Posted on Wednesday 13 November 2013 by Ulster Business


BDO NI Partners Sean Lavery, Alex Ward, Maybeth Shaw, Michael Jennings, Peter Burnside, Nigel Harra, Carol Malcolmson, Brian Murphy and Francis Martin.

In April next year it will be 25 years since accountancy and business advisory firm BDO Northern Ireland first set up in Belfast.

Back then, the company's workforce comprised the three founding partners and a receptionist. Today, BDO NI has grown to a full service firm with nine partners and 150 staff operating across multiple tax, accounting, corporate finance and advisory disciplines.

While many companies marking 25 years in business would be tempted to dwell on their past successes, BDO NI is looking to the future.

Peter Burnside, employee number nine at the firm six months after it was founded, recently took over as the firm's Managing Partner from Francis Martin, who is now leading a resurgent Corporate Finance team. An expert in corporate taxation including corporate reconstruction, mergers, acquisitions, pre-flotation planning and financial services, he says the company's history of spotting opportunities and adapting to clients' needs in changing economic circumstances continues to inform its flexible approach today.

"We started in 1989 in the last recession, which maybe wasn't the best time to start an accountancy practice. But back then it was about seizing opportunities and, as a new practice, opportunities came to us that other people didn't want," he said.

"We did a lot of MBOs back then because the other big accountancy practices didn't want to waste their time on work that they thought had uncertain outcomes. We were willing to work with businesses and match that need. That was the reputation on which we built our corporate finance practice," he explained.

"But we really went from being a small firm to being a medium sized firm when we won the receivership of the Europa Hotel. We were receivers of the hotel group for a number of years and ran it through three separate bombings – one fire bomb the day we were appointed. We eventually sold it to the Hastings Group. We had to staff up significantly to deal with that assignment. It was really the genesis of our business recovery practice, which remains one of the largest in Northern Ireland today."

Burnside acknowledges it has not been plain sailing through the recent downturn. He is confident though, that the firm retained its in-house skills by transferring people from corporate finance into business recovery, when insolvency work was crucial.

"We tightened our belt in the recession and we retained our good staff. So in many ways we are better placed to respond to that challenge because we still have a senior corporate finance team and a senior tax and transactional team," he said.

BDO NI has an established tradition of promoting from within, meaning a number of the firm's partners started as trainees. As he welcomed the new graduate trainees last month, Burnside says he warned them to be prepared that "this may be the first, and also the last, job they'll ever have".

"Outsiders may look in and think growth is a function of avarice. But in a firm like this growth is a necessity because we have eleven new graduates in this year who are looking to pursue their careers with the firm," he said.

Having a really strong partner-to-staff ratio means clients get more access to senior staff than might be the case in other firms. Partner-time is at the centre of BDO NI's commitment to excellent client service and they pride themselves on providing clients with all the service streams they would expect from larger accountancy firms while still offering levels of partner access that would be the envy of much smaller firms.

"We've always prided ourselves on the fact that BDO NI's office in Belfast is a full service office. We have retained that offering and that has assisted our growth over the years. Some of our clients have grown together with us over the last 25 years. We've dealt with their international expansions, we've dealt with their successions and transitions, we've gone through acquisitions," said Burnside.

"If you have good relationships with your clients, if you see them more than once a year, you're more likely to be aware of how they are thinking, what their ambitions are, what's going on with their family. That allows us to react and support them as opposed to just finding out afterwards when we're doing their accounts. We want to be at their side, helping them grow, and being their trusted adviser."

Senior Partner Nigel Harra leads BDO NI's audit and business assurance department, which has 42 staff and a management team who all started as trainees with the firm.

"Most of the satisfaction of the work we do comes from the personal relationship you build up with the client over a period of years, it is not just about signing off a clean audit report or submitting a tax return, it is that interaction with the people, going through ups and downs with them," he said.

Nigel has many years of experience in auditing clients in a number of business sectors including manufacturing, construction, wholesale, services and charitable organisations. While he notes there has "definitely been an improving mood" in recent months, he believes funding and access to finance remain the biggest problem for businesses which often still have property debts on their books.

"We're seeing some improvement with banks more willing to fund trading businesses. But there is still a long way to go. For a lot of companies their relationships with the banks have broken down, so there is a degree of uncertainty about the future," he said.

It is an assessment that BDO NI's tax partner Maybeth Shaw agrees with. Maybeth, who joined the firm as a trainee, specialises in providing corporation tax compliance and consultancy advice, capital gains tax planning and inheritance tax planning, to clients across the property, leisure and hospitality, manufacturing and food services sectors.

