BDO’s managing partner Simon Michaels is emphatic. Fee income might be down
5% and profits down too, but underlying performance has been “solid”.
“When you look across the international networks, and across domestic firms,
that is a pretty solid performance. Our national turnover has seen a modest
contraction over the past year but that is purely as a result of lower levels of
transactional and other one-off assignments.”
BDO’s annual report emerges almost exactly a year since Michaels took office
at the UK’s sixth largest firm. The results display the clear effects of the
UK fee income stands at £335.1m and profits at £58.7m, down from £65m the
previous year. Business recovery however, the department that won the
administrations of Dawnay Day and Aurora Fashions, saw revenues rise 49%.
But as Michaels says, it was a year which saw the economy sink to depths that
could not have been forecast 12 months ago and forced the newly appointed leader
to review his plans. In the end the firm made 10% of partners redundant and
around 8% of the UK workforce.
“We’ve laid some pretty solid foundations and reshaped the business such that
there’s a degree of optimism around the place that we can carry on going out to
the market place and carry on winning and servicing the clients that we’ve got,”
said Michaels. But he added that the firm differentiated itself by being
entirely open and “honest” about what needed to be done.
Those decisions “have been difficult, as they would be for any business” he
said, adding: “I would be surprised if there’s any business that felt that
making decisions like that was easy, because it certainly wasn’t for us.
“But the thing that drove those decisions was one eye on the future and where
we’re going in the market and what the opportunities were…the sense of ambition
behind the firm and that we are clear about what we stand for and what we are
trying to achieve.”
The reduction in turnover, according to Michaels, is down to a steep reduc
transactions and other one-off work. The cut in profitability is the cost of the
restructuring internally. “A pretty solid performance”, according to Michaels.
As a leader though, Michaels has chosen to handle some things differently.
His predecessor, Jeremy Newman, had campaigned hard for changes to make it
easier to compete for audits of large publicly listed companies in the audit
Michaels admits the volume has been “turned down” on that issue. “I don’t
think its about us turning the volume down because we don’t see the business
imperative. We are just driving our growth and reputation in the market in more
direct ways through thought leadership, through engagement with institutions and
through growth of our market share with listed companies.
“The credentials that we’ve got mean that we continue to pitch for and win
more business in that market place without needing to make a lot of noise about
“It’s a slightly different approach to achieve the same end,” he said.
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