PwC UK announces 2021 financial results as private sector demand fuels growth and investment in second half of the year

• Strong private sector demand drove growth for audit, deals and transformation services
  
• Gross revenue for the year ended 30 June 2021 increased by 2% to £4,447m.  
• Underlying net revenue up 5% due to fall in client-related expenses such as travel costs
• Total group profit for the financial year up 25% to £1,171m. 
• 3,300 new joiners as the firm continued to invest in people and honour job offers

Commenting on PwC UK’s performance for the year ended 30 June 2021, Kevin Ellis, PwC Chairman and Senior Partner, said:

“Against a backdrop of uncertainty, I’ve continued to be incredibly impressed by the focus and resilience of our people as they’ve navigated the challenges of the last 12 months.  The year really has been a story of two parts.  Last summer, like many businesses, we faced significant economic disruption and huge uncertainty about how the pandemic would play out.  After a challenging first six months where we held our nerve, made no redundancies and honoured job offers, we were well-placed to meet demand and create investment capacity as confidence in the market picked up. Like our clients, we see the pandemic recovery as a catalyst of profound change, driving increased demand for our deals, financing, digitisation, ESG and supply chain transformation services.”

Financial performance

We experienced strong performances across our business. Audit benefitted from our significant investment in quality, with 7% growth, while the deals-led recovery has kept our Transaction Services and Corporate Finance teams exceptionally busy.  Demand for transformation advice, including finance transformation and digital and data strategies as clients move to the cloud, were key drivers of second half growth, along with increased demand for other services such as decarbonisation plans and designing and delivering hybrid working strategies.

Our underlying average distributable profit per partner was £818,000 which excludes a number of one-off non recurring items. Including these the reported average profit per partner was £868,000. This compares with £685,000 in 2020 and a pre-Covid profit per partner share of £765,000 in 2019. 

The firm’s 2% revenue growth reflects two underlying trends. First, we saw a significant uptick in growth in the second half of the year as client activity rebounded. Second, with large numbers of our people working from home due to the pandemic, revenue related to client engagement costs such as business travel expenses declined considerably. Net revenue, excluding such disbursements, grew at over 5% for the full year.

Investments

With the strong second half performance, we have been able to continue to invest in our business and our people.  We see significant opportunity as the tide is turning against the pandemic and following Britain’s departure from the EU. The challenge of the climate crisis will be the single greatest focus area for our investments over the next three years.

Our investments are aligned with PwC’s global strategy, The New Equation. In total, we will invest more than £1bn in the UK over the next five years on a number of ambitious programmes to create jobs, increase skills and deliver wider benefits to the UK economy. This will not only generate growth for our future partners and staff but also create jobs, increase skills and deliver wider societal benefit. 

Investing in our people

PwC took a position, both as an employer of 22,000 people in the UK and through work with clients to prepare for shifts in working patterns. As part of this, following consultation with our people we launched the Deal: a framework to embed hybrid working giving our people more flexibility than ever before in how and where they work. Financial recognition for our people is an important part of the Deal. Our UK staff bonus pot this year was at a record high of £128 million, up from £83 million in 2020 and £113 million in 2019 while our people also enjoyed an additional day off and an extra week’s pay in May to recognise their efforts.  

Our people-related investments also include significant health and wellbeing support - including a 24/7 virtual GP service, health centres in offices and wellbeing programmes - digital skills training, and support to help our people cut their carbon footprint. Using technology to help our people work smarter and embedding changes to working practices is a vital part of our commitment to achieve Net Zero by 2030.

Investing in our communities

At PwC our purpose is to build trust and solve important problems. In a post-pandemic world the challenges we all face cannot be solved by one part of society. It requires collaboration. Recognising this, we plan to continue to build partnerships with Universities, Government and other stakeholders across the UK. An example of this is in Belfast where we have committed to spending £40 million on an advanced research and engineering centre, which will create 800 new jobs in the city.  This is on top of our many ongoing programmes to drive employment and also to ensure equal access to quality employment. We’ve expanded our Flying Start Degree Programme, which allows people to earn while they learn, with Queen Mary University of London joining the programme. As the number one social mobility employer we are delighted to be working together with Queen Mary’s to help reach even more students who will stand to benefit.

Investment in quality

Our sector as a whole has been undergoing change. Working with Government and regulators we have reiterated our commitment to quality in everything we do.  We are encouraged by our most recent Audit quality results and by the FRC’s recognition of improvements and good practices in our audits. Strengthening the quality of our audits remains a top priority for PwC through our ongoing Programme to Enhance Audit Quality. We’re committed to performing consistently high quality audits, building a culture of challenge and acting upon the recommendations in this year’s findings.

Outlook 

Professional services continue to be a success story of the UK economy as both an economic contributor and as a source of skilled and talented individuals. We recognise the impact we can have on reducing social economic inequality and we plan to continue to recruit at all grades within our business to widen access to the sector. 

Looking ahead, while uncertainty remains, we’re a bellwether for the economy and we see positive signs as our own trading pipeline strengthens. We need an employment-led recovery in the UK that is focused not simply on a war for talent but on creating talent with the skills to address the urgent issues of socio-economic inequality, the climate crisis and the need to harness tech innovation.

Financial highlights for year ended 30 June 2021:

• Revenue by business division:

• Total consolidated profit for the financial year to 30 June 2021 was £1,171m (up 25% from £938m in 2020) and the average distributable profit per partner before tax was £868,000 (up 27% from £685,000 in 2020).
• The firm’s consolidated financial performance includes revenues for PwC in the Middle East, which after accounting for foreign exchange variances and reduced client disbursements declined by 2% to £829m.  Underlying local currency Middle East firm net revenues were $1,003m, up 14% on prior year.
• The firm’s total tax contribution in the UK was £1,336m (2020: £1,274m) and consisted of £787m in taxes collected and £549m in taxes borne.
• The effective UK tax rate for partners was 48% (2020: 48%).

Notes to editors:

Annual Review
PwC UK’s 2021 digital Annual Review for the year ended 30 June 2021 will be published on 15 September 2021. The firm’s consolidated results include revenues for the UK and Middle East. Kevin Ellis is Chairman and Senior Partner of PwC in the UK and the Middle East.