Deloitte in the UK & Switzerland has increased revenue by 10.9% in the year ended 31 May 2019, from £3.58bn in 2018 to £3.97bn. Average profit per equity partner, based on distributable profit, was £882,000, up from £832,000 last year. The year-on-year 6% growth in average profit per equity partner was driven by the improvement in distributable profit which benefited from a one-off gain on the sale of an investment, lower provisioning charges and currency gains; without these, distributable profit would have been flat.
Richard Houston, UK and North and South Europe senior partner and chief executive, said: “Our clients and our own profession are facing a time of substantial change, challenge and opportunity with slowing economic growth, ongoing political uncertainty and the impact of technology disruption.
“Our 2019 results reflect the long-term investment we have been making across our business and, in particular, in audit quality and the training, technology and talent required to support it. This investment has helped us succeed in the market and improved the financial performance of our audit business.”
Across business lines, Audit and Risk Advisory revenue grew by 8.1% to £1,110m (of which Audit & Assurance was £582m), Consulting increased 9.0% to £952m, Financial Advisory by 10.5% to £507m and Tax & Legal saw its revenue rise by 17.8% to £862m. Deloitte Switzerland saw growth of 10% to £538m.
Distributable profit was £617m, up from £584m in the prior year. The firm’s total tax contribution was £1,057m in 2019. This comprised £638m of taxes collected on behalf of HMRC (VAT, PAYE and employee national insurance) and £419m of taxes borne by the firm (partner income taxes, national insurance, corporation tax and employer’s national insurance).
The firm’s audit quality record from FRC inspections improved over the prior year – 84% of audits reviewed by the FRC in 2018/19 were found to require no more than limited improvements, compared with 76% in 2017/18.
Deloitte took a pot-shot at suggestions audit should be hived off, saying: “The strength of being part of a multi-disciplinary firm has enabled a continued multi-year investment in audit quality and transformation. Investment of this scale would not be possible in an audit only firm.
“Delivering the audit product of the future, which meets the evolving needs of society and investors, requires the depth of skills and investment capacity that is only possible with the scale that comes from being a multi-disciplinary partnership firm.”
Stephen Griggs, managing partner Audit & Assurance, said”…we do not agree with proposals that would see any form of separation of the audit business from the rest of the firm. Audit quality is considerably enhanced by the investment capacity and access to specialists that being part of a much larger and diverse multi-disciplinary firm allows.”
Deloitte’s regional business has seen accelerated growth throughout the year with revenue growth of more than 15%.
Pauline Biddle, managing partner for the regional market, said: “Our employee numbers are up 13%, now exceeding 7,500 and the firm’s regional footprint has grown significantly. We have invested in centres of excellence, including our new tech hub in Reading, and continue to invest in a number of our key delivery centres, which will see both Cardiff and Belfast collectively employ over 2,000 people in the near future.
In the 2019 financial year, over 4,000 people joined Deloitte, including 1,200 graduates and school leavers in Deloitte’s apprenticeship programme. Of the 78 partners promoted in the UK, 32 (41%) were women, a near threefold increase in female promotions from last year, taking Deloitte’s female partners to 223 (21%), bringing the firm closer to its target of 25% of female partners by 2020.