Accounting giant’s profits flat despite continued revenue growth

Deloitte’s profits were flat last year despite an eighth-consecutive year of revenue growth at the accounting giant.

Revenues rose to £3.58bn, up 6% in the year and 83% higher than in 2010.

The firm has changed how it reports its distributable profit figures, declaring them after tax for the first time, but like-for-like figures showed an 0.5% improvement on 2017. Equity partners shared £584m and received an average of £832,000,

David Sproul, senior partner and chief executive of Deloitte North West Europe, said: “This is a good result in a market facing slower economic growth and continued uncertainty.”

The firm said the reduced profit was the result of investment, highlighting its spending on its “internal centre of excellence for robotic process automation and the artificial intelligence studio, as well as in training and development of our people and audit quality initiatives”.

Revenues have increased 83% in eight years, but average profit per equity partner is yet to outperform 2010:

Deloitte’s 700-strong Yorkshire & North East practice witnessed another year of strong revenue growth.  The practice operates from offices in Leeds and Newcastle and appointed Stuart Cottee as its new Practice Senior Partner in January.

Cottee said: “Our growth this year was underpinned by continued investment in our people, a large number of new client wins across our service lines, as well as being boosted by the buoyant M&A market.

“Consistent with the performance of Deloitte nationally, our Yorkshire & North East practice has performed strongly, with particularly good results achieved by our Global Employer Services, Forensic and Restructuring Services businesses, which all achieved growth in excess of 20%.

“Our transactions business has also been very busy, and this has continued since our year-end, with strong growth in our Transaction Services, M&A Tax, Debt Advisory and Financial Advisory businesses.  Of particular note last year was our involvement in the £3.4bn sale of Sky Betting & Gaming to Canadian business The Stars Group, Clydesdale and Yorkshire Bank Group’s (CYBG) £1.7bn acquisition of Virgin Money and the £152m sale of Heron Foods to FTSE-250 retailer B&M Bargains.”

Deloitte’s Yorkshire & North East practice recently saw over 150 people achieving promotions across the region, including 13 new partner and director appointments.  The firm also recruited 68 new graduates and seven school-leavers onto the Deloitte Brightstart apprenticeship.

Deloitte is the first of the Big Four to reveal its results, which will come under close scrutiny following several high-profile fines this year for its competitors. Deloitte is currently being investigated for its audits of software firm Autonomy and Sheffield-headquartered building supplier SIG.

Audit and risk advisory services enjoyed a third-consecutive year of double-digit growth, breaking £1bn for the first time. The service line provides the largest revenue contribution, with 29%.

Sproul acknowledged concerns have been raised “over quality, conflicts of interest and a lack of choice” around audits.

He added: “These are serious concerns and we recognise the need for change. We must look at how the audits of the future match the evolving needs of stakeholders and society and address increasing business complexity.

“We have continued to invest in training and technology to help our 4,300 audit professionals deliver the highest quality audits and are proud to audit 27% of the FTSE 100.”

This article was updated on August 28 after clarification that corporate taxes had been deducted in the computation of distributable profit and average profit per equity partner, and were not therefore directly comparable with previous years’ figures.