The 60 largest accountancy firms in the UK are still struggling in a stagnant market, according to our latest survey. Unlike last year's survey, though, the Top 60 did manage to show a small year-on-year increase in fee income. Overall, the 60 firms showed a rise in revenue of just over 1%, from 6.315bn to 6.392bn.

Organic growth is rare. Most firms reported only modest growth or a slight fall in revenue and many of the larger increases can be explained by mergers or acquisitions.

One of the largest increases in fee income comes from north-east London-based Haslers, ranked 50th in the table, with 34%. According to managing partner Stanley Baskin, the growth is entirely organic. 'It's a case of a lot of earlier work on marketing and development bearing fruit. We've strengthened the tax department considerably and have two partners concentrating solely on corporate finance.' As with many firms, Haslers has consciously moved away from compliance work. 'Audit and accounting just doesn't put bread on the table any more.'

Baskin also disagrees with the view of the larger firms that the market conditions are more difficult than ever. 'For our size of firm, looking for SME clients, I'd say that the market is buoyant.'

Restructuring

Similarly, some of the more significant falls in fee income can often be explained by restructuring or reorganising. MacIntyre Hudson, which dropped out of the top 20 this year after reporting a 29% fall in fee income, says it remains buoyant about its prospects. 'In previous years we aggregated the financial services revenue of Moorgate House plc (the firm's associated financial services division) with that of the main practice,' said Dick Panter, the firm's managing partner. 'That company was taken over in September 2003 and we have excluded the financial services revenue for the whole year.' There is healthy growth in all other areas, he said.

Overall, there seems to be growing evidence that firms are reassessing their business and looking for profitable niches or moving away from disciplines that have proved less profitable in the past.

NOTES TO TABLE

1. 2004 fee income is estimated.

2. 2004 fee income is estimated.

3. The figures for Smith & Williamson Ltd include revenue for services provided to Nexia Audit. Nexia Audit Ltd is a legally independent company which uses staff seconded by S&W together with related services (see box left). 'Partners' are fee-earning directors.

4. Financial year end is 30.06.04. Income includes revenue for services provided to Blueprint Audit Ltd.

5. Figures are unaudited.

6. Fee income includes revenue from a services agreement with HLB AV Audit. Business advisory services were transferred to an LLP within the group on 1 June 2004 (see box left).

7. All figures taken from annual report and accounts (see 'How we compile the Top 60', left). 'Partners' are directors. WJB Chiltern's main business is tax consultancy.

8. 'Partners' are executive directors.

9. Prior year figures have been adjusted to take account of a change in the year end.

10. 'Partners' are directors.

11. Staff are seconded from Numerica. 'Partners' are client service directors.

12. Staff are seconded from Smith & Williamson. Full year comparatives not available - Nexia founded in October 2002.

13. Fee income includes financial services and IT consulting income conducted through associated companies.

14. 'Partners' are members.

HOW WE COMPILE THE TOP 60 TABLE

Given that not all firms publish their annual results, the table is mainly put together using responses to a questionnaire sent out by Accountancy.

With the trend towards transparency, the number of firms refusing to complete them has dwindled to a few small firms, with the exception given below.

Given the arrival of the consolidators and Smith & Williamson's transformation into a limited company, the term Top 60 'firm' should now be interpreted in its loosest sense. We include businesses that employ accountants to carry on the sort of businesses traditionally associated with accountancy practices, such as audit, tax and business advice, which compete in the accountancy market and which have links to the professional accountancy bodies.

Hence our decision to include WJB Chiltern which this year declined to complete a questionnaire. We have therefore used its latest published group accounts and website. WJB Chiltern directors do not feel the company is comparable to traditionally-structured accountancy firms.

NOTE ON CONSOLIDATORS INCOME

The incomes of Tenon, Numerica, Smith & Williamson and Vantis include income earned from services, such as provision of staff, to their associated independent audit organisations, respectively, Blueprint, HLB AV Audit, Nexia (all in table) and AuditAssure (too small to be included).