Risk advisory business Deloitte in the UK and Switzerland has increased revenues by an impressive 10.9% in the year ended 31 May 2019 from £3.58 billion in 2018 to £3.97 billion as the firm continues to invest in each of its businesses and in its people.
Richard Houston, UK and North and South Europe senior partner and CEO, said: “Our clients and our own profession are facing a time of substantial change, challenge and opportunity with slowing economic growth, ongoing political uncertainty and the impact of technology disruption. Over the past year, we’ve supported both the public and private sector in navigating a changing and challenging backdrop, whether helping manage the uncertainty of Brexit, transforming businesses through the use of digital technologies or addressing critical risks such as those posed in the cyber realm.”
Houston continued: “Our 2019 results reflect the long-term investment we’ve been making across our business and, in particular, in audit quality and the training, technology and talent required to support it. This investment has helped us to succeed in the market and improved the financial performance of our audit business.”
In addition, Houston stated: “We’ve also made strong progress this year on our purpose agenda. For example, our female partner promotions were up threefold, while we also supported over 416,000 people in gaining access to education and employment through our social impact strategy.”
Houston concluded: “It’s a huge privilege to be leading Deloitte and these results are a testament to our talented people and the progress we’ve made. I want us to go further, though, ensuring we’re making a positive impact in all of the work we do with clients, our people and, importantly, across the many communities in which we work. Among my priorities in the months and years ahead will be an unequivocal focus on workplace culture and inclusion. I want Deloitte to be a strong representation of society, with a diversity of thought and experience, which will only improve how we serve our clients.”
Across business lines, audit and risk advisory revenue grew by 8.1% to £1,110 million (of which Audit and Assurance accounted for £582 million), consulting increased 9.0% to £952 million, financial advisory by 10.5% to £507 million and tax and legal saw its revenue rise by 17.8% to £862 million.
In the year ended 31 May 2019, distributable profit was £617 million, which is up from £584 million in the prior year. Distributable profit in the year ended 31 May 2019 has benefited from a one-off gain on the sale of an investment, lower provisioning charges and currency gains. Without these, distributable profit would have been flat.
The firm’s total tax contribution was £1,057 million in 2019. This comprised £638 million of taxes collected on behalf of HMRC (VAT, PAYE and employee National Insurance) and £419 million of taxes borne by the firm (including partner income taxes, National Insurance, corporation tax and employer’s National Insurance).
The strength of being part of a multi-disciplinary firm has enabled a continued multi-year investment in audit quality and transformation. Investment of this scale would not be possible in an audit-only firm. The firm’s audit quality record from Financial Reporting Council (FRC)-led inspections improved over the prior year – 84% of audits reviewed by the FRC in 2018-2019 were found to require no more than limited improvements compared with 76% in 2017-2018.
In addition to the investment in new audit technologies and processes, the firm is also committed to developing an audit product that is fit for the needs of modern society. Deloitte is engaging with the various reviews into the audit market as well as with a number of other stakeholders to ensure that the firm is at the forefront of this debate.
The company states: “Delivering the audit product of the future, which meets the evolving needs of society and investors, requires the depth of skills and investment capacity that’s only possible with the scale that comes from being a multi-disciplinary partnership firm.”