BDO sees healthy growth as revenues climb 11% to £809m
BDO has reported an 11% increase in revenues to £809 million for the financial year 2021/22 with growth across all three of its service lines of audit, tax and advisory.
Announcing its results, BDO cited the reasons for growth as being the resilience of its core market of entrepreneurial, high-growth and mid-sized businesses in the face of difficult economic circumstances as well as the hard work of its people.
The firm has made significant investments in the business after BDO partners made the strategic choice, at the start of the year, to raise levels of investment. This included spending £70m recruiting an additional 1,000 people, promoting nearly 3,000 individuals, increasing salaries and investing in quality, new technology and digital applications.
The decision to invest in additional people – taking the firm from 6,000 to 7,000 - was designed not only to deal with the increased demand for services but to also promote a healthier work-life balance by spreading workloads across more people.
As a result of the investments and the return to pre-COVID levels of costs, profit before tax was down 8% to £187m. While these high levels of investment mean a planned reduction in FY21/22 profit and partner pay, BDO believes that the focus on longer-term sustainable growth is the right decision.
Paul Eagland, managing partner at BDO LLP, said: “Our strong growth this year is down to the resilience of our core market of high-growth, entrepreneurial businesses, combined with the hard work and ability of our people. During such uncertain economic times, businesses like ours need to invest in skills to stimulate growth and, ultimately, the economy. We’re using the proceeds of growth to invest in our people, for the long-term, with an additional emphasis on wellbeing, work-life balance, quality and innovation.”
All three areas of the business – audit, tax and advisory – performed as expected in the year.
The audit business posted revenues of £324m, up 17% on the previous year. BDO’s long history as a leading AIM auditor and its sector expertise all contributed to the rise in revenue. The audit practice recruited an additional 341 audit professionals, taking the overall UK audit team headcount to 2,600. Significant investment has also been made in audit infrastructure, as well as further enhancements to the firm’s methodologies and technology.
The tax practice generated revenues of £199m; an increase of 3%. This growth builds on a strong prior year and illustrates that the firm’s tax compliance, private client and tax advisory services are in high demand.
BDO’s advisory revenues grew by 10% to £286m, with financial services advisory, transaction services, donor assurance, and digital advisory experiencing particularly strong years.
Average profit per equity partner was down 15% to £647,000, reflecting the additional investment in people and increased partner numbers. For the 12 months to July 2022, 59 new partners were hired or promoted. Since July 2022, the firm has already added further lateral hires and internal promotions taking the partnership to 431 today, the largest it has ever been.
BDO, its partners and employees contributed £310m to HMRC for business, VAT, employment and personal taxes based on the 2021/22 financial results.
Mr Eagland added: “The global economy continues to be in a state of upheaval with extreme levels of uncertainty and volatility. The businesses we work with tell us that they are looking to the Government to create a more stable economic environment so that they can focus on contributing to a growing economy.
“This determination from mid-market businesses provides us with the confidence to continue to invest for the long-term, which in turn will help us continue to retain and attract talented people.”
An area of development for the firm this year has been the establishment of BDO Labs. The role of BDO Labs is to research and develop new digital products and tools which support the firm’s overall business plans and drive for high quality.
Labs are now live across tax, audit and advisory, with more than 60 experiments completed, more than 300 new ideas submitted and the first Labs products were launched this year.
Mr Eagland said: “Investing in innovation is a huge focus for us. Innovation is as much about culture and mindset as it is about technology itself.
“That’s why we are fostering the right culture for BDO Labs and ensuring that space for thinking, testing and “fast learning” are the core principles it operates under.”