Description
In this report, we look at how we've created value for our clients, our people and our communities over the past year. We examine our performance, assess what’s happening in the professional services sector and discuss our plans for the future.
Annual Report 2014
Responsible proftable
growth
www.pwc.co.uk/annualreport
Our Annual Report takes
a look at how we’ve created
value for our clients, our
people and our communities.
Our business at a glance
Our clients
Our people
Supporting our
communities
1
Hours volunteered by our
people in the working day
We work with over
25,000
clients, helping them create the
value they’re looking for
We’re wherever
our clients are
We have 53 offices across
the UK, the Channel
Islands and the
Middle East
18,000 people 854 Partners
1
Our revenues
Assurance
£1,025m
+
6%
Tax
£714m
+
5%
Consulting
£495m
+
4%
Deals
£580m
+
3%
51,535
Who has joined us
1
Over 90,000
people applied for a
job with us this year
Over 1,300 graduates
and school leavers
joined us
1,400 experienced
people also joined us
this year
Group
£2,814m
+
5%
1 UK only; all other data is for the Group.
Contents
The PwC UK Group
In this report, we look at how we’ve created value for our clients,
our people and our communities over the past year. We examine
our performance, assess what’s happening in the professional
services sector and discuss our plans for the future.
The PricewaterhouseCoopers LLP Group consolidated within
these accounts includes PricewaterhouseCoopers’ member ?rms
in the UK, Channel Islands and the Middle East. See page 55 for
further details of the Group’s principal subsidiary undertakings.
The Group is managed through a UK Executive Board that takes
prime responsibility for the UK and Channel Islands’ aspects of
the ?rm, managed through four lines of services – Assurance,
Tax, Deals and Consulting – and through a Middle East Leadership
Team that focuses on the Middle East aspects. The ?nancial year
runs from 1 July 2013 to 30 June 2014.
The Group is part of the broader PwC network that helps
organisations and individuals create the value they’re looking for.
It’s a network of ?rms in 157 countries with more than 184,000
people who are committed to delivering quality assurance, tax,
deals and consulting services.
2 Chairman’s message
6 Our strategy
22 International network
24 Leadership and governance
32 Quality and risk management
34 Financial results
18 Our services
Assurance
Tax
Deals
Consulting
8 The things we do to create value
Clients
People
Communities
Executive Board
Supervisory Board, Audit and Risk Committee,
Public Interest Body
Group
£2,814m
2 PricewaterhouseCoopers LLP Annual Report 2014
A message from Ian Powell, our
Chairman and Senior Partner
How we do business
This year the frm will be 165 years old
and with that history we recognise our
responsibility as custodians of a business that
contributes to society in many different ways.
We are committed to remaining relevant and
signifcant in an exciting and fast-changing
market. Our purpose is clear – to build trust
in society and solve important problems. It
describes the work we do today, and guides our
decision-making for tomorrow. To deliver on
this purpose our business needs to continually
innovate and invest, and also to make choices
aligned with our values, which see the frm
taking a medium- and long-term view.
I am delighted to welcome you to our 2014 Annual Report.
PwC has performed well over the last year. Our revenues
grew by 5% to £2.8bn, a strong performance that refects
demand for our services across a broad client range.
We have pursued our vision of doing the right thing for
our clients, our people and our communities. Over the last
six years we have continued to transform and invest in
our business through international alliances, acquisitions,
innovation and new products, and importantly through
the retention, development and recruitment of a record
number of talented people. As the economy begins to
improve, we are very well positioned to work with our
clients as they focus on growth.
We play an important role in the UK economy in many
ways and during the year we have focused particularly
on supporting small business and enabling UK exporters
to access key markets. Responsible, proftable growth
requires us to be clear about how we do business, our
strategy to serve clients and how we respond to an
increasingly dynamic market.
Chairman’s message 3
Supporting the UK’s economic growth
Our frm is an integral part of the UK’s highly
successful professional and business support
services sector, which contributes more to gross
domestic product than either fnancial services
or manufacturing, and has grown throughout
the recent economic downturn. Our people
and skills are engaged on many of the key
issues that are important if the UK is to prosper.
We have pursued a strategy that has given us
the brand and people to convene the debate
on many of the key issues the country faces.
In 2014, we encouraged a broad spectrum
of people to contribute their views on tax
regulations and systems under the concept
‘Paying for Tomorrow’. Tax remains an
important and emotive topic, and we hope that
this conversation will stimulate and inform the
debate as the call for greater transparency of
the tax system increases.
Aligned with this initiative, we have again been
transparent in this Annual Report regarding
our own tax arrangements. For our 2014
fnancial year we will have paid and collected
almost £1bn of tax with an effective rate of
tax for our partners of 47% on the profts of
our business.
More widely we have played a leading role
in supporting British companies to showcase
their business to the world by sponsoring
and supporting both the GREAT Festival of
Creativity held in Istanbul and the International
Festival of Business held in Liverpool.
Serving our clients
Over the last six years, economic conditions have
been diffcult, but throughout, I’m pleased to say
that our strategy to hold our nerve and to invest
deep into the recession has proven successful.
In total, we have invested more than £750m
during this period in growing and transforming
our business. In 2014, we have continued to
build a balanced and sustainable business with
further direct investment of over £200m.
During the year, the PwC network acquired
Strategy& (formerly Booz & Co), which sees
us combine one of the leading international
strategy and deal consulting businesses with
PwC’s unparalleled capabilities in supporting
organisations through change from strategy
through to implementation. This combination
is already providing value for our clients.
We also acquired Mokum, a leading technology
consultancy, and Geotraceability, a business
providing assurance over supply chains. As
certainty over the source of the food we eat has
become increasingly important, Geotraceability
has the unique potential to rebuild consumers’
trust in the brands they use. We have also
increased our capabilities in areas such as
cyber security, data analytics and digital
business. Halo, a technology platform that
provides almost virtual real-time assurance,
is already supporting clients in the asset
management industry and is transforming
our assurance business while having much
wider applications for our clients.
investment in 2014
£200m
Over
4 PricewaterhouseCoopers LLP Annual Report 2014
All of these investments give our clients access
to enhanced capabilities and offer our people
greater development opportunities.
We operate with clients across the public and
private sector all over the UK. Making sure
that the UK has a balanced economy with
world-class infrastructure is critical to our
success and that of our clients. This year
we have completed the renovation of our
headquarters building at Embankment Place,
winning the highest BREEAM accreditation
for environmental credentials. We are proud
to operate in London; it is a dynamic, world-
leading city that is vital to the UK economy,
but we also recognise the importance of our
clients in other areas of the UK. In the last six
years we have invested in our business across
the country, and we believe we have the largest
presence in local communities of any
professional services frm.
As I talk to our leading clients I know that they
are focused on emerging markets. Internationally,
we see signifcant opportunities to use the
capabilities that we have developed in the UK
frm in these markets, so that the PwC network
can support companies as they seek to invest.
This has driven our strategy of building
successful alliances with our frms in the
Middle East and, most recently, with our
frms in Central and Eastern Europe (CEE)
and Africa. These alliances are exciting
opportunities, both for PwC and our clients,
but especially for the UK, in some of the
fastest-growing regions of the world.
Responding to the dynamic
market
Our people
The market for talent continues to change, both
in terms of the skills of the people we hire and
where they come from. We continue to be a
popular place to start, build and continue a
career. In 2014, we received an amazing 90,000
applications for jobs, refecting the strength
of our brand and attractiveness of our frm,
and recruited a record 2,700 people. Against
a backdrop of concern over the availability
of employment for students leaving university,
we increased the number of graduates and
school leavers we recruit to 1,300, and for a
record eleventh year we were voted the best
graduate employer. We have made our frm
more accessible by attracting and retaining
the best talent, open to all, regardless of their
background. By the end of the year, we believe
that we’ll have more than 200 apprentices
enrolled on what was the professions’ frst
Higher Apprenticeship scheme, leading to
qualifcation in Tax, Consulting and Assurance.
Our workforce must also refect our
communities, and therefore increasing
diversity has been a key priority. We recently
announced our new equity partners and are
pleased to report that 40% of our internally
promoted partners are women. Diversity in
our leadership at the highest levels of the frm
of those were
female
40%
New partner diversity
There were 53 new
partners promoted
internally in the last year
We operate with
clients across the
public and private
sector all over the
UK. Making sure
that the UK has a
balanced economy
with world-class
infrastructure
is critical to our
success and that
of our clients.
is crucial and 25% of my current Executive
Board are women. We have increased the
number of women in senior leadership
positions to 23%; despite this progress, we
have much more to do. We also recognise that
there are more aspects to diversity than gender
and we need to do more to attract and support
a more culturally diverse workforce.
Regulatory change
During 2014, we saw an increase in listed
company audit tenders, primarily as a result
of market sentiment, good governance and
regulatory changes. I’m delighted that some
of the world’s most signifcant companies, such
as HSBC Holdings plc, Vodafone plc and many
others have selected PwC to be their auditors.
However, we have also ceased to audit others
and we look forward to supporting them
through the Assurance, Tax, Deals and
Consulting services that we can provide.
We aim to work with the country’s leading
listed, private and public sector organisations,
and with all clients who recognise the value
we can bring.
Like many industries, we are subject to
increasing regulatory scrutiny, particularly
covering our statutory audits. Quality has been
the key driving force behind our investments
and we are delighted, but not complacent, with
our record on audit quality, based on external
regulatory review.
The European Commission has now enacted
legislation that will alter the audit and
advisory market for listed companies within
the European Union (EU). As Member States
implement the legislation over the next two
years, we hope that individual regulators are
coordinated to ensure that the outcome is easy
to understand for our clients and does not
unnecessarily increase costs on business.
These changes will have a direct impact on our
business and on our share of the audit market;
however, our balanced business model is
resilient and we are confdent that our strategy
will see the continued growth of our frm over
the coming years.
Outlook
In my six years as Chairman, the business
landscape has been complex and uncertain.
Throughout this period, we held our nerve
and invested during the downturn to create a
platform for the responsible, proftable growth
we have achieved this year and which we
believe we will sustain in the years ahead. I am
particularly proud of the many opportunities
that we have given to graduates and apprentices
in recent years, and to the many individuals
who have joined us to develop their careers.
We are optimistic about the economic outlook
and confdent that our frm is well-positioned
to make a signifcant contribution to British
business and society.
Chairman’s message 5
6 PricewaterhouseCoopers LLP Annual Report 2014
Our strategy for creating value
1. Our purpose
To build trust in society and solve
important problems
Iconic
Our vision
Who we are
Performance goals
Growth Profit Quality
Leading
firm
PwC Experience
Personal responsibility
Iconic
Our ambition is to become the iconic
professional services frm, always front of mind,
whenever professional services are mentioned.
Our vision
One Firm – doing the right thing for our clients,
our people and our communities.
Who we are
Who we are is the essence of the culture at
the heart of our frm. It brings our vision to life
and sets out the behaviours we need to adopt
individually and collectively to make the PwC
Experience a reality.
Performance goals
Our performance goals are how we defne
the successful delivery of our strategy.
Delivery of our goals is measured through
our balanced scorecard.
25
New partner
admissions
2
We had 78 new partner
admissions
People engagement
1
This represents those
people who are engaged /
highly engaged
4.00
out of a possible
score of 5
FY13: 3.98
PwC Experience
To achieve our goals and remain ahead, we
need to offer our clients and our people a
distinctive experience. We embed the PwC
Experience behaviours in everything we do.
Personal responsibility
Everyone must take personal responsibility to
play their part in delivering the frm’s strategy.
2. Our strategy
men 53
FY13: 9 women,
46 men
women
1 Figures based on internal staff ‘youmatter’ survey.
2 Figures for the year 2 July 2013 up to and including 1 July 2014.
3 The Brand Health Index survey is commissioned by PwC and conducted
by a third-party research agency (Perspective Research Services). These
results are taken from the May 2014 survey.
4 Measured in line with the London Benchmarking Group (LBG) principles.
5 Based on Defra guidelines May 2013. Prior year fgures have been restated.
See www.pwc.co.uk/corporatesustainability for details.
6 Includes UK and overseas group entities. All other KPIs refer to the UK only.
7 Now measured before the impact of both partner and corporate tax.
8 Figures based on direct client feedback. Prior years restated as client
feedback via online surveys and telephone interviews included in 2014.
See page 8 for further information including the newly published net
promoter score.
This year 40% of our
internally promoted
partners were women
Our strategy 7
• We will compete by further strengthening
relationships with our clients and
responding swiftly to their needs with
compelling propositions that solve their
problems, create value and build trust.
• We will stand apart in the market through
our culture of innovation and the distinctive
skills and integrity of our people. We will
continue to use the strength of our global
network to deliver a consistent and high-
quality PwC Experience.
£
Up 2% this year: FY13 £711,000, up 3%
722,000
£m
Up 5% this year: FY13 £2,689m, up 3%
2,814
+49%
Advocacy Net Promoter Score
Has consistent high quality
PwC 43%
35%
Nearest
competitor
Delivers leading-edge advice
PwC 42%
29%
Nearest
competitor
Leading frm
We want to be the leading professional services
frm – number one in size and reputation.
Which of these comes to mind frst as the
one that...
3
4. Our key performance indicators
hours in the working day
FY13 45,386 hours
51,535
Time volunteered by our people
4
tonnes
FY13 87,743
84,301
Our CO
2
e emissions
5
Growth
We want to remain the leading frm by revenue
and continue to grow responsibly and proftably.
Group revenue
6
Proft
We want to grow our profts, invest in our
future and competitively reward our people.
Distributable proft per partner
7
Quality
8
Delivering an exceptional service and quality
to our clients is an integral part of our strategy.
These are two of the measures we use to
monitor how we’re doing.
• We will attract, develop and engage the
best people to create an agile workforce.
We embrace diversity and value difference
in our people. We have a common set of
values and we believe in taking personal
responsibility for doing the right thing.
3. Delivering our ambition
out of a possible
score of 10
8.52
FY13: 8.45
Based on the Brand Health Index. This is an
independent survey, which benchmarks us
on a range of criteria against our competitors
every two years. It includes a sample of clients
and prospective clients.
FY13: +45%
8 PricewaterhouseCoopers LLP Annual Report 2014
The things we do to create value
Clients
We innovate to help our clients grow
and perform better, and we invest
in our frm so that we’re well-placed
to help our clients create the value
they’re looking for.
Delivering value and solving
problems
We have a strong and diverse client base.
Our aim is to help create the value our
clients are looking for.
Our global scale and reach, combined with
our specialist knowledge in local and regional
markets, bring a rich diversity of skills, expertise
and experience to our clients. Our clients
include listed, private and entrepreneurial
companies, government and third-sector
organisations as well as private individuals.
Our client service strategy is founded on
bringing the best of PwC to our clients,
establishing and developing strong
relationships, and providing key insights to
deliver value and solve important problems.
Deep industry and sector knowledge
Our industry focus enhances our effectiveness,
enabling clients to beneft from access to our
people’s industry and technical knowledge,
and their ability to tailor solutions to clients’
specifc needs.
+49%
Advocacy
1
Net Promoter Score
2
We asked our clients
‘Based on your overall
experience of PwC, how
likely is it that you would
recommend PwC to a peer
or colleague looking for
similar services?’.
Using the same question,
we look at Assignment
Reviews completed in the
2014 fnancial year and
take the number of people
who are promoters
(scoring us a 9 out of 10)
minus the number of
people who are detractors
(scoring us 0–6).
Riding high with Welcome to Yorkshire
In July this year, the Grand Départ of the Tour de France
came to Yorkshire. The bid to host the Grand Départ
was masterminded by tourism agency Welcome to
Yorkshire, with PwC a key part of its support team.
Visit www.pwc.co.uk/annualreport to read the full story.
FY13: +45%
Strong local presence
Our regional network is fundamental to our
strategy. Our deep roots in many communities
bring us closer to our clients and add local
knowledge and wider capabilities. Each of our
regional offces is able to tailor local business
knowledge and expertise with the full scale
and breadth of PwC’s capabilities.
out of a possible
score of 10
8.52
FY13: 8.45
1 Based on direct client feedback. Prior years restated as client feedback via online surveys and telephone interviews included in 2014
2 Net Promoter Score (NPS) measures the loyalty that exists between a provider and a consumer. The primary purpose of the NPS methodology is to evaluate customer loyalty to a brand or company,
not to evaluate their satisfaction with a particular product or transaction. NPS can be as low as -100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive
(i.e. higher than zero) is felt to be good, and an NPS of +50% is excellent.
The things we do to create value 9
Service analysis
Industry analysis
296
240
1,045
1,233
Consumer
and industrial
products
(2013: £1,216m)
Financial
services
(2013: £992m)
Technology, infocomms,
entertainment and
media
(2013: £292m)
Government
(2013: £189m) Revenue £m
Segment analysis
333
264
573
989
214
441
FTSE 100
(2013: £455m)
Mid-cap
(2013: £201m)
Inbound
(2013: £960m)
Private equity
(2013: £236m)
Public sector
(2013: £298m)
Entrepreneurs
and private
companies
(2013: £539m)
Revenue £m
One of the strengths of our business is the balanced
nature of our portfolio. 20% of our revenue comes
from work with entrepreneurs and private companies
– more than the FTSE 100. And 35% of our business
is from inbound clients whose ultimate headquarters
are overseas – demonstrating the need for, and
strength of, the PwC global network.
Over the past seven years we’ve seen a continued demand for services from clients where we are not the auditor.
We work across a broad range of industries. In the
past year we’ve worked with clients as diverse as
Boohoo.com, Express Holdings, King, BAE Systems
and Coca-Cola Enterprises.
2014 2013 2012 2011 2010 2009 2008 2007
Revenue (£m)
100%
1,081
595
431
1,192
593
459
1,251
586
411
1,324
620
387
1,438
630
393
1,575
656
390
63%
24%
13%
51%
28%
21%
Audit services Non-audit services to audit clients Services to clients we do not audit
1,671
646
372
1,773
667
374
R
e
v
e
n
u
e
R
e
v
e
n
u
e
100%
Who we work with
We have a broad and well-diversifed business. We work with a wide range of clients across
a variety of industries.
35% of our
business is from
inbound clients
whose ultimate
headquarters
are overseas,
demonstrating
the need for, and
strength of, the PwC
global network.
10 PricewaterhouseCoopers LLP Annual Report 2014
Making our business stronger
We continue to invest in our core capabilities
to deliver value to our clients as the market
and business world evolves and changes.
We are continuing to develop new services,
both to help support and meet client needs,
and to grow and expand our own business.
Data analytics
The explosion of digital data is revolutionising
business. Organisations of every type are now
expecting their business decisions to be based
on robust data analytics as opposed to intuition
and experience; decision-making has to be
close to real time and deeply embedded into
day-to-day operational processes.
Our Data Analytics team uses the latest analytic
techniques to help clients understand their
business and customers better and improve
business effectiveness. The team is made up
of people from each of our lines of services and
client demand is making this area increasingly
central to the digital services we offer.
Cyber security: building confdence
in your digital future
Cyber security has been thrust into the
spotlight over the last couple of years.
With high-profle data leakages, prominent
security breaches across a variety of industries
and identity theft at the forefront of consumers’
minds, security of our digital assets and
profles is essential. This applies right across
the private and public sectors as organisations
build their digital capability. In response to
these increasing cyber threats, we have built a
dedicated multi-service cyber security practice
to help our clients tackle the issue head-on.
The challenge for all organisations is to stay
ahead of the game and recognise that cyber risk
is ever constant and, like any other risk, has
to be managed. It is a boardroom issue and the
consequences of not addressing it properly can
result in severe reputational damage. There is a
spread of adversaries involved in cyber activity,
interested in fnancial gain, theft of intellectual
property and broader business and operational
disruption – and they include organised
criminal gangs, hactivists, cyber terrorists and
insider threats from disaffected employees.
Charlie McMurdie, former
head of the Metropolitan
Police central e-crime
unit, joined us as a senior
cyber crime adviser.
Her vast experience,
along with that of other
specialists in the team, is
helping us create the value
our clients are seeking.
Boohoo.com
From October 2013 to March 2014, a team from
across our business worked closely with boohoo.com
on its successful AIM listing. ‘The whole team was
impressive and important to our company’s life’, said
Boohoo CFO Neil Catto.
The things we do to create value 11
World is in beta
In a world exploding with potential, the way you
embrace emerging technology, and the transformations
it causes, will greatly affect your business. Be ready.
Be part of it. Visit www.worldinbeta.com.
Our dedicated team is made up of people who
live and breathe cyber security, involving deep
subject-matter experts, industry specialists and
staff drawn from a military and intelligence
service background. With an integrated set of
services, from legal to culture change specialists,
from technology advisers, risk management
specialists to threat intelligence and response
experts, our market positioning is clear – we
aim to help our clients build confdence in their
digital future and prepare for, and protect
against, cyber threats.
A business strategy for the digital age
Findings from our Global CEO Survey show
that 82% of UK CEOs rate technological
advances as having the greatest impact on their
business over the next fve years. Focusing on
the digital aspect of technology, it’s clear that
digital has been used as an easier way to sell
goods and services more cheaply and more
effectively. In response to this, our campaign
‘The world is in beta’ is a debate on what the
next wave of innovation on digital will be.
It looks at why you don’t need a digital strategy
to succeed in this world; you need a business
strategy for the digital age.
You don’t need a
digital strategy
to succeed in this
world, you need a
business strategy
for the digital age.
12 PricewaterhouseCoopers LLP Annual Report 2014
Enhancing our capability
We combined with Strategy& (formerly Booz
& Co) to further enhance our leading position.
This combination gives us the ability to work
with our clients from strategy development
right through to implementation.
Through our Mokum acquisition we have a
combined force of over 200 Oracle practitioners
across the UK, strengthening our position as a
leading technology service provider.
We also acquired GeoTraceability, a company
offering specialised tracking and data collection
technology for natural resources. Resource
scarcity and supply chain management are
signifcant issues for many of our clients.
These are examples of how we’re investing in
innovative services that help our clients make
better business decisions, establish trust and
reduce their risk.
Commercial innovation
We have brought together a broad range of
existing skills from across our frm to create
a new businesses team. This is a new way of
working for our frm and it allows us to get
involved with initiatives in a way that is
different from what we’ve done in the past.
This could include conceiving of, and
incubating, a new business either to keep or
to divest, or acquiring or taking a stake in a
business we see as having potential, and then
working to strengthen and grow it. We might
also substitute fees for equity in businesses
we help, or we could enter into a joint venture
where we see a suffcient alignment of interests
with our potential partners.
One new business we have focused on this
year is My Financepartner. This is a cloud-
based managed fnance service. It is targeted
at small/medium enterprises and provides
transactional reporting and fnancial insight,
which enables better decision-making.
Getting ahead of megatrends
Megatrends are changes that take place over
a long period of time and that have a major
impact on business and society. They create big
opportunities or risks in terms of how clients
manage their businesses and interact with
customers. We’ve been working closely with
clients to understand the changes that are the
most disruptive to their organisations. We’ve
distilled what we’ve learned into fve global
shifts that we believe will be important over
the coming decades.
Demographic and
social change
Shift in global
economic power
Rapid urbanisation
Climate change and
resource scarcity
Technological
breakthroughs
Meeting the needs of our clients
We have created a Financial Services Risk and
Regulation (FSRR) practice that brings together
the combined expertise of around 60 partners and
900 staff. Our clients are bene?ting from the deep
knowledge and specialist expertise of our people
whose focus is on helping both large and small
?nancial services organisations manage risk and
respond to the complex and evolving regulatory
environment.
We expanded our Working Capital Management
team by adding two new partners and over 25 new
team members over the last two years. In the past
?nancial year, the team served 30 clients. Notably,
we realised our ?rst €1bn plus cash improvement
for a client. We hope all our clients share the same
views on our team as Coca-Cola Enterprises’ CFO
Nik Jhangiani: ‘They’re clearly all subject matter
experts but, importantly, their expertise is borne
from their practical experience: they can bring real
life experiences to bear on the problems that are
facing the client. They are not theoretical.’
The megatrends
To fnd out more about how we plan to
bring a fresh perspective on each of the
fve megatrends – something different
from the normal debate and something
that will help organisations make the
most of the changes and challenges
ahead, visit www.pwc.com.
Tackling the challenges of climate
change and resource scarcity
We work with public and private sector
organisations to tackle the challenges posed
by climate change and resource scarcity.
For the Department for International
Development (DFID), we continue to manage
the Business Innovation Facility, which has
already supported over 80 companies to
develop inclusive business models in Africa
and the Indian subcontinent, and will continue
to support companies and other market players
in Malawi, Nigeria and Burma to adopt
commercially sustainable innovations.
In the private sector, we’re working with clients
across a spectrum of industries, from fnancial
services to mining, including many of the
world’s ‘sustainability leaders’.
Measuring the impact of business
Our Total Impact Measurement and
Management framework – launched at the
UN General Assembly last year – has been very
well-received. The framework helps businesses
understand the net impact of their activities on
the economy, public fnances, the environment
and wider society.
We remain the leading assurer of sustainability
data among the UK FTSE-100 companies,
and also provide assurance to public sector
clients, such as The Crown Estate, one of the
frst organisations to publish an integrated
annual report.
