I am delighted to welcome you to this update on the firm’s financial performance for FY21.
This year really has been a story of two halves.
We entered the financial year in July 2020 facing considerable uncertainty.
Given we had a strong balance sheet, our technology was working and our people were delivering for clients, we felt we were in a strong position to withstand a considerable amount of market disruption.
Furthermore, back in March 2020, we had taken a decision to protect jobs and prioritise support for our people’s wellbeing and we were determined not to take any government funding. While trading conditions through to the end of December were challenging, these decisions underpinned our confidence as a business and reinforced our capacity to ride through tough times.
We were, however, genuinely surprised at how strongly the market returned from January onward.
A year on and the change in the environment could hardly be more stark.
Our gross revenue growth of 2% does not tell the whole story of a really strong year. This 2% growth reflects two offsetting trends - first we have seen growth in chargeable hours billed as activity has picked up. Second, in light of the sizable numbers of our people working from home, revenue derived from the billing of disbursements to clients for items such as business travel expenses have declined considerably. A better measure of our underlying activity is our net revenue, excluding such disbursements - this grew at over 5% for the full year.
We are pleased also that demand has been led by a recovery in private sector work. We’ve experienced strong performances across all our Lines of Service. Audit provided a great anchor for our business with 7% growth, and the Deals-led recovery is keeping our Transaction Services and Corporate Finance teams exceptionally busy.
Our underlying distributable profit per partner is £818,000 which excludes non recurrent gains. Including those one off gains - the reported profit per partner for this year is £868,000.
This compares with £685,000 in 2020 and a pre-Covid profit per partner share of £765,000 in 2019.
Our Total Tax Contribution this year was £1.336bn, up 5 percent on the previous year. Our partners average effective tax rate was, once again 48 percent.
The staff bonus allocation this year was at a record high of £128 million, up from £83 million in 2020 and £113 million in 2019, while our people have also enjoyed an additional day off and an extra week’s pay in May.
Our status as a large employer, a substantial contributor to the UK tax base, and our demonstrated capacity to navigate the pandemic without drawing on government assistance all serve to reinforce the importance of our multi disciplinary firm business model.
Our Alliance relationship with our Middle East firm has gone from strength to strength and they also had an outstanding year, reaching the milestone of $1bn in revenue with 14 percent growth in US dollar terms.
One of the keys to our success in 2021 has been our focus on cash collection. Our people have understood its importance and the reaction has been impressive. Prior to the pandemic we’d borrow up to £200 million from time to time. But not this year.
As a result we are now poised to be able to invest in growth areas such as Value Creation in Deals, Execution Managed Services, Front Office Transformation and ESG services.
I remain extremely thankful for the investment decisions that we have taken over the last five years. These enabled us to adopt a balanced response to the pandemic to the benefit of our people and clients while maintaining our ability to continue to invest and grow into the future.
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Corporate Affairs, PwC United Kingdom