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April 30, 2008

Dutch market leader posts negligible growth

Deloitte Netherlands is attributing stable revenues and decreased profit to significant restructuring within its SME business and reduced Sarbanes-Oxley and IFRS work.

 

The Netherlands’ largest profession services firm reported fee income of €749 million ($1 billion) for the year ended May 2008, only a fraction higher than the €748 million it reported for the previous period.

Profit on ordinary activities before tax was €118 million, down 2 percent from €121 million the previous year.

The firm’s SME accounting and advisory, and consulting service lines reported the sharpest downturns. The revenue for the former dropped 11 percent to €77 million. The latter dropped 11 percent to €97 million.

Audit, tax and financial services all recorded positive fee income growth.

The firm’s partner and staff numbers fell by 4 percent to just below 5,000. There are now 260 partners (in full-time equivalents), one less than the previous year.

Deloitte Netherlands chairman Roger Dassen said despite the lack of growth, he remains optimistic. He noted that the firm has felt the effects of the weaker economy in recent months.

“Turnover in the past year grew less than planned. First the deal flow in the high end of the transaction market slowed down significantly, which impacted our M&A-related activities. Also, a number of consulting projects were called off at the last minute, as companies decided to postpone them for the foreseeable future,” he said.

“Finally, we gained and lost several audit mandates as a result of the acquisition of several large Dutch companies by foreign companies.”

Dassen said the process of restructuring accounting and advisory services for SMEs also continued during the past year with a focus on delivering integrated services to clients.

“We have divested a number of offices and merged others, even though this had a negative impact on our revenue in the short term.

“Further, we have sold our payroll processing activities, and have continued the process of rationalising our office network. This explains the reduction in net revenue levels versus last year,” he explained.

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