The UK and Middle East wing of Big Four firm PwC reported a 7% increase in its fee income to £2.6bn for the year to 30 June 2012. Profits for the year were up 10% to £727m, but individual partners saw their actual profit shares drop £28,000 from last year to £679,000.
The UK’s biggest accountancy firm continues to defy stagnation in the wider economy. Chief Financial Officer Keith Tilson commented: “Growing revenue by 7% in such a difficult economy is a significant achievement and testimony to our strategy and investment through the downturn.”
While rival firm KPMG announced the likelihood of 3% staff cuts last month, PwC has taken on 2,300 staff during the past year, including more than 1,300 graduates and school leavers.
The firm’s various practices made the following contributions to the total fee income for the UK and Middle East, with growth rates in brackets:
- Assurance £963m (up 6% from £909m in 2011)
- Tax £659m (up 2% from £645m)
- Deals (business recovery, corporate finance etc) £561m (up 8% from £518m)
- Consulting £438m (up 13% £389m).
“We continue to see high growth potential for our consulting, risk assurance, forensic and actuarial businesses, as well as our Middle East firm,” said chairman Ian Powell in the firm's results announcement.
The firm’s assurance practice was boosted by audit wins including Aviva, Dubai World, Genel Energy and Yule Catto. Showing a renewed enthusiasm after a decade under the restrictive Sarbanes-Oxley Act, consulting continued to shine with 13% annual growth driven in part my new service lines addressing sustainability and climate change services.
Out of the total profit for the year of £727m (2011: £656m), the amount available for division among members was of £672m (up 8% from £622m last year). The average profit per partner disclosed in the accounts increased from £763,000 to £798,000, but deductions to cover annuity payments to certain former partners other equity adjustments brought the distributable profit per partner down 4% from £707,000 in 2011 to £679,000 for this year.
PwC’s 64-page annual report 'Doing The Right Thing' is a good showcase for the firm’s corporate aspirations, with roughly half of the content devoted to non-financial information on topics such as corporate governance, risk management, sustainability and diversity. “Our ambition is to become the iconic professional services firm, always front of mind whenever professional services are mentioned,” the firm commented, describing itself as “a powerhouse of a commercial enterprise that does the right thing for our clients, our people and our communities”.
Given the political climate and controversies surrounding tax avoidance, an entire page is devoted to the amount of tax paid by the firm during the year - a total of £975m in 2012 (up from £900m in 2011), itemised in terms of amounts paid in corporation tax, partners’ contributions, income tax and VAT.
With upper rate income tax due on amounts over £150,000, plus 2% in NICs, the average effective tax rate for LLP partners in 2012 was approximately 47% compared to 46% last year, the firm said.