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Friday, 19th April 2024
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Mid-tier firms shine in another buoyant year of double digit fee income growth Back  
A robust economy continues to fuel growth in Ireland’s accountancy sector, with the top firms benefiting from an average annual growth rate of almost 18 per cent,according to this year’s FINANCE Accountancy Survey. Mid-tier firms are the strongest performers, with Farrell Grant Sparks benefiting from its recent acquisitions,
and Grant Thornton recording a remarkable 42.9 per cent annual growth rate. As in last year’s survey, Deloitte is once more the most ‘efficient’ top accountancy firm, returning the most income per employee.
Although Ireland’s top accountancy firms are still recording double digit annual fee income growth, the rate of growth amongst is slowing, according to this year’s FINANCE Accountancy Survey. Last year, the rate of growth was over 20 per cent, while this year it has fallen off to 17.9 per cent.

Profitability
Overall, amongst the 21 companies polled, fee income was up by 17.9 per cent on last year’s total of €765.9 million, to stand at €902.9 million this year. This year the Big 4 have a slightly smaller share of total fee income. Last year the Big 4 accounted for 75.7 per cent of all fee income, while this year that figure has reduced slightly to stand at 73.5 per cent, which equates to €663.1 million of the total fee income across all firms of €902.9 million. The Big 4’s average growth in fee income is 14.2 per cent, which is below total growth for the whole sector.
KPMG reported a total fee income of €211.2 million for this year, just surpassing PwC’s €210 million. This is a reversal of last year’s top two in the chart, when PwC took the crown with €181 million, compared to KPMG’s reported fee income of €176 million. Deloitte holds onto third place, and lengthens the distance between itself and fourth placed Ernst & Young, with fee income of €124.9 million, compared to E&Y’s €117 million. Last year, just €3.5 million separated the two.

The fastest mover in the Big 4 was KPMG, which recorded fee income growth of 20 per cent over the past year, followed by PwC, with growth of 16 per cent.

Acquisitions are driving growth in the mid-tier sector and smaller firm, with most firms seeing strong growth in fee income for this year. The best performer in the last financial year is Moore Stephens, which saw its fee income almost double from €4.2 million to €7.9 million, following the inclusion of Limerick based firm, McNamara and Associates, in the network, and hence the survey figures. The firm has also moved up the league table, and is now the fourteenth largest accountancy firm in Ireland, up from 20th place last year.

However, not all of Moore Stephens’ growth is due to the expansion of the network. According to Julian Caplin, managing partner of Moore Stephens Caplin Meehan, growth in the Dublin office alone was in the region of 30 per cent.

Farrell Grant Sparks also registered impressive growth last year, with its fee income jumping from €14.8 million to €26.5 million. This follows the firm’s merger with Northern Ireland’s McClure Watters, and Longford based Lyons Keenan Kilemade, earlier in the year.

The fastest mover outside of acquisitions was Grant Thornton, which organically grew its business by almost 43 per cent over the past year.

With static growth at Oliver Freaney, and growth of just 4.0 per cent at OSK Accountants & Business Consultants, both firms have been leap-frogged in the league table. Growth of almost 10 per cent at HLB Nathans has seen the firm over-take Oliver Freaney, and OSK has fallen back to 19th place from 15th last year.

Overall, the four larger mid-tier firms (BDO, Grant Thornton, FGS and Mazars) collectively grew their fee income by 30.2 per cent, from €106 million last year, to €138 million this year, over double the average growth in the sector of 15 per cent.

In terms of market share, KPMG also leads the way this year, controlling some 23.4 per cent of the accountancy market in Ireland. PwC has a 23.3 per cent stake and Deloitte takes the bronze with a 13.8 per cent share of the overall market. The next in line is Ernst & Young, who controls 13.0 per cent of the Irish accountancy sector. Snapping at the heels of the Big 4 are BDO Simpson Xavier, with a 6.7 per cent market share, and Grant Thornton, who controls just over 3 per cent of the market.

The efficiency factor
The survey also compared the firms in terms of efficiency, by looking at how much income is generated per staff member. This year Deloitte was once again the most efficient firm, with its 823 staff members generating income of €151,701 each.

The mid-tier and smaller firms performed well in this category, and Mazars was the second most efficient firm with each of its 149 staff generating €140,940 in revenue.
UHY O’Connor Leddy Holmes came next with its 48 staff each generating €140,625.

