Deloitte closes in on top spot as £2bn barrier stands ready to fall

Deloitte is expected to announce it is within striking distance of number one firm PricewaterhouseCoopers when it reveals its annual results later this year, breaking the £2bn barrier and beating its self-imposed target.

The profession expects Deloitte to reveal a 12% rise in revenues, just enough to take it through the £2bn mark. The growth rate of the firm would put it so close to PwC that a competition for the top spot would become a real possibility.

The target was set by the firm’s chairman John Connolly in 2006, who dubbed it ‘two in two’ ­ or two billion in two years. Hitting the target will be a striking vindication of his leadership.

The firm is still working on the final figures and observers say it could be touch and go as Deloitte calculates numbers for the final part of the year. Though the target has been steep, it is understood that
the first part of the year put the firm on course for success.

Breaking through £2bn gives Connolly three years, the rest of his term in charge, to overhaul PwC at a time when the UK’s current number one has a new chairman and senior partner in Ian Powell, who takes over from Kieran Poynter in July.

Latest figures for PwC, to the end of June last year, show the firm has taken £2.1bn in revenues on a growth rate of 6%. If the firm were to book a growth rate of 10% at the end of this year revenues would stand at about £2.3bn, tantalisingly close for Deloitte.

For the year ending 21 May 2007, Deloitte booked revenues of £1.8bn, a growth rate of 15.6%.
Deloitte declined to comment on the figures, saying the firm would review them in a month’s time. ‘In the meantime, we are not prepared to comment further on our financial performance,’ a spokesman said.

Poynter, PwC senior partner and chairman, said: ‘Our strategy remains making the right long-term investments to build a sustainable business to meet the current and future demands of our clients.’

The past year has seen Deloitte make a number of high profile client and contract wins. The firm won prestigious FTSE100 clients by becoming auditors to insurer Royal & Sun Alliance and house builder Barratt Developments. Both were won from PwC.

Deloitte has been successful in other areas too. After the controversy surrounding call charges for phone-in competitions on television, Deloitte was commissioned by ITV to investigate, producing a report that helped ITV avoid a much stiffer fine from the broadcast watchdog.

The firm also won lucrative work on the 2012 London Olympics. In December, it became the official professional service supporter, but also became the exclusive provider of services ­ including tax, management consultancy and financial support ­ to LOCOG, the London Organising Committee.

The credit crunch has also benefited Deloitte as the firm became the lead player in taking on the administration of structured investment vehicles as the crisis took hold. Deloitte took over at Rhinebridge, Cheyne, Whistlejacket and Golden Key, all of which made headlines on the business pages.

In September last year, Deloitte reported that its hedge fund practice had doubled in just 12 months.

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