- Underlying revenues increase by 8.5% to £464.1m from £427.8m last year
- Targeted investments pay off as profits reach £109.4m enabling further spending on people and technology
- Over one quarter of BDO people promoted and over 300 trainees recruited
- Continued focus on automation, analytics and innovation
Accountancy and business advisory firm BDO in the UK has continued its record of sustainable and profitable growth with an increase in revenues and profits, it announced today.
Despite a backdrop of change and uncertainty, the firm posted revenue growth for the sixth consecutive year with underlying revenues of £464.1m; an increase of 8.5% on the previous year.
BDO in the UK's profits increased by 19.7% to £109.4m. This level of profitability means that BDO can continue to invest in its people and develop technology while attracting and retaining the talent needed for future sustainable growth. Average distributable profit per partner (PEP) increased 17% to £531,000.
BDO has invested heavily in its people. This year it appointed 11 new partners from other firms and promoted a further 14 partners internally. Outside of the partner group, BDO promoted 1,115 people – more than one quarter of its total UK headcount – and recruited another 306 trainees into the business.
In line with BDO’s strategy of a targeted approach to technology, the firm continued its focus on automation, analytics and innovation. This has included greater use of Robotic Process Automation, for example to mine and test data, accelerate business processes and accurately speed up the creation of internal reports. The firm also saw an increase in the use of its audit analytics tools and the internal launch of an idea-creation programme to generate further innovation for clients and the firm.
BDO puts its success down to three factors: its entrepreneurially-spirited client base being resilient and hungry for growth despite economic uncertainty, great people and, finally, its focus on quality.
Paul Eagland, BDO Managing Partner, said: “Changes in international trade, technology and world politics are all consuming. It’s vitally important that accountancy firms adapt and help their clients understand, navigate and capitalise on those changes. We’ve been doing that by making focused investments in people and technology and delivering on quality.
“There is a common misconception that accountancy is primarily focused on numbers. In my experience, our clients buy our people and their expertise. BDO is – and always will be – a business with great people at its core. It’s the hard work, knowledge and tenacity of our people that has provided the foundation for these great results. With plans to increase our apprentice intake next year and more partners from competitor firms making enquiries about joining us, the pipeline of talent that is so crucial for growth will continue to flow into the business.”
Growth across the business
BDO in the UK saw a strong performance across all three of its service lines of audit, tax and advisory.
BDO’s audit business posted revenues of £164.6m growing 9.2% on the previous year. It performed particularly well with mid-sized, entrepreneurial businesses as well as stretching its lead as the top auditor for AIM-listed companies. The tax practice reported growth of 4.9% generating revenues of £141.8m following some significant wins. Growth in this area was driven by increasing awareness from businesses and individuals of the need to be globally tax compliant.
BDO’s advisory revenues grew, increasing 11.1% to £157.7m. M&A had a strong year as Brexit jitters failed to materialise with private equity houses and corporates continuing to invest. The transaction services team saw double digit growth and across the rest of the advisory practice, forensics, tax dispute resolutions and valuations all performed well.
Understanding the UK economic engine
Sitting alongside some significant wins in the listed market, BDO’s client heartland remains the UK’s mid-sized, ambitious and entrepreneurially spirited businesses. The firm continues to be one of the most trusted advisers to mid-sized, PE-backed and AIM-listed companies.
Responsible for a third of UK turnover but only making up under 2% of businesses by number, BDO describes this segment of the economy as the “UK economic engine”.
Despite their impact, policymakers have overlooked the UK economic engine. Too small to make their voices heard amongst larger high-profile enterprises but too big to take advantage of the attention paid to start-ups, these businesses fall into a policy and profile gap. Through its ‘new economy’ campaign, BDO has put forward public policy ideas that will help the UK economic engine thrive and tackle structural issues around skills, infrastructure and patient capital.
Eagland said: “Our client heartland consists of companies that we call the UK’s economic engine; they are ambitious, entrepreneurially-spirited businesses that are not only driving growth but doing so while dealing with a unique set of opportunities and challenges.
“As advisers, we are perfectly placed to help them navigate complex trading environments in both domestic and international markets. We have some exceptional sector experts, particularly in retail, manufacturing and technology, who know the market inside out. This, together with our heritage and experience, means that we combine our deep understanding of these businesses with our extensive global reach. We’re well positioned for growth and are optimistic for the future.”
He added: “I would also like to put on record my thanks to our clients. Their evolving challenges keep life interesting for us and helping them succeed ensures we too are successful.”