The things we do to create value 13
Climate & Development
Knowledge Network
(CDKN)
We’ve secured an
extension from the
UK Government to lead
CDKN through to 2017.
Over the past four years,
CDKN has supported
over 70 developing
countries to plan and
implement strategies
for their speci?c climate
change challenges.
It’s funded by both
the UK Department for
International Development
and the Dutch Ministry
of Foreign Affairs, and
allows us to use our
skills to contribute to
policy change, accessing
climate ?nance and
disaster risk management.
Express Holdings
Our Newcastle Corporate
Finance team has helped
one of the UK’s leading
manufacturing companies,
Express Holdings, secure
private equity funding.
The investment will help
Express Holdings with its
acquisition and expansion
programme both in the
UK and overseas.
Energetics Networked Energy Limited
Teams of people from across our ?rm have been
working with energy networks company Energetics,
helping management through the sale process for a
proportion of the businesses to Macquarie Bank. From
an initially dif?cult ?nancial position following signi?cant
growth, Energetics is now stronger than it has ever
been and 219 staff positions have been secured.
Pictured: Ken Stewart, Director and Bill McClymont, CEO
14 PricewaterhouseCoopers LLP Annual Report 2014
The things we do to create value
People
Young Philanthropy
Consistent with our goal of developing
responsible leaders, we are a founding
partner of ‘Young Philanthropy’. This
social enterprise has leadership at its core,
educating and empowering a new generation
of philanthropists to take a leading role in
transforming society. Young professionals
invest their time, money and skills in niche
charity projects. We now have over 14 teams
being led by people from all grades.
Different ways to start
your career
Our position as the UK’s leading graduate
employer is something we’re very proud of.
We continue to recruit top graduates from
around the country every year.
We recognise that the traditional graduate
entry route may not suit everyone who has
the potential to join us. This is why we offer
a variety of ways to join our frm.
Our Higher Apprenticeship programme
offers full-time paid professional roles for
school leavers. It’s designed to help individuals
develop their business skills while completing
formal training and studying towards
qualifcations. This year we were named by the
National Apprenticeship Service and City &
Guilds as a Top 100 Apprenticeship Employer.
Creating value for our people through
opportunity, growth and new experiences
is a key part of what we do.
Peter White (left) and Mark
Baker, from our Assurance
practice, founded their
Young Philanthropy team
shortly after the graduate
welcome event in
September 2013,
showing responsible
leadership from the outset.
People engagement
This represents those
people who are engaged /
highly engaged
4.00
out of a possible
score of 5
FY13: 3.98
As a progressive employer we believe that
having diverse and motivated people sits at
the heart of our frm’s strategy. Engaged people
with a range of skills, experiences and ideas
put us in a better position to build trust and
meet the needs of our clients.
People engagement
Throughout the year we measure the
engagement levels of our people. We also use
a framework called ‘the deal’ to understand
what individuals value about working for the
frm and what our frm expects from them.
Learning and development
We offer our people a broad range of
opportunities to grow and develop, from
formal training programmes to on-the-job
coaching, mentoring and work experiences.
The PwC Professional
We launched a leadership capability framework
called ‘The PwC Professional’. It set out fve
attributes – technical, relationships, leadership,
business and global acumen – which we expect
our people to develop to meet our clients’
needs. A global mindset is a key part of the
PwC Professional, and the framework has
been adopted across the PwC global network
to support all of our people.
The things we do to create value 15
Our Flying Start programme offers valuable
experience for those who want to go to
university and ultimately want to become
a chartered accountant. This PwC-endorsed
accounting and fnance degree (in conjunction
with the ICAEW and the universities of
Newcastle, Nottingham and Reading) offers an
exciting and challenging opportunity, with the
beneft of going to university, getting paid work
experience and fast-tracking your career.
This year we saw our frst director promotion
from this population.
Opportunity and choice
We encourage our people to look for new
opportunities within the frm. This year we
expanded our internal Careers Service, which
enables our people to talk to trained career
coaches to help them make the right career
choices. It’s proven to be a great initiative
that is making a real difference, helping
people move around the frm and take on
new challenges.
Strong links to our global network give our
people a variety of career opportunities and
potential to travel. And it gives our clients access
to an enviable pool of talent. We currently have
over 237 people on a secondment to the UK and
over 144 on secondment to other PwC offces
around the world.
Looking after the well-being of our people is
an important part of our strategy. This is why
fexible working is a valued and important
part of our operating model. In total, 10%
of our workforce work fexibly, including 50
of our partners and 138 of our directors.
Valuing difference
We believe that investing in a broad range
of skills, experiences and backgrounds puts us
in a stronger position to understand and meet
the needs of our clients. This year we have
continued to recruit a more diverse range of
talent, in particular to encourage more women
and those from different social backgrounds
to our organisation.
We want to see a greater cultural and gender
diversity in our business. Through the work we
have done to create a strong pipeline of talent,
we are making progress. This year, 40% of our
new internal admissions to the partnership
were female. Of our existing partners, 17%
are female and 6% are from a minority ethnic
background. We’ll continue to focus on setting
and monitoring gender and diversity targets at
all levels.
We have recruited over 90 students onto our
‘Shadow a Female Leader’ programme. We
also introduced a ‘Business Insight Week’ work
experience programme for sixth-form students,
focused on improving access to the profession.
The future
During the downturn we held frm and
continued to invest in recruitment. This year,
more people have joined us than ever before.
As well as recruiting over 1,200 graduates
this year, we’ve taken on 112 school leavers
and apprentices, and a further 31 graduates
from our Flying Start degree partnership.
In addition, 795 students joined us on our
internship programme. We also recruited
over 1,400 experienced people this year,
and welcomed a further 98 from acquired
businesses. In the year ahead we’ll continue
to stay focused on recruiting, developing and
retaining a talented workforce. And we’ll
continue to build on what we’ve achieved in
creating an agile and adaptable workforce,
making sure we remain responsive to change
and offer varied and exciting career
opportunities to our people.
Higher apprentices Christy
Oliver, Holly Simms and
Luke Constable. All three
have just completed their
exams and have been
offered full-time roles.
Jennifer Duck from our
Newcastle of?ce is our
?rst director promotion
from the Flying Start
programme.
New partner diversity
25
men 53
FY13: 9 women,
46 men
women
This year 32% of our 78
new partners were women
16 PricewaterhouseCoopers LLP Annual Report 2014
The things we do to create value
Community and sustainability
Improving our environmental
performance
After almost two years of refurbishment, we
fully reopened our Embankment Place offce in
London, achieving the highest ever score under
BREEAM, the world’s foremost environmental
assessment method and rating system for
buildings. In conjunction with our More London
building, which itself achieved a BREEAM
Outstanding award, we now have 10,000
of our people located in some of the most
environmentally friendly buildings in the UK.
Our overall carbon footprint fell 4% this year
to 84,301 tonnes, aided by the mild winter and
our new Embankment Place offce trigenerator,
running on recycled cooking oil, which
combined to reduce our gas consumption.
Carbon emissions from fights now account for
more than half of our overall footprint, so our
campaign to promote online meetings as an
alternative to travel remains a priority. This year,
online meetings hosted per person rose by 201%.
We generated less waste again this year,
showing good progress towards our reduction
target of 50% by 2017. But much of the 31%
reduction is due to improvements in the way we
measure the amount of paper we recycle – our
largest waste stream. In turn, this affects our
overall recycling ratio, which fell from 74% to
68%. Consumption of paper and water remain
on track to meet our 2017 targets.
Having achieved the Carbon Trust Standard for
the third time in 2013, we’re also delighted to be
one of the frst three organisations to achieve the
new Carbon Trust ‘triple crown’ of certifcates
for good carbon, water and waste management.
Our Embankment
Place of?ce
achieved
the highest
ever score
Carbon footprint
4%
to 84,301
tonnes due to
reduced gas
consumption
Down
Online meetings
Waste generated
Recycling ratio
74%
68%
2013
2014
Environmental
impact
The Carbon Trust
Standard for the third
time in 2013
BREEAM
96%
201%
Hosted
per
person
Up
31%
Down
One of the ?rst three
organisations to
achieve The Carbon
Trust ‘triple crown’
Creating value through our community
and sustainability programmes is an
important part of our strategy. We are
committed to doing the right thing for
our communities and are constantly
looking for ways to eliminate as many
of our environmental impacts as
possible. We encourage our people to
share their skills and energy to support
groups and charities across the UK.
Building a sustainability mindset
benefts our people and the clients
and communities we serve.
Charities we support
The things we do to create value 17
Investing in our communities
Our community programmes continue apace
and we are engaging more of our people in
more ways.
We volunteered 51,000 hours during the year
– up 14% from 2013. For the frst time we held
a vote for our people to select three charities of
the year which will be supported by the PwC
Foundation. These three charities, together
with our two existing charities, Beyond Food
Foundation and Wellbeing of Women, formed
the basis of our annual frmwide volunteering
day. We are planning other fundraising events
throughout next year to enable our people to
pool their talents and energies to really make
a difference for these charities.
Our volunteering also continues in other areas.
We support education, social enterprise and
employability initiatives, making the most of
our professional skills to maximise our impact.
More than 50% of our volunteering is skills-
based this year.
Meanwhile, our social entrepreneurs’ club,
which provides mentoring and other support to
social entrepreneurs, has grown to more than
200 members across the UK, and we’re on track
to reach our 2017 target of 250. We’ve published
a review of our fve-year relationship with the
School for Social Entrepreneurs, and we ran
social impact measurement training for our social
entrepreneurs in London, Leeds and Scotland.
Measuring our impact
For many years we’ve actively encouraged our
people to volunteer in the communities in which
we operate. In recent years we’ve sought to
maximise the impact of these activities by
sharing our professional skills where possible.
So, this year we’ve published ongoing targets
for volunteering hours and skills-based
volunteering. And we’re also publishing the total
number of benefciaries of our volunteering.
We’ve been tracking our people’s expectations
about our social and environmental responsibility
for some time, too. So we’re also including
these metrics in our scorecard. See pages
71–72 for more details of our quality and ethics,
workplace and diversity, and community and
environmental targets and achievements.
Over the next year, we’ll continue to embed
sustainability more deeply into our supply
chain and client work, infuencing all the
elements of our value chain for greater social
and environmental impact, as well as setting
up additional programmes to help us achieve
our 2017 goals.
For more information visit www.pwc.co.uk/
corporatesustainability.
Getting our people
to think sustainability
This year, we developed
an online training called
‘Think Sustainability’ to
help our people and
contractors to understand
the implications of social
and environmental issues
in client work. With 94%
of them completing the
course, over half of those
surveyed* con?rmed that
it led to them adopting
more sustainable
behaviour. We’re proud
that the module received
external recognition,
being voted ‘best
internal engagement’
by the environmental
organisation 2degrees.
*629 people
One Firm One Day
On one day each year, we encourage all our people to
get involved with community projects. This year, many
took part in fundraising activities for local charities:
one group walked, jogged and ran dressed as the
popular character from the children’s book series
‘Where’s Wally?’ to raise money for the National
Literacy Trust.
Brigade at the
Firestation
Our own social enterprise
restaurant, Brigade, goes
from strength to strength.
Another 15 apprentices
joined the Beyond Food
Foundation programme
this year, bringing the
total apprenticeships
facilitated this way to 60
since it opened in 2011.
18 PricewaterhouseCoopers LLP Annual Report 2014
Assurance
With nearly 7,000 people, we have a strong
Assurance practice that works with many listed
companies and thousands of private and family
businesses, as they look to expand both in the
UK and globally.
We’re proud of our auditing heritage and work
with some of the UK’s leading organisations.
Our work extends beyond statutory audit
to encompass internal audit, risk assurance,
actuarial services and advice on capital market
transactions. Together, these services help
build trust and provide the confdence that’s
vital for decision-makers when they are faced
with complex problems.
As a result of legislative and regulatory
change, tendering activity in the audit
market is signifcantly increasing.
These measures have already led to an increase
in clients changing auditors. During the year,
we won the audits of HSBC, Vodafone, British
Land, Morrisons, Bunzl, Henderson and
Ladbrokes, and retained the audit of Lloyds
Banking Group. We’ve also seen our audit
relationship with clients including Unilever,
M&S and the London Stock Exchange come
to an end. Our focus remains the delivery
of high-quality services to all of our clients
during the transition period.
We were pleased with our 2013–2014 Audit
Quality Review results, which showed
continuous improvement on our previous
strong performance. We’re continuing
to make signifcant investments to ensure
our audit methodology remains best in class
and we’re introducing new technologies to
help deliver ever more insightful, effcient
and high-quality audits to our clients.
Our Risk Assurance business achieved double-
digit growth for the ffth consecutive year.
We provide insight and independent assurance
to help our clients protect and strengthen
every aspect of their business from people to
performance, systems to strategy and business
plans to business resilience.
Our actuarial practice provides the expertise
and experience needed to help clients manage
risk and capital more effectively. We provide
insights and solutions for all manner of
businesses that face signifcant and complex
risks, not just insurers.
Our capital markets and structuring teams
advise companies raising debt or equity in
global capital markets, including designing
the optimal deal structure. Our deals-related
revenue grew strongly in the year, thanks to
a resurgence of IPO and M&A activity.
Looking forward, we have an important role
in helping clients offer more transparency
through their corporate reporting. We are also
moving from a historical focus to provision of
assurance on a real-time basis. We’ve started
piloting our frst real-time assurance products.
We are fully committed to providing the skills
and qualifcations that future assurance
professionals will need to operate in the
changing assurance environment.
Our services
We offer our clients an integrated approach to our services.
Our core services are assurance, tax, deals and consulting.
Trust sits at the heart of everything we do for our clients.
Whether it’s trust in the relationship they have with us or the
trust we help them build with their stakeholders. Across our
business we have talented people who are innovative and
agile in their approaches. They have a common set of values,
and are empowered to take personal responsibility and do
the right thing.
Our services 19
Tax
We are proud to have the largest UK Tax
practice and the leading reputation, according
to the Global Tax Monitor.
1
But being the leading frm means more to us
than size and reputation. It also means taking
a leading role on the key issues that affect our
clients and markets, from pension changes and
executive reward to tax reform. As an example,
through our ‘Paying for tomorrow: future tax’
campaign, we’ve engaged with the public
through a Citizens’ Jury to come up with
reforms to the UK tax system. Our experts also
regularly provide commentary to the media,
bringing a business perspective to topical issues
through sharing their insights and opinions.
The world is changing, and our focus over the
last year has been to continue to adapt, transform
and diversify our business. To keep pace with the
evolving economic landscape we’ve refreshed
our global code of conduct. The code helps us
best serve our clients by ensuring we balance
their technical needs with reputational concerns.
Embracing change has allowed us to help
our clients – be they business, entrepreneurs,
private clients or public sector – to solve new
and increasingly complex problems, so they
can grow, employ new people and invest.
Our diverse business with over 3,500 talented
people brings together tax, HR and related
legal expertise to enable us to work alongside
our clients as they respond to the challenges
and opportunities they face. Over the last year,
we have increased our focus on helping clients
with the opportunities and challenges
presented by operating in a digital economy.
Projects have ranged from helping clients
manage rapid advances in technology in the
workplace to advising on the tax implications
of transacting online and across borders.
The diversity of our clients and our business, and
the strength of our global network means we can
give our people rewarding, varied experiences
and help them develop new skills. The range of
industry awards and qualifcations our practice
and people have achieved demonstrates our
breadth of skills and career paths. We’ve also
continued to invest directly in our people – over
500 moved within our business, and we made
more promotions and admitted more partners
than last year. We continue to recruit the most
talented people in the market to help us improve,
grow and diversify our offering to meet the
needs of our clients.
We’re looking forward with confdence,
committed to creating a sustainable business with
a lasting legacy built on responsible, proftable
growth. At the heart of this is our commitment
to continue bringing the very best of our diverse
practice, frm and global network to our clients.
The diversity of our
clients and business,
which brings
together tax, HR
and related legal
expertise, and
the strength of
our global network
means we can
give our people
rewarding, varied
experiences and
help them develop
new skills.
Candy Crush
In the past year, a team
drawn from a number of
our key service lines has
advised mobile game-
maker King on its multi-
billion-dollar ?otation
on the New York Stock
Exchange. Most famous
for its global hit Candy
Crush, King has more
than 180 titles in over
200 countries.
BAE Systems picks
Skyval
BAE Systems, the global
defence, security and
aerospace company,
has chosen Skyval to
manage and monitor
its pensions obligations
across all seven of its
UK schemes. Skyval is
a web-based pensions
analytics tool that gives
companies and trustees
access to real-time
information and analysis
on their schemes’
liabilities, assets, risk
and valuations. Visit www.
pwc.co.uk/annualreport
to read the story in full.
1 Launched in 2000, the Global Tax Monitor (GTM) is an independent survey conducted by research agency TNS, which examines the competitive position of the top
frms in the tax advisory market – globally, regionally, nationally and on an industry basis. It provides a comprehensive measure of frm reputation, client service
and brand health, gained currently from just over 4,000 telephone interviews annually with key decision-makers (CFOs and tax directors) in 40 key markets.
20 PricewaterhouseCoopers LLP Annual Report 2014
Deals
We have over 2,200 commercially focused
people supporting clients through transactions,
restructuring and crisis.
In an economy characterised by cautious
optimism, our focus for the last year has been
on delivering insight to help our clients get
the best outcome from complicated business
problems – be that realising the best value
from a transaction, restructuring businesses,
or providing advice on regulatory and
reputational risks.
A particular highlight has been announcing the
repayment of 100% to unsecured creditors of
Lehman Brothers International (Europe), with
over £40bn expected to be returned to creditors.
We have a strong and growing forensics team.
The fnancial and reputational risks of economic
crime and disputes can be huge. Our specialist
teams have been helping to investigate, analyse
and resolve potential issues by providing advice
to help prevent crises arising.
Over the year, the transactions market has
become more buoyant, particularly at the
mid-market level, and we’re seeing the benefts
of our recent investment in the regions.
The changing
focus from crisis
to growth has also
given our people
the opportunity to
develop and apply
their diverse skills
in new ways, which
will continue to be
a priority. CVC Capital Partners
When UK Transaction
Services’ director
Hugh Ellis was invited
to relocate to Hong Kong
to support CVC Capital
Partners in Asia, he said
‘I seized the opportunity
with both hands. The
past eight months have
been a whirlwind of deal
work and personal
development’.
Our specialist teams
have been helping
to investigate,
analyse and resolve
potential issues by
providing advice to
help prevent crises
arising.
We have had good success with our corporate
fnance teams seeing a growing range of
mandates. We’ve also been seeing an increasing
level of due diligence and transaction service
activity, together with the need for post-deal
implementation services.
The changing focus from crisis to growth
has also given our people the opportunity to
develop and apply their diverse skills in new
ways, which will continue to be a priority.
We are the largest Deals business in the PwC
network, which gives our people opportunities
to work on a wide range of international
assignments and experience secondments
to developing markets.
We are well positioned to continue to use
our diverse skills and deep sector knowledge
to help our clients respond rapidly to market
events, and will increase our focus on
developing original deal ideas to help
them grow and invest.
Our services 21
Consulting
Across the UK and the Middle East we now
have nearly 2,500 practitioners with a wide
and diverse range of skill sets. It’s been a year
of investment and change across our Consulting
business. Our focus continued to be on helping
our clients to work better and faster, and we
have invested further in our capabilities to
achieve this. Through our Strategy& and
Mokum investments and by investing in the
skills of our people, we seek to help our clients
improve how they operate, innovate and grow,
reduce cost, manage risks, build talent and
evolve the way they do business. We have also
established a New Business arm within the
Consulting practice, which is proving successful
as we explore new commercial models.
A recent industry report on consulting
describes our frm as occupying a positively
differentiated position in the UK market –
further evidence that our strategy is working.
We have embraced the potential opportunities
that digital integration offers clients and our
recently launched The World in Beta
campaign is showcasing our frmwide digital
capabilities. Our consulting insights and
propositions help clients think through the
radical implications for their business models
created by the digital world, execute change
and reassess the way they view customer and
supply-chain relationships. Our digital offering
is at the core of, and integral to, our Consulting
business and will shape our offering and client
conversations going forward.
Over the year we made a signifcant investment
in our people across all levels, with 800 new
recruits joining our Consulting business.
This is alongside our investment in Strategy&
– which Consulting Magazine described as bold
and shrewd, saying that it ‘may be the game-
changing move the consulting profession’s been
waiting on.’ It is a key element in our plans to
exploit the potential of large-scale international
projects that integrate strategy and delivery
across the client landscape.
The past year saw a number of achievements
for our people including four Management
Consultancies Association awards – more than
any other organisation. We were voted Graduate
Employer of Choice in Consulting in the Times
Top 100 Graduate Employers awards.
The consulting market has experienced
signifcant change over the past year and this
will continue. However, we have proved we
can anticipate change and adapt to new market
opportunities, and in the coming year we will
continue to deliver the transformational
outcomes that our clients need.
Ministry of Interior
In 2013, we helped the UAE’s Ministry of Interior
revolutionise security and safety services across the
country. Drawing on our understanding of the global
security arena, we combined complex crime analysis
with workforce expertise to create a tool to deploy
resources where and when they’re needed most.
Consulting
Magazine described
our investment in
Strategy& as bold
and shrewd, saying
that it ‘may be the
game-changing
move the consulting
profession’s been
waiting on.’
22 PricewaterhouseCoopers LLP Annual Report 2014
International network
Strength and depth of the PwC network
Supporting our clients
internationally
The combination of geographic reach and local
capabilities gives the PwC network strength
to service clients wherever they operate. Lead
partners on global accounts have responsibility
for mobilising talent to deliver the support that
clients need. Global market leaders also share
industry insight and best practice to make sure
that we have the latest thinking on key market
issues. Demand for expertise across territories
is high and increasing capacity in markets with
high potential is a key focus.
What is ‘PwC’?
PwC is the brand under which the individual
member frms of PricewaterhouseCoopers
International Limited (PwCIL) operate and
provide professional services, drawing on
common resources and methodologies.
PwCIL acts as a coordinating entity that focuses
on key areas, such as strategy, brand, and risk
and quality. The PwC network is not one
international partnership and the PwC member
frms are not otherwise legal partners with
each other.
The UK’s contribution
The UK frm is well-represented across PwC’s
network leadership teams and plays an active
role in contributing to the development of the
network’s strategy.
Network Leadership Team
The Network Leadership Team sets the overall
strategy for the PwC network and the standards
to which PwC frms agree to adhere.
Network Executive Team
The Network Executive Team is appointed by,
and reports to, the Network Leadership Team.
Its members are responsible for strategy and
the coordination of key aspects of PwC’s
Assurance, Advisory and Tax offerings, and
functional areas such as Risk & Legal, Human
Capital, Operations and Clients & Markets
across the PwC network.
Strengthening our network
The gradual return to economic growth in
developed countries is welcome news. But
we know that high growth is likely to come
from less mature markets. In response to this,
the UK frm began a strategy in 2009 which
connects those parts of our network that have
high-growth potential and which would beneft
from access to the UK’s developed talent pools
and product offerings.
This strategy began with an alliance with the
PwC frm in the Middle East and has been
extended during 2014 through investment in
PwC Central and Eastern Europe. We have also
recently announced a further alliance relationship
with PwC in Central and Southern Africa.
Seplat Petroleum
A combined UK and
Nigerian transactions
team has advised Seplat
Petroleum on its historic
dual listing on the
London and Nigerian
stock exchanges.
The $535m deal is one
of the largest ?otations
by an oil exploration and
production company
since the ?nancial crisis.
The PwC global network of frms operates in 157 countries,
with over 184,000 people. The geographic reach of the PwC
network and the depth and breadth of our services gives us
great strength in the professional services marketplace.
We are focused on how we can improve the delivery of this
expertise to our clients and maximise the opportunities for
developing our people.
International network 23
Middle East
The Middle East frm has continued to deliver
sustainable growth since the UK frm’s initial
investment in 2009. Certain local economies
continue to grow strongly across the Middle
East, with client demand for our services
in sectors such as capital projects and
infrastructure, oil and gas, government
and sovereign wealth funds.
The business has grown to over 2,600 people.
The frm promoted 617 people with 32 new
partners in the year and two new graduate
programmes were launched. Some 170
graduates joined across the region.
Central and Eastern Europe
We announced our investment strategy in PwC
Central and Eastern Europe (CEE) in October
2013. The CEE region spans 29 countries across
six time zones. The investment strategy is
designed to develop market opportunities
in the region for the beneft of both frms.
The UK has committed to invest in a number
of specifc initiatives including oil and gas,
consulting, cyber security and forensic services,
business recovery and transaction services, and
in strategy and operations consulting.
Africa
In July 2014, we also announced a strategic
investment with PwC frms in Central and
Southern Africa, to meet increased demand for
professional services as trade activity between
the two regions grows. It also gives our people
across the UK and Africa the chance to
experience different working environments.
PwC teams from the UK and Africa have a
strong track record of working together to
support businesses, governments and NGOs
across the region with expertise in felds such
as economic development, climate change,
education, infrastructure, natural resources,
and power and utilities.
To capitalise on our links and to be well-
positioned to respond to the potential economic
boom expected in the continent, the UK and
African frms are developing a robust and
fexible talent strategy.
