In its full-year accounts published yesterday (August 24), the PFS’ operating expenses stood at £4.77mn, down from £5.74mn in 2020.
This was £967,000 lower than the prior year as the company received a reduction in central recharge costs from the CII and this was the main component of cost reduction in the year.
Central overhead changes compromises of membership services and other overheads.
Membership services includes customer services, membership communication, events, marketing, and operations.
Regulatory costs and those brought about by a hardening professional indemnity insurance market increase financial risk exposure for firms and their clients. PFS Other overheads comprise all other services including IT, Finance, HR, Secretariat and Legal, together with property and related costs.
In 2021, central overhead recharge was £3.85mn, down from £4.49mn in 2020, representing a reduction of £644,000.
Promotion and travel costs were £442,000 compared to £658,000 which represented a further £216,000 reduction in costs reported in the year and mainly represents saving in certain conference cancellation costs incurred in 2020.
Earlier this year, the CII said it was "on the road to financial recovery" after it reported an operating surplus before tax of £3.28mn for 2021, compared with a deficit of £4mn in 2020.
In its financial statement in May, the CII said the improvement was largely down to a £2.2mn increase in revenue from qualifications and educational activities over the year.
The institute reported consolidated operating income of £39.06mn in 2021, an increase of £2.11mn on the previous year when it was £36.95mn.
However, it still wrote a post-tax loss of £4.4mn, largely due to tax and a £6.6mn defined benefit pension cost.
Members fall
As at December 31, 2021, the company had 39,374 members which was down by 138 from 39,512 in 2020.
The members included 3,618 fellows (2020: 3,449), 4,489 associates (2020: 4,273), 21,107 members at diploma level (2020: 20,941) and 3,410 members at certificate level (2020: 3,698).
There were approximately 6,750 at student level and affiliates (2020: 7,151).
The PFS also reported profit on ordinary activities before taxation of £3.39mn, compared to £2.49mn the previous year.
Revenue in 2021 was broadly in line with the previous year at £8.14mn versus £8.17mn.
An increase in membership subscriptions of £23,000 was offset by a reduction in sponsorship income of £48,000.
The reported operating profit of the company for 2021 was £3.37mn, up from £2.43mn, and represents the highest operating result ever reported.
The taxation charge for the year was £1.67mn, up from £36,000, and includes a provision which has been estimated while the PFS engages the tax authority to clarify historic tax positions.
As at the date of the approval of the financial statements, the outcome of the tax review remained uncertain, but the PFS said it expects to resolve the matter in 2022.
Meanwhile, the net reserves of the firm stood at £15.71mn, up from £13.99mn, which represents approximately 40 months compared to 29 months of operating expenditure, providing sufficient protection against future risks and uncertainties.
Planning ahead, the PFS wrote: “The Covid-19 pandemic has created a sense of urgency for many consumers to take ownership of their financial wellbeing and control of their own financial destinies. This will further increase demand for expert financial advice.
“It is vital that the society continues to promote the benefits and value of professional advice as well as working with policymakers to widen access to advice and reduce the growing advice gap.”
It added: “Regulatory costs and those brought about by a hardening professional indemnity insurance market increase financial risk exposure for firms and their clients. The society will maintain engagement with government and regulators seeking reform for a fairer and more sustainable strategy for both consumers and the profession alike.”
sonia.rach@ft.com
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