Deloitte records double-digit revenue growth
Business advisory firm releases financial results for year ended 31 May 2017
29 August 2017
- Revenue up 11.2% to £3.4bn (2016: 13.6%)1
- In the UK, double digit growth is reported in Consulting and Audit and Risk Advisory
- Switzerland revenue growth excluding currency benefits was 14.4%
- Distributable profit for 2017 was flat year on year at £608m reflecting continued investment in people and market leading solutions2
- 1,600 school leavers, interns and graduates recruited last year
- Social impact strategy launched to support One Million Futures
- Firm invests in innovation through global alliances and acquisitions
Deloitte, the business advisory firm, has increased revenue by £340m1 in the year ended 31 May 2017, from £3,040m to £3,380m. This is the seventh consecutive year of revenue growth and the second consecutive year of double-digit growth.
Consulting revenue grew by 13.6% to £859m, Audit and Risk Advisory by 13.1% to £932m, Tax was up by 5.7% to £691m and Financial Advisory, on a like-for-like basis, grew by 1.5% to £459m3. Deloitte Switzerland grew by 14.4% to CHF564m (£439m: 31%). Distributable profit for 2017 was flat year on year at £608m and average profit per equity partner was £865,0002.
David Sproul, Senior Partner and Chief Executive of Deloitte, commented: “This is a good performance in a complex and uncertain market which has been impacted by Brexit and the elections in the US and UK. Our Consulting and Audit and Risk Advisory businesses both grew by double-digits. Consulting has continued to see significant demand for technology-enabled business transformation and there has been further strong growth in Deloitte Digital, our creative digital consultancy. The firm won a series of major audits this year, including BAE Systems, BP, Centrica and GlaxoSmithKline which has taken our share of the FTSE 100 audit market to 26% and we saw further success in the FTSE 250, private and international markets. Our Risk Advisory business has seen increasing demand for supplier risk, cyber and regulatory advice.
“Growth in tax was driven by the global tax reset, Brexit and the possibility of US tax reform, alongside continued demand for technology-enabled compliance services. Financial Advisory advised on 87 M&A deals last year with a total value of more than £7bn and we advised on 38% of main market IPOs. We also saw strong growth in forensic driven by a number of large investigations and regulatory remediation work across Europe. From an industry perspective, growth was notable in Consumer and Industrial Products and Life Sciences and Healthcare.
“Switzerland delivered another impressive performance, driven by high demand for digital technology, cyber and M&A services. The firm has also won new audit clients including Lafarge Holcim.
“We have continued to invest through this year of uncertainty and that investment in our people, in winning market share and in building market leading solutions has resulted in flat distributable profits.”
Investing in our people, in society and in our clients
In the past 12 months, Deloitte has announced a number of technology alliances and acquisitions. These include an alliance with Apple designed to help companies use the iOS platform in the workplace and with McLaren Applied Technologies to build data-driven business products. The firm also completed the acquisition of Market Gravity and has continued to invest in further developing its creative consulting capabilities with the acquisition of Swedish creative agency Acne announced last week.
Sproul said: “Our clients are operating in a more globally connected way than ever before, and are increasingly turning to us not only for advice, but also for digital and physical products to solve their problems. Through these alliances and acquisitions we will see Deloitte increasing our recruitment in the areas of digital design and big-data analytics.”
More than 3,500 people were recruited in the last financial year, including more than 1,600 school leavers, interns and graduates. This includes a record number of new joiners to its BrightStart apprenticeship scheme. More than 200 school leavers joined Deloitte through this scheme in FY17 and this number will increase again to almost 300 in September’s intake.
The firm is also beginning to see the positive impact of actions taken to attract a more diverse workforce and help improve the UK’s record on social mobility. Deloitte’s use of contextualised academic data has resulted in more than 100 people joining who previously would not have passed the selection criteria. These successes contributed to Deloitte being ranked 5th in the UK’s first Social Mobility Employer Index. Regionally, Deloitte now employs nearly 6,000 people across 22 offices and this year, the firm has announced job creation programmes in Belfast, Cardiff and Newcastle.
Deloitte promoted more than 5,000 people this year as it seeks to retain its brightest talent, while in the UK the firm promoted 57 new partners and recruited a further 30. The proportion of female partners in the UK now stands at 19%, up from 14% in 2014. Deloitte has a target that 25% of partners will be women by 2020.
This year, Deloitte launched its social impact strategy, One Million Futures, which over five years aims to support one million people in the UK. The firm is working with over 50 society partners to help improve education, skills and employability. Over the past year this has included supporting more than 4,800 pupils in low-income communities through the Deloitte Access programme.