Given our historical and cultural ties, we
have a strong cadre of people with African
backgrounds in the UK frm. We expect some to
take up learning or secondment opportunities
in Africa. The UK frm also wants to help the
African frm in recruiting and developing
a local workforce to grow and develop the
potential in local domestic economies.
Leading thoughts
PwC produces various reports and white
papers throughout the year to share insights
and stimulate debate on current and future
market issues.
Global CEO Survey
The PwC Global CEO Survey was published
for the seventeenth year. This annual survey
gives PwC a chance to fnd out what’s on the
minds of CEOs around the world. It puts us
in a better position to help them deal with
these challenges.
Global Entertainment and Media Outlook
Now in its ffteenth year, PwC’s annual Global
entertainment and media outlook (Outlook)
provides a single comparable source of fve-year
forecast and fve-year historic consumer and
advertiser spending data and commentary, for
13 entertainment and media segments across
54 countries.
Leading network
The UK frm continues proactively to help
develop and support the PwC network. It is
of vital importance for our ability to service
our clients, share knowledge and insight,
and develop our people.
Paul Cleal, UK partner,
will join the Africa
leadership team on
secondment and will be
based on the continent.
PwC Middle East has
grown to over 2,600
people. Some 170
graduates joined
across the region.
24 PricewaterhouseCoopers LLP Annual Report 2014
1 Ian Powell
Chairman and Senior Partner
Ian joined the UK frm’s Executive Board in 2006
and was elected chairman and senior partner
in 2008. He joined the UK frm as a graduate
trainee in 1977 with a degree in economics from
Wolverhampton Polytechnic. He became a partner
in 1991. Before becoming chairman, he was Head
of Advisory. He has an honorary doctorate
in business administration, awarded by the
University of Wolverhampton Business School.
2 Kevin Ellis
Managing Partner
Kevin graduated in industrial economics from
Nottingham University, joined the frm in 1984
and became a partner in 1996. Before he joined the
Executive Board in 2008, he headed up our Business
Recovery Services and between 2008 and 2012 he
was Head of Advisory. During his time with the frm
Kevin has been on two secondments, one with an
overseas bank and the other with a major UK
fnancial institution.
3 Gaenor Bagley
People
Gaenor graduated from Cambridge University
with a mathematics and management degree.
She trained in audit and spent three years in
an investment bank corporate fnance team.
In 1992, she joined the Tax practice and in 2000
became a partner, continuing to work in M&A,
and specialising in Private Equity. She joined
the Executive Board in 2011 and is responsible
for our people, communities and sustainability.
Our Board is chaired by Ian Powell, whose term of offce runs for four
years from July 2012 to June 2016. The chairman appoints the other
Executive Board members, all of whom are partners in the frm.
Each board member has responsibility and accountability for a specifc
aspect of our business. Our Executive Board meets at least monthly,
and conducts formal business at additional meetings, as necessary.
Keith Tilson was a member of the Executive Board until 30 September
2013, when he retired from the frm.
The Executive Board is responsible for developing and
implementing the policies and strategy of our frm, and for
its direction and management. It sets and communicates
our frm’s strategic priorities, which feed into our business
planning process. The contribution of each part of the frm
is monitored through balanced scorecard reporting.
4 James Chalmers
Assurance
James graduated from Oxford University with an
engineering degree and joined the frm in 1985.
He became a partner in 1997. Before joining
the Executive Board in 2008 as Head of Strategy
and Talent, he was a member of the Assurance
leadership team. During his time in Assurance
he worked with multinational clients and has been
on long-term secondments to clients in the banking
and healthcare sectors.
5 Margaret Cole
General Counsel
Margaret graduated from Cambridge with a degree
in law. She joined the Executive Board on 1 January
2013 and was previously Managing Director of
Enforcement and Financial Crime and a board
member of the FSA. She has over 20 years’
experience in private practice, specialising in
commercial litigation with an emphasis on fnancial
services. She has held positions with Stephenson
Harwood and White & Case.
6 John Dwyer
Deals
John graduated from University College Dublin
with a commerce degree. He has worked in most of
the businesses under the Deals umbrella including
Business Recovery and Corporate Finance. He
became a partner in 1997 and ran the Transaction
Services business between 2007 and 2011. He
joined the Executive Board in 2012.
Leadership
The Executive Board
2 1
7
Leadership and governance 25
7 Warwick Hunt
Chief Financial Offcer
Warwick graduated from the University of the
Witwatersrand in Johannesburg with a bachelor
of accountancy. He is responsible for the leadership
of the UK Firm’s Finance and Operations functions.
Before joining the Executive Board in October 2013
he was PwC Middle East senior partner. He was
territory senior partner and Chief Executive
Offcer in PwC New Zealand from 2003 to 2009.
8 Stephanie Hyde
Regions
Stephanie graduated from Brunel University with a
mathematics and management degree. She joined the
frm in 1995 and became a partner in 2006. Before
joining the Executive Board in 2011, she led our
Assurance practice in Reading and our mid-cap market
in the South East. Stephanie has worked in a number
of our offces in the UK with clients ranging from
private businesses through to FTSE 100 companies.
9 Kevin Nicholson
Tax
Kevin joined the Executive Board in 2008 as Head
of Regions after spending four years leading the
Entrepreneurs and Private Clients practice on
the Tax Leadership Team. He graduated from
Newcastle-upon-Tyne Polytechnic, joined the frm
in 1991 and became a partner in 2000. Over this
period he worked in the North East, the Midlands,
London and Hong Kong, and also spent two years
working with Global Tax Leadership in New York.
10 Richard Oldfeld
Strategy
Richard graduated from the University of York with
an economics degree. He joined the frm in 1992
and became a partner in 2003. Before joining the
Executive Board in 2011, he led our Banking and
Capital Markets business within Assurance. He has
worked in London, Zurich, Paris, New York and most
recently Sydney, on both audit and non-audit clients.
11 Dan Schwarzmann
Clients and Markets
Dan has a masters degree in Business
Administration from City University and became a
partner in 1998. Before joining the Executive Board
in January 2014 he was responsible for the Business
Recovery Services team in the UK from 2008. Dan
has been involved in a number of high-profle UK
and international assignments, mainly in the
fnancial services sector.
12 Ashley Unwin
Consulting
Ashley graduated from Sheffeld University in 1991
with a degree in business; he also gained an MSc in
organisational development. He joined the frm in
2009 to lead our Consulting practice. Ashley’s early
career was spent with Arthur Andersen where he
made partner in 1998. Before joining the frm, he
worked in private equity and held senior positions
in EMI. He joined the Executive Board in 2012.
3 4 5 6
8 9 10 11 12
26 PricewaterhouseCoopers LLP Annual Report 2014
Governance
Supervisory Board, Audit and Risk Committee,
Public Interest Body
Supervisory Board
This has been my frst full year as Chairman
of the Supervisory Board and it has been a busy
12 months, refecting the many developments
within our frm. Sound governance remains
a key principle of our partnership and over the
year we were focused on having the right level
of constructive conversation and reporting
between the Executive Board, the Supervisory
Board and the wider partnership. The principal
communication channels were through regular
discussions and meetings.
We have also worked closely so that any
concerns of the partnership or individuals
are dealt with quickly and the right level of
guidance is provided to the Executive Board.
The relationship between the two bodies is
positive and works well, with both boards
taking their responsibilities to represent the
partnership seriously.
On a fnal point, a key strength of the
Supervisory Board is the experience and
diversity of members; this has aided the quality
of discussions and ability to represent the
partnership effectively.
Matthew Thorogood
Supervisory Board Chairman
What does the Supervisory
Board do?
The principal roles of the Supervisory Board
are to hold the frm’s Executive Board to
account and to represent the interests of
partners, and as such it is a vital part of the
frm’s governance structure.
The Supervisory Board is made up of 12
partner members, who are elected for a term
of four years by our partners.
In addition to the 12 elected members, UK
Chairman Ian Powell serves as an ex-offcio
member, along with two partners who have been
elected to the Board of PricewaterhouseCoopers
International Limited, the global Board of the
PwC Network. The Supervisory Board elects its
own Chairman.
Partners use the Supervisory Board as a formal
communication channel with the Executive
Board. This is achieved by holding regular
meetings with partners to get their views on
the frm’s overall strategy and any other issues
that may be of concern.
The Supervisory Board is also responsible for
approving the Annual Report and the choice
of auditor, for approving the admission of
new partners and for approving transactions
and arrangements outside the ordinary course
of business.
It also has the ability to consult partners on
any proposed signifcant change in the form
or direction of the LLP. It has responsibility for
managing the process leading to the election
of the frm’s Chairman.
Our Supervisory Board
The current members of
the Supervisory Board are:
Matthew Thorogood, Chair
Pauline Campbell††,
Deputy Chair
Christine Adshead~†
Dave Allen~
Colin Brereton*~
Paul Clarke~†
Duncan Cox~*
Katharine Finn**
Mark Hudson~~
Rob Hunt*†
Sue Rissbrook*
Caroline Roxburgh†
Ex of?cio members
Simon Friend^†
Gerry Lagerberg^
Ian Powell
* Partner Affairs Committee
member
** Partner Affairs Committee
Chairman
† Audit and Risk Committee
member
†† Audit and Risk
Committee Chairman
~ Strategy and Governance
Committee member
~~ Strategy and Governance
Committee Chairman
^ Member of the Board of
PricewaterhouseCoopers
International
27
There are four subcommittees of the Supervisory
Board: Partner Affairs, Senior Management
Remuneration, Strategy and Governance and
Audit and Risk.
The Partner Affairs Committee is responsible
for making sure that the frm’s policy on
partners’ remuneration is being properly and
fairly applied. It also has oversight of partner
admissions and retirements.
The Senior Management Remuneration
Committee makes recommendations to the
Supervisory Board, which sets the Chairman’s
proft share and approves the Chairman’s
recommendations for the proft share of other
members of the Executive Board.
The Strategy and Governance Committee
provides oversight of both the development
of the UK frm’s strategy and any material
acquisitions or disposals. Its role is also to
provide the Supervisory Board with a forward
agenda to assist it to effectively commit time
to strategic issues facing the frm as well as
to routine operational issues.
The Supervisory Board works closely with
the frm’s Public Interest Body (PIB). During
the year Matthew Thorogood and Pauline
Campbell, until she stepped down in April
2014, in their capacity as members of the
Supervisory Board, sat on the PIB to make
sure that there is effective communication
between the two bodies.
Audit and Risk Committee
Role
The Audit and Risk Committee is a committee
of the Supervisory Board. The Committee
comprises six members of the Supervisory
Board, having both audit and non-audit
backgrounds. The Committee met 11 times in
the year ended 30 June 2014 (2013: 10 times).
The Chief Financial Offcer, the General
Counsel, the Head of Internal Audit and the
external auditors, Crowe Clark Whitehill LLP
(CCW), attend the Committee’s meetings
by invitation. Both the internal and external
auditors meet privately with the Committee
without management presence.
We have also
worked closely so
that any concerns
of the partnership
or individuals are
dealt with quickly
and the right level
of guidance is
provided to the
Executive Board.
The principal roles
of the Supervisory
Board are to hold
the frm’s Executive
Board to account
and to represent the
interests of partners,
and as such it is a
vital part of the
frm’s governance
structure.
The Committee monitors and reviews the:
• effectiveness of the Group’s internal control
and risk management systems
• frm’s policies and practices concerning
compliance, independence, business conduct
and ethics including whistle-blowing and
the risk of fraud
• scope, results and effectiveness of the frm’s
internal audit function
• effectiveness and independence of the frm’s
statutory auditor, CCW
• reappointment, remuneration and engagement
terms of CCW including the policy in relation
to, and provision of, non-audit services
• planning, conduct and conclusions of the
external audit
• integrity of the Group’s fnancial statements
and the signifcant reporting judgements
contained in them
• frm’s Transparency and Sustainability reports.
Internal control and risk management
systems
The Committee’s review of internal control
includes considering reports from the frm’s
Risk Council and internal and external auditors.
A member of the Committee attends the Risk
Council meetings throughout the year. Also,
during the year the Committee considered and
approved the internal audit work programme
including its risk assessment, proposed audit
approach and coverage, and the allocation of
resources. The Committee reviewed the results
of audits undertaken and considered the
adequacy of management’s response to matters
raised, including the implementation of
recommendations. The effectiveness of the
frm’s internal audit function was also assessed.
The Committee also considered reports from
other parts of the frm charged with governance
and the maintenance of internal control including
in respect of independence, compliance, ethics,
whistle-blowing, fraud, data security, business
continuity management and the management
of the frm’s own tax affairs.
The Committee also reviewed and considered
the statements on page 32 in respect of the
systems of internal control and concurred
with the disclosures made.
Leadership and governance
28 PricewaterhouseCoopers LLP Annual Report 2014
Financial reporting
The Committee carried out its responsibility
for monitoring and reviewing the integrity of
the Group’s fnancial statements by reviewing
formal updates provided by management on
key accounting developments and by reviewing
the fnancial statements with both management
and the external auditors.
The signifcant issues the Committee considered
in relation to the fnancial statements for the
year ended 30 June 2014 are set out below.
The Committee has discussed these with CCW,
together with CCW’s areas of particular audit
focus described in the independent auditor’s
report on pages 38 to 40.
• Critical accounting estimates and
judgements
The Committee reviewed management’s
process for considering the appropriateness
of critical accounting estimates and
judgements. These encompassed revenue
recognition, the fair value of unbilled
revenue on client assignments, provisions in
respect of client claims and the assumptions
adopted in valuing the frm’s defned beneft
pension schemes for the purposes of fnancial
reporting. The Committee is satisfed that
appropriate estimates and judgements have
been made in the preparation of the
consolidated fnancial statements.
• Goodwill impairment
Management’s process and methodology for
assessing the carrying value of goodwill was
reviewed by the Committee. This included
considering key assumptions, resulting
headroom and the sensitivities applied
by management in forming its assessment.
The Committee agrees with management
that there was no impairment of goodwill
in the year.
• Defned beneft pension schemes
Consideration was given to the accounting
policy change resulting from the adoption
of IAS 19 (revised) ‘Employee benefts’ and its
effect on the consolidated fnancial statements.
Following consideration of the matters
presented to it and discussion with both
management and CCW, the Committee is
satisfed with the judgements and disclosures
included within the fnancial statements.
The Committee has also reviewed the form
and content of the Group’s 2014 Annual Report.
External audit
The Committee undertakes an annual review
of the qualifcation, expertise, resources and
independence of the external auditors and the
effectiveness of the external audit process by:
• reviewing CCW’s plans for the audit of the
Group’s fnancial statements, the terms of
engagement for the audit and the proposed
audit fee
• considering the views of management and
the CCW engagement partner on CCW’s
independence, objectivity, integrity, audit
strategy and its relationship with the Group,
obtained by way of interview
• taking into account information provided by
CCW on its independence and quality control.
The external auditors are engaged to provide
non-audit services where there are business
benefts in doing so, their objectivity and
independence would not be compromised
and no confict of interests would be created.
Suitable approval processes are in place to
ensure that these criteria are met before CCW
is engaged to provide non-audit services. Fees
paid to CCW for audit and non-audit services
are set out in note 4 to the fnancial statements.
The non-audit assurance services provided
during the year related to sustainability
reporting, grant claims and regulatory
compliance. Non-audit services constituted
13% (2013: 15%) of CCW’s total fee for the
fnancial year.
The fnancial year to 30 June 2014 was the
Audit Engagement Partner’s frst year in role,
following completion of a fve-year term by
the previous Audit Engagement Partner.
Having considered a number of factors
including audit effectiveness, business insight,
tenure and approach to audit partner rotation,
the Committee concluded that it was
appropriate to reappoint CCW as auditor.
members, we fnd the relationship between the
frm’s Executive and the PIB to be a very open
one. The frm surfaces issues of potential public
interest for our attention and is receptive to our
requests for topics to be discussed. Matters we
have particularly focused on in the last year are
set out below:
• The PwC network acquisition of
Strategy& (formerly Booz & Co)
We discussed with the frm’s leadership
and the Head of Consulting the public
interest aspects of this strategic investment.
In particular, we discussed how this
development would impact on the balance
between Audit and Assurance and other
services in the frm’s business. We also
discussed how these activities are being
integrated within PwC’s network of frms.
We will revisit this area in the next year as
the integration of these activities proceeds.
• Implementation of the reforms to the
audit market arising from the Competition
Commission and EU audit reform process
We debate on a regular basis with the
frm’s Head of Assurance and the leader for
Regulatory Affairs, how the frm is addressing
the challenges of both the market-driven
and regulatory-driven changes in the audit
market. We believe that the frm is adopting
an appropriate balance in maintaining
expertise in both audit and non-audit services
in key industry sectors, and that the frm’s
commitment to audit quality remains
paramount in tendering activity.
29
A report from the Public
Interest Body
This is my fourth annual report on the
operation of the Public Interest Body (PIB)
since it was established in 2010. For the
independent non-executives, this means
we have each now begun our second term
of appointment. An appropriate time, then,
to take stock. This is something we will be
doing for ourselves, as the PIB plans to have
an external effectiveness review later this year.
It is also something the Financial Reporting
Council (FRC) is doing, as it has begun its
review of the application of the Audit Firm
Governance Code. I will return to these subjects
later in my report, but frst want to deal with
the work we have undertaken this year.
Just before doing this, it is worth reiterating
that the PIB’s membership and activities
refect the objectives of the Code, which states
that the independent non-executives should
improve confdence in the public interest
aspects of the frm’s decision-making, dealings
with stakeholders and management of
reputational risks.
The public interest and reputational risks
In the corporate world, businesses and their
auditors are being encouraged to report with a
greater emphasis on the principal areas of risk.
Hence, I thought I would begin my commentary
this year by reporting on – from the perspective
of the public interest and the frm’s reputation
– the key areas we have discussed with the
frm’s leaders. Speaking for the non-executive
Our Public Interest
Body
The ?rm established
the Public Interest Body
following the introduction
of the Audit Firm
Governance Code, which
applied to PwC UK for
the ?rst time for the year
ended 30 June 2011.
The Public Interest
Body’s purpose is to
enhance stakeholder
con?dence in the public
interest aspects of the
?rm’s activities, through
the involvement of
independent non-
executives.
Independent non-
executives
Sir Richard Lapthorne
(Chairman)
Sir Graeme Davies
Dame Karen Dunnell
Sir Ian Gibson (to April
2014)
Paul Skinner OBE
PwC members
Ian Powell^
Pauline Campbell†
(to April 2014)
James Chalmers^
Matthew Thorogood†
^ Member of the Executive
Board
† Member of the
Supervisory Board
Leadership and governance
30 PricewaterhouseCoopers LLP Annual Report 2014
• How the frm manages the reputational
risks around providing tax advice
Given the continued spotlight on corporate
taxes, we carried on our dialogue begun
last year with the frm’s Head of Tax on
how the frm manages the reputational
risks around providing tax advice and how
it has contributed ideas and evidence to the
debate on how much tax companies pay.
• Signifcant claims and litigation affecting
the UK frm
We receive regular reports from the frm’s
General Counsel on the most signifcant
cases affecting the frm. We are satisfed
that these are being appropriately handled
by the frm and its external legal advisers.
• The management of risk in the frm’s
Public Sector advisory business
At our request, the frm’s Government and
Public Sector leader discussed with us how
risks are managed in PwC’s work for the public
services, in particular in the health sector.
In all of our discussions on the above matters,
the frm’s leaders have welcomed input from
the independent non-executives and
acknowledge that we have infuenced their
thinking, for example by challenging them to
see alternative perspectives. The independent
non-executive members are satisfed that the
frm’s processes for raising matters of public
interest for the PIB’s attention are appropriate,
and that our questions have been answered in
a considered and effective manner.
External inspections of audit quality
We continue to spend substantial time engaging
with the frm’s annual inspection reports from
the Audit Quality Review Team (AQRT) of the
FRC. For the second successive year, I attended
a ‘clearance meeting’ with the frm’s Head of
Assurance and senior AQRT staff, so that we
could hear about their inspection fndings prior
to publication. This interaction is very helpful
and enables us to better understand how the
regulator’s priorities compare with our own.
I would like to see this engagement with the FRC’s
inspection unit evolve to resemble more closely
the relationship between a public company and its
external auditors. This would become a two-way
process, such that the frm could also provide
input to the FRC on the inspection process.
Stakeholder engagement
Within the frm, it is important that the PIB has
links to the wider body of the partnership, who
are the owners of the business. In addition to
hearing at each meeting from the chairman of
the Supervisory Board, we meet with all the
members of that Board at least once a year.
The non-executive members continue to meet
partners and staff through other forums, for
example by attending the annual Partner
Meeting and other events.
Externally, the Code identifes institutional
shareholders and the corporate community as
primary constituencies. During the year several
independent members of the PIB and the frm’s
Head of Assurance participated in a meeting with
a wide range of representatives of institutional
shareholder organisations. We also met with some
shareholder representatives on an individual
basis. We devoted substantial time in these
meetings to explaining PwC’s governance model
and how the PIB provides advice to the frm’s
leaders, as well as discussing current changes in
the audit market. These meetings were positive
and helpful and there is a willingness on all sides
to continue this engagement on a regular basis.
As always, if any of PwC’s stakeholders would
like to raise issues related to the Code or our
work, do please get in touch.
Reviewing the effectiveness of audit
frm governance
As indicated above, the FRC is in the course of
reviewing the Code in the light of several years’
implementation in practice. The FRC has, as
part of its evidence-gathering for its review,
held meetings with the independent non-
executives and, separately, with the frm’s
Executive to gain their respective thoughts
and experience of applying the Code.
It is too early to predict what changes, if any,
will emerge from the FRC’s review. However,
speaking from the perspective of the non-
executives, we believe that the Code has
generally worked well and that it should
continue to be suffciently fexible to
accommodate the different governance and
network structures of the major audit frms.
That is not to say that there are no
improvements that we can make in our
operations. We are planning an effectiveness
review of the PIB in the second half of 2014.
This will be externally facilitated and will build
on the work of the internal effectiveness review
that was conducted in 2012.
Changes in our membership
We were informed in April that PwC had been
successful in its tender for the audit of WM
Morrisons Supermarkets PLC. Sir Ian Gibson,
chairman of Morrisons, was one of the
independent non-executives on the PIB (he was
not involved with any aspect of the audit tender
process or decision-making). Upon hearing that
PwC would be appointed for the 2015 audit of
Morrisons, Ian immediately resigned as a
member of the PIB.
Ian’s resignation leaves four independent
non-executives on the PIB. In order to remain
compliant with the provision in the Code
requiring that independent non-executives
should have the majority on such a body, it was
decided that Pauline Campbell (one of two
representatives from the frm’s Supervisory
Board members) should also step down.
I would like to record, on behalf of all members
of the PIB and the frm, our sincere thanks
to Ian for his signifcant and thoughtful
contributions to our meetings. His wise advice
and counsel were valued by all of us and we
wish him well for the future.
Sir Richard Lapthorne
Chairman of the Public Interest Body
31 Leadership and governance
32 PricewaterhouseCoopers LLP Annual Report 2014
Managing and controlling risk
We have a clear business strategy. In
implementing this strategy it is vital that
we also manage the risks associated with
it. As a result we have a defned process for
assessing, monitoring and controlling risk.
The Executive Board takes overall responsibility
for establishing systems of internal control and
for reviewing and evaluating their effectiveness.
The day-to-day responsibility for implementation
of these systems and for ongoing monitoring of
risk and the effectiveness of controls rests with
senior management.
The systems, which have been in place
throughout the fnancial year and up to the
date of approval of these fnancial statements,
include the following:
• The Risk Council, an Executive Board
subcommittee, is responsible for making
sure that the controls are in place to
identify, evaluate and manage risk.
• Our lines of service and our internal
frm services, which document risks
and the responses to them, carry out risk
assessments annually and report to the
Risk Council on how effectively they
have managed risk during the year.
• Periodic reviews of performance and
quality are carried out independently
by the PwC network.
• Our internal audit team reviews the
effectiveness of the fnancial and operational
systems and controls throughout the Group,
and reports to the Executive Board and the
Audit and Risk Committee.
• Our risk and quality functions oversee our
professional services risk management
systems and report to the Executive Board.
We take client acceptance procedures extremely
seriously and we do not automatically take
on new client engagements or new work for
existing clients. Understanding properly both
who we are working with and the nature of
the work requested is central to protecting
our reputation for quality.
We have procedures to assess the risks
associated with new clients. We seek to serve
only those clients we are competent to serve,
who value our service and who meet appropriate
standards of legitimacy and integrity. We also
establish upfront whether we are able to comply
with independence requirements and to address
any potential conficts of interest. In addition, we
conduct annual risk reviews of all audit clients.
Internal control assessment
Our internal control systems are designed to
manage, rather than eliminate, the risk of failure
to achieve business objectives or, in the case of
fnancial controls, the risk of material misstatement
in our fnancial statements. Accordingly, they
provide reasonable but not absolute assurance
against such failure or material misstatement.
The Executive Board has reviewed the systems
of internal control in operation during the year
and is satisfed with their effectiveness.
Our principal risks
The key risks faced by our business and the
management response are summarised on
the opposite page.
