PwC posts 3% rise in revenues, 8% fall in profits

In common with others of the Big Four, PwC acknowledged this year’s financial results have been impacted by Covid, with revenues up by 3% at £4,380m but profits falling 8%, resulting in a 10% cut to partner payouts

Profit for the year ended 30 June 2020 was £938m, down from £1,016m in 2019, and the average distributable profit per partner was £685,000 compared to £765,000 last year.

Kevin Ellis, PwC UK chairman and senior partner, said: ‘For the first eight months of the financial year we saw good performance across our balanced portfolio of services.

‘We started to feel the impact of the pandemic in March and saw growth slow significantly by the end of June, impacting the last four months of our financial year and into the current financial year.

‘Since September we’ve seen a steady uptick in demand despite the uncertainties of Covid-19 and Brexit.’

The tax division posted the highest revenues at £1,071m, although these were flat compared with the previous year. The strongest growth was in the consulting division, which grew 11% to £1,057m.

On 1 July 2019 the assurance practice was divided into audit and risk assurance divisions, with PwC reporting audit services up 5% with revenues of £1,003m, while risk assurance saw a 5% dip to £468m. The deals division posted a 1% increase in revenues to £781m.

Ellis said: ‘Audit has proved resilient and versatile, requiring new approaches as Covid restrictions made accessing company sites and data more challenging.

‘Risk assurance had a solid first year establishing itself as a new standalone business division, with technology risk and cyber security performing well.

‘Demand for forensic and transaction services from deals and for deals-related advice from our consulting and tax practices was particularly strong, although suffered a weakening in the immediate Covid lockdown period.

‘Clients in both the UK and the Middle East continued to seek support with technology and transformation programmes.’

Ellis said the cut in partner distributions reflected the firm’s focus on protecting jobs and salaries and paying staff bonuses.

‘We were clear in our response to the crisis from day one that we prioritised providing support and reassurance to our people.

‘We took an early decision not to take government funding through the furlough scheme or loans.’ Ellis said the firm continued to expand its operations across the country, as part of a levelling up agenda, with half of employees now based outside London.  This included opening new offices in Birmingham and Watford. It has also taken more space in Bradford where the firm’s headcount has doubled, and are moving to a new, larger office in Belfast in 2021.

‘While we know a different balance between office and working from home is here to stay, our offices across the UK will continue to play a vital role.

‘Our people tell us they value access to the office and important activities, such as learning, training and team building, work better in person.

‘We are reviewing the layout and technology of all of our offices to ensure they are best equipped for a hybrid working world,’ he said.

Looking ahead to next year, Ellis said: ‘While the external environment remains tough, the rollout of the vaccine programme will give business leaders more confidence to plan and make decisions.

‘Since the summer we have seen demand increase month by month as clients accelerate the transformation of their businesses, embed new technologies, overhaul their business models to deliver Net Zero and reconfigure their supply chains.

‘All of our business divisions are performing well with the anticipated deals-led recovery and increased capital markets activity also driving demand for services.’

PwC UK’s consolidated financial statements, people data and balanced scorecard for the year ended 30 June 2020 will be published in January. The firm’s consolidated results include revenues for the UK and Middle East.

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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