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Annual Report 2019: Our financial highlights transcript

Hello. Thanks for joining me as we take a look at the highlights of the performance of our UK and Middle East businesses in 2018/19. 

It has been another strong year, a year that enables us to continue investing in our people and our firm’s future. This is critical to ensuring we can drive sustainable profitable growth over the long term. 

In FY19 revenue in our UK and Middle East firms grew by 12% to £4.2bn and our profitability by 9%. Activity was strong across all of our lines of service in spite of ongoing political and economic uncertainty, in the UK, the Middle East and on the global stage. 

As all of our businesses grow, they continue to evolve in response to market demands and challenges.  That said, our audit offering remains at the heart of our brand, with external audit representing 21% of our overall revenues.  

Two years ago, we set ourselves the challenge of achieving 20% of our revenues being technology driven by 2020. We are pleased to have exceeded this target - technology continues to be an area of ongoing investment and is fundamental to our journey.  As such, we experienced a significant jump in client demand for data enabled and cloud based technology solutions including Salesforce in support of customer and revenue growth and SAP4Hana driving financial efficiencies. 

We are helping clients as they grapple with ever more critical risks, including cyber security - reflecting the need to manage access, protect data and be resilient in complex and integrated online environments.  And we are helping clients to capitalise on opportunities - such as how to best utilise Data Analytics to optimise their data assets and make better and faster decisions.  

For the second year running, we awarded record bonuses to our people totalling £135m.  Our Profit per Partner increased 7% to £765,000 with partners’ effective average tax rate being 48%. In the UK, we contributed and collected a record combined £1.3bn in direct and indirect taxes for HMRC.

The ongoing lack of clarity surrounding Brexit has been challenging for us, our clients and the wider community.  Our contingency planning for a no deal Brexit is well developed and we have adopted the same approach we recommend to clients.  This involves understanding people and data challenges, client engagements and contracting and potential regulatory changes as well as supply chain exposures.  Our foremost priority has been to support our EU citizens with the Settled Scheme registration process to provide certainty for their ongoing right to live and work in the UK. 

In spite of the geopolitical challenges in the Middle East our practice grew revenues by 19%. We are actively engaged across the region and our transformation work in the provision of Health services across Gulf nations and support for consolidation of the regional financial services sector in particular both embody our Purpose to build trust in society and solve important problems.

As we look forward to 2020 uncertainty remains, including the immediate question of the terms on which the UK leaves the EU. Although I believe we are well prepared for a no deal scenario, it is right that we remain cautious about the outlook. 

Our strong results, however, enable our plans to invest £140m next year, including £30m in our Audit Quality Enhancement Programme and in our Intelligent Digital initiatives that balance business understanding and human insight with technology innovation.  We will complement this with comprehensive whole of firm training to upskill our people for the future digital world. 

We will also continue our investments beyond London - moving and expanding into a new 2,000 person office in Birmingham and a 2,500 person office in Belfast.  This will position us well to offer even more exciting career opportunities in each of the Midlands and Northern Ireland. 

So, overall, a fantastic result where through delivering sustainable, profitable growth, driving quality and maintaining a strong balance sheet, we are well placed to progress ambitious investment plans for our people, our clients and our partners into 2020 and beyond.

Thank you

 

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Corporate Affairs, PwC United Kingdom

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