and operations. However, each partner would continue to operate the existing membership bodies as individual entities, and the two governing councils would remain.

There are currently no plans to increase subscription fees to specifically support the proposal.

Subject to council approval, members of CIMA and the AICPA would be asked to endorse the plan in 2016. It requires approval from two-thirds of those voting.

Details at http://bit.ly/1HI1Xor