The firm revealed that around 9% of the revenue increase reflects the first full year of BDO’s merger with Moore Stephens LLP back in 2019, with 5% coming from organic growth.
Accounting profit before tax was flat at £137m with underlying business profits falling by £25m.
The first nine months of the financial year showed “strong growth” for the firm with BDO adding its focus on “quality and its successful merger” paid off in increased revenue and profit pre-Covid-19.
It said, however, the impact of Covid-19 and the subsequent lockdown saw a “reversal” in BDO’s profitability. In the final three months of the year (April 2020 to June 2020), revenues and profits fell “substantially” by 13% and 50% versus prior year respectively.
The fall in revenue in the last quarter equated to a drop of £25m and a £25m corresponding reduction in underlying business profits.
The £25m reduction in profits was absorbed by BDO’s partners with average distributable profit per partner (PEP), before taxation, for the year decreasing by 14% to £518,000 compared to £602,000 last year – all associated with the impact of Covid-19.
It also revealed that with additional economic volatility caused by the prospect of a winter spike in infections, lower levels of profitability look set to continue.
Paul Eagland, Managing Partner at BDO LLP, said: “To fully understand our annual results, they should be broken down into two very different periods: pre-lockdown and lockdown. The strength of our overall financial results derives entirely from the first nine months before the crisis hit us. The last three months tell a completely different story with revenues and profits falling as lockdown took hold.
“To brace ourselves for the Covid-19 impact, our first step was to ask partners to reduce their monthly ‘pay’ and forego their quarterly distributions. Subsequently – and in order to protect the jobs and pay packets of our 5,500 UK people – we applied to use the Coronavirus Job Retention Scheme.“
He added: “We ensured our furloughed employees were paid in full by topping up their wages to 100% during their time on furlough, and we brought all our employees back into full time employment with no redundancies made across our workforce.”
“Covid-19 has already had a huge impact on our business and we don’t know what lies around the corner. This means we have had to take a number of tough but prudent decisions to ensure the sustainability of the firm and to protect our people’s jobs – not just for the initial lockdown period but also looking ahead to the slow, challenging recovery.”