Quality and risk
management
Managing risk is a clear strategic priority for the Executive
Board and senior management of the frm.
Quality and risk management 33
Risk Response
Quality: Signi?cant quality failure
in the UK ?rm or the PwC network
due to either engaging with an
inappropriate client or inadequate
delivery of services leading to a
potential service failing, litigation
and/or regulatory action.
Our internal quality management systems, which are designed to maintain and enhance quality,
include:
• Recruitment standards and staff development procedures.
• Client engagement and acceptance processes.
• Client engagement standards supported by methodologies and tools.
• Quality reviews of PwC network ?rms including the UK ?rm.
• Monitoring and review of key performance indicators by the Executive Board.
People and talent: Failure to
engage fully with our people,
impacting our ability to attract,
develop and retain the best talent
and provide quality services.
• Regular reviews of the market for student and experienced talent to understand the ?rm’s
relative competitive position.
• Embedding the PwC Experience for our people.
• The deal framework supporting staff engagement.
• The PwC Professional framework, which includes our investment in training.
• Use of various communication and discussion channels to engage with our people.
• Monitoring and review of key performance indicators by the Executive Board including staff
surveys, external Brand Health Index and regular client feedback.
Public perception and reputation:
Failure to respond in a transparent
manner to issues raised by the
‘public interest’ debates.
• Embedding a culture of ‘doing the right thing’ for our people, our clients and our
communities, as a matter of strategic intent.
• Open and active engagement in serious debate with relevant stakeholder groups on trust-
related and public interest issues to inspire change.
• Sharing of knowledge and insights on trust to sustain, widen and enrich the discussion.
• Actively participating in, leading on and collaborating on initiatives to restore trust such as the PwC
Building Public Trust programme, the World Economic Forum’s ‘Leadership, Trust and Economic
Performance’ project and the UK ?rm’s consultation ‘Paying for Tomorrow – The Future of Tax’.
Independence and regulatory
requirements: Failure to comply
with relevant independence, legal,
ethical, regulatory or professional
requirements.
Established compliance and independence management systems including:
• Clear policies, procedures and guidance.
• Mandatory annual training for all partners and staff.
• Client and engagement acceptance procedures.
• Annual independence and compliance submissions for all partners and staff enforced by
penalties for non-compliance.
• Regular monitoring and reporting to the Executive Board.
Data compromise: Failure to
safeguard con?dential information.
• Information Governance and Security committee, chaired by a member of the Executive Board,
which provides overall strategic direction, framework and policies for information security.
• The ?rm operates an ISO/IEC 27001:2013 certi?ed information security management system,
which includes:
– governance and policies for client data and other information
– physical, technical and human resource controls
– incident response capability
– regular monitoring and independent review systems.
Client assets: Failure to
appropriately manage client
assets including major client
administrations.
Well-established procedures for dealing with client assets and related matters including:
• Portfolio diversi?cation policy.
• Daily monitoring of credit and related ratings and maturities.
• Internal controls and procedures.
• Monitoring and independent review.
• A Treasury Committee that receives regular updates on the above.
New business: Failure to manage
risks created by new business and
other innovations in service delivery.
Firmwide process for reviewing new business so that relevant risks are identi?ed promptly
and addressed.
Acquisitions: Failure to integrate newly
acquired business, non-realisation of
expected synergies and inadequate
on-boarding of new partners and staff.
• Regular reviews of commercial and risk management lessons learnt from recent acquisition
experience.
• Clear objective-led management of the integration process for all acquisitions.
• On-boarding processes designed to handle the large number of lateral hires created by acquisitions.
Digital disruption: Failure to use
advanced technology to underpin
new business models and cost
structures for existing services.
• Signi?cant investment in new and innovative technology solutions for existing services.
• Commitment to new platforms to allow delivery of quality services at a highly competitive
pricing point.
Regulatory change: Failure to
respond to regulatory changes in the
various environments in which we
operate (UK, Europe and global),
which will impact our business.
• Regulatory Affairs team works to anticipate and understand changes in applicable regulatory
regimes.
• Timely consideration by the Executive Board of forthcoming changes and the potential for
strategic impact.
• Regular interaction with regulators to understand regulatory change and expectations for
implementation.
• Timely updating of the ?rm’s processes and procedures to ensure compliance with current
and developing regulation.
• Communication and training programmes to ensure our people and our clients are kept informed.
34 PricewaterhouseCoopers LLP Annual Report 2014
Financial
Understanding our financial performance
Members’ report
The Executive Board submits its report and
the audited consolidated fnancial statements
of PricewaterhouseCoopers LLP for the year
ended 30 June 2014.
This report should be read in conjunction
with the other sections of this annual report.
Financial performance
Our revenue grew 5% to £2,814m in a
challenging but improving market. This follows
the 3% revenue growth recorded last year. Risk
assurance, direct tax, HR advisory, corporate
fnance, transaction services and our Middle East
businesses all grew strongly. The core Assurance
business continued to see intense competition,
pricing challenge and increased levels of audit
tendering, with more modest growth, but some
high-profle wins, while the business recovery
and insolvency business saw a slight decline in
revenues. Consulting has continued to grow its
market footprint and presence including the
ability to provide full ‘strategy to implementation’
consulting through our investment in Strategy&.
Operating costs
Our total staff costs increased 5% across the year,
refecting a 4% increase in overall staff headcount
and the impact of 1 July 2013 pay awards.
Staff bonuses across the Group increased 8% to
£94m, including National Insurance (2013: £87m).
Other operating charges increased by 5%,
mainly as a result of the increased costs of
tendering and business development activity,
continued investment in new technology and
property, and the growing Middle East frm.
Proft for the fnancial year
Total proft for the fnancial year of £772m
(2013: £750m), comprises proft available
for division among members of £711m (2013:
£690m) and proft attributable to non-
controlling interests of £61m (2013: £60m).
The proft distributed to partners is calculated
after deducting their personal obligations to
make annuity payments to certain former
partners and after certain equity adjustments,
and is now calculated before the impact of
partner and corporation tax. Actual distributable
proft per partner, before tax, increased 2% from
£711,000 to £722,000 for the year ended 30
June 2014.
Average proft per partner based on the profts
shown in these statutory accounts, which is
stated after corporation tax and excludes the
impact of members on overseas secondment,
increased from £821,000 to £873,000.
Staff pensions
Just over 13,000 of our staff are active members
of the frm’s defned contribution pension
arrangements. The frm also has two defned
beneft schemes that are now closed to future
service accrual and new members.
As more fully disclosed in note 1 to the fnancial
statements, the Group has adopted the revised
version of the IAS 19 accounting standard
relating to its defned beneft schemes.
This has led to the restatement of a number of
pension-related balances within the fnancial
statements, the most signifcant of which is to
decrease members’ reserves at 1 July 2013 by
£282m to a restated balance of £346m.
Up 2% this year: FY13
£711,000, up 3%
£722,000
Up 5% this year: FY13
£2,689m, up 3%
£2,814m
Group revenue
Distributable proft
per partner
2012 2013 2014
2.6
2.7
2.8
£bn
Group revenue
Financial results 35
is made by the Executive Board, once their
individual performance has been assessed
and the annual fnancial statements have been
approved. The Supervisory Board approves
the process and oversees its application.
Each member’s proft share comprises three
interrelated proft-dependent components:
• Responsibility income – refecting the
member’s sustained contribution and
responsibilities.
• Performance income – refecting how a
member and their team(s) have performed.
• Equity unit income – refecting the overall
proftability of the frm.
Each member’s performance income, which
in the current year represents on average
approximately 39% of their proft share (2013:
38%), is determined by assessing achievements
against an individually tailored balanced
scorecard of objectives, based on the member’s
role. These objectives include ensuring that
we deliver quality services and maintain
our independence and integrity. There is
transparency among the members over the
total income allocated to each individual.
Drawings
The overall policy for members’ drawings is to
distribute a proportion of the proft during the
fnancial year, taking into account the need to
maintain suffcient funds to settle members’
income-tax liabilities and to fnance the
working capital and other needs of the business.
The Executive Board, with the approval of the
Supervisory Board, sets the level of members’
monthly drawings, based on a percentage of
their individual responsibility income.
Tax policy
The frm is committed to being a responsible
and compliant taxpayer in the countries where
it operates. We conduct our own tax affairs in
accordance with our Code of Conduct. We
maintain appropriate processes and controls,
which are intended to avoid the risk of non-
compliance with tax laws, fling and disclosure
requirements. We engage openly with HM
Revenue & Customs.
Responsibility for the conduct of the frm’s tax
affairs lies with the frm’s chief fnancial offcer
and is subject to scrutiny by the Executive and
Supervisory Boards.
The accounting valuations undertaken for the
purpose of these fnancial statements at 30
June 2014 indicate a combined defned beneft
pension defcit of £57m, compared with £33m
in the prior year. The increase in the defcit
primarily refects a decrease in the discount
rate used to value liabilities, offset by asset
returns and cash contributions in the period.
The 31 March 2014 triennial funding review
is currently underway. Due to the different
actuarial assumptions used, the funding
defcit arising from this review is likely to be
substantially larger than the £57m accounting
defcit shown in these fnancial statements.
Net assets and fnancing
Notwithstanding the restatement brought
about by the change in pensions accounting
standard mentioned above, the Group’s
balance sheet remains healthy, with total
members’ interests of £566m (2013: £516m).
The Group is fnanced through a combination
of members’ capital, undistributed profts and
borrowing facilities. Members’ capital
contributions totalling £208m (2013: £189m)
are determined by the Executive Board with
the approval of the Supervisory Board, having
regard to the working capital needs of the
business. They are set by reference to an
individual member’s equity unit proft share and
are repayable following the member’s retirement.
The Group’s working capital loan facilities
totalled £376m at the year-end (2013: £322m).
The Group’s principal facility was renewed
in June 2011 under a £225m four-year
arrangement, which expires in June 2015.
The Group’s facilities are spread across a
number of banks and are maintained at a
level suffcient to cover the expected peak
cash requirements of the business.
Our treasury focus is on making sure that there are
suffcient funds available to fnance the business
and on managing foreign currency exposure.
Surplus cash is invested in short-term money
market deposits. Hedging is undertaken to
reduce risk. No speculative activity is permitted.
Members’ proft shares
Members are remunerated solely out of the
profts of the frm after adjusting for annuity
payments to certain former partners and other
equity adjustments. The fnal allocation and
distribution of proft to individual members
Just over 13,000 of our
staff are active members
of the ?rm’s de?ned
contribution pension
arrangements.
2012 2013 2014
393
516
566
£m
Total members’ interests
36 PricewaterhouseCoopers LLP Annual Report 2014
Total UK tax contribution
Our frm makes a signifcant contribution to the
UK public purse through the taxes paid by our
members, the business and employees. In total,
this is estimated to be £984m in respect of the
past year (2013: £960m).
The Group and its members contribute to UK
government fnances through taxes borne
and taxes collected. We pay a range of taxes
including income tax, capital gains tax,
employment taxes, corporation tax, property
taxes, indirect taxes and environmental taxes.
The largest tax borne by the members
of the LLP is on the profts distributed to
them. Distributable proft per partner is
now calculated on a proft before tax basis.
Consequently, the taxes borne by partners
include both income tax as well as the
corporation tax on subsidiary profts.
Partner income tax and National Insurance
contributions payable by partners of the LLP on
current year distributable profts, together with
their share of corporation tax on subsidiary
profts, is estimated at £276m (2013: £261m).
This gives an effective tax rate for partners
of the LLP of approximately 47% (2013:
approximately 43%). The LLP administers the
payment of partner taxes and makes periodic
allocations of proft to cover payment of these
tax liabilities.
In addition to partner and corporate taxes,
a further £129m (2013: £129m) of UK
business taxes was borne by the Group, with
the largest element being National Insurance
contributions, refecting the fact that people
are essential to our business.
As well as taxes borne, the Group collected
taxes on behalf of the UK government of
£579m (2013: £570m), comprising employment
taxes and indirect taxes. These taxes are an
indication of the value we add in society
through our business activities. They
demonstrate our wider economic impact
and overall contribution to the economy.
Creditor payment policy
We seek to agree commercial payment terms
with our suppliers and, provided performance
is in accordance with these terms, to make
payments accordingly. The number of days
outstanding between receipt of invoice and
date of payment, calculated by reference to
the amount owed in respect of the Group’s
trade payables at the year-end as a proportion
of the total amounts invoiced by suppliers and
overseas PwC member frms during the year,
was 31 days (2013: 30 days).
Political donations
The frm has no political affliation and does
not make any cash donations to any political
party or other groups with a political agenda.
However, in the interests of the frm and its
clients, we seek to develop and maintain
constructive relationships with the main
political parties. In pursuit of this objective, we
may, subject to the agreement of the Executive
Board, provide limited non-cash assistance to
those parties in areas where we have
appropriate expertise.
Our people provide limited and fully disclosed
technical support to the main political parties
in areas where our expertise and knowledge
of the business environment can help them
better understand technical matters and the
consequences of their policy proposals. We
do not develop policy on their behalf. Areas
of assistance may include observations on
the improvement of legislation or proposed
legislation, and the exchange of information
relevant to effective policy development. In
considering any assistance, the Executive Board
has regard to the possible impact on clients of
the frm and the frm’s overall reputation.
Total UK tax contribution to 30 June 2014
30 June 2014
£m
30 June 2013
£m
Taxes paid/payable
Partner tax and NIC payable on current
year distributable pro?ts
258 257
Corporation tax on subsidiary pro?ts 18 4
Employers’ NIC 99 97
Business rates 18 22
PAYE/NIC on bene?ts 6 6
Other 6 4
405 390
Taxes collected
Net VAT 307 297
PAYE 216 218
Employees’ NIC 56 55
579 570
Total 984 960
In addition to the above, taxes paid/payable by other entities included in these consolidated
fnancial statements totalled £18m and taxes collected by these entities totalled £14m.
2012 2013 2014
975
960
984
£m
Total tax contribution
• make judgements and estimates that
are reasonable and prudent
• state whether applicable accounting
standards have been followed, subject
to any material departures disclosed
and explained in the fnancial statements
• prepare the fnancial statements on
the going concern basis, unless it is
inappropriate to assume that the LLP
or Group will continue in business.
The members are also responsible for keeping
proper accounting records that disclose with
reasonable accuracy at any time the fnancial
position of the LLP and the Group, and enable
them to ensure that the fnancial statements
comply with the Companies Act 2006, as
applied to limited liability partnerships.
They are also responsible for safeguarding the
assets of the LLP and Group, and for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
These responsibilities are fulflled by the
Executive Board on behalf of the members.
The Executive Board confrms that it has
complied with the above requirements in
preparing the fnancial statements.
On behalf of the Executive Board
Ian Powell
Chairman and Senior Partner
Warwick Hunt
Chief Financial Offcer
Financial results 37
The frm is
committed to being
a responsible and
compliant taxpayer
in the countries
where it operates.
We conduct our
own tax affairs in
accordance with our
Code of Conduct.
We completed the
refurbishment of our
Embankment Place
of?ce in London during
the year. It achieved the
highest ever BREEAM
accreditation for
environmental credentials.
We are also upgrading
a large number of our
regional properties.
In the period covered by this report, we
provided a total of some 6,004 hours of free
technical support to political parties during
the year (2013: 4,827 hours). The value of
this work, as reported to the parties using
the principles established by the Electoral
Commission, was £0.4m (2013: £0.5m) and
comprised 4,493 hours to the Labour Party
and 1,511 hours to the Liberal Democrat Party.
Over the years we have supported requests
from each of the main political parties.
Throughout this period the trend has been that
we have provided more hours to the opposition
parties as they have less support infrastructure.
Designated members
The designated members (as defned in the
Limited Liability Partnerships Act 2000) of
PricewaterhouseCoopers LLP during the whole
of the year were Ian Powell and Kevin Ellis.
Keith Tilson was a designated member until
his retirement on 30 September 2013. Warwick
Hunt was appointed a designated member on
1 October 2013.
Auditor
The independent auditor, Crowe Clark
Whitehill LLP, has indicated its willingness
to be reappointed.
Going concern
The Executive Board has a reasonable
expectation that the Group has adequate
fnancial resources to meet its operational
needs for the foreseeable future and therefore
the going concern basis has been adopted in
preparing the fnancial statements.
Statement of members’
responsibilities in respect of
the fnancial statements
The Companies Act 2006, as applied to limited
liability partnerships, requires members to
prepare fnancial statements for each fnancial
year, which give a true and fair view of the
state of affairs of both PricewaterhouseCoopers
LLP and the Group, and of the proft or loss of
the Group for that period. In preparing those
fnancial statements, the members are
required to:
• select suitable accounting policies and
then apply them consistently, subject to
any changes disclosed and explained in
the fnancial statements
38 PricewaterhouseCoopers LLP Annual Report 2014
Independent auditor’s report to the members of PricewaterhouseCoopers LLP
Report on the ?nancial statements
Our opinion
In our opinion:
• the ?nancial statements, de?ned below, give a true and
fair view of the state of the Group’s and of the parent LLP’s
afairs as at 30 June 2014 and of the Group’s pro?t and
of the Group’s and parent LLP’s cash ?ows for the year
then ended;
• the Group ?nancial statements have been properly
prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the
European Union;
• the parent LLP ?nancial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union and as applied in accordance with the
provisions of the Companies Act 2006, as applied to
limited liability partnerships; and
• the ?nancial statements have been prepared in
accordance with the requirements of the Companies Act
2006, as applied to limited liability partnerships.
This opinion is to be read in the context of what we say below.
What we have audited
The Group ?nancial statements and parent LLP ?nancial
statements (the ‘?nancial statements’), which are prepared
by PricewaterhouseCoopers LLP, comprise:
• the Group income statement and statement of
comprehensive income for the year then ended;
• the Group and parent LLP statements of ?nancial position
as at 30 June 2014;
• the Group and parent LLP statements of cash ?ows and
statements of changes in equity for the year then ended;
and
• the notes to the ?nancial statements, which include a
summary of signi?cant accounting policies and other
explanatory information.
The ?nancial reporting framework that has been applied
in their preparation comprises applicable law and IFRS as
adopted by the European Union and, as regards the parent
LLP, as applied in accordance with the provisions of the
Companies Act 2006, as applied to limited liability
partnerships.
What an audit of ?nancial statements involves
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (ISAs (UK &
Ireland)). Our responsibilities under those standards are
further described below under Respective Responsibilities of
Members and Auditor. In performing our audit, as required
by those standards, we complied with the Financial
Reporting Council’s Ethical Standards for Auditors including
those requiring us to be independent and objective.
An audit involves obtaining evidence about the amounts and
disclosures in the ?nancial statements sufcient to give
reasonable assurance that the ?nancial statements are free
from material misstatement, whether caused by fraud or
error. This includes an assessment of:
• whether the accounting policies are appropriate to the
Group’s and parent LLP’s circumstances and have been
consistently applied and adequately disclosed;
• the reasonableness of signi?cant accounting estimates
made by the designated members; and
• the overall presentation of the ?nancial statements.
In addition, we read all the ?nancial and non-?nancial
information in the Annual Report to identify material
inconsistencies with the audited ?nancial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept
of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions
of a user of the ?nancial statements. We used the concept
of materiality to both focus our testing and to evaluate the
impact of misstatements identi?ed.
When assessing the level of materiality we considered the
revenue, pro?ts before taxation and the net and gross assets
of the Group. We determined overall materiality for the
Group ?nancial statements as a whole to be £25m. We
conducted our audit of particular groups of balances or
transactions at a level of materiality lower than overall
materiality (‘performance materiality’). We agreed with
the Audit Committee to report to it all identi?ed errors in
excess of £0.5m. Errors below that threshold would also
be reported to it if, in our opinion as auditors, disclosure
was required on qualitative grounds.
Overview of the scope of our audit
The Group and its material subsidiaries are accounted for
from one central operating location with the exception of the
Middle East group of subsidiaries. Our audit was conducted
from the main operating location and all material subsidiary
companies were within the scope of our audit testing.
A member of the Crowe Horwath International network
undertook speci?ed audit procedures in the Middle East
under our direction.
Financial statements 39
Areas of particular audit focus
In preparing the ?nancial statements, the Executive Board,
on behalf of the members, made a number of subjective
judgements, for example in respect of signi?cant accounting
estimates that involved making assumptions and considering
future events that are inherently uncertain. We focused our
work primarily on these areas by assessing the Executive
Board’s judgements against available evidence, forming
our own judgements and evaluating the disclosures in
the ?nancial statements.
In our audit, we tested and examined information, using
sampling and other auditing techniques, to the extent we
considered necessary to provide a reasonable basis for us
to draw conclusions. We obtained audit evidence through
testing the efectiveness of controls, substantive procedures
or a combination of both.
We considered the following areas to be those that required
particular focus in the current year. This is not a complete list
of all risks or areas of focus identi?ed by our audit.
The Audit Committee’s consideration of these matters is set
out on page 28.
Area of focus How the scope of our audit addressed the area of focus
Revenue recognition and the valuation of unbilled amounts
for client work
The Group increasingly enters into a broader range of client
contract types, with difering revenue recognition criteria.
The timing of revenue recognition on these contracts is
dependent on the ful?lment of contractual terms, which can
be complex and involve subjective judgements on contract
completeness and recoverability. Judgements are also
required in assessing the fair value of unbilled amounts
for client work.
We selected a sample of client assignments focusing on
material contracts and contracts that met certain identi?ed
risk criteria. Contract terms were examined and relevant
information obtained from the client engagement team.
The justi?cation for the stage of contract completeness of
an engagement, revenue recognised, provisions held against
work in progress and the assessment of the fair value of
unbilled revenue at the year end were appropriately
challenged, reviewed and discussed with management
and supporting evidence obtained.
Client claims
Client claims are received in the normal course of business.
We focused on this area because of the potential ?nancial
impact that a major claim could have on the Group and
because of the uncertainties involved, including the need to
exercise judgement.
The Audit Engagement Partner met with management to
discuss signi?cant claims. We reviewed these claims,
including legal advice in relation thereto, minutes and risk
assessment processes for assessing the risk of unrecorded
claims. We reviewed the terms of the Group’s insurance
arrangements and considered the impact of those terms and
the level of cover on the provisions made.
Goodwill
When assessing the carrying value of goodwill, management
make signi?cant judgements about strategy, future results
and pro?tability and the assumptions underlying these.
We reviewed, in comparison to the requirements set out in
IAS 36, management’s assessment as to whether goodwill
was impaired. We challenged, reviewed and considered, by
reference to external evidence, management’s impairment
model and key estimates, including the discount rate. We
reviewed the appropriateness and consistency of the process
for making such estimates.
Risk of management override of internal controls
International Standards on Auditing (UK and Ireland) state
that this risk must always be treated as signi?cant because
management, in all businesses, are in a position to be able to
override internal control systems established to prevent
fraud or error.
We examined whether there was any evidence of
management bias in the preparation of the ?nancial
statements. This included an examination, review and
challenge of critical estimates and judgements covering,
in addition to the areas noted above, receivables valuation,
onerous property costs and the assumptions used in the
determination of the de?ned bene?t pension de?cit.
We also performed analytical procedures and testing on
a sample of journal entries to assess and test the risk of
management override of controls.
40 PricewaterhouseCoopers LLP Annual Report 2014
Independent auditor’s report to the members of PricewaterhouseCoopers LLP
continued
Going concern
As noted in the members’ statement, the members have
concluded that it is appropriate to prepare the Group’s and
parent LLP’s ?nancial statements using the going concern
basis of accounting. The going concern basis presumes that
the Group and parent LLP have adequate resources to remain
in operation, and that the members intend them to do so,
for at least one year from the date the ?nancial statements
were signed. As part of our audit we have concluded that
the members’ use of the going concern basis is appropriate.
However, because not all future events or conditions can be
predicted, these statements are not a guarantee as to the Group’s
and the parent LLP’s ability to continue as a going concern.
Other matters on which we are required
to report by exception
Adequacy of accounting records and information
and explanations received
Under the Companies Act 2006, as applied to limited liability
partnerships, we are required to report to you if, in our
opinion:
• we have not received all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
parent LLP, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent LLP ?nancial statements are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Other information in the Annual Report
Under ISAs (UK & Ireland), we are required to report to you
if, in our opinion, information in the Annual Report is:
• materially inconsistent with the information in the
audited ?nancial statements; or
• apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Group and parent
LLP acquired in the course of performing our audit; or
• is otherwise misleading.
We have no exceptions to report arising from this
responsibility.
Responsibilities for the ?nancial
statement audit
Our responsibilities and those of the members
As explained more fully in the Members’ Responsibilities
Statement set out on page 37, the members are responsible
for the preparation of the Group and parent LLP ?nancial
statements and for being satis?ed that they give a true and
fair view.
Our responsibility is to audit and express an opinion on the
Group and parent LLP ?nancial statements in accordance
with applicable law and ISAs (UK & Ireland). Those
standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
This report is made solely to the LLP’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act
2006 as applied to limited liability partnerships. Our audit
work has been undertaken so that we might state to the LLP’s
members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the LLP and the LLP’s
members as a body, for our audit work, for this report or
for the opinions we have formed.
