Accountancy and business advisory firm BDO LLP has continued its record of sustainable and profitable growth, announcing an increase in revenues and double digit profit growth in its UK annual results published today.
The firm, which has had five consecutive years of growth, reports underlying revenues of £428m – an increase of 5.7% compared to £405m last year – and credits its entrepreneurially-spirited client base for being resilient and hungry for growth despite a backdrop of change and uncertainty.
BDO profits increased by 11% to £87.6m. This resulted in average profits per equity partner (PEP) growing 22% to £454,000[1], allowing the firm to attract and retain talent in the business.
BDO appointed 25 new partners from other firms in the last financial year and promoted an additional 15 in July. The firm also promoted 1,175 people – a third of its total UK headcount – and has just recruited another 280 trainees into the business.
Richard Rose, partner and head of BDO in the Midlands, commented on the results, saying: “The last year has been one of great success against a backdrop of change for the UK economy. Like many firms, we can say we’ve been investing heavily but, importantly, we’ve been investing in targeted areas that help our people and clients succeed.
“Technology and digitalisation are now part and parcel of our daily lives. However we are – and always will be – a people-powered business. It is the hard work and combined efforts of all our people that have resulted in great success – culturally, technically and financially – for BDO this year.”
Growth across the business
Audit is still the largest part of BDO’s business. A focus on quality and data analytics saw the audit practice increase revenues to £150.7m, representing growth of 5.4%. BDO also retained its title as number one auditor for AIM companies and has recently added another FTSE 250 company to its list of audit clients.
BDO’s tax business has continued to grow, with the team reporting a 7.4% increase in revenues to £135.2m in the last financial year. The firm said its mid-market and large corporate client base continues to pursue growth while focusing on compliance and complex regulatory requirements. BDO has also had some significant tax wins in the Public Interest Entities (PIEs) market since audit reform took hold in June 2016.
BDO’s advisory revenues grew too, increasing 4.5% to £141.9m. The firm said Brexit jitters had not impacted client M&A activity, with its corporate finance team reporting a high level of deal activity with a combined value of almost £6bn.
For the sixth year running, BDO has been the leading reporting accountant for AIM IPOs. It also reported impressive work with the private equity community, with a 30% increase in deal activity.
Other strong performances came from the firm’s global outsourcing team, reflecting BDO’s understanding of high-growth businesses combined with its global reach across 158 countries via 68,000 international BDO experts. Forensics and risk and advisory services also performed well.
Focused investment
BDO has more than 20 project plans in progress under the umbrella of ‘digital transformation’ which will impact every area of its business. Its BDODrive Solutions offering – a service underpinned by cloud accounting – has seen 40% growth this year.
It has continued to invest in its physical infrastructure, with impressive new offices in Central Square, Leeds (April 2017) and Thames Tower, Reading (last month). It is also undergoing a significant agile-working programme at its HQ in Baker Street, London.
Richard Rose said: “The great challenge for all professional services firms is to address the medium- and long-term changes brought about by technology, regulation and workforce patterns while delivering sustainable and profitable growth for the business.
“Targeted investments that help us do business better, make our clients’ lives easier and help our people achieve their potential will continue to be our focus.”
Brexit implications
BDO advises approximately 23,000 clients in the UK, which between them generate more than £300bn in revenues, £16bn in profits and employ almost 2m people.
Rosesaid: “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.
“Brexit is without doubt at the top of the agenda for many. However, our clients are adaptable and have wasted no time in planning for scenarios, assess their supply chains and looking at the implications for their people.”
He added: “As advisers, we are perfectly placed to help them navigate complex trading environments in both domestic and international markets. No other firm combines our understanding of these businesses with our extensive global reach. We’re well positioned for growth and are optimistic for the future.”