PwC increases profits by £113m in difficult year

PwC has increased profits by £113m, enabling its partners to receive an average pay rise of £60,000, despite a difficult year in the spotlight.

The accounting giant was untypically shy about its profits this year, putting the figure more than 1,000 words into its results announcement, reflecting a sensitivity to criticisms the Big 4 have faced in the last year about the lack of competition in the audit market as well as its performance. Profits were up 14% to £935m in the year to June while revenues increased by 5%, to £3.76bn.

PwC was hit with two record fines during the financial year – £5.1m for misconduct related to its 2011 audit of RSM Tenon and £6.5m for its work on BHS’s accounts. Both firms subsequently failed.

Kevin Ellis, PwC UK’s chairman, acknowledged the firm’s work “fell below the standards expected”.

He said: “During the year there has been significant scrutiny of our profession and the audit market in particular, with recent commentary highlighting concerns over competition, choice and audit quality.

“We are committed to helping regulators find practical remedies to increase choice and are clear that audit quality must be the top priority.”

Its assurance business remains the largest division, accounting for 37% of the firm’s revenue, although its tax and deals divisions grew faster last year, both in percentage terms and revenue.

Ellis added: “Momentum in our business is good, driven by a strong deals market and demand for technology-driven business expertise, as we see organisations turn to us to help them transform their business models, many in response to digital disruption.”

The firm is growing in Birmingham and next year plans to move 1,400 staff into One Chamberlain Square, the first building in the Paradise development. The 150,000 sq ft offices will have capacity for 1,000 more people as the firm changes how it works across the Midlands.

Paul Norbury, office senior partner for PwC in the East Midlands, said: “PwC is changing its presence across the UK to match the changing footprint of its clients and make the most of new opportunities in fast growing regions, like the Midlands.

“In 2017, 55 per cent of our graduate intake was recruited into roles outside London and that will rise to 60 per cent in 2018. In the East Midlands we have welcomed 43 new graduates and interns to the practice, creating new routes into our profession and cementing the foundations for our future growth. Graduate programmes like the Flying Start initiative, which we run with the University of Nottingham Business School, are essential to providing opportunities to attract and develop the best local talent by blending work with studying.

“Ensuring that we have the right skills, increased levels of specialisms and technologies to assist with the challenges facing our clients in the future is essential. Whilst creating new and more flexible ways of working bringing together our people and technology to deliver a wider range of integrated services in a way that best suits our clients”.