In 2008/2009, from 1 July 2008 to 31 May 2009, Deloitte faced a difficult and testing time as the economic downturn accelerated and weakened the market for professional business services in the Netherlands. Revenues fell by 3.4% on a like-for-like basis, adjusted for € 14 million revenues of Audit businesses divested in 2008. Revenues adjusted for the cost of work that Deloitte subcontracts to others fell by 2.4%. At the same time, profit margins declined significantly as the number of employees was higher than required for the volume of business.

We took decisive action to offset the impact of the downturn and maintained a disciplined market approach. Overcapacity in some areas resulted in redundancies, while the firm sought to retain its highest-quality talent and continued investing in the strategic development of its people.

Measures were taken to progress towards lower and more flexible cost structures that are aligned to the realities of the market. For the year 2008/2009 actions were taken to manage salary-related costs, which included the adoption of a lower payout ratio for variable remuneration, the limited renewal of fixed contracts, improvement of credit management to better manage working capital and significant reduction of overhead costs. For the current year, 2009/2010 actions were taken to use additional vacation days, to adjust our salary growth scale to the economic circumstances making sure we are still able to recognise our talent for their achievements and to make the variable remuneration profit dependent.

As competition in the market intensified, there was downward pressure on pricing. The size of individual assignments decreased. To counterbalance this, Deloitte engaged in smart pricing where necessary and sought to strengthen its existing client relationships through broader service offerings.

Notwithstanding these challenges, Deloitte implemented its strategy to drive innovation, quality and talent in the market. The year, while tough, saw significant achievements, including important new client mandates, stronger market positions and increased levels of external recognition.