Sproul added: “Our priority is to ensure our talent pool is diverse and reflects the make-up of today’s society and we are proud of the progress made so far. We will continue to work hard to show that everyone can thrive, develop and succeed in our firm. We also recognise the difference we can make by improving access to education and training across society more broadly. Through One Million Futures we want to help people overcome barriers to education and employment and in the process raise aspirations, improve skills and develop leaders.”
Another strong year for Deloitte in Yorkshire and the North East
Martin Jenkins, Practice Senior Partner for Yorkshire and the North East at Deloitte, said: “Our practice has performed well this year, with strong growth in tax, financial advisory and consulting, as well as some prominent audit wins, such as FTSE-listed Fenner plc. We are proud to act for some of the most innovative, respected and thriving organisations across the region.”
Deloitte’s Financial Advisory team in Yorkshire advised on 22 transactions with a combined value in excess of £2.2bn. This included the £750m sale of Zenith Vehicle Holdings, the £326m sale of Gardner Aerospace, the £61m sale of Aflex Hose and the sale of Contract Vehicle Holdings (CVL).
The regional Tax team saw continued demand across its client base, from FTSE companies to smaller entrepreneurial businesses, and advised on more than 50 transactions across corporate M&A, private company disposals and private equity investments. The firm’s national Global Employer Services practice, which has a strong presence in Yorkshire, led by partner Helen Kaye, won the ‘Best Tax Team in a Big 4 Firm’ award at the 2017 Tolley’s Taxation Awards.
Mirroring the firm’s national picture, consulting growth was driven by demand for technology-enabled business transformation, while risk advisory was led by increased interest in supplier risk, cyber and regulatory advice.
Deloitte’s practice across Yorkshire and the North East now employs over 700 people, including more than 80 at the firm’s national accounting Centre of Excellence in Newcastle, and over 130 in the fast-growing consulting and risk advisory practices.
Stephen Hall, office senior partner in Newcastle, said: “The accounting Centre of Excellence is a key element of the firm’s audit offering nationally and supports the work we do for some of our highest-profile national clients. We will continue to invest and anticipate increasing the number of people employed in this centre to 110.”
The firm has also promoted two new Partners and six new Directors in the region.
Jenkins added: “We have consistently invested in talent and these senior promotions underline our commitment to further developing our practice and enhancing the services we offer to clients in Yorkshire and the North East. We have also recruited 50 graduates, two undergraduates on an industrial placement and 10 school leavers, who joined Deloitte as part of the firm’s BrightStart apprenticeship scheme.
“The success of Deloitte is not only measured in the positive impact we make for our clients and our people, but also in the difference we make to the wider community. Through our responsible business strategy, One Million Futures, we are supporting IntoUniversity, a charity which offers an innovative programme to help people from disadvantaged backgrounds attain either a university place or a route into a sustainable career.”
Reflecting on the first quarter of the new financial year, Jenkins added: “Notwithstanding the challenges and uncertainty resulting from Brexit and the recent US and UK elections, I am encouraged by the continued momentum we have seen in the market over the past three months. This is reflected in sustained M&A activity levels over the summer including, most recently, the £152m sale of Heron Foods to FTSE-250 retailer B&M Bargains, which was initiated and led by our teams in Leeds.”
Deloitte North West Europe
On 1 June 2017, Deloitte North West Europe came into effect, bringing together over 30,000 people across the UK, Switzerland, the Nordics, Belgium and the Netherlands to create a new €5bn firm.
David Sproul concluded: “Deloitte North West Europe provides the scale, and the means, to increase our investment in the innovation clients need, and provide more growth and opportunity for our people. It will also play a part in helping us consistently embed quality in all we do.”
Notes to editors
Deloitte employs 16,898 people in the UK and Switzerland - up from 16,006 last year. Deloitte has 703 equity partners in the UK and Switzerland - down from 726 in FY16.
In this press release references to “Deloitte” are references to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”) a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see deloitte.com/about for a detailed description of the legal structure of DTTL and its member firms.
Deloitte LLP is a subsidiary of Deloitte NWE LLP, which is a member firm of DTTL, and is among the UK's leading professional services firms.
The information contained in this press release is correct at the time of going to press.
For more information, please visit www.deloitte.co.uk.
Member of Deloitte Touche Tohmatsu Limited.
1 All revenue numbers presented herein exclude revenue from the CIS and have been prepared in accordance with International Financial Reporting Standards and IFRS Interpretation Committee interpretations, as issued by the International Accounting Standards Board, and are unaudited
2 Distributable Profit differs from profit as reported in the Firm’s Statutory Financial Statements as a consequence of, among other things, the treatment of Equity Partner annuities. Average profit per equity partner is based on Distributable Profit
3 Results for Financial Advisory in 2017 are impacted by Deloitte’s sale of its Agency, Lease Advisory and Asset & Property Management teams effective 31 May 2016. On a like-for-like basis, growth for Financial Advisory was 1.5% in 2017, however in absolute terms revenues declined from £471m to £459m.