Financial Highlights

Welcome to PwC's Annual Report. I’m Warwick Hunt and as our Chief Financial Officer I would like to take you through a summary of our financial performance for FY15.

We’ve enjoyed a very strong year with good broadly based growth, continued investment in our people, markets and products, and a sound profit result. In a notable milestone our revenues grew 10% to exceed £3 billion for the first time reflecting strong growth across all of our lines of service.

Pleasingly we saw especially strong demand in a range of areas involving digital, data analytic and cyber security services. At the same time our more traditional businesses continued to perform strongly with each of Assurance, Deals, Consulting and Tax exceeding both prior year and budgeted growth levels. We also continued to expand in a range of targeted industries across the entire UK market with our Insurance, Entertainment, Hospitality and Government sectors performing particularly strongly. Furthermore, the strong focus we placed on investing in the entrepreneurial and private business arena is producing strong growth as well. Now over 20% of our revenues are derived from that segment. That is more than we earn from FTSE 100 companies.

Growing our business on a profitable, sustainable basis has always been a core underpinning of our strategy. That means we continue to invest in our people, across a range of London and regional office locations, and in client facing and efficiency enhancing technologies. This ongoing investment means though that where we experienced revenue growth of 10% this year our profitability grew less, at some 6%.

And through our continued admission of new partners our distributable profit per partner was up 2½% to £740,000 from £722,000 in the prior year. We are delighted to have welcomed 71 new partners during the year resulting in a total complement for the year of 885, including those working overseas. We also appointed a further 74 new partners on 1 July 2015.

Interest in matters involving tax remains high, and as the UK’s leading tax advisors we believe being transparent with our own tax positon is both important and the right thing for us to do. We’ve published our total tax contribution for the past 10 years. This year the taxes paid by our business and its partners and our employees exceeded £1 billion for the first time at almost £1.1 billion. Our distributable profit per partner is calculated on a pre-tax basis and the taxes borne individually by our partners include both income tax as well as corporation tax on subsidiary profits. This gives an effective tax rate for our partners in the current year of 48%.

Now, ensuring we continue to build a strong firm that remains relevant and fit for purpose in a changing world is incredibly important. One of the key ways we do this is through recruiting, developing and retaining the outstanding professionals that make PwC distinctive. This year our headcount increased to over 19,700 and with this our staff remuneration, inclusive of bonuses and national insurance, increased 11% to £1.3 billion. We continue also to invest in the upgrading refurbishment of our offices around the United Kingdom while at the same time promoting working practices driven by advanced technologies that are flexible and promote both client service as well as a quality of work experience for our people. One way we did this was to provide our entire UK workforce with smart phone devices in 2015.

During the course of the year we worked increasingly closely with our new colleagues in Strategy& and together we have delivered a number of engagements for iconic clients where our objective of providing strategy through execution has increasingly become a reality.

And speaking of investments, looking beyond the UK, our strategic investment in the Middle East continues to grow from strength to strength, achieving 21% revenue growth for the year. And we’ve also made tangible progress advancing both of our alliance arrangements in Central and Eastern Europe as well as in Africa.

Our balance sheet position at 30 June is sound. Our partners have continued to increase their investment in the business with total members’ interests up 25% to £705 million. Furthermore during the year we renegotiated our banking arrangements on favourable terms and presently have £434 million in banking facilities available to us.

So as I hope is apparent from this brief summary, the past year has been one of very good performance and progress. Looking forward, our strategy of continued investment and our focus on ensuring we are best able to assist clients in existing, new and emerging markets, means we are well placed to continue as a sustainable, profitable and growing business.

Many thanks for taking the time to watch this.