At the other end of the scale came Moore Stephens. Its 78 staff brought up the rear, generating some €73,143 each over the past year. Grant Thornton was the biggest improver in terms of efficiency this year, with its income per staff member increasing by 31.47 per cent to €119,522. This means that the company moves up five places in the efficiency rankings, from 16th last year to 11th this year.

When just chargeable staff are looked at, Deloitte is again the most efficient firm, with income of €165,584 per each chargeable staff member, followed by UHY O’Connor Leddy Holmes, and Oliver Freaney.

The ratio of partner numbers to fee income remains largely unchanged across all firms surveyed this year. At the upper end of the scale, fee income is triple the number of partners (KPMG and Deloitte), with partners generating income of more than €3 million each. This multiple reduces thereafter, with PwC, Ernst & Young and Grant Thornton all generating income of €2 million per partner, and the remaining firms producing income of E1 million per partner.

Staff numbers
According to the survey, Ireland’s top twenty accountancy firms employ 7,003 people, up by 654, or by almost 10 per cent on last year.

In terms of staff numbers, PwC leads the way with a total of 1653 employees this year, 86 of whom are partners. KPMG is the second largest employer, with 1503 staff throughout Ireland, including 72 partners. Of Ernst & Young’s 898 staff, some 49 are partners, while Deloitte has 43 partners out of a total staff of 823.

Once again a number of firms outside the Big 4 recorded strong growth in staff levels, with Moore Stephens leading the way with a 145.5 per cent jump in staff levels. Last year, Moore Stephens’ Dublin firm, Caplin Meehan employed 44 people, and this figure has since jumped to 108, due to the inclusion of McNamara and Associates in the figures.
Similarly, following its acquisition of two other firms, Farrell Grant Sparks also grew quite considerably this year, with total staff levels almost doubling. In 2005 the company employed 107 people and at the last head count this number had increased to 207.

Horwath Bastow Charleton also recorded strong employee growth, growing its numbers by 87 per cent, from 79 last year, to 148 this year. Of the Big 4, Deloitte grew its staff figures the most, up by 7.3 per cent to 823 from last year.
The biggest decline in staff numbers was at Baker, Tilly, O’Hare, where the numbers employed fell by almost 10 per cent from 42 in 2005, to 38 this year.

Last year’s survey highlighted the difficulties that many firms within the accountancy sector had with recruiting quality staff. This is an issue that was commented on once again in this year’s survey. Despite their concerns, it seems that the firms operating within this sector are still quite confident of securing the appropriate staff to fuel their growth.
KPMG has the highest staff to partner ratio, with just under twenty staff to each partner, followed by PwC, Deloitte and Grant Thornton. Brenson Lawler has the lowest ratio, with four staff members per each partner.

Gender of partners
Long seen as the preserve of the middle aged man, accounting has undergone an overhaul in recent years. However the percentage of women in senior positions is still quite low. Of the 435 partners in accounting firms around the country, only 51 are women, which represents just less than 12 per cent of all partners. Last year the figure was also 12 per cent.
The Big 4 is a little more progressive, with 14 per cent of all partners in these firms being female. Almost 20 per cent of PwC’s 86 partners are women making it one of the most gender equal firms. Elsewhere Baker, Tilly, O’Hare and RSM Robson Rhodes again have the best representation of females at partner level.
At the other end of the scale is BDO Simpson Xavier, where only one of its 43 partners is female.

Age of partners
None of the firms surveyed had any partners under 30. The majority of partners, 37.8 per cent, are in the 40-49 age bracket, with the next most popular age category being 30-39 (31%) and then 50-59 (27.9%). Horwath Bastow Charleton is one of the youngest firms, with almost half, 8 out of 15, of its partners under the age of 40.

Growth areas
Audit/accounting and tax have been identifed by the survey respondents as being the two key drivers of growth in their business over the past year. Thirty-five per cent of respondents chose audit/accounting, and 35 per cent chose tax, as the area which ‘had the strongest revenue growth over the past year’. Corporate finance is also a strong area, accounting for 15 per cent of votes.

Last year audit/accounting and tax were again the key drivers of growth, with a much smaller proportion highlighting management consulting as being important. In this year’s survey, no-one chose this category.

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