PwC reports double digit growth for second consecutive year as long-term investment strategy delivers
PwC has reported a second consecutive year of double digit revenue growth as the firm continues to invest heavily in its people, technology and new client services.
Revenues grew to a record £3.44bn for the year ended 30 June 2016, up 11% from last year’s £3.08bn.
All of PwC’s core businesses – assurance, tax, deals and consulting – delivered good growth, with assurance and consulting recording double digit increases. There was increased demand in particular for cyber security, data analytics and technology services. Targeted investment in regional UK practices continued to deliver good growth, while revenues from privately owned businesses grew significantly.
Kevin Ellis, chairman and senior partner, said:
“Our second year of consecutive double-digit growth is the result of the long-term investment we’ve continued to make in our people and new technology. We’ve had a strong year across all of our business areas. We’re seeing particularly high demand for our technology services, largely as a result of investment in targeted acquisitions. And we have prioritised building market-leading teams to help our clients capitalise on market disrupters such as blockchain, artificial intelligence and cloud technology.”
Commenting on the impact of the EU referendum, Kevin Ellis added:
“While the impact of leaving the EU is still being worked through, we believe we’ll be in the strongest position by continuing to invest in new technology and leading the way in student recruitment – just as we did during the 2008 financial crisis. UK business has a good track record of innovating in the face of change and it’s important that businesses continue to invest to ensure that the UK is in the best possible position when negotiating our exit from the EU and entering into other trade agreements. We are working with our clients to navigate the changing landscape and we’re seeing increased appetite for strategic advice and support around immigration, trade negotiations and financial services.”
Investing in People
The firm has made significant investment in its people this year. PwC now employs over 21,000 people across its 64 offices in the UK, Channel Islands and Middle East and this year promoted a record 61 equity partners, taking the total number of equity partners to 926. Distributable profit per partner was down 5% to £706,000 due to our strategy of continuing to invest in people and technology, which included key acquisitions, record partner promotions and increases in staff remuneration.
Following PwC’s leading stance in publishing its gender pay gap, the firm is publishing social mobility data for its graduate intake, as well as gender and ethnicity targets and progress for all job roles for the first time this year. The firm is also publishing its gender pay gap for the third year in a row, all as part of its second fully digital annual report.
Kevin Ellis continued:
“We want to be the employer where people can reach their full potential, regardless of background, ethnicity, gender or sexual orientation. We’ve made great progress but recognise that to create a truly diverse organisation we need to set ourselves stretching targets and hold ourselves accountable to drive real change. Diversity makes solid business sense with different views, perspectives and experience leading to better problem solving and ultimately better performance. Anyone can easily access our social mobility data and see the progress we’re making against our gender and ethnicity targets via our digital annual report. We believe that greater transparency drives action and shows that our firm is open to all.”
The Midlands region
PwC has three offices in the Midlands region, including Birmingham in the West Midlands, Castle Donington in the East Midlands and in Milton Keynes, which serves the South Midlands area.
Matt Hammond, regional chairman at PwC in the Midlands, said:
“It’s been a strong year for the Midlands business, with double digit growth overall and in each of our offices. Every part of our business grew, driven by our high growth consulting business, significant volume and value in our transactions and crisis deals businesses, important audit wins for our assurance business and heavyweight investment in our tax business. We also saw strong growth in our listed and private business segments. We now employ over 1,600 people across the Midlands and have just welcomed our latest intake of graduates and students. We recently invested in our next generation of experienced talent, with 190 promotions from senior associate up to senior manager, and strengthened our senior team with nine new partners and 14 new directors. We also appointed a new head of diversity, head of people, head of tax and a new head of our consulting practice. Being involved in and supporting our local communities remains incredibly important to us. We appointed a new head of community in the region and over the past 12 months, 568 of our people have donated almost 6,000 hours volunteering for local causes. Earlier this year we announced that we will be relocating our Birmingham office in early 2019 to One Chamberlain Square, a landmark building in the city’s £500 million, transformational Paradise development. This investment reflects our commitment to our clients and people in Birmingham and our desire to offer them a truly first-class working environment. Looking to the financial year ahead, we are continuing to invest in our business and our people. We will be working closely with our clients and people in the Midlands to contemplate the impact of the EU referendum decision and support them in embracing the opportunities that come with change.”
2016 financial highlights
All of the firm’s business divisions delivered good growth:
Business area Revenue Revenue growth since 2015
Assurance £1,241m 11%
Tax £822m 8%
Deals £654m 4%
Consulting £720m 26%
The firm’s profits increased to £829m while average distributable profit per partner before tax was £706,000, down 5% from £740,000 last year as the overall number of equity partners increased to 926, from 885 last year.
Average distributable profit per partner was a 12.8 multiple of average employee pay and bonus, compared to 13.6 in 2015. UK regional revenues grew by 10.6%.
The firm’s total tax contribution – which comprises taxes borne and taxes collected – was more than £1.12bn, up from £1.08bn last year.
2016 non-financial highlights
PwC has published its gender pay gap for the third year in a row, after becoming the first professional services firm to publicly publish its data in 2014. PwC’s gender pay gap for 2016 is 15.2%; 2.6% when adjusted by grade.
The firm has published its gender and ethnicity targets for the first time for all levels of the business.
Last year PwC became the first major employer to drop UCAS points as graduate recruitment entry criteria, as a way to widen access to the firm. This has led to increased diversity amongst student applicants and recruits. In the firm’s latest student intake, 38% were first generation graduates, 73% attended state school, 14% came from homes eligible for income support and 9% were eligible for school meals.
More than 96,000 people applied for a job with PwC this year. The firm now employs more than 21,000 people and 926 partners across 64 offices in the UK, Channel Islands, and Middle East. This includes recruiting more than 1,600 graduates and school leavers, and more than 2,000 experienced professionals in the year.
The firm’s employees volunteered more than 71,000 hours during the working day.