We have continued to grow our business profitably against a backdrop of challenging economic conditions. In tough times, we have remained close to our clients and worked hard to deliver outstanding service to them.
Five years ago we set out our strategy to build a sustainable business that invests for long-term success. We’ve remained on course and taken decisions that add value to our clients, our people and the communities in which they work.
The Eurozone crisis and a slowdown in growth from the BRIC developing countries (Brazil, Russia, India and China) had an impact across our firm and the wider market – making growth much harder than in previous years. And this is a clear reflection of the challenges facing our clients. That said, there have been some strong performances in our business and we are pleased with our progress.
We have also identified key growth opportunities for the future, which we believe are in the interests not just of our own business, but of the economy as well.
As we look to the coming year, we believe that innovation is absolutely critical in helping our clients grow and perform better. And in turn, if we want to grow our revenues and continue to be differentiated from our competitors, we need to be innovative and agile in bringing insights to our clients and to the wider market. We are a richly talented firm with great strength and depth across multiple specialisms, which we are able to use to the advantage of our clients.
A great example of this is the work we’ve done with clients such as Puffa, Wrigley and the BBC. We worked with each of these clients to formulate questions which were then posed to all of our people. We call it One because it brings the creativity of all our people together for the benefit of our clients.
We believe that the commercial cyber security market represents a significant opportunity for us to work with our clients as they face far more advanced threats. The business world has changed and companies of all sizes, in all countries and across industries, are now routinely sharing information across business borders, whether it’s with business partners or on employees’ personal devices.
Another new service we offer recognises the importance of developing our capabilities across assurance in nonfinancial areas. Our Total Impact Measurement and Management (TIMM) methodology – which goes beyond a financial analysis to look at an organisation’s total impact on society, the environment, the economy and fiscal position helps businesses make more informed decisions by presenting the bigger picture. This helps to understand and optimise choices to create value and deliver ‘good’ growth. Using TIMM, we’ve been sharing our thinking with the UN’s High Level Panel in developing a strategy on the Post-2015 Development Agenda.
Data analytics is another area that presents a great market opportunity for us and we are working with leading technology suppliers to embed analytics capabilities across our businesses and help our clients master the data challenge. Our clients are energised by the opportunities to extract insight and competitive advantage from the large quantities of information they inevitably generate, but they are also grappling with the challenge of governing such data and keeping it accurate, relevant and secure.
While we’re continuing to invest in the UK market, we have also been investing in other territories. Four years ago, we entered into a strategic alliance with the Middle East firm. The Middle East is one of the fastest-growing regions in our network, and both firms have had a huge benefit from the alliance. The Middle East firm has been able to invest in infrastructure and its people. Our clients have benefited from stronger ties and our people have had greater opportunity to experience working in these territories.
Replicating this success elsewhere is an important priority. We see growth opportunities in using our reservoir of talent in overseas developing economies like the Middle East and also in Central and Eastern Europe. Not only does this benefit our firm and the PwC global network, it will also be good for the UK economy.
As one of the largest firms in the PwC network, we participate actively in driving the firm’s international strategy and our partners are actively involved in building our networks, brand and reputation. Creating a balanced and sustainable business is a priority not just for the UK, but also for our international network. Our brand and reputation is as vital to us as our financial success and we will continue to build a strong network in the interests of our clients, our people and the communities in which we all work.
We are well placed to deal with a changing regulatory environment, particularly in respect of our audit business and the requirement for more frequent audit tendering. We are well prepared to retain our existing audit clients, but this is also a great opportunity for our firm, as the market leader with unrivalled expertise and capacity, to win new audit clients. We also see significant audit opportunities at private and medium-sized listed companies.
The great strength of our business, though, is the balanced nature of our portfolio and our ability to be responsive to changing market opportunities. As well as providing services to our audit clients, this year 62% (2012: 60%) of our business came from clients we do not audit and we are are in a strong position to provide an extensive range of services to them. We have invested in all areas of our portfolio for the medium and long term and all our businesses have good growth prospects.
The balance of our inbound and outbound business is also strong and we see considerable growth opportunities both in the UK and internationally. We believe this growth will come from organisations of all sizes, but we also see a particular opportunity as mediumsized companies respond to improving economic conditions. As we’ve already mentioned, we expect continued high demand for those services that help our clients to remain competitive and secure in a fast-changing environment: specifically, our cyber security, consulting and data analytics capabilities.
We remain focused on maintaining and enhancing PwC’s position as a trusted leader in its field, both in terms of business performance and wider social contribution. Our core values of integrity, independence, professional ethics and professional competence continue to inform all that we do.