PwC’s UK partners took home record pay this year after the firm’s profits rose by a quarter to a fresh high of almost £1.2 billion (€1.4 billion) on the boom in corporate dealmaking.
Average profit per partner for the year to the end of June 2021 was its highest ever at £868,000, up from £685,000 in 2020 and £765,000 in 2019. The firm’s 22,000 UK staff shared a total bonus pot of £128 million, up from £83 million a year earlier.
Large legal and accounting firms have generally performed well during the pandemic, given high demand for advice on takeovers. Private equity firms alone announced deals worth $513 billion (€437 billion) globally in the first six months of 2021.
Reduced travel and client entertainment costs have also helped. PwC UK reported a 2 per cent rise in gross revenue to more than £4.4 billion in the 12-month period, but underlying net revenue rose 5 per cent because of the fall in business travel and other expenses, it said. Pre-tax profit rose to almost £1.2 billion, a 25 per cent year-on-year rise.
Kevin Ellis, chair and senior partner of PwC UK, predicted a multiyear boom for the sector driven by “three waves” of corporate activity: adapting to climate change, deals backed by private investors with access to cheap money, and a sharp rise in companies investing in technology.
The figures, which also include the firm’s Middle East business, reflect a rebound in performance for PwC. The group reduced average partner pay by 10 per cent last year to avoid job losses when clients cut spending at the start of the pandemic.
‘Year of two halves’
Mr Ellis said the firm had a “year of two halves” but that its decision not to make staff redundant when business slumped early in the pandemic had paid off, allowing it to capitalise on “a deals-led recovery” from September onwards.
“We probably carried over 1,000 people above the headcount that we needed [at the start of the pandemic] and we had 3,000 job offers out there that we could have delayed or cancelled and we didn’t,” he said.
None of the Big Four, which also includes Deloitte, EY and KPMG, used the furlough scheme under which taxpayers paid up to 80 per cent of employees’ wages.
PwC is the first of the four to report headline financial results for the most recent financial year.
Average partner pay included £50,000 from one-off transactions, such as the disposal of LikeZero, a fintech unit. Ellis signalled he was open to further disposals but added that PwC did not plan to follow KPMG and Deloitte by selling its restructuring division.
Revenue in PwC’s deal advisory arm rose 9 per cent to £854 million while audit fee income rose 7 per cent to nearly £1.1 billion. That reflected an investment of about £90 million in audit quality over three years, Mr Ellis said.
Audit fees have been rising across the market following concerns that price competition has led to poor quality checks on companies’ financial statements.
Despite strong demand from companies for advice on digitisation and carbon reduction, consulting revenue fell 6 per cent to £996 million.
Revenues in the tax division were flat at close to £1.1 billion, while risk advisory slipped 2 per cent to £458 million.
– Financial Times Limited
