Deloitte LLP updates
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Deloitte’s UK partners will receive an average payout of about £1m after the accounting firm’s profits rebounded from a pandemic slump last year, helped by the sale of its restructuring division.
The share of profits to 700 equity partners is the highest in at least a decade, according to people briefed on the annual results, which are due to be published next week.
The results are the latest example of a large professional services firm increasing profits during the pandemic as companies seek advice on digitising their businesses and strengthening supply chains. Costs were also reduced across the sector by curbs on business travel and client entertaining.
Last year the average share of Deloitte profits was £731,000. The people familiar with the results said the corresponding figure would rise for the financial year ending May 2021 but not surpass 2019’s level of £882,000.
However, the overall average payout will be boosted by an additional sum of about £200,000 following the sale of Deloitte’s UK restructuring arm to Teneo, the advisory firm backed by private equity group CVC Capital Partners, the people said. The highest earners will receive significantly more than £1m in total.
Deloitte declined to comment.
Deloitte announced this month that its global revenues rose 5.5 per cent to $50.2bn in the year to the end of May, helped by demand for corporate finance advice and a boom in mergers and acquisitions.
PwC reported record profits of £868,000 per partner in the UK last month while its Big Four rival EY will also report increased profits when it reports results in the coming weeks, said people briefed on the matter.
KPMG, the final Big Four UK accounting group, usually announces its results later in the year because its accounting period does not end until September.
The uptick in performance at Deloitte, which employs about 20,000 people in the UK, is likely to intensify scrutiny of the hundreds of millions of pounds of taxpayer money it was paid for work on the government’s pandemic response.
By May, the firm had been awarded 26 contracts worth up to £278.7m, primarily to support the rollout of the UK’s test-and-trace programme. MPs have criticised the government for continuing to use consultants after the testing programme was up and running.
The increased profits come despite Deloitte being ordered to pay a record £15m fine plus legal costs of £5.6m for serious misconduct in its audit of Autonomy, a former FTSE 100 technology group, between 2009 and 2011.
The immediate windfall for Deloitte’s equity partners, who do not receive a salary but instead share the profits of the business according to seniority and performance, is partly offset by an increase in the amount of capital they were required to contribute to the firm last year, a person close to the firm said.
Because they are structured as partnerships, Deloitte and its main rivals cannot raise funds from external shareholders and instead rely on capital contributions from their partners, which are repaid when they retire.
Source Global Research, a data provider on the consulting industry, predicted that after a 5.5 per cent contraction in 2020, the UK consulting sector would grow 11.5 per cent to £12.1bn in 2021.
“The recovery has been so fast in this industry that consulting firms are turning away work because they don’t have enough people to meet demand,” said Fiona Czerniawska, CEO of Source Global.
Credit: Source link
