Pandemic headwinds turn Accenture's New Zealand revenues south

Pandemic headwinds turn Accenture's New Zealand revenues south

Accounts reveal the price Accenture paid for A/NZ SAP specialist Zag, formerly Soltius

Credit: Dreamstime

IT management consultancy and outsourcer Accenture NZ said the COVID-19 pandemic was "significantly adversely impacting" its business during the 2020 financial year.

Accenture NZ reported total revenues of $66.1 million for the year ended 31 August 2020, down from $76.7 million in 2019. Net profit after tax dropped for the year from $9.5 million to $6.8 million.

Accenture reported revenues from consulting and outsourcing separately, but both appear to have been affected. Consulting revenue fell from $64.7 million to $57.1 million while outsourcing declined from $7.7 million to $5.7 million.

"The pandemic and the actions taken by governments, businesses and individuals in response to the pandemic have resulted in, and are expected to continue to result in, a substantial curtailment of business activities, weakened economic conditions, significant economic uncertainty and volatility," the financial report said.

The local branch appears to have cut its cloth to meet its income, with severance costs increasing from $137,000 to $320,000 during the year.

Wages and salary expenses declined from $13.4 million to $12.2 million while bonuses also fell, from $1.4 million to $1.2 million. 

One very large customer, Inland Revenue, could be playing an outsized role in Accenture's revenue trend. Contracts awarded data over the last few years indicates Accenture's revenue from the tax office's business transformation is now waning.

In 2018, Accenture won $72.2 million of business from Inland Revenue while in 2019 that fell to $36.7 million. In the nine months to 31 March 2020, the same number fell to $26.9 million.

Accenture has played a leading role in the implementation of both a new core tax engine at IRD and in rolling out cloud-based enterprise support services from Oracle.

The financial statements also shed light on two acquisitions Accenture NZ made during the year and subsequently.

The company bought SAP services specialist Soltians Ltd, trading as Zag, in October. Australian media reported the sale price as around A$45 million, however the local accounts place that slightly lower at NZ$40 million.

A note said Zag was bought to increase the number of in-demand SAP specialists on staff, especially those with skills related to the latest cloud version of SAP's enterprise resource planning software, S/4 HANA.

Accenture NZ also acquired A/NZ SAP supply chain and business intelligence service provider Icon Integration in February last year for an undisclosed sum.

The accounts said the New Zealand part of that deal cost $1.2 million.

Globally, Accenture recorded a slight increase in revenue between 2020 (US$44.3 billion) and 2019 (US$43.2 billion).

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