PwC UK loses ground to rival
despite steady growth

A 6 percent increase in turnover, achieving carbon neutrality
and the purchase of new London premises were highlights for
PricewaterhouseCoopers (PwC) UK over the past 12 months.

The highest-grossing UK firm announced its turnover grew to £2.1
billion ($4.3 billion) for 2007 financial year end. This was up
from £2 billion the previous year but is notably less growth than
achieved by its closest rival. Deloitte UK last month reported fee
income of £1.8 billion and growth of 15.6 percent – closing the gap
to about £300 million from £420 million the previous year.

PwC reported that its net revenue grew 9 percent and profit was up
11 percent to £631 million. Average profit per partner rose 6
percent to £757,000, while the partnership grew to 822
members.

PwC chairman Kieran Poynter said the results demonstrate the
diversity of the firm’s business. “The results reflect the demands
for an increasingly broad set of high quality services from our
clients, with 72 percent of our turnover coming from non-audit
services,” he said, while adding that the firm attracted several
high-profile clients, including Gordon Ramsay Holdings, Graff
Diamonds, LaSenza and William Grant.

Of the service lines, overall assurance turnover remained the top
earner and grew 4 percent to £947 million, tax turnover increased
13 percent to £667 million and advisory grew 4 percent to £493
million.

Poynter explained: “Growth in our tax practice was excellent. This
was fuelled by a strong transactions market and through particular
success in the mid-tier and private client marketplaces, as well as
in our human resource services business. Within advisory services,
performance improvement consulting grew by 8 percent. Net revenue
growth in corporate finance remained strong at 12 percent,
reflecting the buoyant transactions market and strong deal flow.
But as expected, revenue declined in our large business recovery
services unit reflecting yet another year of benign economic
conditions.”

The firm has experienced steady growth in non-audit services
turnover for the past three years: turnover rose from £828 million
in 2005 to £1.1 billion this year, an increase of 31 percent. Audit
services grew 20 percent over the same period. Non-audit services
to audit clients dropped from £456 million in 2005 to £431 million
this year due to a Sarbanes-Oxley tail-off.

As part of the firm’s corporate responsibility initiatives, PwC
became carbon neutral this year. It reduced its total carbon
emissions by more than 40 percent over the past four years.

“We have achieved this by buying 85 percent of our electricity from
renewable sources, improving our space efficiency to reduce heat
and light requirements, conducting energy audits to identify
problem areas, installing low-energy lighting and, with help from
our people, implementing local energy-saving initiatives,” Poynter
said.

Investment in phone and video conferencing systems, the provision
of interest-free season ticket loans, a Cycle to Work scheme and
cycle and shower facilities in many of the offices have also helped
the drive towards carbon neutrality.

“We continue to focus on making the right long-term investments to
build a sustainable business to meet the current and future demands
of our clients. To do this, we have continued an unwavering focus
on our people – initiating a range of new programmes to support all
of our people in developing their skills and building diverse and
challenging careers,” Poynter added.

Another major highlight of the year was the firm’s acquisition of a
new London office at 7 More London, due for occupation in
2011.

In the chairman’s report of PwC’s 2007 annual report, Poynter said
the firm also supports the development of a robust, high quality
regulatory environment – in light of the Financial Reporting
Council’s concerns about the UK audit market offering adequate
choice to large listed companies. He added that the firm prefers
the introduction of legislation to cap auditor liability.

Nicholas Moody