PwC prepares for new normal as revenues rise

Marion Dakers

ACCOUNTANCY giant PwC has said it is adjusting to a “new normal”, where the economy grows more slowly and the group faces the prospect of losing out on audit work.

The Big Four company, which today posted a three per cent rise in revenues to £2.69bn for the year to the end of June, said it expects UK output to grow 1.3 per cent this year.

PwC UK said this “reflects a ‘New Normal’ for growth affecting all western economies”.

Chairman and senior partner Ian Powell told City A.M. the company is also prepared to lose clients as new rules force big listed firms to invite bids for their audits every five years.

“People are looking at the cost of audits but it’s also about getting good audits done on an efficient basis. We might see a reduction in our market share but the key is that we work with clients that we want to work with,” he said.

However, he pointed to last month’s successful bid for HSBC’s mandate as a sign the company can compete even as the Competition Commission works on plans to crack open the market.

PwC audits 41 of the FTSE 100 companies and 29 per cent of the FTSE 350.

Over the last year, PwC made a profit of £740m, up from £727m in 2012. The average profit per partner rose four per cent to £705,000.

The company’s assurance business, which includes audit, grew its revenues one per cent to £969m, while its tax unit turnover rose three per cent to £680m.

The quiet M&A market meant revenues from deals advice were flat at £562m, the firm said, while expansion in its consultancy business pushed revenues up nine per cent to £478m.

Around 62 per cent of PwC’s revenues come from non-audit clients, up from 60 per cent last year.

And one in every six pounds of revenue was generated by work done outside the UK – a figure Powell thinks will grow.