"There's definitely more of an appetite now for acquisitions and expansions that people have put on hold for a while. We're starting to see more action," she said.

"We're helping clients realise we have good reliefs for R&D and highlighting the patent box regime. We're finding clients taking much more of an interest in those measures to encourage innovation – they're starting to look at R&D projects because there are tax reliefs to help fund it. It is an incentive to get people to spend their money rather than just talking about it."

One of BDO NI's main strengths has been in its understanding and knowledge of the common challenges and issues facing local owner-managed businesses.

Peter Burnside explains: "By far the vast majority of our clients are locally-owned, however that doesn't necessarily mean they are small – we look after many of those listed in the Ulster Business Top 100 and several of the top 10 firms in Northern Ireland.

"Locally owned family businesses have specific advisory needs and one of Maybeth's roles is developing our family business consultancy division, which helps businesses to plan for succession and transition because that's when they are most vulnerable. The issues those businesses are struggling with are often not unique to them, other companies are going through the same things."

The recently announced Managing Partner believes there are a number of areas which will provide BDO NI with growth potential in coming years. For example BDO NI's energy team have helped one of their clients complete the first investment with the UK's Green Bank and are looking at several other innovative waste and energy projects.

Burnside also sees opportunity in the fact that a lot of businesses are "unsettled" at the moment as relationships with their banks have broken down over the last five or six years.

"As the banking sector normalises I think there'll be a lot more work in that re-banking world. We can already see a pick-up in corporate finance enquiries and it hasn't been as busy for some time. We have clients looking at acquisitions in England and beyond UK shores. That transactional activity picking up will undoubtedly lead to future growth within the firm," he said.

"I get the feeling generally that business is now looking beyond this recession. Lots of people I talk to are keen to do things – to expand, to look at new markets – despite any visible central government support. In the last recession the government introduced enhanced capital allowances to encourage businesses that had reserves to invest in competitiveness. They introduced rules to let them carry back their trading losses further to create cashflow. In this recession the government is doing the opposite – they restricted loss relief, they restricted capital allowances. It is not a platform for recovery that they've created.

"The lack of clarity on Northern Ireland enterprise zones is also frustrating because we have clients looking at substantial investment plans who have this reticence. What if you expand 100 yards just too far outside a zone which is going to be an enterprise zone? If you're spending millions of pounds the difference of a hundred yards could be significant," added Burnside.

And having played a leading role in the drive to see the devolution of corporation tax varying powers, BDO NI is hopeful of a swift resolution after the referendum on Scottish independence.

"We've done all we can to campaign for change, all we can do now is wait for a resolution," said Burnside.

"If you look at what low corporation tax has done for Malta and Cyprus, there has been a huge increase in business activity on those islands. I don't think we should underestimate the impact it would have on Northern Ireland."

Whether or not a lower rate of corporation tax comes to Northern Ireland is still unclear. Whilst Peter and his partners at BDO NI would welcome it, it is clear that their main focus will be their own growth strategy in the forthcoming years.

Preparing for FRS102

The new accounting standard FRS102 was announced this year with more of a whimper than a bang. The long anticipated standard affects companies as early as January 2014 and businesses need to be prepared, says BDO NI.

FRS 102 is the core of new UK GAAP, providing a concise and simplified accounting framework for companies. There are some key differences with current accounting standards.

"It has been overdue, we've been waiting for it a long time and when it has finally arrived nobody has really noticed it," says Nigel Harra.

"If you have a December year end then the first year where it is compulsory is December 31, 2015. But that means you need comparative figures for the year before.
That year starts on January 1, 2014, so people do need to be aware of it and do need to plan ahead for certain aspects of it that could create an impact on their accounts that they might be surprised about."

"One of the things that will have a big impact is that where company accounts have investment properties in them. In the past you were able to revalue that up and down into a revaluation reserve rather than through your profit and loss account. With the new standard any revaluation down or up goes straight to the profit and loss account so it will affect people's posted results, it could affect bank covenants, bank facilities, the growth strategy of the business. It is something to think about."

Also, under FRS 102 deferred tax is recognised on valuations and fair value adjustments in a business combination.

Maybeth Shaw comments: "Companies have to potentially provide for more deferred tax than they would have in the past, which could have an impact on the balance sheet. And we are still awaiting clarification from HMRC around how certain things will be treated, such as goodwill and intangible assets. The tax rules and accounting rules are not always aligned."




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