Nigel Bostock
(Senior Statutory Auditor)
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditors
London
8 August 2014
Financial statements 41
Consolidated income statement for the year ended 30 June 2014
Note
2014
£m
2013
Restated
£m Increase
Revenue 2 2,814 2,689 5%
Expenses and disbursements on client assignments (331) (320) 3%
Net revenue 2,483 2,369 5%
Staf costs 3 (1,197) (1,142) 5%
Depreciation and amortisation 4 (41) (35)
Other operating charges 4 (447) (427) 5%
Operating pro?t 798 765 4%
Finance expense 5 (5) (7)
Pro?t on ordinary activities before taxation 793 758 5%
Tax expense in corporate subsidiaries 6 (21) (8)
Pro?t for the ?nancial year before members’ pro?t shares 772 750 3%
Pro?t available for division among members 21 711 690 3%
Pro?t attributable to non-controlling interests 21 61 60 2%
Pro?t for the ?nancial year 772 750 3%
Consolidated statement of comprehensive income for the year ended 30 June 2014
Note
2014
£m
2013
Restated
£m
Pro?t for the ?nancial year 772 750
Other comprehensive (expense) income
Items that may be reclassi?ed subsequently to pro?t or loss:
Cash ?ow hedges 23 (3) (1)
Translation of foreign operations (2) –
Items that will not be reclassi?ed to pro?t or loss:
Remeasurements of retirement bene?t obligations 20 (45) 49
Other comprehensive (expense) income for the ?nancial year (50) 48
Total comprehensive income for the ?nancial year 722 798
Total comprehensive income for the ?nancial year attributable to:
Members 663 738
Non-controlling interests 59 60
Total comprehensive income for the ?nancial year 722 798
There is no tax on any component of other comprehensive (expense) income.
42 PricewaterhouseCoopers LLP Annual Report 2014
Consolidated statement of ?nancial position at 30 June 2014
Note
2014
£m
2013
Restated
£m
2012
Restated
£m
Non-current assets
Property, plant and equipment 8 190 172 153
Intangible assets 9 24 30 19
Goodwill 9 47 43 41
Interests in joint ventures 11 1 1 –
Other investments 12 86 8 5
348 254 218
Current assets
Trade and other receivables 13 839 824 788
Cash and cash equivalents 14 261 236 159
1,100 1,060 947
Total assets 1,448 1,314 1,165
Current liabilities
Trade and other payables 15 (654) (600) (547)
Corporation tax (17) (13) (13)
Borrowings 16 (46) (41) (23)
Provisions 17 (3) (4) (5)
Members’ capital 18 (9) (18) (13)
(729) (676) (601)
Non-current liabilities
Borrowings 16 (6) (10) (13)
Provisions 17 (42) (52) (54)
Deferred tax liabilities 19 – (1) –
Members’ capital 18 (199) (171) (152)
Other non-current liabilities 15 (64) (41) (34)
Retirement bene?t obligation 20 (57) (33) (79)
(368) (308) (332)
Total liabilities (1,097) (984) (933)
Net assets 351 330 232
Equity
Members’ reserves 21 365 346 249
Non-controlling interests 21 (14) (16) (17)
Total equity 351 330 232
Total members’ interests
Members’ capital 18 208 189 165
Members’ reserves 21 365 346 249
Amounts due from members (included in trade and other
receivables) 21 (7) (19) (21)
Total members’ interests 21 566 516 393
The ?nancial statements on pages 41 to 70 were authorised for issue and signed on 8 August 2014 on behalf of the members
of PricewaterhouseCoopers LLP, registered number OC303525, by:
Ian Powell Warwick Hunt
Financial statements 43
Note
2014
£m
2013
Restated
£m
2012
Restated
£m
Non-current assets
Property, plant and equipment 8 – 1 1
Intangible assets 9 3 5 7
Goodwill 9 6 6 6
Investments in subsidiaries 10 68 50 49
Other investments 12 65 8 5
142 70 68
Current assets
Trade and other receivables 13 637 610 595
Cash and cash equivalents 14 214 204 130
851 814 725
Total assets 993 884 793
Current liabilities
Trade and other payables 15 (382) (311) (290)
Provisions 17 (3) (3) (4)
Members’ capital 18 (9) (18) (13)
(394) (332) (307)
Non-current liabilities
Provisions 17 (15) (22) (25)
Members’ capital 18 (199) (171) (152)
Other non-current liabilities 15 (23) – –
Retirement bene?t obligation 20 (57) (33) (79)
(294) (226) (256)
Total liabilities (688) (558) (563)
Net assets 305 326 230
Equity
Members’ reserves 21 305 326 230
Total equity 305 326 230
Total members’ interests
Members’ capital 18 208 189 165
Members’ reserves 21 305 326 230
Total members’ interests 21 513 515 395
The ?nancial statements on pages 41 to 70 were authorised for issue and signed on 8 August 2014 on behalf of the members
of PricewaterhouseCoopers LLP, registered number OC303525, by:
Ian Powell Warwick Hunt
Parent LLP statement of ?nancial position at 30 June 2014
44 PricewaterhouseCoopers LLP Annual Report 2014
Statements of cash ?ows for the year ended 30 June 2014
Group LLP
2014
£m
2013
Restated
£m
2014
£m
2013
Restated
£m
Cash ?ows from operating activities
Pro?t after taxation 772 750 668 688
Tax on pro?ts 21 8 – –
Adjustments for:
Depreciation and amortisation 41 35 4 3
Loss on disposal of property, plant and equipment 1 2 – –
Loss on disposal of intangible assets 1 1 – –
Finance income – – (1) (1)
Finance expense 5 7 2 3
Changes in working capital (excluding the efects of acquisitions):
Increase in trade and other receivables (27) (36) (27) (15)
Increase in trade and other payables 28 51 46 21
(Decrease) increase in provisions and other non-current liabilities (12) 3 (7) (4)
Movement in retirement bene?ts (23) – (23) –
Cash generated from operations 807 821 662 695
Tax paid by corporate subsidiaries (25) (25) – –
Net cash in?ow from operating activities 782 796 662 695
Cash ?ows from investing activities
Purchase of property, plant and equipment (50) (52) – –
Proceeds from sale of property, plant and equipment – 3 – –
Purchase of intangible assets (6) (18) (1) (1)
Purchase of other businesses (net of cash acquired) (5) (4) – –
Purchase of investments (31) (3) (31) (4)
Proceeds from sale of investments – – 4 –
Purchase of interest in joint venture – (1) – –
Interest received – – 1 1
Net cash out?ow from investing activities (92) (75) (27) (4)
Cash ?ows from ?nancing activities
Payments to members (644) (641) (644) (641)
Payments to non-controlling interests (57) (59) – –
Interest paid (2) (3) – –
Movement in borrowings 1 15 – –
Compensating payment by members 18 20 – –
Capital contributions by members 37 34 37 34
Capital repayments to members (18) (10) (18) (10)
Net cash out?ow from ?nancing activities (665) (644) (625) (617)
Net increase in cash and cash equivalents 25 77 10 74
Cash and cash equivalents at beginning of year 236 159 204 130
Cash and cash equivalents at end of year (note 14) 261 236 214 204
Financial statements 45
Statements of changes in members’ equity for the year ended 30 June 2014
Group LLP
Available for
division among
members
£m
Attributable to
non-controlling
interests
£m
Total
£m
Total
£m
Balance at 30 June 2012 – as previously reported 590 (17) 573 571
Efect of adopting IAS 19 (revised) (341) – (341) (341)
Balance at 30 June 2012 – restated 249 (17) 232 230
Pro?t for the ?nancial year – restated 690 60 750 688
Other comprehensive income for the ?nancial year – restated 48 – 48 49
Total comprehensive income – restated 738 60 798 737
Allocated pro?t in the ?nancial year (641) (59) (700) (641)
Transactions with owners (641) (59) (700) (641)
Balance at 30 June 2013 (note 21) – restated 346 (16) 330 326
Pro?t for the ?nancial year 711 61 772 668
Other comprehensive expense for the ?nancial year (48) (2) (50) (45)
Total comprehensive income 663 59 722 623
Allocated pro?t in the ?nancial year (644) (57) (701) (644)
Transactions with owners (644) (57) (701) (644)
Balance at 30 June 2014 (note 21) 365 (14) 351 305
46 PricewaterhouseCoopers LLP Annual Report 2014
1 Basis of preparation
Notes to the ?nancial statements for the year ended 30 June 2014
These ?nancial statements consolidate the results and ?nancial position of PricewaterhouseCoopers LLP (‘the LLP’) and its
subsidiary undertakings (together ‘the Group’).
Accounting policies that relate to the ?nancial statements as a whole are set out below, while those that relate to speci?c
areas of the ?nancial statements are shown in the corresponding note. All accounting policies have been consistently applied
to all the years presented.
The ?nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and
IFRS Interpretation Committee (IFRS IC) interpretations, as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to limited liability partnerships (LLPs) reporting under IFRS.
The ?nancial statements have been prepared on a going concern basis under the historical cost convention, except
as otherwise described in the accounting policies.
As permitted by section 408 of the Companies Act 2006, as applied to LLPs, no separate income statement is presented
for the LLP.
New standards adopted in the year
During the year, the Group adopted IFRS 13 ‘Fair value measurement’ and the amendments to IFRS 7 ‘Financial instruments:
Disclosures on ofsetting’ and IAS 36 ‘Recoverable amount disclosures for non-?nancial assets’. These changes have had no
signi?cant impact on the ?nancial statements.
The Group also adopted IAS 19 (revised) ‘Employee bene?ts’ during the year. This standard makes signi?cant changes to the
recognition and measurement of the de?ned bene?t pension expense and termination bene?ts and to the disclosures for
employee bene?ts. The most signi?cant changes to the Group are that actuarial gains and losses are recognised immediately
in other comprehensive income, the full net pension de?cit or surplus is recognised in the statement of ?nancial position and
interest cost and expected return on assets are replaced by a single net interest amount calculated using a common discount rate.
Restatement of previously reported results
The following table summarises the adjustments made to each of the ?nancial statement line items on the adoption of IAS 19
(revised):
Group LLP
2013
£m
2012
£m
2013
£m
2012
£m
Finance income – as previously reported 81 98 82 97
Restatement of interest income (6) (8) (6) (8)
Reclassi?cation of interest income (75) (89) (75) (89)
Finance income – restated – 1 1 –
Finance expense – as previously reported (98) (94) (94) (89)
Reversal of amortisation of actuarial losses on retirement bene?ts 16 2 16 (2)
Reclassi?cation of interest income 75 89 75 89
Finance expense – restated (7) (3) (3) (2)
Other comprehensive (expense) income – as previously reported (1) 1 – –
Restatement of return on assets 6 8 6 8
Recognition of remeasurement gains (losses) for the ?nancial year 43 (158) 43 (158)
Other comprehensive income (expense) – restated 48 (149) 49 (150)
Retirement bene?t asset – as previously reported 249 262 249 262
Recognition of cumulative remeasurement gains (losses) (282) (341) (282) (341)
Retirement bene?t obligation – restated (33) (79) (33) (79)
Members’ reserves – as previously reported 628 590 608 571
Recognition of cumulative remeasurement gains (losses) (282) (341) (282) (341)
Members’ reserves – restated 346 249 326 230
Financial statements 47
New standards and interpretations not yet adopted
The following IFRS standards and amendments and IFRS IC
interpretations have been issued by the IASB, have not been
early adopted and are not expected to have a material impact
on the Group’s results:
• IFRS 9 ‘Financial instruments’ addresses the classi?cation,
measurement and recognition of ?nancial assets and
?nancial liabilities and replaces IAS 39. IFRS 9 will
become efective for the accounting period to June 2019,
subject to EU endorsement.
• IFRS 10 ‘Consolidated ?nancial statements’, IFRS 11 ‘Joint
arrangements’, IFRS 12 ‘Disclosure of interests in other
entities’, IAS 27 ‘Separate ?nancial statements’ and IAS 28
(revised) ‘Investments in associates and joint ventures’
become efective for the accounting period to June 2015.
• Amendment to IAS 32 ‘Financial instruments: Presentation’
clari?es some of the requirements for ofsetting ?nancial
assets and liabilities. The amendment will become efective
for the accounting period to June 2015.
In addition, IFRS 15 ‘Revenue from contracts with customers’
will become efective for the accounting period to June 2018,
subject to EU endorsement. The impact of the standard is
currently being assessed.
Critical accounting estimates and judgements
The preparation of consolidated ?nancial statements
in conformity with IFRS requires management to make
estimates and assumptions that afect the reported amounts
of revenue, expenses, assets and liabilities. The estimates
and judgements are based on historical experience and other
factors, including expectations of future events that are
believed to be reasonable, and constitute management’s best
judgement at the date of the ?nancial statements. In the
future, actual experience could difer from those estimates.
The principal estimates and judgements that could have
a signi?cant efect upon the Group’s ?nancial results relate
to the fair value of unbilled revenue on client assignments,
receivables valuation, provisions in respect of client claims,
onerous property costs and goodwill impairment. In
addition, the net de?cit or surplus disclosed for each de?ned
bene?t pension scheme and subsidiary undertaking annuity
provisions are sensitive to movements in the related actuarial
assumptions, in particular the discount rate, in?ation and
mortality. Where appropriate, present values are calculated
using discount rates re?ecting the currency and maturity
of the items being valued. Further details of estimates
and judgements are set out in the related notes to the
?nancial statements.
Consolidation
Subsidiary undertakings are entities over which the Group
has the power to govern the ?nancial and operating policies.
Subsidiary undertakings are fully consolidated from the date
on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account
for business combinations by the Group. The consideration
transferred for the acquisition of a subsidiary undertaking
is the fair values of the assets transferred and the liabilities
incurred by the Group, including those from any contingent
consideration arrangement. Acquisition-related costs are
expensed as incurred. Identi?able assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The excess of the consideration transferred,
the amount of any non-controlling interest in the acquiree
and the acquisition date fair value of any previous equity
interest in the acquiree over the fair value of the Group’s
share of the identi?able net assets acquired is recorded as
goodwill. If this is less than the fair value of the net assets
of the subsidiary acquired in the case of a bargain purchase,
the diference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains
and losses on transactions between Group companies are
eliminated. Accounting policies of subsidiary undertakings
have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Foreign currencies
Transactions in foreign currencies are recorded at the rate
of exchange ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated using the rates of exchange at the reporting date
and the gains and losses on translation are included in the
income statement.
The individual ?nancial statements of the Group’s subsidiary
undertakings are presented in their functional currency. For
the purpose of these consolidated ?nancial statements, the
results and ?nancial position of each subsidiary undertaking
are expressed in pounds sterling, which is the functional
currency of the LLP and the presentation currency for these
consolidated ?nancial statements.
The assets and liabilities of the Group’s foreign undertakings
are translated at exchange rates prevailing on the reporting
date. Income and expense items are translated at the average
exchange rates for the period. Exchange diferences arising
on consolidation on the retranslation of foreign undertakings
are recognised in other comprehensive income.
1 Basis of preparation continued
Notes to the ?nancial statements continued
48 PricewaterhouseCoopers LLP Annual Report 2014
2 Revenue
Revenue represents amounts recoverable from clients for professional services provided during the year. It is measured at
the fair value of consideration received or receivable on each client assignment, including expenses and disbursements and
excluding Value Added Tax. Revenue is recognised when the amount can be reliably measured and it is probable that future
economic bene?ts will ?ow.
Revenue recognition occurs in the period in which services are rendered by reference to the stage of completion, which is
assessed on actual services provided as a proportion of total services to be provided.
Revenue in respect of contingent fee assignments (over and above any agreed minimum fee) is recognised when the
contingent event occurs.
Unbilled revenue on individual client assignments is included as unbilled amounts for client work within trade and other
receivables. Where individual on-account billings exceed revenue on client assignments, the excess is classi?ed as progress
billings for client work within trade and other payables.
3 Staf costs
Group
2014
£m
2013
£m
Salaries, including termination bene?ts of £5m (2013: £9m) 1,015 971
Social security costs 106 102
Pension costs in respect of de?ned contribution scheme (note 20) 76 69
1,197 1,142
Salaries include wages and salaries, bonuses, employee bene?ts and termination bene?ts.
The Group recognises termination bene?ts when it is demonstrably committed to terminating the employment of current
employees before their retirement or providing termination bene?ts as a result of an ofer made to encourage voluntary
severance.
The average monthly number of employees during the year was 18,096, including practice support staf of 3,445
(2013: 17,420, including practice support staf of 3,333).
LLP
There were no employees in the LLP during the year (2013: nil).
Financial statements 49
4 Other operating costs
Depreciation and amortisation
2014
£m
2013
£m
Depreciation of property, plant and equipment (note 8) 31 28
Amortisation of intangible assets (note 9) 10 7
41 35
Other operating charges
Other operating charges include:
2014
£m
2013
£m
Operating lease rentals:
Land and buildings 64 68
Plant and machinery 8 8
72 76
Leases in which a signi?cant portion of the risks and rewards of ownership are retained by the lessor are classi?ed as
operating leases. Rental payments made under operating leases are charged to the income statement on a straight-line basis
over the period of the lease. Lease incentives are recognised on a straight-line basis over the lease term as a reduction of
rental expense.
Total fees and expenses payable to the auditors, Crowe Clark Whitehill LLP, for the year ended 30 June 2014 were £0.5m
(2013: £0.4m). This comprised audit fees of £0.4m (2013: £0.3m) relating to the LLP and Group consolidation and other
service fees of £0.1m (2013: £0.1m) relating to the audit of subsidiary companies and audit-related assurance.
5 Finance expense
2014
£m
2013
Restated
£m
Interest payable 2 3
Unwinding of discount on provisions (note 17) 1 1
Net interest expense on pension scheme (note 20) 2 3
5 7
Notes to the ?nancial statements continued
50 PricewaterhouseCoopers LLP Annual Report 2014
6 Tax expense in corporate subsidiaries
Certain companies consolidated in these ?nancial statements are subject to corporate taxes based on their pro?ts for the
?nancial year. Income tax payable on the pro?ts of the LLP and other LLPs consolidated within the Group is solely the
personal liability of the individual members of those LLPs and consequently is not dealt with in these ?nancial statements.
The charge to tax, which arises in the corporate subsidiaries included within these ?nancial statements, is:
2014
£m
2013
£m
Current tax on income of corporate subsidiaries for the year 28 25
Compensating payment due from LLP members (6) (18)
Deferred tax movements (note 19) (1) 1
Tax expense in corporate subsidiaries 21 8
In accordance with UK transfer pricing legislation up to 24 October 2013, the UK corporation tax expense in subsidiary
undertakings included an additional amount in respect of the taxable pro?ts of those subsidiaries, the cost of which is being
met by compensating payments made by LLP members direct to the relevant subsidiaries. Following changes to the transfer
pricing legislation, which took efect from 25 October 2013, and consequential changes to the terms of business between the
LLP and its subsidiaries, the full UK corporation tax charge is being borne by the relevant subsidiaries and no additional
amounts in respect of taxable pro?ts or compensating payments have accrued since that date.
The following table reconciles the tax expense at the standard rate to the actual tax expense:
2014
£m
2013
£m
Pro?t on ordinary activities of corporate entities before tax 85 27
Tax expense at UK standard rate of 22.5% (2013: 23.75%) 19 6
Impact of items not deductible for tax purposes 6 7
Adjustment to tax charge in respect of prior years (2) (4)
Efect of diferent tax rates in which the Group operates (2) (1)
21 8
7 Members’ pro?t shares
Excluding members on secondment overseas, the average pro?t per member based on these ?nancial statements was
£873,000 (2013 restated: £821,000), calculated by dividing the total pro?t available for division among members by
the average number of UK members.
The Chairman is the member with the largest entitlement to pro?t. The Executive Board represents key management
personnel for the purposes of these ?nancial statements.
The ?nal allocation and distribution of pro?t to individual members is made after the ?nancial statements have been
approved. Based on the pro?ts shown in these ?nancial statements, the estimated pro?t attributable to the Chairman is
£4.5m (2013 restated: actual £4.2m, estimated £4.2m). The full-time equivalent number of members serving on the
Executive Board during the year to 30 June 2014 was 11.5 (2013: 11.9). The estimated pro?t attributable to the members
of the Executive Board amounts to £25.8m (2013 restated: actual £25.1m, estimated £25.0m).
Financial statements 51
7 Members’ pro?t shares continued
The actual distributable pro?ts per member are calculated after deducting their personal obligations to make annuity
payments to certain former members and after equity adjustments. As from the ?nancial year ended 30 June 2014,
distributable pro?t shares are presented on a before tax basis as this is considered a more relevant measure of the
Group’s pro?tability. Tax comprises members’ personal tax and National Insurance contributions, payable on current year
distributable pro?ts, and corporation tax on subsidiary pro?ts. The distributable pro?t shares before tax for the year to
30 June are:
Distributable pro?t share before tax
2014
Estimate
2013
Actual
Average per member (excluding members on secondment overseas) £722,000 £711,000
Chairman £3.7m £3.6m
Executive Board (2014: 11.5 members; 2013: 11.9 members) £21.1m £21.5m
The average estimated distributable pro?t per member disclosed in the ?nancial statements for the year to 30 June 2013 was
£705,000 and was calculated after charging the tax expense in corporate subsidiaries. The estimated after tax distributable
pro?t for the Chairman and 11.9 members of the Executive Board was £3.6m and £21.5m, respectively, for the year to
30 June 2013.
The average monthly number of LLP members during the year was:
2014
Number
2013
Number
UK members 814 840
Members on secondment overseas 40 34
854 874
8 Property, plant and equipment
Group
Freehold
property
£m
Leasehold
property
£m
Fittings,
furniture and
equipment
£m
Total
£m
Cost
At beginning of prior year 6 68 183 257
Additions – 13 39 52
Disposals – (11) (19) (30)
At end of prior year 6 70 203 279
Additions – 9 41 50
Disposals – (1) (33) (34)
At end of year 6 78 211 295
Accumulated depreciation
At beginning of prior year 1 21 82 104
Depreciation charge for the year – 4 24 28
Disposals – (10) (15) (25)
At end of prior year 1 15 91 107
Depreciation charge for the year 1 4 26 31
Disposals – (1) (32) (33)
At end of year 2 18 85 105
Net book amount at end of prior year 5 55 112 172
Net book amount at end of year 4 60 126 190
Notes to the ?nancial statements continued
52 PricewaterhouseCoopers LLP Annual Report 2014
8 Property, plant and equipment continued
Property, plant and equipment is measured at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is provided on a straight-line basis from the point the asset is available for use over the following estimated
useful lives:
Freehold property 50 years
Leasehold property 50 years or shorter leasehold term
Fittings and furniture 10–20 years or shorter leasehold term
Equipment 3–5 years
Repairs and maintenance costs arising on property, plant and equipment are charged to the income statement as incurred.
Group capital commitments relating to property, plant and equipment contracted but not provided for at 30 June 2014
amounted to £1m (2013: £14m); there were no capital commitments in the LLP. Included within property, plant and
equipment are £23m (2013: £11m) of assets under construction. The capital commitments contracted but not provided for
and assets under construction relate principally to the refurbishment of certain regional ofces.
LLP
Leasehold
property
£m
Cost
At beginning of prior year 15
Disposals (9)
At end of prior year 6
Disposals (1)
At end of year 5
Accumulated depreciation
At beginning of prior year 14
Disposals (9)
At end of prior year 5
Depreciation charge for the year 1
Disposals (1)
At end of year 5
Net book amount at end of prior year 1
Net book amount at end of year –
Financial statements 53
9 Intangible assets and goodwill
Group
Customer
relationships
£m
Computer
software
£m
Total
intangible
assets
£m
Goodwill
£m
Cost
At beginning of prior year 8 64 72 46
Exchange diferences 1 – 1 1
Additions – 18 18 –
Acquisition of subsidiaries – – – 3
Final fair value adjustments on prior period acquisitions – – – (2)
Disposals – (4) (4) –
At end of prior year 9 78 87 48
Exchange diferences (1) – (1) (2)
Additions – 6 6 –
Acquisition of subsidiaries – – – 6
Disposals – (1) (1) –
At end of year 8 83 91 52
Accumulated amortisation/impairment
At beginning of prior year 3 50 53 5
Amortisation charge for the year 1 6 7 –
Disposals – (3) (3) –
At end of prior year 4 53 57 5
Amortisation charge for the year 1 9 10 –
At end of year 5 62 67 5
Net book amount at end of prior year 5 25 30 43
Net book amount at end of year 3 21 24 47
Intangible assets
Customer relationship intangible assets are recognised at fair value on the acquisition of a business and are amortised on a
straight-line basis over the expected useful economic life of the relationship, typically three to ten years.
Computer software comprises purchased software licences and costs directly associated with the development of software for
internal use, which will generate future economic bene?ts. Computer software is measured at cost less accumulated
amortisation and any recognised impairment loss. Amortisation is provided on a straight-line basis over the expected useful
economic lives, typically three to ?ve years.
Goodwill
On the acquisition of a business, fair values are attributed to the identi?able assets, liabilities and contingent liabilities
acquired. Goodwill arises where the fair value of the consideration given for a business exceeds the fair value of such assets,
liabilities and contingent liabilities. Goodwill arising on acquisitions is capitalised with an inde?nite useful life and tested
annually for impairment. For the purposes of impairment testing goodwill is allocated to the cash-generating units that are
expected to bene?t from the business combination in which the goodwill arose.
