I am delighted to take you through the highlights of the performance of our UK and Middle East businesses in 2017/18.
During the year we continued to invest in our people, our clients, and in technology. To achieve this from a financial perspective, we aim to drive sustainable, profitable growth over the long term.
Our prior financial year was characterised by upheaval and business challenge following the June 2016 referendum result. While Brexit continued to be an unsettling factor in 2018, most industry sectors of our UK market grew again despite the uncertainty. In the Middle East, while business conditions remained challenging, demand for our services remained strong in the United Arab Emirates and the Kingdom of Saudi Arabia.
As a result FY18 was a solid year across the UK and Middle East, with overall revenue growth of 5% to £3.8 bn. Coupled with tightly targeted investment and conservative discretionary spending, we generated 14% growth in group profit. Overall UK profit per partner returned to pre 2016 referendum levels at £712,000, an increase of 9%. Furthermore, I am also delighted that in the current year we paid a record £93.5m in staff bonuses, up 18%.
All four of our UK lines of service performed strongly. While the full impact of mandatory firm rotation has led to a flattening in our external audit related revenues, this area remains a fundamental component of the firm’s services and our commitment to continuously improve audit quality is at the forefront of our strategy.
Our Middle East practice grew revenue by 15.7% in USD terms and is now over 5x the size it was 9 years ago, at over £600m. As such, it remains a strongly growing component of our wider business.
We’ve also strengthened our balance sheet - with a particular focus on ensuring more efficient and technology enabled use of our UK property estate - and ensured that our staff pension and other major commitments are adequately and prudently accounted for.
For the second year running, we contributed over £1.1bn of taxes to the UK tax authorities, with the effective UK income tax rate for partners remaining at 48%.
Looking ahead, we will continue to invest to grow our business. We have built on our adoption of the Google Cloud based collaboration system last year, launching the Salesforce Customer Relationship Management platform and we have just adopted the Workday Human Capital system. Across both the UK and the Middle East, our focus on the digitisation of our services and support to our people to develop their technology skills will expand into next year and beyond.
At the same time we continue to invest in and modernise our office real estate, this sets us up for the future, giving us some of the most mobile, technology enabled and energy efficient working environments. Our workspaces create a contemporary experience for our clients and our people - flexible, efficient and responsive.
So, overall, following a somewhat subdued result in 2017, the current year has set us back on the path to sustainable, profitable growth, with a strong balance sheet and improved earnings for our people and partners.
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Corporate Affairs, PwC United Kingdom