Deloitte bets on rising growth to boost its profits

 
Tim Wallace
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PROFITS edged up at Deloitte LLP in the last year, the consultancy reported today, and the group expects the improving economy to give its fortunes a boost in the coming 12 months.

Revenues increased eight per cent on the year to £2.5bn, driven by improvements in all five business divisions.

The biggest gains came in consulting where revenue jumped 14 per cent to £596m in the financial year.

Audit revenues climbed 12 per cent to £663m, tax six per cent to £529m and corporate finance one per cent to £405m.

And the group’s Swiss arm saw revenue remain flat in sterling, at £209m, but up seven per cent in local currency terms at SwFr313m in the year.

Profits distributable to partners edged up 0.35 per cent to £571m, as rising costs balanced out much of the increase in revenues.

Staff costs increased six per cent to £1.03bn as the group hired more than 3,000 new workers and promoted or recruited an additional 70 partners to take the total to 1,011.

As a result, despite the small rise in profit, the average profit earned by each partner in the year fell 2.2 per cent to £772,000.

And the chief executive and senior partner David Sproul saw his pay slip from £2.8m to £2.7m in the year.

But the boss remains confident of firmer growth in the coming 12 month period.

“I believe UK businesses have reached a turning point in terms of confidence and, with substantial cash holdings and improving credit conditions, they’ve got the firepower to invest for growth,” said Sproul.

“The appetite for risk is increasing and clients are showing greater willingness to invest. This is evidenced by a higher demand for those services that are focused on helping clients grow.”

There are threats to the group, in particular from regulation on how auditors are chosen for large firms. Deloitte said it plans “proactive and constructive discussions and liaison with government and regulatory bodies” to mitigate the effects.