The largest element of the goodwill held within the Group is £28m in respect of the ?rm’s strategic alliance in the Middle
East, which is considered to be a single cash-generating unit. The recoverable amount for goodwill has been determined
based on value in use, being the present value of future cash ?ows based on three-year ?nancial budgets approved by
management. An average annual revenue growth assumption of 15% has been used (2013: 18%). Cash ?ows for the periods
beyond the approved ?nancial budgets have been extrapolated using a 5% historic long-term GDP annual regional growth
rate (2013: 5%). The discount rate applied against the anticipated future cash ?ows is based on a pre-tax estimated weighted
average cost of capital of 12% (2013: 12%). A reasonable change in the key assumptions does not have a signi?cant impact
on the diference between value in use and the carrying value.
Notes to the ?nancial statements continued
54 PricewaterhouseCoopers LLP Annual Report 2014
9 Intangible assets and goodwill continued
Impairment of non-?nancial assets
Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identi?able cash ?ows (cash-generating units). Non-?nancial assets, other than goodwill, that
have sufered impairment are reviewed for possible reversal of the impairment at each reporting date.
Acquisitions
During the year, the Group acquired a 100% interest in Mokum International Limited (subsequently renamed PwC Change
Management Limited), a leading Oracle consultancy in Europe, and a 92% interest in GeoTraceability Limited, which ofers
specialised global tracking and data collection technology for natural resources. The combined consideration of these
acquisitions was £6m, of which £1m is contingent on future revenue targets being achieved. The fair values of assets and
liabilities recognised on acquisition have been estimated and approximate to the pre-acquisition carrying values based on the
respective accounts, prepared as at the acquisition dates. There were no separately identi?able intangible assets recognised
in respect of these acquisitions. The combined net asset value, pending ?nal valuation, was £1m. The Group recognised £6m
of goodwill in respect of these acquisitions, which is attributable to the companies’ existing workforce.
In the prior year, the Group acquired 100% interests in PRPi Consulting Limited and Vantage Performance Solutions Limited
(renamed PwC Performance Solutions Limited) for a combined consideration of £5m. The Group recognised £3m of
goodwill in respect of the acquisition.
LLP
Customer
relationships
£m
Computer
software
£m
Total
intangible
assets
£m
Goodwill
£m
Cost
At beginning of prior year 1 13 14 6
Additions – 1 1 –
At end of prior year 1 14 15 6
Additions – 1 1 –
At end of year 1 15 16 6
Accumulated amortisation/impairment
At beginning of prior year 1 6 7 –
Amortisation charge for the year – 3 3 –
At end of prior year 1 9 10 –
Amortisation charge for the year – 3 3 –
At end of year 1 12 13 –
Net book amount at end of prior year – 5 5 6
Net book amount at end of year – 3 3 6
Financial statements 55
10 Investments in subsidiaries
2014
£m
2013
£m
Shares in subsidiary undertakings
Cost
At beginning of year 53 52
Additions 22 1
Capital repayments (4) –
At end of year 71 53
Accumulated impairment
At beginning and end of year 3 3
Net book amount at end of prior year 50 49
Net book amount at end of year 68 50
Investments in subsidiaries are measured at cost less impairment.
The ?nancial statements consolidate the results and ?nancial position of the Group, including all subsidiary undertakings.
The subsidiary undertakings whose results or ?nancial position principally afected the ?gures shown in the Group’s ?nancial
statements are listed below. A full list of all subsidiary undertakings is annexed to the Annual Return of
PricewaterhouseCoopers LLP ?led at Companies House.
Companies Principal activity
PricewaterhouseCoopers Services Limited Service company and employment of staf
PricewaterhouseCoopers (Resources) Employment of staf
PricewaterhouseCoopers (Middle East Group) Limited Professional services
PricewaterhouseCoopers Overseas Limited Professional services
PricewaterhouseCoopers Advisory Services Limited Professional services
PwC Change Management Limited Professional services
PwC Consulting Associates Limited Professional services
PwC Performance Solutions Limited Professional services
PRPi Consulting Limited Professional services
Fire Station Operating Company Limited Social enterprise
GeoTraceability Limited Natural resource tracking
Limited Liability Partnerships Principal activity
PricewaterhouseCoopers CI LLP Professional services
PricewaterhouseCoopers Legal LLP Legal services
All principal subsidiary companies are 100% owned, except for GeoTraceability Limited which is 92% owned.
All principal subsidiary companies are incorporated in Great Britain, except for PricewaterhouseCoopers (Middle East
Group) Limited which is incorporated in Guernsey, with the Group owning 100% of the ordinary shares and the local Middle
East partners owning ‘B’ shares. The ‘B’ shares provide certain income access rights for local Middle East partners.
Additions to investments in subsidiaries during the year to 30 June 2014 comprise primarily a capital investment of £21m in
PricewaterhouseCoopers ME Holdings No. 1 LLP, relating to the Group’s investment in PwC Strategy& Parent (UK) Limited,
as described in note 12.
Following the Solicitors Regulation Authority’s approval of an Alternative Business Structure, PricewaterhouseCoopers LLP
became a member of PricewaterhouseCoopers Legal LLP during the year.
The non-controlling interest pro?ts and capital attributable to the members of PricewaterhouseCoopers Legal LLP and
PricewaterhouseCoopers CI LLP and to the Middle East partners of PricewaterhouseCoopers (Middle East Group) Limited are
shown as non-controlling interests in the consolidated ?nancial statements.
Notes to the ?nancial statements continued
56 PricewaterhouseCoopers LLP Annual Report 2014
11 Interests in joint ventures
The Group’s interest in jointly controlled entities is consolidated using the equity method of accounting. The investment is
initially recognised at cost and the carrying value is increased or decreased to recognise the Group’s share of the pro?t or
loss of the joint venture after the date of acquisition. The Group’s share of pro?t or loss is recognised in the income statement
with a corresponding adjustment to the carrying amount of the investment.
In the prior year, the Group acquired an interest in a joint venture, Skyval Holdings LLP, for a total consideration of £1m.
Skyval develops, maintains and licenses pension-related software and is incorporated in the United Kingdom. The Group has
50% voting control and owns 20% of the equity, with a 50% share of the pro?ts and losses over the ?rst three years, reducing
to 20% thereafter. The Group also paid £9m to acquire licences for the exclusive use of Skyval software, which are recognised
within intangible assets.
At 30 June 2014, Skyval Holdings LLP had assets of £5m (2013: £1m) and liabilities of £3m (2013: nil). For the ?nancial
year to 30 June 2014, Skyval Holdings LLP’s revenue was £5m (2013: nil) and pro?t was nil (2013: nil).
12 Other investments
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Cost
At beginning of year 8 5 8 5
Additions 78 3 57 3
At end of year 86 8 65 8
Accumulated impairment
At beginning and end of year – – – –
Net book amount at end of prior year 8 5 8 5
Net book amount at end of year 86 8 65 8
Other investments are measured initially at the fair value of the consideration paid on acquisition. Where there is no active
market and no reliable measure of their fair value, they are measured at cost less impairment. Income from these investments
is recognised in the income statement when entitlement is established.
Other investments include equity holdings in, and preference shares and subordinated loan notes from, entities in the PwC
global network.
During the year the Group acquired an equity holding in PwC Strategy& Parent (UK) Limited for £71m, comprising an initial
payment of £23m and a commitment to provide further capital funding, currently estimated at £48m, over the next four
years. Strategy& is a global strategy consulting ?rm.
During the year the Group also invested in £3m of preference shares issued by the PwC Central and Eastern European ?rm as
part of a strategic investment plan. In addition, the Group acquired £4m of additional subordinated loan notes from an entity
in the PwC global network.
In the prior year the Group acquired an equity holding of £3m in PwC Network Holdings Pte Limited, a company which
invests in the member ?rms of the PwC global network.
Financial statements 57
13 Trade and other receivables
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Client receivables 420 404 348 336
Due from PwC network ?rms 35 42 31 38
Trade receivables 455 446 379 374
Amounts due from members 7 19 – –
Other receivables 32 27 5 6
Prepayments 45 58 2 4
Unbilled amounts for client work 300 274 251 226
839 824 637 610
Trade receivables are measured initially at fair value and held at amortised cost less provisions for impairment.
Provisions for impairment represent an allowance for doubtful debts that is estimated, based upon current observable
data and historical trends.
Unbilled amounts for client work are measured initially at fair value and held at amortised cost less provisions for
foreseeable losses.
Group and LLP trade receivables are primarily denominated in sterling. £79m of the Group’s trade receivables are denominated
in US dollars/US dollar-linked currencies (2013: £79m) and £14m are denominated in euros (2013: £17m). The carrying
value of trade and other receivables in the Group and LLP is consistent with fair value in the current and prior year.
The other classes of assets within trade and other receivables are primarily denominated in sterling and do not contain
impaired assets.
The ageing and credit risk relating to trade receivables is analysed as follows:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
30 days or less, fully performing 282 291 246 248
31 to 180 days, past due and fully performing 166 152 132 123
More than 180 days, past due and impaired 22 19 13 15
Impairment provision (15) (16) (12) (12)
455 446 379 374
Movements in the impairment provision on trade receivables were as follows:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Balance at beginning of year (16) (15) (12) (11)
Charged to the income statement (9) (11) (6) (8)
Released unused during the year 6 7 3 4
Utilised during year 4 3 3 3
Balance at end of year (15) (16) (12) (12)
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.
The Group does not hold any collateral as security.
Notes to the ?nancial statements continued
58 PricewaterhouseCoopers LLP Annual Report 2014
14 Cash and cash equivalents
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Cash at bank and in hand 38 27 6 2
Short-term deposits 223 209 208 202
261 236 214 204
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less. Fair values of cash and cash equivalents approximate to carrying
value owing to the short maturity of these instruments.
Group cash and cash equivalent balances are primarily denominated in sterling, with £20m being denominated in US dollars/
US dollar-linked currencies (2013: £21m) and nil being denominated in euros (2013: £12m).
15 Trade and other payables
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Current
Trade payables 105 96 – –
Amounts owed to Group undertakings – – 217 157
Other payables including taxation and social security 148 137 50 48
Accruals 282 256 10 8
Progress billings for client work 119 111 105 98
654 600 382 311
Trade and other payables are measured at amortised cost.
Group trade payables are primarily denominated in sterling, with £32m being denominated in US dollars/US dollar-linked
currencies (2013: £33m) and £16m being denominated in euros (2013: £17m). The carrying value of trade and other
payables in the Group and LLP is consistent with fair value in the current and prior year. Group current trade payables
include amounts owing to PwC network ?rms totalling £70m (2013: £63m).
Other current payables including taxation and social security comprise:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Other taxes and social security 92 83 – –
Deferred capital investment payment 25 – 25 –
Other payables 31 54 25 48
148 137 50 48
The Group is committed to make further investments in PwC Strategy& Parent (UK) Limited, a member of the PwC global
network. The investment is variable based on the future costs incurred by PwC Strategy& Parent (UK) Limited. The current
estimate of this investment is £48m to be paid over four years, of which £25m is to be paid within one year. The committed
capital provision is based on estimated future cash ?ows that have been discounted to present value using an average
discount rate of 0.8%.
Other non-current liabilities
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Capital loans provided by non-controlling interest partners
in subsidiary undertakings 41 41 – –
Deferred capital investment payment 23 – 23 –
64 41 23 –
Financial statements 59
16 Borrowings
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Current
Bank borrowings 34 26 – –
Other loans 12 15 – –
46 41 – –
Non-current
Bank borrowings – 1 – –
Other loans 6 9 – –
6 10 – –
Total borrowings 52 51 – –
Borrowings are initially measured at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost; any diference between the proceeds (net of transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the efective interest method. The carrying values of borrowings
approximate their fair value.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent
there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the period of the facility to which it relates.
The Group’s borrowings at 30 June 2014 and 30 June 2013 were unsecured and denominated in US dollars.
All non-current borrowings mature within one to ?ve years.
17 Provisions and contingent liabilities
Group
Annuities
£m
Client claims
£m
Property
£m
Total
£m
Balance at beginning of prior year 18 17 24 59
Income statement:
Charge for the year 2 5 3 10
Released unused during the year – (2) – (2)
Unwinding of discount 1 – – 1
Cash payments (3) (3) (6) (12)
Balance at end of prior year 18 17 21 56
Income statement:
Charge for the year 1 6 3 10
Released unused during the year – (3) (1) (4)
Unwinding of discount 1 – – 1
Exchange gains (2) – – (2)
Transfer to accruals – – (5) (5)
Cash payments (1) (6) (4) (11)
Balance at end of year 17 14 14 45
Notes to the ?nancial statements continued
60 PricewaterhouseCoopers LLP Annual Report 2014
17 Provisions and contingent liabilities continued
LLP
Client claims
£m
Property
£m
Total
£m
Balance at beginning of prior year 17 12 29
Income statement:
Charge for the year 4 2 6
Released unused during the year (2) – (2)
Cash payments (3) (5) (8)
Balance at end of prior year 16 9 25
Income statement:
Charge for the year 6 2 8
Released unused during the year (3) – (3)
Transfer to accruals – (3) (3)
Cash payments (6) (3) (9)
Balance at end of year 13 5 18
Disclosed as:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Current 3 4 3 3
Non-current 42 52 15 22
45 56 18 25
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an out?ow of resources will be required to settle the obligation and the amount can be reliably estimated.
Non-current provisions are measured at their present value. The discount rates used are based on the yield on corporate
bonds, adjusted for risk.
Annuities
The Group ?nancial statements consolidate the provision made for the annuities payable by certain subsidiary undertakings
to the non-controlling interest partners in those undertakings, principally in relation to the Middle East. These partners are
not members of the LLP and the annuities are unfunded. The provision re?ects the present value of the obligations arising
from service to date. Any changes in the provision for these annuities arising from changes in entitlements, ?nancial
estimates or actuarial assumptions are recognised in the income statement. The unwinding of the discount is presented in
the income statement as a ?nance expense. When the entitled individuals retire and their annuities come into payment,
these payments are shown as a movement against the provision.
The principal actuarial assumptions that have been used in calculating the annuities provision are an assumed retirement
age of 57 (2013: assumed retirement age of 57), with a discount rate of 4.3% (2013: 4.6%) and in?ation rates of 2.3% for
US dollar-denominated annuities (2013: 2.5%) and 3.3% for sterling-denominated annuities (2013: 3.3%).
Members of the LLP are required to make their own provision for pensions and do so mainly through contributions to
personal pension policies and other appropriate investments. Members, in their capacity as partners in the
PricewaterhouseCoopers United Kingdom Partnership, have agreed to pay pension annuities and other post-retirement
payments to certain former partners of that partnership and the widows and dependants of deceased former partners.
These annuities and other post-retirement payments are personal obligations of the individuals and are not obligations of,
or guaranteed by, the LLP or its subsidiary undertakings. Accordingly, these annuities are not recognised within
these ?nancial statements.
Financial statements 61
17 Provisions and contingent liabilities continued
Client claims
In common with comparable professional practices, the Group is involved in a number of disputes in the ordinary course of
business which may give rise to claims. Provision representing the cost of defending and concluding claims is made in the
?nancial statements for all claims where costs are likely to be incurred and can be measured reliably. The Group carries
professional indemnity insurance and no separate disclosure is made of the detail of claims or the costs covered by insurance,
as to do so could seriously prejudice the position of the Group.
Property
Provisions are recognised for obligations under property contracts that are onerous and to restore premises to their original
condition upon vacating them, where such an obligation exists under the lease. The provisions are based on estimated future
cash ?ows that have been discounted to present value, with the unwinding of that discount presented in the income
statement as a ?nance expense. The onerous lease provision covers residual lease commitments up to the end of the lease
and is after allowing for existing or expected sublet rental income, with most of the provision expecting to unwind over the
next ?ve years.
The property provisions are based on estimated future cash ?ows that have been discounted to present value at an average
rate of 3.5% (2013: 3.8%).
Contingent liabilities
Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events or present
obligations where the out?ow of resources is uncertain or cannot be measured reliably. Contingent liabilities are not
recognised in the ?nancial statements, but are disclosed unless they are remote. The Group’s policy on client claims is
disclosed above.
Where ?nancial guarantees are recognised, they are initially measured at fair value and subsequently measured at the higher
of their initial fair value, less amounts recognised in the income statement, and the best estimate of the amount that will be
required to settle the obligation. The current fair value of the guarantees disclosed below is nil (2013: nil).
Together with other entities in the PwC global network, the LLP has cross-guaranteed the aggregate commitment to invest
further capital in PwC Strategy& Parent (UK) Limited. At 30 June 2014, the amount guaranteed by the LLP was US $76m
(2013: nil).
The Group is committed to provide funding to two entities in the PwC global network. At 30 June 2014 the Group has
committed, subject to certain investment conditions, to make additional payments of up to US $105m (2013: US $55m).
The Group has entered into US $14m (2013: US $12m) of guarantees with third-party banks in connection with work
performed in foreign territories, predominantly the Middle East.
The LLP has entered into a US $52m (2013: US $52m) loan guarantee with a third-party bank in connection with a loan to
an entity in the PwC global network.
The LLP has provided guarantees in respect of the future lease commitments of a subsidiary company, totalling £724m over
the remaining lease terms (2013: £744m). The majority of these commitments relate to the ofce premises at 7 More London
and 1 Embankment Place.
The LLP guarantees the bank borrowings of a subsidiary company, which is included in the consolidated statement of
?nancial position. At 30 June 2014, the relevant subsidiary company bank borrowings were nil (2013: nil).
Notes to the ?nancial statements continued
62 PricewaterhouseCoopers LLP Annual Report 2014
18 Members’ capital
Group
and LLP
£m
Balance at beginning of prior year 165
Contributions by members 34
Repayments to members (10)
Balance at end of prior year 189
Contributions by members 37
Repayments to members (18)
Balance at end of year 208
Capital attributable to members retiring within one year is shown as current as it will be repaid within 12 months of the
reporting date. Total members’ capital analysed by repayable dates is as follows:
Group
and LLP
2014
£m
Group
and LLP
2013
£m
Current 9 18
Non-current 199 171
208 189
Members’ capital, which is measured at fair value, is classi?ed as a ?nancial liability.
Members’ capital contributions are determined by the Executive Board with the approval of the Supervisory Board, having
regard to the working capital needs of the business. Individual members’ capital contributions are set by reference to equity
unit pro?t share proportions and are not repayable until the member retires. Members are required to provide one year’s
notice of retirement.
The carrying value of members’ capital liabilities (Group and LLP) is consistent with fair value in the current and prior year.
19 Deferred tax
The movements in the Group’s deferred tax liabilities during the year were as follows:
2014
£m
2013
£m
Balance of deferred tax liabilities at beginning of year (1) –
Charged to the income statement 1 (1)
Balance of deferred tax liabilities at end of year – (1)
Deferred tax liabilities relate to temporary diferences at the reporting date between the tax bases of assets and liabilities and
their carrying amounts for ?nancial reporting purposes, recognised using the liability method.
Deferred tax assets are recognised to the extent that it is probable that future taxable pro?t will be available against which
the temporary diferences can be utilised.
Deferred tax is measured at the tax rates that are substantively enacted at the reporting date and expected to apply in the
periods in which the temporary diferences reverse.
Deferred tax is calculated using a tax rate of 23% for the period to 31 March 2014, 21% for the period to 31 March 2015 and
20% thereafter (2013: 24% for the period to 31 March 2013 and 23% thereafter).
The Group has no deferred tax assets (2013: nil).
There was no deferred tax arising in the LLP for the years to 30 June 2014 and 30 June 2013.
Financial statements 63
20 Retirement bene?ts
De?ned contribution scheme
As at the end of June 2014 there were 13,283 members of the ?rm’s de?ned contribution scheme (2013: 13,129), of which
3,111 members were auto enrolled (2013: 2,739). The Group’s contributions to the scheme are charged to the income
statement as they fall due. Costs of £76m (2013: £69m) were recognised by the Group in respect of the scheme. Costs of the
de?ned contribution scheme in the LLP were nil (2013: nil).
De?ned bene?t schemes
The Group’s two de?ned bene?t pension schemes are the PwC Pension Fund (the “Fund”) and the DH&S Retirement and
Death Bene?ts Plan (the “Plan”). Both of the Group’s de?ned bene?t pension scheme arrangements are closed to future
service accrual, although certain current employee member bene?ts remain linked to ?nal salary. Both schemes are funded
and their assets are held separately from those of the Group. The liabilities arising in the de?ned bene?t schemes are
assessed by independent actuaries, using the projected unit credit method. Both schemes are valued formally every three
years, with the last valuation dated 31 March 2011. The 31 March 2014 valuation is currently underway.
The net de?cit or surplus in each scheme is calculated in accordance with IAS 19 (revised), based on the present value of the
de?ned bene?t obligation at the reporting date, less the fair value of the scheme assets. The Group adopted IAS 19 (revised)
‘Employee bene?ts’ during the year and the impact of this change has been detailed in note 1 to the ?nancial statements.
The Group’s income statement includes the current service cost of providing pension bene?ts, the expected return on scheme
assets and the interest cost on scheme obligations, calculated using a single discount rate. Past service costs arising from
changes to scheme bene?ts are recognised immediately in the income statement, unless the bene?ts are conditional on the
employees remaining in service for a speci?ed period of time, in which case the past service costs are amortised over that
vesting period.
Actuarial gains and losses are recognised in full in other comprehensive income in the period in which they arise. Other income
and expenses associated with the de?ned bene?t schemes are recognised in the income statement.
Assumptions
The principal actuarial assumptions used for the purposes of these ?nancial statements prepared under IAS 19 (revised) are:
2014 2013 2012
Discount rate 4.3% 4.6% 4.4%
In?ation (RPI) 3.3% 3.3% 2.8%
In?ation (CPI) 2.3% 2.3% 2.1%
Expected rate of increase in salaries 2.9% 2.8% 2.8%
Expected rate of increase in pensions in payment 2.8% 2.8% 2.5%
The majority of liabilities for the Fund and the Plan are indexed on an RPI basis, while future increases to deferred member
pensions before retirement increase using CPI.
Sensitivity analysis
The following table shows the sensitivity of the present value of the de?ned bene?t obligations to changes in each of the
individual principal actuarial assumptions:
Fund
Increase
£m
Plan
Increase
£m
Total
£m
0.25% decrease to discount rate 60 34 94
0.25% increase to salary increases 4 1 5
0.25% increase to in?ation 35 23 58
One year increase to life expectancy 22 13 35
The methods and assumptions used in the sensitivity analysis above are consistent with those used in the prior year ?nancial
statements.
Notes to the ?nancial statements continued
64 PricewaterhouseCoopers LLP Annual Report 2014
20 Retirement bene?ts continued
The ?gures used in these ?nancial statements assume that the mortality of the schemes’ members will be in line with
nationally published S1NA mortality tables, adjusted to re?ect the longer life expectancy of members of the Group’s
schemes versus the standard table by a one-year age rating for males and a half-a-year age rating for females, and with
future improvements in line with Continuous Mortality Investigation (CMI) 2009 projections, with a 1.25% long-term rate.
The following table illustrates the actual life expectancy for a current pensioner member aged 65 at 30 June and a future
pensioner member aged 45 at 30 June:
2014 2013
Fund
Years
Plan
Years
Fund
Years
Plan
Years
Life expectancy of current pensioners at age 65:
male 23.3 23.3 23.2 23.2
female 25.2 25.2 25.0 25.0
Life expectancy of future pensioners at age 65:
male 25.1 25.1 25.0 25.0
female 27.2 27.2 27.0 27.0
Income statement
The amounts recognised in the consolidated income statement are as follows:
2014 2013 Restated
Fund
£m
Plan
£m
Total
£m
Fund
£m
Plan
£m
Total
£m
Net interest expense (2) – (2) (3) – (3)
Past service costs (3) – (3) – – –
(5) – (5) (3) – (3)
Scheme assets and de?ned bene?t obligation
The amounts recognised in the Group and LLP statements of ?nancial position and the analysis of the movement in the
de?ned bene?t scheme assets and obligations are as follows:
Fund Plan
Scheme
assets
£m
De?ned bene?t
obligation
£m
Total
£m
Scheme
assets
£m
De?ned bene?t
obligation
£m
Total
£m
Total
£m
Fair value at beginning of prior year 1,110 (1,175) (65) 611 (625) (14) (79)
Net interest on de?ned bene?t
obligations 48 (51) (3) 27 (27) – (3)
Remeasurement gains (losses):
Return on plan assets excluding
amounts included in net interest 52 – 52 24 – 24 76
Changes in ?nancial assumptions – (20) (20) – (7) (7) (27)
Bene?ts paid (30) 30 – (15) 15 – –
Fair value at end of prior year 1,180 (1,216) (36) 647 (644) 3 (33)
Net interest on de?ned bene?t
obligations 54 (56) (2) 30 (30) – (2)
Past service costs – (3) (3) – – – (3)
Remeasurement gains (losses):
Return on plan assets excluding
amounts included in net interest 44 – 44 19 – 19 63
Changes in ?nancial assumptions – (71) (71) – (37) (37) (108)
Contributions by employer 17 – 17 9 – 9 26
Bene?ts paid (33) 33 – (17) 17 – –
Fair value at end of year 1,262 (1,313) (51) 688 (694) (6) (57)
Financial statements 65
20 Retirement bene?ts continued
The £26m of contributions paid during the year to 30 June 2014 comprise £23m of de?cit reduction contributions and £3m
of funding for past service costs.
