Deloitte UK partners enjoy biggest payout in decade: £832,000 average

24 September 2018 Consultancy.uk

Deloitte UK’s more than 700 equity partners are set to receive a bumper pay-out in 2018, following a boost to the firm’s profits. Despite turbulent economic conditions in Britain, Deloitte’s bullish performance means Partners will pocket an average of over £800,000 each.

Big Four professional services firm Deloitte has been consistently working to bolster its size and revenue both internationally and in the UK over 2018. A hiring spree in Britain, including the pushing of Deloitte’s Cardiff office beyond the 1,000 employee boundary, buoyed billable hours for the firm, while across the world, Deloitte announced it would sink a substantial £430 million into its cybersecurity line to tap into booming demand in the sector.

This has reportedly paid dividends to Deloitte’s UK and Swiss operations in particular, which are run as one entity. The company logged a 5.9% rise in revenue from £3.38 billion to £3.58 billion for the year, including £3 billion in revenue for the UK alone, up 5.1% from a year earlier. The professional services firm’s audit and risk advisory revenues saw the most rapid of this growth, up 10.2% to £1 billion, while its tax services revenue was boosted by 5.8% to £732 million. Consulting maintained slow yet steady growth of only 1.7% to £873 million, while financial advisory services remained more or less flat at £459 million.

Deloitte UK partners enjoy biggest payout in decade: £832,000 average

As a result, Partners at Deloitte are in line for a bumper pay-out in 2018, after the audit and advisory giant logged higher profits in the UK, despite an economic slowdown and “continued uncertainty”. After the deduction of corporation tax, distributable profit for the year leading to May 31st 2018 stood at £584 million. Deloitte said this marked a 0.5% rise compared to a year earlier, and leaves Deloitte’s 702 equity partners set to receive an average of £832,000 each. The figure is technically lower than the £865,000 logged last year, however this does not take into account how Deloitte has switched to reporting average profit on a post-tax rather than pre-tax basis. When that is factored in, Partners are set for their biggest pay-out in nine years.

Commenting on the positive results, David Sproul, Chief Executive of Deloitte North West Europe, said, “This is a good result in a market facing slower economic growth and continued uncertainty. Tax revenues have been boosted by demand for M&A, private client and employment-related services work, as well as demand for digital solutions to global compliance obligations, where we are continuing to invest. Following the launch of our UK legal services, we are also growing our offering in immigration, employment services, corporate dispute and resolutions, alongside a focus on ‘new law’ services.”

Auditing versus Consulting

At the same time, alongside its Big Four peers, Deloitte is still facing the threat of an industry wide break-up, relating to the Big Four’s perceived dominance of the UK auditing scene. The Big Four’s alleged strangle-hold on the UK’s auditing market has been the source of a sustained debate in recent months. EY, KPMG, Deloitte and PwC currently audit 99 of the FTSE 100, while the quartet of the world’s largest accounting and consulting firms grew their portion of FTSE 350 auditing from 95% to 98% over the past five years. Critics cited concerns that the Big Four’s growing consulting arms make for conflicts of interest in their auditing duties, and could lead to a situation similar to that which caused the collapse of US energy giant Enron at the turn of the century.

Relating continued inquiries of the auditing market to Deloitte’s broader results, Sproul added, “The audit profession has faced significant scrutiny in the past year, with concerns raised over quality, conflicts of interest and a lack of choice. These are serious concerns and we recognise the need for change. We must look at how the audits of the future match the evolving needs of stakeholders and society and address increasing business complexity.”

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PA Consulting results reveal record 14% revenue growth

17 April 2019 Consultancy.uk

Global professional services firm PA Consulting has reported another year of strong growth, outpacing the global consulting market significantly over the duration of 2018. PA’s revenue boomed by 14%, passing £455.8 million over the course of the year.

Founded in 1943, by Englishmen Ernest Butten, Tom Kirkham and David Seymour, the firm once known as Personnel Administration has since gone on to become one of the largest consulting firms in the world. PA Consulting Group, as it is now known, has over 2,600 professionals and a global presence spanning 18 countries. While turnover took a decade to recover from a rocky spell after the global financial crisis, PA Consulting is now firmly on the upward incline.

PA has booked strong growth in recent years, following its securing of private equity investment from the Carlyle Group in 2015. While the first full year of results following that move were slightly muted, due in part to the altering of how PA measured its results, the decision has clearly paid dividends since. Revenues jumped by 6% in 2017, hitting an all-time high of £400 million in the process.

Annual consulting revenues of PA Consulting versus UK market

Now, in the latest chapter of the firm’s rapid turnaround, the innovation and transformation consultancy has revealed things only got better in 2018. A set of record results released in April have confirmed that fee income rocketed up by 14% over the course of the prior 12 months, hitting £455.8 million. Considering the UK’s consulting market saw growth slow for the second year running (just 5.6%), PA’s performance is even more pronounced, especially in its first year of full results since influential Chair Marcus Agius stood down. 

The firm is also outpacing the global consulting market. Analytics firm Statista estimates that the consulting market expanded by 4.08% in 2018. As a result of such bullish demand, PA Consulting has also bolstered its staffing, boosting its consulting team’s headcount by 10% in the space of 12 months. 

PA’s team was further strengthened with its continued acquisition campaign, which brought three new firms into the fold during 2018. Boston-based innovation company Essential Design, specialist digital service design firm We Are Friday and London-based digital insight and strategy consultancy Sparkler all became part of PA over the course of the year. PA has also announced plans to recruit 400 professionals for its new digital centre in Belfast. 

‘Not traditional’

In terms of client work, in the UK PA supported Skipping Rocks Lab to create an edible alternative to single use plastic drink packaging, and worked on a notable restructuring project at disability charity Scope. Further afield, PA helped Norwegian authorities deliver their citizen-facing digital services, while in the US and India, PA partnered with Virgin Hyperloop One to build the first new mode of transport in a century, one that hopes to revolutionise travel. It even worked with United Nations to identify the technologies most likely to contribute to the achievement of the organization's Sustainable Development Goals.

Commenting on the year’s performance, Alan Middleton, PA Consulting CEO, said, “We’re not a traditional consulting firm and we think this is key to our ongoing success and why 98% of our clients recommend us… Our people are strategists, technologists, digital experts, consultants, designers, scientists and engineers – all of whom bring real-world experience, and apply it at pace. We offer the innovation, design, digital and transformation skills that our clients need to change, fast. There’s a sense of optimism behind our purpose. And it’s a feeling that inspires our people as well as our clients.”

The existing staff of PA also enjoyed a bumper year, as it was revealed that a refinancing manoeuver at the firm was expected to land over 1,000 employee shareholders a significant pay-out. The firm’s debt, which includes vendor loan notes put in place when Carlyle purchased the firm, is set to be refinanced in a deal worth £350 million.