Top 75 Firms survey 2018: seventh consecutive year of market growth
1 Feb 2018
The Accountancy Top 75 2018 survey shows that fee income, for so long the measure of success in the profession, continues its run of seven consecutive years of growth since 2011
1 Feb 2018
The top 75 accountancy firms in the UK now have a record combined fee income of £14.95bn, up from last year’s £13.96bn. That’s a 7% growth rate. However, among those firms that publicly declare their profits, there has been an average downward shift in profitability, albeit of only 1% over the past 12 months.
At PwC, ranked number one in the annual Top 75 ranking, profit results were described as ‘flat’, as they fell 0.3% to £865m (2016: £868m). But partners at KPMG, fourth largest of the Big Four, might use more colourful language to describe their firm’s performance.
KPMG delivered an unprecedented pre-Christmas blow by revealing last December a near-20% drop in profits from £374m to £301m, largely through a write off of investments. Meanwhile Deloitte showed zero profits growth, static at £608m, and EY reported a 2.7% rise to £464m (2016: £452m).
In the mid-tier, Grant Thornton saw its fee income drop by 6.4% to £500m, in part because of the cancellation of a major government-funded contract for Business Growth Services, although it actually increased its pre-tax profits by nearly 8% to £78m. The firm said it had taken ‘bold steps to reshape its client portfolio, replacing 20% of profits through exiting certain streams of business and investing in others aligned to its business strategy’.
Rival BDO maintained its growth run, recording profits of £91m on fees of £456m, up 11.6% and 4.7% respectively.
According to managing partner Eagland, BDO has benefitted from the disruption in the audit market, pointing to the firm’s recent win of FTSE 250 outsourcer Mitie, albeit in circumstances that saw Deloitte defenestrated following an accounting scandal that remains the subject of a Financial Reporting Council (FRC) investigation.
In terms of technology investment, BDO is investing at a global level, together with firms in the US and Israel, particularly in areas such as cyber security and risk assurance services, while cloud accounting is ‘developing at quite a fast pace’.
Looking forward, the number six firm is now targeting more than 5% in growth in the current financial year, though he anticipates profits will be flat, reflecting this investment.
For the Top 75 league table and more detailed analysis, read the full feature here.