PwC UK delays annual results to account for cost of Covid-19

PwC UK will delay publishing its annual results until next year as it assesses the impact of the coronavirus pandemic on pay and bonuses for its staff and partners.

The United Kingdom’s largest accounting firm said it will not release its accounts for the 12 months to June 30th until January.

“Our current priorities are managing our business, supporting our clients and preserving jobs before we make any decisions about the quantum of the bonuses we pay to our staff and distributions to our partners,” said PwC.

The new date is compliant with PwC’s statutory reporting requirements in Britain but is a departure from its normal timetable as it would usually publish its results and distribute profits to its partners by September.

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Results

Deloitte is usually the first of the Big Four accounting firms to publish its annual results at the end of August or in early September. The firm said there would be no substantial delay in releasing its 2020 figures.

PwC’s 900 equity partners, who in 2019 received a 10-year record average share of profits of £765,000 (€848,000), will not be paid a year-end dividend this summer until the firm has considered how the hit to trading from coronavirus will affect its profits.

Partners’ monthly profit distributions were reduced by 20 per cent during the pandemic so PwC could retain more cash to weather the downturn.

So far PwC, which employs 24,000 people in the UK, has made no redundancies during the crisis and has not used the government’s furlough scheme.

The decision to delay its results will allow the firm to take into account how it performs over the coming months before deciding on bonuses for staff and profit payments to partners.

Last year, PwC also paid more than 1,000 of its retired partners a total £100 million as part of an annuity scheme that is far more generous than any of its competitors’.

PwC UK froze promotions, pay rises and bonuses for staff in April. Kevin Ellis, its chairman, told staff that partners would take a financial hit to protect jobs and provide salary security for its employees.

Quality

Mr Ellis warned in September last year – long before the start of the pandemic – that its 2020 profits would probably be flat as it was investing £30 million in its audit department to improve training and quality.

PwC is under investigation by the UK accounts watchdog for its audits of haulier Eddie Stobart and mini-bonds firm London Capital & Finance. In the past year it was fined £4.6 million for botched audits for cloud computing business Redcentric.

In the year to July 2019, PwC UK made revenues of £4.23 billion and profits of £1.02 billion. PwC global, which made revenues of $42 billion last year, is expected to reveal its 2020 figures next week.

The Big Four accountants – which also include Deloitte, EY and KPMG – have been given until October to outline to the industry’s regulator how they will financially separate their audit practices from their consulting divisions over the next four years.

The demand from the Financial Reporting Council has compounded regulatory pressure on the firms following years of corporate failures and accounting scandals that have hurt their reputations, and has added to recent financial pressure as a result of a downturn in work.

Demand for consultants has dropped since March as companies have paused deals and put large transformation projects on hold. About 80 per cent of revenues at the Big Four are generated by consulting work. – Copyright The Financial Times Limited 2020