The firm is particularly pleased with the results, given the backdrop of weakening business confidence and the lack of certainty surrounding Brexit.
Managing partner Paul Eagland, who has just completed a year in post, commented that he couldn’t have asked for a better year. “Partners and clients have been so supportive, our people have been fantastic and our financial results are good. It’s been everything I’ve wanted.”
He puts the success down to a combination of the firm’s “entrepreneurially-spirited” client base of medium-sized businesses which has proved “resilient and hungry for growth”, the firm’s own investment in technology, digitalisation and training, and BDO’s people.
“We are – and always will be – a people-powered business,” he said. “It is the hard work and combined efforts of all our people that have resulted in great success – culturally, technically and financially – for BDO this year.”
Star performer over the 12 months to 30 June 2017 was the tax practice, which saw a 7.4% growth in revenues to £135.2m. This, the firm said, stemmed from its mid-market and large corporate clients’ pursuit of growth, as well as tax compliance and complex regulatory requirements work.
It also reported several “significant” tax wins in the public interest entity market on the back of the implementation of the Audit Regulation and Directive in June last year. This new legislation brought in mandatory tendering of audit and limitations on providing non-audit services to audit clients.
The reforms also helped BDO’s audit practice perform well, along with the firm’s emphasis on quality and its increasing use of data analytics. Revenue grew by 5.4% to £150.7m.
Against stiff competition, BDO held on to its title as the auditor with the largest number of AIM company clients; it also won a new FTSE 250 audit client. It is ranked fifth behind the Big Four in the number of listed companies it audits.
After flat-lining in 2015/16, the firm’s advisory services took off, reporting revenues up 4.5% to £141.9m. Growth was boosted by M&A activity, again down to the determination of the client base to carry on growing. Work with private equity firms also increased, with deal activity up 30%.
The firm also topped the tables as leading reporting accountants for AIM IPOs for the sixth year running.
Global outsourcing services had a good year, as large companies looked to ensure compliance or use the firm’s payroll, company secretarial or accounting services.
Eagland added that there was also increasing interest in the firm’s cyber security advisory and risk advisory businesses. “So many businesses feel exposed to certain risk that they want people like us to provide assurance,” he said.
All of this added up to a lucrative year for equity partners. They saw their average profits per partner grow by 22% from £360,000 in 2015/16 to £454,000 this year.
As far as next year is concerned, Eagland said that it was a difficult one to judge. “We set our budgets roughly in and around June and check it and test it again in July.
“When we set the budget for the year just past, we prepared our draft prior to the Brexit vote and then the Brexit vote happened and, to be frank, we did temper our expectations. But we have beaten those, which is great.
“Now as we look forward to next year, we are thinking of modest growth of about 3% to 5% but we are also potentially bracing ourselves for whatever Brexit brings.”
He said the firm was determined to stay on track by pursuing its strategy and investing in people. “We are taking confidence from the fact that our clients have been so resilient so far and we are backing our client base to continue.”
He added that BDO had more than 20 separate digital transformation projects in progress that would impact on every aspect of the business, and it was investing in its infrastructure to enable its people to work wherever they felt most comfortable – whether that be from "home, the local coffee shop or the brand new banks of desks" at the firm’s HQ in Baker Street, London.