Revenue growth of 11 per cent to $3.4 billion has yet to reflect the imminent sale of its consulting arm and reputational damage, the firm says.
PwC partners to cop 30% pay cut after ‘challenging year’
PwC Australia partners will cop a 30 per cent pay cut this year on the heels of a 12 per cent drop in FY2022–23 as the firm adjusts to the sale of its consulting division and challenges “due to the sharing of confidential Treasury information”.
Revenue growth of 11 per cent to $3.4 billion for the year came against a backdrop of “failures in professional, ethical or leadership responsibilities” chief executive Kevin Burrowes admitted and that had hit profits.
“It has clearly been a challenging year for PwC Australia and our people,” Mr Burrowes said in the wake of the damaging revelations about the firm’s use of secret tax plans to help multinational clients restructure.
“While our revenue results were pleasing, the challenges we experienced in the final quarter had an impact on our profit, which remained flat as compared with FY22.”
“We completely accept that past leadership failed to meet the standards our people, our clients, the community and the Australian government rightly expect, and for that I apologise.
“We didn’t get it right, but our focus has, and always will be, on our clients, as we take the necessary steps to re-earn trust with our stakeholders.”
PwC said annualised partner pay ranged from $374,000 to $4,043,000 (for former CEO Tom Seymour), an average decline of 12 per cent that had yet to reflect the divestment of its government consulting arm, which accounted for $680 million or about 20 per cent of the firm’s FY23 revenue.
“This divestment, along with the ongoing reputational challenges the firm faces, will impact our FY24 results. To manage this, the owners of our firm – our partners – are taking a target income reduction of up to 30 per cent in FY24,” PwC said.
Its consulting business lifted revenue 12 per cent for the year, driven by demand in the corporate and health sectors.
Its financial advisory division grew revenue 9 per cent on the back of double-digit growth for energy transition advice while the assurance business generated record growth of 15 per cent fuelled by advice and audit related to cyber, risk and regulation and sustainability.
PwC said average fixed remuneration for staff rose 4.5 per cent and it would make incentive payments totalling $47 million. It promoted 1,513 people from a workforce of nearly 10,000.
Partnership numbers grew to 882, with 97 new partners and 79 retiring.
“The firm made the difficult decision to defer its July 2023 partner intake, which was in no way a reflection on any of the individuals being considered, but rather a prudent decision in light of the current circumstances,” it said. “These candidates will be welcomed to the partnership at a later date.”
“The firm’s planned divestment of its government advisory business to Allegro Funds will see more than 1,500 partners and employees join the new standalone business Scyne Advisory. The Scyne Advisory transaction is expected to be completed by the end of the month.”
The firm said it would publish a Transparency Report later this year and release the report of Dr Ziggy Switkowski’s review of the firm’s governance, accountability and culture in late September.