The actual return on scheme assets during the year to 30 June 2014 was an increase of £147m (2013: £151m increase).
The allocation and market value of assets of the de?ned bene?t schemes were as follows:
2014 2013
Fund
£m
Plan
£m
Total
£m
Fund
£m
Plan
£m
Total
£m
Equities 346 155 501 359 159 518
Property 61 34 95 57 32 89
Hedge Funds 122 65 187 115 63 178
Bonds 280 187 467 258 178 436
Gilts 390 212 602 375 205 580
Cash 50 28 78 16 10 26
Other 13 7 20 – – –
1,262 688 1,950 1,180 647 1,827
Future cash funding
The most recent full actuarial valuations for both the Fund and the Plan were as at 31 March 2011, conducted under the new
Scheme Funding Regulations (Pensions Act 2004). These valuations formed the basis for the update to 30 June 2014 used in
these ?nancial statements. For the year ended 30 June 2014, Mercer Ltd was the actuary for the Fund and the Plan.
The Group expects to pay contributions of £20m in the year to 30 June 2015.
Notes to the ?nancial statements continued
66 PricewaterhouseCoopers LLP Annual Report 2014
21 Total members’ interests
During the year, the Executive Board sets the level of interim pro?t allocations and members’ monthly drawings after
considering the working capital needs of the Group. The ?nal allocation of pro?ts and distribution to members is made after
assessing each member’s contribution for the year and after the annual ?nancial statements are approved. Unallocated
pro?ts are included in reserves within members’ equity. To the extent that interim pro?t allocations exceed drawings, the
excess pro?t is included in the statement of ?nancial position under trade and other payables. Where drawings exceed the
allocated pro?ts, the excess is included in trade and other receivables. The same treatment is used for members who retire
during the year.
Group
Members’ interests Non-controlling interests
Members’
capital
£m
Reserves
Restated
£m
Amounts due
to (from)
members
£m
Total
Restated
£m
Reserves
£m
Amounts due
to (from)
non-controlling
interests
£m
Balance at beginning of prior year 165 249 (21) 393 (17) –
Pro?t for the prior year available for
division among members – 690 – 690 60 –
165 939 (21) 1,083 43 –
Allocated pro?t – (641) 641 – (59) 59
Movement on cash ?ow hedges – (1) – (1) – –
Remeasurements on retirement
bene?ts obligations – 49 – 49 – –
Introduced by members 34 – – 34 – –
Repayment of capital (10) – – (10) – –
Drawings and distributions – – (641) (641) – (59)
Movement in compensating payment
due to subsidiary undertakings – – 2 2 – –
Balance at end of prior year 189 346 (19) 516 (16) –
Pro?t for the current year available for
division among members – 711 – 711 61 –
189 1,057 (19) 1,227 45 –
Allocated pro?t – (644) 644 – (57) 57
Movement on cash ?ow hedges – (3) – (3) – –
Remeasurements on retirement
bene?ts obligations – (45) – (45) – –
Translation of foreign operations – – – – (2) –
Introduced by members 37 – – 37 – –
Repayment of capital (18) – – (18) – –
Drawings and distributions – – (644) (644) – (57)
Movement in compensating payment
due to subsidiary undertakings – – 12 12 – –
Balance at end of year 208 365 (7) 566 (14) –
Financial statements 67
21 Total members’ interests continued
LLP
Members’
capital
£m
Reserves
Restated
£m
Amounts due
to (from)
members £m
Total
Restated
£m
Balance at beginning of prior year 165 230 – 395
Pro?t for the prior year available for division among members – 688 – 688
165 918 – 1,083
Allocated pro?t – (641) 641 –
Remeasurements on retirement bene?ts obligations – 49 – 49
Introduced by members 34 – – 34
Repayment of capital (10) – – (10)
Drawings and distributions – – (641) (641)
Balance at end of prior year 189 326 – 515
Pro?t for the current year available for division among members – 668 – 668
189 994 – 1,183
Allocated pro?t – (644) 644 –
Remeasurements on retirement bene?ts obligations – (45) – (45)
Introduced by members 37 – – 37
Repayment of capital (18) – – (18)
Drawings and distributions – – (644) (644)
Balance at end of year 208 305 – 513
Amounts due to members represent allocated pro?ts not yet paid to members and are due within one year. In the event of a
winding-up, members’ reserves rank after unsecured creditors.
22 Commitments under operating leases
The Group’s total commitments under non-cancellable operating leases, together with the obligations by maturity, are
as follows:
2014 2013
Land and
buildings
£m
Other
assets
£m
Land and
buildings
£m
Other
assets
£m
Within one year 44 5 53 5
1–2 years 43 3 40 3
2–3 years 58 1 36 1
3–4 years 55 – 49 –
4–5 years 50 – 47 –
More than ?ve years 600 – 622 –
Notes to the ?nancial statements continued
68 PricewaterhouseCoopers LLP Annual Report 2014
23 Financial instruments
Financial instruments are initially measured at fair value. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date.
Derivatives, such as forward foreign-exchange contracts, are held or issued in order to manage the Group’s currency and
interest rate risks arising from its operations and sources of ?nance. The fair values of all derivatives are based on their
quoted price in an active market. Hedge accounting is applied where the relevant criteria are met. The efective portion of
changes in the fair value of derivatives that are designated and qualify as cash ?ow hedges is recognised in other
comprehensive income or expense within the statement of comprehensive income. The gain or loss relating to any inefective
portion is recognised immediately in the income statement. Amounts accumulated in equity are reclassi?ed to pro?t or loss
in the periods when the hedged item afects pro?t or loss (for example, when the forecast sale that is hedged takes place).
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement.
Financial risk management and management of capital
The Group’s objectives when managing capital are to safeguard the Group’s ability to operate as a going concern and to
maintain an optimal capital structure to cover the expected peak cash requirements of the business. The Group’s capital
comprises the members’ capital, undistributed pro?ts and borrowing facilities. The Group holds or issues ?nancial
instruments in order to ?nance its operations and manage foreign currency and interest-rate risks arising from its operations
and sources of ?nance. The principal ?nancial instruments, other than derivatives, held or issued by the Group are:
• Trade and other receivables – The balance primarily represents billed and unbilled amounts in respect of services provided
to clients, for which payment has not yet been received.
• Cash and cash equivalents – The Group manages its cash resources in order to meet daily working capital requirements.
Cash and any outstanding debt are kept to a minimum and liquid fund deposits are maximised.
• Trade and other payables – The balance primarily represents progress billings to clients and trade payables and accruals in
respect of services received from suppliers, for which payment has not yet been made.
• Members’ capital – The Group requires members to provide long-term ?nancing, which is classi?ed as a liability.
• Debt – The Group’s policy permits short-term variable rate facilities with a maximum facility maturity of ?ve years and
long-term ?xed borrowing with a maximum maturity of ten years.
The Executive Board determines the treasury policies of the Group. These policies, designed to manage risk, relate to speci?c
risk areas that management wish to control, including liquidity, credit risk, interest rate and foreign currency exposures. No
speculative trading is permitted and hedging is undertaken against speci?c exposures to reduce risk.
Liquidity risk
The Group’s most signi?cant treasury exposures relate to liquidity. The Group manages the risk of uncertainty in its funding
operations by spreading the maturity pro?le of its borrowings and deposits. Committed facilities are arranged with minimum
headroom of 25% of forecast maximum debt levels. The Group’s facilities at 30 June 2014 totalling £376m (2013: £322m)
are predominantly held with seven leading international banks, with the main £225m facility due to expire in June 2015.
Credit risk
Cash deposits and other ?nancial instruments with banks and ?nancial institutions give rise to counterparty risk. The Group
manages this counterparty risk by reviewing their credit ratings regularly and limiting the aggregate amount and duration of
exposure to any one counterparty, taking into account its credit rating, market capitalisation and relative credit default swap
price. The minimum long-term credit rating of all banks and ?nancial institutions who held the Group’s short-term deposits
during the year was A-.
The Group’s other signi?cant credit risk relates to receivables from clients. Exposure to that risk is monitored on a routine
basis and credit evaluations are performed on clients as appropriate. The Group’s exposure is in?uenced mainly by the
individual characteristics of each client. Risk is managed by maintaining close contact with each client and by routine billing
and cash collection for work done.
Financial statements 69
23 Financial instruments continued
Interest rate risk
The Group’s borrowings and any surplus cash balances are held at variable interest rates linked to London interbank ofered
rate (LIBOR). Outstanding borrowings are in US dollars to re?ect the composition of the Group’s assets that the borrowings
are funding. A movement of 50 basis points in the interest rate on borrowings and surplus cash balances through the year
would have had an immaterial impact on the pre-tax pro?ts of the Group.
Foreign currency risk
The major part of the Group’s income and expenditure is in sterling. Other than the Middle East business, fees and costs
denominated in foreign currencies are mainly in connection with professional indemnity insurance and transactions with
PwC network ?rms. The Group seeks to minimise its exposure to ?uctuations in exchange rates by hedging against foreign
currency exposures. These hedges are designated as cash ?ow hedges where the necessary criteria are met. The Group’s
policy is to enter into forward or derivative transactions as soon as economic exposures are recognised.
Group ?nancial assets and liabilities by category
2014 2013
Loans and
receivables
£m
Available-
for-sale
£m
Derivatives
used for
hedging
£m
Other
?nancial
liabilities
£m
Loans and
receivables
£m
Available-
for-sale
£m
Derivatives
used for
hedging
£m
Other
?nancial
liabilities
£m
Assets
Trade and other
receivables 794 – – – 766 – – –
Investments – 86 – – – 8 – –
Cash and cash
equivalents 261 – – – 236 – – –
Liabilities
Trade and other
payables – – – 562 – – – 517
Borrowings – – – 52 – – – 51
Members’ capital – – – 208 – – – 189
Other non-current
liabilities – – – 64 – – – 41
Forward foreign-
exchange contracts
Cash ?ow hedges – – (3) – – – – –
Interest rate pro?le of ?nancial assets and ?nancial liabilities
Group short-term deposits with banks of £223m (2013: £209m) and Group borrowings of £52m (2013: £51m) are subject to
?oating interest rates. LLP short-term deposits with banks of £208m (2013: £202m) are subject to ?oating interest rates.
Group and LLP investments include ?oating rate subordinated loan notes of £6m (2013: £2m).
Currency pro?le of ?nancial assets and liabilities
The major part of the Group’s income and expenditure is in sterling. After taking into account forward contracts and known
US dollar and euro-denominated assets and liabilities, the Group had net US dollar-denominated assets at 30 June 2014 of
£27m (2013: £1m) and net euro-denominated assets at 30 June 2014 of £4m (2013: £13m).
Derivative ?nancial instruments
Forward foreign-exchange contracts all mature in less than two years, and have been valued using forward market prices
prevailing at the reporting date. The inefective portion of cash ?ow hedges recognised in the income statement was nil
(2013: nil). The efective portion of cash ?ow hedges recognised directly in other comprehensive expense was £3m
(2013: £1m in other comprehensive income). The notional principal amount of forward foreign-exchange contracts was
£83m (2013: £66m).
Notes to the ?nancial statements continued
70 PricewaterhouseCoopers LLP Annual Report 2014
24 Related party transactions
The LLP and the PricewaterhouseCoopers United Kingdom Partnership are related parties because they are both controlled
by the same group of individuals and the United Kingdom Partnership is the predecessor ?rm of the LLP. This controlling
group of individuals consists of all the members of the LLP who are also all the members of the United Kingdom Partnership.
Related party transactions with the United Kingdom Partnership and other related parties are summarised below.
Services provided to PricewaterhouseCoopers United Kingdom Partnership in respect of client assignments
Arrangements are in place for the LLP to supply services to the United Kingdom Partnership in connection with certain client
assignments. For the year ended 30 June 2014, the LLP provided services to the United Kingdom Partnership to the value
of £229,000 (2013: £201,000) under these arrangements. There were no balances outstanding at the end of the year
(2013: nil).
Administrative support to PricewaterhouseCoopers United Kingdom Partnership
On behalf of its members, the LLP provides certain administrative services to support the United Kingdom Partnership,
including the calculation of annuities and paying agent arrangements in connection with the pension annuities and certain
other post-retirement payments due to certain former members of that partnership. The LLP charged the United Kingdom
Partnership £200,000 for these support services for the year ended 30 June 2014 (2013: £200,000). There were no balances
outstanding at the end of the year (2013: nil). Amounts paid during the year to the annuitants on behalf of the continuing
members in their capacity as members of the United Kingdom Partnership totalled £91m (2013: £85m).
Transactions with joint ventures
Details of the Group’s interests in joint ventures are provided in note 11. During the year, Skyval Limited, a wholly owned
subsidiary of Skyval Holdings LLP, charged the Group £4,334,000 (2013: £640,000) for services provided. The Group
charged Skyval Limited £915,000 (2013: nil) for services provided. At 30 June 2014, the Group has an outstanding balance
of £143,000 receivable from Skyval Limited (2013: nil).
LLP
The subsidiary undertakings described in note 10 are related parties of the LLP. The transactions during the ?nancial year
with these related parties are as follows:
2014
£m
2013
£m
Purchase of services from related parties
PricewaterhouseCoopers Services Limited 1,527 1,433
Other subsidiaries 11 11
Provision of services to related parties
Other subsidiaries (27) (22)
1,511 1,422
The balances as at 30 June with these related parties are as follows:
2014
£m
2013
£m
PricewaterhouseCoopers Services Limited (234) (166)
Other subsidiaries 17 9
(217) (157)
71 Sustainability data
Firmwide non-?nancial sustainability data (assured to ISAE 3000 standard)
For full details and further explanation on performance and metrics, including Crowe Clark Whitehill LLP’s independent
assurance statement, see: www.pwc.co.uk/corporatesustainability
Quality & Ethics
Units
Ongoing
Target 2014 2013 Base Base year
Quality
Client advocacy
1
score out of 10 – 8.52 8.45 8.49 (2009)
Net promoter score
1
percentage – 49% 45% 47% (2009)
Ethics
Ethical culture
2
score out of 5 4.00 3.89 3.87 3.87 (2013)
Dismissals for misconduct
3
number – 8 9 14 (2011)
Independence
Breaches of external auditor independence regulations
4
percentage 0% 0.22% 0.22% 0.24% (2012)
Information security
5
ISO 27001: major nonconformities number 0 0 0 0 (2011)
ISO 27001: minor nonconformities number – 2 1 10 (2011)
1 Based on direct client feedback. Prior years restated as client feedback via online surveys and telephone interviews included in 2014
2 Results are derived from the ?rmwide staf youmatter survey. A score of 4 or above corresponds to a response of ‘agree’ or ‘strongly agree’
3 Data covers all permanent UK staf. Excludes dismissals for failed exams and missed performance standards
4 Breaches of the auditor personal independence regulations reported to the regulator, as a percentage of FTE. Prior year data restated to re?ect updated measurement method
5 A major nonconformity is a situation that raises signi?cant doubt about the ability of the ?rm’s information security management system to achieve its intended policy and
objectives. A minor nonconformity is a single identi?ed lapse which would not in itself raise signi?cant doubt as to the capability of the ?rm’s information security management
system to achieve its intended policy and objectives
Workplace & Diversity
Units
2017
Target
2015
Target 2014 2013 Base Base year
Talent attraction and retention
People engagement score
1
score out of 5 >4.00 >4.00 4.00 3.98 3.97 (2007)
Graduate retention (3 years) percentage 85% 83% 79% 78% 82% (2010)
High potential retention percentage 95% 90% 88% 90% 89% (2012)
Voluntary turnover percentage 12%–15% 12%–15% 13% 12% 14% (2008)
Employee sustainability expectations
1
Social responsibility score out of 5 >4.00 >4.00 4.12 4.08 4.01 (2010)
Environmental responsibility score out of 5 >4.00 >4.00 4.04 4.01 3.79 (2010)
Inclusion and diversity
New hire diversity: gender – women percentage 50% 44% 40% 42% 41% (2009)
New hire diversity: ethnicity – BME
2
percentage 30% 26% 26% 23% 21% (2009)
Partner admissions: women
3
percentage >30% 30% 32% 16% 16% (2007)
Senior management diversity: gender – women percentage 30% 20% 23% 22% 17% (2011)
Employee wellbeing
Absence through sickness percentage 50% 53% 80% 58% (2011)
Volunteering during working hours no. of occasions 6,503 5,320 2,900 (2007)
Volunteering during working hours no. of people 5,663 4,069 4,226 (2011)
Payroll giving participation percentage of staf 3.4% 3.2% 3.5% (2011)
Bene?ciaries: direct
3
no. of people 18,500 15,113 19,559 (2012)
1 Measured according to London Benchmarking Group (LBG) principles, including calculating in-kind contributions on an engagement basis
2 These ?gures exclude a signi?cant amount of work undertaken for charities and social enterprises, which is excluded because it does not meet LBG recording criteria
3 Bene?ciary numbers have been rounded down to provide a prudent representation of activity
Environment
Units
2017
Target
Progress
against
base year 2014 2013
2007
Base
Carbon emissions
1
Scope 1
2
tonnes CO
2
e – –45% 3,088 3,874 5,603
Scope 2 tonnes CO
2
e – –39% 15,460 16,182 25,546
Scope 3: Business travel
3
tonnes CO
2
e 0% –16% 56,669 57,869 67,775
Scope 3: Other
4,6
tonnes CO
2
e – –38% 9,084 9,818 14,685
Total tonnes CO
2
e –25% –26% 84,301 87,743 113,609
Operations
Energy million kWh –50% –37% 52 56 82
Paper procured tonnes –50% –51% 415 409 844
Water supply m3 (k) –50% –32% 140 141 206
Online meetings
5
meetings hosted per FTE – 2187% 3.22 1.07 0.14
5
Waste
6
Land?ll tonnes –100% –100% 0 0 587
Incineration to energy tonnes – –54% 642 773 1,408
Recycling
6
tonnes – –34% 1,366 2,149 2,059
Total
6
tonnes –50% –50% 2,008 2,922 4,054
1 Calculated using Defra conversion factors (May 2013)
2 Landlord operated ofces and 2007–2011 estimated on the basis of ofce area
3 Air and associated carbon emissions restated to re?ect new Defra emission factors which include radiative forcing (resulting in almost a 90% uplift)
4 Fuel and energy upstream emissions added as per new Defra emission factors
5 2010 data shown as earliest year available. Prior year data restated to re?ect updated measurement method
6 In 2014 we improved the accuracy for measuring our paper waste. The change has resulted in a signi?cant drop in our ?gures for recycling and total waste
All data excludes Middle East
Metrics are ?rm wide and cover all lines of service. FTE ?gures used are speci?c to individual metrics
For full details on performance and metrics, including Crowe Clark Whitehill LLP’s assurance statement, see: www.pwc.co.uk/corporatesustainability
© 2014 PricewaterhouseCoopers LLP. All rights reserved. ‘PricewaterhouseCoopers’ and ‘PwC’ refer to PricewaterhouseCoopers LLP
(a limited liability partnership in the United Kingdom) or, as the context requires, the PwC global network or other member frms
of the network, each of which is a separate and independent legal entity.
Unless otherwise indicated, either expressly or by the context, we use the word ‘partner’ to describe a member
of PricewaterhouseCoopers LLP.
Registered offce: 1 Embankment Place, London, WC2N 6RH.
Registered number: OC 303525.
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Paper manufactured to ISO 14001 and EMAS (Eco-Management & Audit Scheme) international standards, minimising negative
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21680
www.pwc.co.uk/annualreport
doc_830969289.pdf
In this report, we look at how we've created value for our clients, our people and our communities over the past year. We examine our performance, assess what’s happening in the professional services sector and discuss our plans for the future.
Annual Report 2014
Responsible proftable
growth
www.pwc.co.uk/annualreport
Our Annual Report takes
a look at how we’ve created
value for our clients, our
people and our communities.
Our business at a glance
Our clients
Our people
Supporting our
communities
1
Hours volunteered by our
people in the working day
We work with over
25,000
clients, helping them create the
value they’re looking for
We’re wherever
our clients are
We have 53 offices across
the UK, the Channel
Islands and the
Middle East
18,000 people 854 Partners
1
Our revenues
Assurance
£1,025m
+
6%
Tax
£714m
+
5%
Consulting
£495m
+
4%
Deals
£580m
+
3%
51,535
Who has joined us
1
Over 90,000
people applied for a
job with us this year
Over 1,300 graduates
and school leavers
joined us
1,400 experienced
people also joined us
this year
Group
£2,814m
+
5%
1 UK only; all other data is for the Group.
Contents
The PwC UK Group
In this report, we look at how we’ve created value for our clients,
our people and our communities over the past year. We examine
our performance, assess what’s happening in the professional
services sector and discuss our plans for the future.
The PricewaterhouseCoopers LLP Group consolidated within
these accounts includes PricewaterhouseCoopers’ member ?rms
in the UK, Channel Islands and the Middle East. See page 55 for
further details of the Group’s principal subsidiary undertakings.
The Group is managed through a UK Executive Board that takes
prime responsibility for the UK and Channel Islands’ aspects of
the ?rm, managed through four lines of services – Assurance,
Tax, Deals and Consulting – and through a Middle East Leadership
Team that focuses on the Middle East aspects. The ?nancial year
runs from 1 July 2013 to 30 June 2014.
The Group is part of the broader PwC network that helps
organisations and individuals create the value they’re looking for.
It’s a network of ?rms in 157 countries with more than 184,000
people who are committed to delivering quality assurance, tax,
deals and consulting services.
2 Chairman’s message
6 Our strategy
22 International network
24 Leadership and governance
32 Quality and risk management
34 Financial results
18 Our services
Assurance
Tax
Deals
Consulting
8 The things we do to create value
Clients
People
Communities
Executive Board
Supervisory Board, Audit and Risk Committee,
Public Interest Body
Group
£2,814m
2 PricewaterhouseCoopers LLP Annual Report 2014
A message from Ian Powell, our
Chairman and Senior Partner
How we do business
This year the frm will be 165 years old
and with that history we recognise our
responsibility as custodians of a business that
contributes to society in many different ways.
We are committed to remaining relevant and
signifcant in an exciting and fast-changing
market. Our purpose is clear – to build trust
in society and solve important problems. It
describes the work we do today, and guides our
decision-making for tomorrow. To deliver on
this purpose our business needs to continually
innovate and invest, and also to make choices
aligned with our values, which see the frm
taking a medium- and long-term view.
I am delighted to welcome you to our 2014 Annual Report.
PwC has performed well over the last year. Our revenues
grew by 5% to £2.8bn, a strong performance that refects
demand for our services across a broad client range.
We have pursued our vision of doing the right thing for
our clients, our people and our communities. Over the last
six years we have continued to transform and invest in
our business through international alliances, acquisitions,
innovation and new products, and importantly through
the retention, development and recruitment of a record
number of talented people. As the economy begins to
improve, we are very well positioned to work with our
clients as they focus on growth.
We play an important role in the UK economy in many
ways and during the year we have focused particularly
on supporting small business and enabling UK exporters
to access key markets. Responsible, proftable growth
requires us to be clear about how we do business, our
strategy to serve clients and how we respond to an
increasingly dynamic market.
Chairman’s message 3
Supporting the UK’s economic growth
Our frm is an integral part of the UK’s highly
successful professional and business support
services sector, which contributes more to gross
domestic product than either fnancial services
or manufacturing, and has grown throughout
the recent economic downturn. Our people
and skills are engaged on many of the key
issues that are important if the UK is to prosper.
We have pursued a strategy that has given us
the brand and people to convene the debate
on many of the key issues the country faces.
In 2014, we encouraged a broad spectrum
of people to contribute their views on tax
regulations and systems under the concept
‘Paying for Tomorrow’. Tax remains an
important and emotive topic, and we hope that
this conversation will stimulate and inform the
debate as the call for greater transparency of
the tax system increases.
Aligned with this initiative, we have again been
transparent in this Annual Report regarding
our own tax arrangements. For our 2014
fnancial year we will have paid and collected
almost £1bn of tax with an effective rate of
tax for our partners of 47% on the profts of
our business.
More widely we have played a leading role
in supporting British companies to showcase
their business to the world by sponsoring
and supporting both the GREAT Festival of
Creativity held in Istanbul and the International
Festival of Business held in Liverpool.
Serving our clients
Over the last six years, economic conditions have
been diffcult, but throughout, I’m pleased to say
that our strategy to hold our nerve and to invest
deep into the recession has proven successful.
In total, we have invested more than £750m
during this period in growing and transforming
our business. In 2014, we have continued to
build a balanced and sustainable business with
further direct investment of over £200m.
During the year, the PwC network acquired
Strategy& (formerly Booz & Co), which sees
us combine one of the leading international
strategy and deal consulting businesses with
PwC’s unparalleled capabilities in supporting
organisations through change from strategy
through to implementation. This combination
is already providing value for our clients.
