Top six firm BDO has breached the £400m mark for the first time as it announced revenues of around £405m in its annual results, released today
That fee income represents a 3.8% increase on the £390m taken last year, albeit adjusted down from the £400m it posted in February’s Accountancy Top 75 survey.
Profits grew 22% to £80.3m compared to £65.6m last year, with average profits per equity partner (PEP) increasing by 29% to £360,000.
BDO promoted 538 people from within the business and taken on 334 new trainees, including 66 school leavers. It is also set to recruit 25 new partners to the business in the next 12 months, after two years of a net fall in partner numbers from 255 in 2014 to 227 last year. Today, BDO's headcount stands at 3,333, 212 of which are partners.
The firm’s audit arm increased revenues by 8.3% to £143m from £132m last year. It cited new opportunities among its high growth, entrepreneurial client base created by a ‘changing regulatory market’ as a key factor behind the rise.
In particular, the Audit Regulation and Directive (ARD) has afforded the firm greater opportunity among public interest entities (PIEs) managing partner Paul Eagland told CCH Daily.
'There are a number of issues running through the system at the moment,' Eagland said. 'There's the European changes which are making so many PIEs stop and think about who their auditor is and and who they want to think about using as a result of any rotation or change in auditor. As that settles, it's also flushing out people's views as to who they want to use after their auditor as oppoosed to others and we are certainly being invited to tender for some very interesting work. Of course, that then tips some dynamics that sit outside of the pure audit market in terms of other advisory and tax services.'
The firm’s tax business posted 5.8% growth with revenues of £126m, up from £119m in 2015, a significant slowdown from the 20% growth it experienced the year before. As with audit, Eagland cites legislative change and uncertainty relating to Brexit as prominent contributing factors to the service line's fee income.
'For me, the thing that's making a difference is our approach to knowledge sharing and ensuring we take that knowledge to the client and the market,' he said. 'As they navigate a wild amount of change coming down the line, they can comply and deal with everything that they need to deal with.'
BDO’s advisory revenues held steady at £136m. Its business recovery, forensic, valuations, tax investigations and global outsourcing business areas all ‘performed well’, according to Eagland, who assumed the post last week after previous incumbent Simon Michaels completed the second of his maximum two four-year terms.
He added: ‘The ambitious and high-growth businesses we work with - many of which are in the mid-market, AIM-listed or PE-backed - have continued to succeed despite uncertainty in global markets, the EU referendum and government changes at home. This, in addition, to significant regulatory changes has created opportunities for both BDO and our entrepreneurially-spirited clients.’