| FINANCE Accountancy Survey 2001 |
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| Increase in fee incomes of Ireland’s top accountancy firms indicates that the market is still strong, with first Irish accountancy firm to top £100 million in fees but there is no change in the rankings as PWC remains the biggest and KPMG the most profitable. |
In a year when the phenomenal growth that has characterised the economy for the past decade finally started to slow, fee income at the top accountancy practices continued to boast sharp increases.
Total fees earned by the accountancy, tax and consulting practices of chartered accountancy firms included in the Republic of Ireland 2001 survey was £402 million, up 16.2 per cent from last year’s £346 million figure.
PricewaterhouseCoopers again topped the Fee Income table with its preliminary estimate of fees for its financial year ending 30 June 2001 of £144 million, an impressive increase of 21 per cent. This boosts PWC’s market share somewhat to 28 per cent, compared with last year’s 27 per cent.
KPMG remains in second place in the accountancy stakes and recorded a fee income of £77 million - almost on a par with last year. But far from indicating a lack of growth within the group the stable figure is thanks to the exclusion of KPMG Consulting following its sale to KCI.
Jerome Kennedy, managing partner of KPMG said ‘The turnover for the year of £76.9 million excludes Management Consulting revenues and reflects an increase of 16.9 per cent over the previous year’s revenues (excluding Management Consulting). During the year we transferred our Management Consulting division into the US Consulting arm of KPMG. This company was successfully floated on NASDAQ in February of this year and is now an independent US publicly quoted consulting company. This move positions KPMG Consulting as totally independent from our audit practice.’
As a result, market share for KPMG dropped to 19 per cent - from last year’s 22 per cent.
Both PWC and KPMG are the substantial players in the market with the fee income from the two accounting for over half of all fees earned by the top 20 firms in the country.
Meanwhile Deloitte & Touche’s fee income also made impressive progress at £46.5 million - up 28 per cent when compared with last year.
The 80:20 rule is still in effect in accounting and professional services. The dominance of the big five accounting firms is clearly shown by their near 80 per cent market share of fees - the estimate is 79 per cent.
If the next five companies are included, namely BDO Simpson Xavier, Chapman Flood Mazars, Farrell Grant Sparks, Grant Thorton and Horwath Bastow Charlton the top ten companies account for approximately 93 per cent of the market.
Farrell Grant Sparks’ fee income figures of £6.7 million demonstrate an increase of 25 per cent.
Notably Horwath Bastow Charlton have made it into the top ten while IFAC accounts have dropped to 11th place. HBC’s fee income was up 12 per cent to £5.4 million while IFAC’s fee income dropped by 2 per cent to £5.1 million.
The dominance of the top ten firms however cannot hide the fact that other firms have made strong business gains in the last year representing effective small practice management.
Both OSK and Russell Brennan Keane recorded growth in fee income rates of 38 per cent. Clearly there is still a strong place in the market for ‘niche’ or smaller practices.
As is apparent from the ‘growth areas’ table, there has been a change in where accountancy practices expect to see growth over the coming year. Compared to last year’s survey where Corporate Finance was most frequently mentioned as the most promising area, particularly for mid-sized firms, this year the Management and IT Consultancy divisions are seen as having most potential. In some respects the euro changeover may be responsible for this growth.
The significant drop in the attitudes to Corporate Finance, where it fell from 37 per cent of mentions in 2000 to just 15 per cent of mentions in 2001, may be as a result of the declining activity in M&A activity thanks to a global slowdown. Irish M&A activity has slumped since the start of 2001.
Also the areas of Corporate Recovery and Business Services each received 7 per cent of mentions. |
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| Article appeared in the July 2001 issue.
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