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August 26, 2014

Deloitte UK growth slows as audit revenues fall

By Isabella Grotto

Deloitte UK has seen its growth slow to 1.4%, as revenue increased to £2.55bn ($4.23bn) for the year ending 31 May 2014, compared to £2.52bn last year.

The growth figure marks the lowest level in four years and a sharp fall compared to the 8% revenue increase witnessed in 2013 and 11% growth in 2012, which was mainly on the back of strategic investments.

Among the firm’s service lines, audit fell 1.8%, from £719m in 2013 to £706m. The decrease comes after last year’s 12% increase in fee income in audit.

The decrease in audit is likely down to pending mandatory audit firm rotation and many FTSE350 already retendering their audit contracts. Last week PwC forecasted 56 of the FTSE350 are to put their audit out to tender this year.

For Deloitte UK tax revenues remained flat at £562m, compared to £563m last year.

Consulting increased slightly (0.5%) from £619m last year to £622m, while corporate finance bucked the trend with a 4.7% increase to £424m from £405m in 2013.

Profit distributable to partners for 2014 fell from £571m in 2013 to £554m at the end of May, with the average profit earned by partners also decreasing in 2014 to £750,000 from £772,000 the year previous.

Overall, employment figures increased from 3,000 to 3,500, with 72 new partners and 1,500 new entry-level positions added.

Deloitte UK chief executive and senior partner David Sproul attributed the slowdown in growth to "uncertainty" in the market and added that despite a "year of investment" for the firm, doubt continued to dampen prospects for the coming months.

"Looking ahead, we expect that better economic conditions will result in significant improvements across our markets. Growth has increased in the first quarter of the new financial year and we are seeing a renewed confidence and optimism in our clients to make investment decisions. The global ambition of our clients and our people is creating opportunities for the firm to increase revenue internationally," he said.

"However, whilst we continue to make investments for the future, we do hold a concern that political uncertainty may dampen business activity later in the year."

Deloitte UK results also include the network’s Swiss practice, which contributed £236m to the firm, a 13% increase on last year’s figure of £209m.

Deloitte UK is the first of the Big Four to report its 2014 results and the revenue increase puts the firm closer together with the largest UK firm, PwC UK, which reported revenues of just under £2.6bn in the year to 30 June 2013. PwC UK is likely to announce its results in September.

Deloitte is currently the largest accounting network in the world.

Related links:

Deloitte UK

PwC UK

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