The past
fiscal year was one of the hardest for Spanish companies immersed
in the economic crisis. Accounting firms say the period was defined
by an ongoing search for efficiency through significant cost
adjustments.
Two years since the onset of the global
financial crisis, the accounting industry is still reeling from
extreme fee pressure, which is the single biggest issue for audit
practices. Another area that is suffering is transactions services
as M&A activity is sparse amid the economic uncertainty.
The bright spots in Spain are tax and some
niche advisory services, such as restructuring and due diligence.
Foreign investors are running the rule over failing Spanish
businesses and this is providing some opportunities for firms to
help investors assess prospects.
Despite the gloom, the workforce grew
marginally although headcounts varied from firm to firm. Hiring was
largely strategic but the majority of firms have managed to retain
current headcount levels.
Firms, networks and associations surveyed in our report earned a
total of €1.8bn in 2010, the result of 3% average growth. This is
markedly better than Spain’s economy, which contracted by 0.47% in
2010 following a contraction of 3.7% in 2009.
The International Monetary Fund has predicted
the Spanish GDP will grow by about 1% in 2011 and this is creating
optimism among the accounting firms who are currently investing in
service lines, staff training and improving internal processes.
Seventy percent of firms reported an
increase in revenue but only three reported double-digit growth.
Last year, double-digit growth was far more common.
Deloitte leads the pack
Deloitte is the market leader and reported a
5% revenue increase to €459m ($649m) in the year to 31 May 2010. It
also has the largest workforce with 4,668 people across 20
offices.
“In the past fiscal year we had to make an
enormous effort to provide solutions for our clients,” a Deloitte
spokesperson explains.
“By giving our team’s greater flexibility in
order to offer new types of services, reduce our overheads and
motivate our professionals to work even harder and more
efficiently.”
PwC also
reported 5% growth to €429m, while Ernst & Young (E&Y) is
the only Big Four firm to report a decrease in revenue of 6%, from
€278m to €261m in the year to 31 June 2010.
Bucking the trend, PwC audit managing partner
Manell Valls says it was the development of audit-related services
that helped the firm to produce a modest increase in overall
revenue.
From E&Y, there is a jump of €173m to the
largest mid-tier firm, BDO, who reported 2% growth to €88.3m in the
year to 31 August 2010. That BDO is nearly half the size of the
smallest Big Four firm is unusual in a developed Western
market.
Mid-tier network PKF International reported the largest growth of
707% from €2.8m to €22.6m in the year to 31 June 2010. The
substantial growth is due to admission of an exclusive
correspondent firm, Attest, which is in the process of becoming a
full member firm.
AGN International member firm D[i]G Advocats
had the largest drop in revenue of -13% to €1.7m in the year to 31
December 2010.
