Resilient revenues with a 3% increase to £4,380m, while profits impacted and down 8%
Deals led recovery, Net Zero and digital transformation all driving pick up in demand
3,000+ new graduates, school leavers and experienced hires brought on board during pandemic
Investment in regional offices including Bradford office expansion, new offices opened in Birmingham and Watford in 2020 with Belfast opening in 2021
Having finalised staff bonus and partner distribution arrangements, this release provides PwC’s headline financial results for the year ended 30 June 2020. The full financial statements, people data and balanced scorecard for the year will be published in January.
Revenue increased for the year ended 30 June 2020 by 3% to £4,380m, despite the exceptional circumstances of the pandemic. This reflects good growth until Covid-19 began to impact the business in March. Profit was down 8% to £938m and the average distributable profit per partner was down 10% to £685,000 as the partnership prioritised protecting jobs and salaries and paying staff bonuses.
Kevin Ellis, PwC UK Chairman and Senior Partner, said:
“I’ve been impressed by the resilience of our people and business as we’ve adapted to new ways of working while keeping a constant focus on supporting our clients. As is to be expected the pandemic had a significant impact on our financial performance in 2020, however I am proud that we have continued to invest in our people and regional growth opportunities.
“We were clear in our response to the crisis from day one that we prioritised providing support and reassurance to our people. We took an early decision not to take government funding through the furlough scheme or loans. Supporting our people enabled us to continue to deliver for our clients. Through the hard work of our partners and staff we have maintained our focus while recognising it’s been a difficult time for everyone and that many of our people have been personally impacted.
“For the first eight months of the financial year we saw good performance across our balanced portfolio of services. We started to feel the impact of the pandemic in March and saw growth slow significantly by the end of June, impacting the last four months of our financial year and into the current financial year. Since September we’ve seen a steady uptick in demand despite the uncertainties of Covid-19 and Brexit.
“Audit has proved resilient and versatile, requiring new approaches as Covid restrictions made accessing company sites and data more challenging. Risk Assurance had a solid first year establishing itself as a new standalone business division, with technology risk and cyber security performing well. Demand for forensic and transaction services from Deals and for deals-related advice from our Consulting and Tax practices was particularly strong, although suffered a weakening in the immediate Covid lockdown period. Clients in both the UK and the Middle East continued to seek support with technology and transformation programmes.
Investing for the longer term
“Over several years we have invested significantly in leading edge cloud-based technology and this allowed us to adapt quickly to keep our 22,000 people safe while staying focused on our clients. Despite the disruption caused by the pandemic we have onboarded more than 3,000 graduates, school leavers and experienced hires during the crisis as we continue to invest for the future. Looking forward to next year’s graduate intake, we have adapted our recruitment process, leveraging AI technology to develop a ‘virtual park’ online that has already been visited by more than 5,500 students.
Growing our regional presence and levelling up
“Over the year we continued to grow our UK regional presence and half of our employees are now based outside London. As a UK-wide business we see the economic and societal benefits of levelling up our own operations across the country. While we know a different balance between office and working from home is here to stay, our offices across the UK will continue to play a vital role. Our people tell us they value access to the office and important activities, such as learning, training and team building, work better in person. We are committed to playing our part as the UK economy rebuilds and have opened new offices in Birmingham and Watford, taken more space in Bradford where we’ve doubled our headcount, and are moving to a new, larger office in Belfast in 2021. We are reviewing the layout and technology of all of our offices to ensure they are best equipped for a hybrid working world.
Prioritising diversity and inclusion
“Widening access to jobs, social mobility and equality remain priorities and we were ranked as the leading social mobility employer in the UK in October for the second consecutive year and named Organisation of the Year at the Social Mobility Awards. We committed to further actions in our Colour Brave programme, recognising the need to do more to support our people and up the pace of progress on racial equality. This includes mandatory unconscious bias training for all our people and the creation of a staff diversity council, to make sure all voices within the firm are heard and represented.
Upskilling our people
“We have offered more upskilling opportunities with 10,000 of our people attending digital training academies this year. 22% of our work in 2020 was technology-related and we see this continuing to rise sharply as Covid acts as a catalyst for accelerated digital transformation. To ensure our people are equipped to support our clients we have continued to invest in training and innovation. More than half of our people are using our Digital Lab to build and share tech solutions.
Enhancing audit quality and governance
“We engaged with regulators during the year on our plans for operational separation and on Covid-19 considerations for going concern. We continue to drive our three year programme to enhance audit quality and reinforce a culture of challenge, and have rolled out additional training for all of our auditors this year. We have further strengthened the governance of our Audit practice with the creation of an Audit Oversight Body (AOB) chaired by Philip Rycroft CB, an independent non-executive (INE), to ensure we remain focused on the delivery of consistently high quality audits.
Committing to Net Zero
“We have been carbon neutral in the UK since 2007 and in September made a science-based Net Zero commtment as a network. This not only includes achieving net zero greenhouse gas (GHG) emissions across our worldwide operations by 2030 but supporting our clients and suppliers in their transition to Net Zero and meeting related reporting requirements.
Outlook for 2021
“While the external environment remains tough, the rollout of the vaccine programme will give business leaders more confidence to plan and make decisions. We will stay focused on providing high quality services to help our clients tackle the challenges they face.
“Since the summer we have seen demand increase month by month as clients accelerate the transformation of their businesses, embed new technologies, overhaul their business models to deliver Net Zero and reconfigure their supply chains. All of our business divisions are performing well with the anticipated deals-led recovery and increased capital markets activity also driving demand for services.”
2020 Financial highlights for year ended 30 June 2020:
Revenue by business division:
|Business Area||2020 Revenue||Growth v 2019||2019 Revenue|
* On 1 July 2019 the Assurance practice was divided into Audit and Risk Assurance divisions. The reported 2019 Assurance revenue of £1,442m has been re-analysed to provide comparative figures with the new structure.
Total consolidated profit for the financial year to 30 June 2020 was £938m (down 8% from £1,016m in 2019) and the average distributable profit per partner before tax was £685,000 (down 10% from £765,000 in 2019).
The firm’s consolidated financial performance includes revenues for PwC in the Middle East, which grew by 18% to £850m.
The firm’s total tax contribution in the UK was £1,274m (2019: £1,265m) and consisted of £798m in taxes collected and £476m in taxes borne.
The effective UK tax rate for partners was 48% (2019: 48%).
Notes to editors:
PwC UK’s consolidated financial statements, people data and balanced scorecard for the year ended 30 June 2020 will be published in January. 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.
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