We also acquired Mokum, a leading technology
consultancy, and Geotraceability, a business
providing assurance over supply chains. As
certainty over the source of the food we eat has
become increasingly important, Geotraceability
has the unique potential to rebuild consumers’
trust in the brands they use. We have also
increased our capabilities in areas such as
cyber security, data analytics and digital
business. Halo, a technology platform that
provides almost virtual real-time assurance,
is already supporting clients in the asset
management industry and is transforming
our assurance business while having much
wider applications for our clients.
investment in 2014
£200m
Over
4 PricewaterhouseCoopers LLP Annual Report 2014
All of these investments give our clients access
to enhanced capabilities and offer our people
greater development opportunities.
We operate with clients across the public and
private sector all over the UK. Making sure
that the UK has a balanced economy with
world-class infrastructure is critical to our
success and that of our clients. This year
we have completed the renovation of our
headquarters building at Embankment Place,
winning the highest BREEAM accreditation
for environmental credentials. We are proud
to operate in London; it is a dynamic, world-
leading city that is vital to the UK economy,
but we also recognise the importance of our
clients in other areas of the UK. In the last six
years we have invested in our business across
the country, and we believe we have the largest
presence in local communities of any
professional services frm.
As I talk to our leading clients I know that they
are focused on emerging markets. Internationally,
we see signifcant opportunities to use the
capabilities that we have developed in the UK
frm in these markets, so that the PwC network
can support companies as they seek to invest.
This has driven our strategy of building
successful alliances with our frms in the
Middle East and, most recently, with our
frms in Central and Eastern Europe (CEE)
and Africa. These alliances are exciting
opportunities, both for PwC and our clients,
but especially for the UK, in some of the
fastest-growing regions of the world.
Responding to the dynamic
market
Our people
The market for talent continues to change, both
in terms of the skills of the people we hire and
where they come from. We continue to be a
popular place to start, build and continue a
career. In 2014, we received an amazing 90,000
applications for jobs, refecting the strength
of our brand and attractiveness of our frm,
and recruited a record 2,700 people. Against
a backdrop of concern over the availability
of employment for students leaving university,
we increased the number of graduates and
school leavers we recruit to 1,300, and for a
record eleventh year we were voted the best
graduate employer. We have made our frm
more accessible by attracting and retaining
the best talent, open to all, regardless of their
background. By the end of the year, we believe
that we’ll have more than 200 apprentices
enrolled on what was the professions’ frst
Higher Apprenticeship scheme, leading to
qualifcation in Tax, Consulting and Assurance.
Our workforce must also refect our
communities, and therefore increasing
diversity has been a key priority. We recently
announced our new equity partners and are
pleased to report that 40% of our internally
promoted partners are women. Diversity in
our leadership at the highest levels of the frm
of those were
female
40%
New partner diversity
There were 53 new
partners promoted
internally in the last year
We operate with
clients across the
public and private
sector all over the
UK. Making sure
that the UK has a
balanced economy
with world-class
infrastructure
is critical to our
success and that
of our clients.
is crucial and 25% of my current Executive
Board are women. We have increased the
number of women in senior leadership
positions to 23%; despite this progress, we
have much more to do. We also recognise that
there are more aspects to diversity than gender
and we need to do more to attract and support
a more culturally diverse workforce.
Regulatory change
During 2014, we saw an increase in listed
company audit tenders, primarily as a result
of market sentiment, good governance and
regulatory changes. I’m delighted that some
of the world’s most signifcant companies, such
as HSBC Holdings plc, Vodafone plc and many
others have selected PwC to be their auditors.
However, we have also ceased to audit others
and we look forward to supporting them
through the Assurance, Tax, Deals and
Consulting services that we can provide.
We aim to work with the country’s leading
listed, private and public sector organisations,
and with all clients who recognise the value
we can bring.
Like many industries, we are subject to
increasing regulatory scrutiny, particularly
covering our statutory audits. Quality has been
the key driving force behind our investments
and we are delighted, but not complacent, with
our record on audit quality, based on external
regulatory review.
The European Commission has now enacted
legislation that will alter the audit and
advisory market for listed companies within
the European Union (EU). As Member States
implement the legislation over the next two
years, we hope that individual regulators are
coordinated to ensure that the outcome is easy
to understand for our clients and does not
unnecessarily increase costs on business.
These changes will have a direct impact on our
business and on our share of the audit market;
however, our balanced business model is
resilient and we are confdent that our strategy
will see the continued growth of our frm over
the coming years.
Outlook
In my six years as Chairman, the business
landscape has been complex and uncertain.
Throughout this period, we held our nerve
and invested during the downturn to create a
platform for the responsible, proftable growth
we have achieved this year and which we
believe we will sustain in the years ahead. I am
particularly proud of the many opportunities
that we have given to graduates and apprentices
in recent years, and to the many individuals
who have joined us to develop their careers.
We are optimistic about the economic outlook
and confdent that our frm is well-positioned
to make a signifcant contribution to British
business and society.
Chairman’s message 5
6 PricewaterhouseCoopers LLP Annual Report 2014
Our strategy for creating value
1. Our purpose
To build trust in society and solve
important problems
Iconic
Our vision
Who we are
Performance goals
Growth Profit Quality
Leading
firm
PwC Experience
Personal responsibility
Iconic
Our ambition is to become the iconic
professional services frm, always front of mind,
whenever professional services are mentioned.
Our vision
One Firm – doing the right thing for our clients,
our people and our communities.
Who we are
Who we are is the essence of the culture at
the heart of our frm. It brings our vision to life
and sets out the behaviours we need to adopt
individually and collectively to make the PwC
Experience a reality.
Performance goals
Our performance goals are how we defne
the successful delivery of our strategy.
Delivery of our goals is measured through
our balanced scorecard.
25
New partner
admissions
2
We had 78 new partner
admissions
People engagement
1
This represents those
people who are engaged /
highly engaged
4.00
out of a possible
score of 5
FY13: 3.98
PwC Experience
To achieve our goals and remain ahead, we
need to offer our clients and our people a
distinctive experience. We embed the PwC
Experience behaviours in everything we do.
Personal responsibility
Everyone must take personal responsibility to
play their part in delivering the frm’s strategy.
2. Our strategy
men 53
FY13: 9 women,
46 men
women
1 Figures based on internal staff ‘youmatter’ survey.
2 Figures for the year 2 July 2013 up to and including 1 July 2014.
3 The Brand Health Index survey is commissioned by PwC and conducted
by a third-party research agency (Perspective Research Services). These
results are taken from the May 2014 survey.
4 Measured in line with the London Benchmarking Group (LBG) principles.
5 Based on Defra guidelines May 2013. Prior year fgures have been restated.
See www.pwc.co.uk/corporatesustainability for details.
6 Includes UK and overseas group entities. All other KPIs refer to the UK only.
7 Now measured before the impact of both partner and corporate tax.
8 Figures based on direct client feedback. Prior years restated as client
feedback via online surveys and telephone interviews included in 2014.
See page 8 for further information including the newly published net
promoter score.
This year 40% of our
internally promoted
partners were women
Our strategy 7
• We will compete by further strengthening
relationships with our clients and
responding swiftly to their needs with
compelling propositions that solve their
problems, create value and build trust.
• We will stand apart in the market through
our culture of innovation and the distinctive
skills and integrity of our people. We will
continue to use the strength of our global
network to deliver a consistent and high-
quality PwC Experience.
£
Up 2% this year: FY13 £711,000, up 3%
722,000
£m
Up 5% this year: FY13 £2,689m, up 3%
2,814
+49%
Advocacy Net Promoter Score
Has consistent high quality
PwC 43%
35%
Nearest
competitor
Delivers leading-edge advice
PwC 42%
29%
Nearest
competitor
Leading frm
We want to be the leading professional services
frm – number one in size and reputation.
Which of these comes to mind frst as the
one that...
3
4. Our key performance indicators
hours in the working day
FY13 45,386 hours
51,535
Time volunteered by our people
4
tonnes
FY13 87,743
84,301
Our CO
2
e emissions
5
Growth
We want to remain the leading frm by revenue
and continue to grow responsibly and proftably.
Group revenue
6
Proft
We want to grow our profts, invest in our
future and competitively reward our people.
Distributable proft per partner
7
Quality
8
Delivering an exceptional service and quality
to our clients is an integral part of our strategy.
These are two of the measures we use to
monitor how we’re doing.
• We will attract, develop and engage the
best people to create an agile workforce.
We embrace diversity and value difference
in our people. We have a common set of
values and we believe in taking personal
responsibility for doing the right thing.
3. Delivering our ambition
out of a possible
score of 10
8.52
FY13: 8.45
Based on the Brand Health Index. This is an
independent survey, which benchmarks us
on a range of criteria against our competitors
every two years. It includes a sample of clients
and prospective clients.
FY13: +45%
8 PricewaterhouseCoopers LLP Annual Report 2014
The things we do to create value
Clients
We innovate to help our clients grow
and perform better, and we invest
in our frm so that we’re well-placed
to help our clients create the value
they’re looking for.
Delivering value and solving
problems
We have a strong and diverse client base.
Our aim is to help create the value our
clients are looking for.
Our global scale and reach, combined with
our specialist knowledge in local and regional
markets, bring a rich diversity of skills, expertise
and experience to our clients. Our clients
include listed, private and entrepreneurial
companies, government and third-sector
organisations as well as private individuals.
Our client service strategy is founded on
bringing the best of PwC to our clients,
establishing and developing strong
relationships, and providing key insights to
deliver value and solve important problems.
Deep industry and sector knowledge
Our industry focus enhances our effectiveness,
enabling clients to beneft from access to our
people’s industry and technical knowledge,
and their ability to tailor solutions to clients’
specifc needs.
+49%
Advocacy
1
Net Promoter Score
2
We asked our clients
‘Based on your overall
experience of PwC, how
likely is it that you would
recommend PwC to a peer
or colleague looking for
similar services?’.
Using the same question,
we look at Assignment
Reviews completed in the
2014 fnancial year and
take the number of people
who are promoters
(scoring us a 9 out of 10)
minus the number of
people who are detractors
(scoring us 0–6).
Riding high with Welcome to Yorkshire
In July this year, the Grand Départ of the Tour de France
came to Yorkshire. The bid to host the Grand Départ
was masterminded by tourism agency Welcome to
Yorkshire, with PwC a key part of its support team.
Visit www.pwc.co.uk/annualreport to read the full story.
FY13: +45%
Strong local presence
Our regional network is fundamental to our
strategy. Our deep roots in many communities
bring us closer to our clients and add local
knowledge and wider capabilities. Each of our
regional offces is able to tailor local business
knowledge and expertise with the full scale
and breadth of PwC’s capabilities.
out of a possible
score of 10
8.52
FY13: 8.45
1 Based on direct client feedback. Prior years restated as client feedback via online surveys and telephone interviews included in 2014
2 Net Promoter Score (NPS) measures the loyalty that exists between a provider and a consumer. The primary purpose of the NPS methodology is to evaluate customer loyalty to a brand or company,
not to evaluate their satisfaction with a particular product or transaction. NPS can be as low as -100 (everybody is a detractor) or as high as +100 (everybody is a promoter). An NPS that is positive
(i.e. higher than zero) is felt to be good, and an NPS of +50% is excellent.
The things we do to create value 9
Service analysis
Industry analysis
296
240
1,045
1,233
Consumer
and industrial
products
(2013: £1,216m)
Financial
services
(2013: £992m)
Technology, infocomms,
entertainment and
media
(2013: £292m)
Government
(2013: £189m) Revenue £m
Segment analysis
333
264
573
989
214
441
FTSE 100
(2013: £455m)
Mid-cap
(2013: £201m)
Inbound
(2013: £960m)
Private equity
(2013: £236m)
Public sector
(2013: £298m)
Entrepreneurs
and private
companies
(2013: £539m)
Revenue £m
One of the strengths of our business is the balanced
nature of our portfolio. 20% of our revenue comes
from work with entrepreneurs and private companies
– more than the FTSE 100. And 35% of our business
is from inbound clients whose ultimate headquarters
are overseas – demonstrating the need for, and
strength of, the PwC global network.
Over the past seven years we’ve seen a continued demand for services from clients where we are not the auditor.
We work across a broad range of industries. In the
past year we’ve worked with clients as diverse as
Boohoo.com, Express Holdings, King, BAE Systems
and Coca-Cola Enterprises.
2014 2013 2012 2011 2010 2009 2008 2007
Revenue (£m)
100%
1,081
595
431
1,192
593
459
1,251
586
411
1,324
620
387
1,438
630
393
1,575
656
390
63%
24%
13%
51%
28%
21%
Audit services Non-audit services to audit clients Services to clients we do not audit
1,671
646
372
1,773
667
374
R
e
v
e
n
u
e
R
e
v
e
n
u
e
100%
Who we work with
We have a broad and well-diversifed business. We work with a wide range of clients across
a variety of industries.
35% of our
business is from
inbound clients
whose ultimate
headquarters
are overseas,
demonstrating
the need for, and
strength of, the PwC
global network.
10 PricewaterhouseCoopers LLP Annual Report 2014
Making our business stronger
We continue to invest in our core capabilities
to deliver value to our clients as the market
and business world evolves and changes.
We are continuing to develop new services,
both to help support and meet client needs,
and to grow and expand our own business.
Data analytics
The explosion of digital data is revolutionising
business. Organisations of every type are now
expecting their business decisions to be based
on robust data analytics as opposed to intuition
and experience; decision-making has to be
close to real time and deeply embedded into
day-to-day operational processes.
Our Data Analytics team uses the latest analytic
techniques to help clients understand their
business and customers better and improve
business effectiveness. The team is made up
of people from each of our lines of services and
client demand is making this area increasingly
central to the digital services we offer.
Cyber security: building confdence
in your digital future
Cyber security has been thrust into the
spotlight over the last couple of years.
With high-profle data leakages, prominent
security breaches across a variety of industries
and identity theft at the forefront of consumers’
minds, security of our digital assets and
profles is essential. This applies right across
the private and public sectors as organisations
build their digital capability. In response to
these increasing cyber threats, we have built a
dedicated multi-service cyber security practice
to help our clients tackle the issue head-on.
The challenge for all organisations is to stay
ahead of the game and recognise that cyber risk
is ever constant and, like any other risk, has
to be managed. It is a boardroom issue and the
consequences of not addressing it properly can
result in severe reputational damage. There is a
spread of adversaries involved in cyber activity,
interested in fnancial gain, theft of intellectual
property and broader business and operational
disruption – and they include organised
criminal gangs, hactivists, cyber terrorists and
insider threats from disaffected employees.
Charlie McMurdie, former
head of the Metropolitan
Police central e-crime
unit, joined us as a senior
cyber crime adviser.
Her vast experience,
along with that of other
specialists in the team, is
helping us create the value
our clients are seeking.
Boohoo.com
From October 2013 to March 2014, a team from
across our business worked closely with boohoo.com
on its successful AIM listing. ‘The whole team was
impressive and important to our company’s life’, said
Boohoo CFO Neil Catto.
The things we do to create value 11
World is in beta
In a world exploding with potential, the way you
embrace emerging technology, and the transformations
it causes, will greatly affect your business. Be ready.
Be part of it. Visit www.worldinbeta.com.
Our dedicated team is made up of people who
live and breathe cyber security, involving deep
subject-matter experts, industry specialists and
staff drawn from a military and intelligence
service background. With an integrated set of
services, from legal to culture change specialists,
from technology advisers, risk management
specialists to threat intelligence and response
experts, our market positioning is clear – we
aim to help our clients build confdence in their
digital future and prepare for, and protect
against, cyber threats.
A business strategy for the digital age
Findings from our Global CEO Survey show
that 82% of UK CEOs rate technological
advances as having the greatest impact on their
business over the next fve years. Focusing on
the digital aspect of technology, it’s clear that
digital has been used as an easier way to sell
goods and services more cheaply and more
effectively. In response to this, our campaign
‘The world is in beta’ is a debate on what the
next wave of innovation on digital will be.
It looks at why you don’t need a digital strategy
to succeed in this world; you need a business
strategy for the digital age.
You don’t need a
digital strategy
to succeed in this
world, you need a
business strategy
for the digital age.
12 PricewaterhouseCoopers LLP Annual Report 2014
Enhancing our capability
We combined with Strategy& (formerly Booz
& Co) to further enhance our leading position.
This combination gives us the ability to work
with our clients from strategy development
right through to implementation.
Through our Mokum acquisition we have a
combined force of over 200 Oracle practitioners
across the UK, strengthening our position as a
leading technology service provider.
We also acquired GeoTraceability, a company
offering specialised tracking and data collection
technology for natural resources. Resource
scarcity and supply chain management are
signifcant issues for many of our clients.
These are examples of how we’re investing in
innovative services that help our clients make
better business decisions, establish trust and
reduce their risk.
Commercial innovation
We have brought together a broad range of
existing skills from across our frm to create
a new businesses team. This is a new way of
working for our frm and it allows us to get
involved with initiatives in a way that is
different from what we’ve done in the past.
This could include conceiving of, and
incubating, a new business either to keep or
to divest, or acquiring or taking a stake in a
business we see as having potential, and then
working to strengthen and grow it. We might
also substitute fees for equity in businesses
we help, or we could enter into a joint venture
where we see a suffcient alignment of interests
with our potential partners.
One new business we have focused on this
year is My Financepartner. This is a cloud-
based managed fnance service. It is targeted
at small/medium enterprises and provides
transactional reporting and fnancial insight,
which enables better decision-making.
Getting ahead of megatrends
Megatrends are changes that take place over
a long period of time and that have a major
impact on business and society. They create big
opportunities or risks in terms of how clients
manage their businesses and interact with
customers. We’ve been working closely with
clients to understand the changes that are the
most disruptive to their organisations. We’ve
distilled what we’ve learned into fve global
shifts that we believe will be important over
the coming decades.
Demographic and
social change
Shift in global
economic power
Rapid urbanisation
Climate change and
resource scarcity
Technological
breakthroughs
Meeting the needs of our clients
We have created a Financial Services Risk and
Regulation (FSRR) practice that brings together
the combined expertise of around 60 partners and
900 staff. Our clients are bene?ting from the deep
knowledge and specialist expertise of our people
whose focus is on helping both large and small
?nancial services organisations manage risk and
respond to the complex and evolving regulatory
environment.
We expanded our Working Capital Management
team by adding two new partners and over 25 new
team members over the last two years. In the past
?nancial year, the team served 30 clients. Notably,
we realised our ?rst €1bn plus cash improvement
for a client. We hope all our clients share the same
views on our team as Coca-Cola Enterprises’ CFO
Nik Jhangiani: ‘They’re clearly all subject matter
experts but, importantly, their expertise is borne
from their practical experience: they can bring real
life experiences to bear on the problems that are
facing the client. They are not theoretical.’
The megatrends
To fnd out more about how we plan to
bring a fresh perspective on each of the
fve megatrends – something different
from the normal debate and something
that will help organisations make the
most of the changes and challenges
ahead, visit www.pwc.com.
Tackling the challenges of climate
change and resource scarcity
We work with public and private sector
organisations to tackle the challenges posed
by climate change and resource scarcity.
For the Department for International
Development (DFID), we continue to manage
the Business Innovation Facility, which has
already supported over 80 companies to
develop inclusive business models in Africa
and the Indian subcontinent, and will continue
to support companies and other market players
in Malawi, Nigeria and Burma to adopt
commercially sustainable innovations.
In the private sector, we’re working with clients
across a spectrum of industries, from fnancial
services to mining, including many of the
world’s ‘sustainability leaders’.
Measuring the impact of business
Our Total Impact Measurement and
Management framework – launched at the
UN General Assembly last year – has been very
well-received. The framework helps businesses
understand the net impact of their activities on
the economy, public fnances, the environment
and wider society.
We remain the leading assurer of sustainability
data among the UK FTSE-100 companies,
and also provide assurance to public sector
clients, such as The Crown Estate, one of the
frst organisations to publish an integrated
annual report.
The things we do to create value 13
Climate & Development
Knowledge Network
(CDKN)
We’ve secured an
extension from the
UK Government to lead
CDKN through to 2017.
Over the past four years,
CDKN has supported
over 70 developing
countries to plan and
implement strategies
for their speci?c climate
change challenges.
It’s funded by both
the UK Department for
International Development
and the Dutch Ministry
of Foreign Affairs, and
allows us to use our
skills to contribute to
policy change, accessing
climate ?nance and
disaster risk management.
Express Holdings
Our Newcastle Corporate
Finance team has helped
one of the UK’s leading
manufacturing companies,
Express Holdings, secure
private equity funding.
The investment will help
Express Holdings with its
acquisition and expansion
programme both in the
UK and overseas.
Energetics Networked Energy Limited
Teams of people from across our ?rm have been
working with energy networks company Energetics,
helping management through the sale process for a
proportion of the businesses to Macquarie Bank. From
an initially dif?cult ?nancial position following signi?cant
growth, Energetics is now stronger than it has ever
been and 219 staff positions have been secured.
Pictured: Ken Stewart, Director and Bill McClymont, CEO
14 PricewaterhouseCoopers LLP Annual Report 2014
The things we do to create value
People
Young Philanthropy
Consistent with our goal of developing
responsible leaders, we are a founding
partner of ‘Young Philanthropy’. This
social enterprise has leadership at its core,
educating and empowering a new generation
of philanthropists to take a leading role in
transforming society. Young professionals
invest their time, money and skills in niche
charity projects. We now have over 14 teams
being led by people from all grades.
Different ways to start
your career
Our position as the UK’s leading graduate
employer is something we’re very proud of.
We continue to recruit top graduates from
around the country every year.
We recognise that the traditional graduate
entry route may not suit everyone who has
the potential to join us. This is why we offer
a variety of ways to join our frm.
Our Higher Apprenticeship programme
offers full-time paid professional roles for
school leavers. It’s designed to help individuals
develop their business skills while completing
formal training and studying towards
qualifcations. This year we were named by the
National Apprenticeship Service and City &
Guilds as a Top 100 Apprenticeship Employer.
Creating value for our people through
opportunity, growth and new experiences
is a key part of what we do.
Peter White (left) and Mark
Baker, from our Assurance
practice, founded their
Young Philanthropy team
shortly after the graduate
welcome event in
September 2013,
showing responsible
leadership from the outset.
People engagement
This represents those
people who are engaged /
highly engaged
4.00
out of a possible
score of 5
FY13: 3.98
As a progressive employer we believe that
having diverse and motivated people sits at
the heart of our frm’s strategy. Engaged people
with a range of skills, experiences and ideas
put us in a better position to build trust and
meet the needs of our clients.
People engagement
Throughout the year we measure the
engagement levels of our people. We also use
a framework called ‘the deal’ to understand
what individuals value about working for the
frm and what our frm expects from them.
Learning and development
We offer our people a broad range of
opportunities to grow and develop, from
formal training programmes to on-the-job
coaching, mentoring and work experiences.
The PwC Professional
We launched a leadership capability framework
called ‘The PwC Professional’. It set out fve
attributes – technical, relationships, leadership,
business and global acumen – which we expect
our people to develop to meet our clients’
needs. A global mindset is a key part of the
PwC Professional, and the framework has
been adopted across the PwC global network
to support all of our people.
The things we do to create value 15
Our Flying Start programme offers valuable
experience for those who want to go to
university and ultimately want to become
a chartered accountant. This PwC-endorsed
accounting and fnance degree (in conjunction
with the ICAEW and the universities of
Newcastle, Nottingham and Reading) offers an
exciting and challenging opportunity, with the
beneft of going to university, getting paid work
experience and fast-tracking your career.
This year we saw our frst director promotion
from this population.
Opportunity and choice
We encourage our people to look for new
opportunities within the frm. This year we
expanded our internal Careers Service, which
enables our people to talk to trained career
coaches to help them make the right career
choices. It’s proven to be a great initiative
that is making a real difference, helping
people move around the frm and take on
new challenges.
Strong links to our global network give our
people a variety of career opportunities and
potential to travel. And it gives our clients access
to an enviable pool of talent. We currently have
over 237 people on a secondment to the UK and
over 144 on secondment to other PwC offces
around the world.
Looking after the well-being of our people is
an important part of our strategy. This is why
fexible working is a valued and important
part of our operating model. In total, 10%
of our workforce work fexibly, including 50
of our partners and 138 of our directors.
Valuing difference
We believe that investing in a broad range
of skills, experiences and backgrounds puts us
in a stronger position to understand and meet
the needs of our clients. This year we have
continued to recruit a more diverse range of
talent, in particular to encourage more women
and those from different social backgrounds
to our organisation.
We want to see a greater cultural and gender
diversity in our business. Through the work we
have done to create a strong pipeline of talent,
we are making progress. This year, 40% of our
new internal admissions to the partnership
were female. Of our existing partners, 17%
are female and 6% are from a minority ethnic
background. We’ll continue to focus on setting
and monitoring gender and diversity targets at
all levels.
We have recruited over 90 students onto our
‘Shadow a Female Leader’ programme. We
also introduced a ‘Business Insight Week’ work
experience programme for sixth-form students,
focused on improving access to the profession.
The future
During the downturn we held frm and
continued to invest in recruitment. This year,
more people have joined us than ever before.
As well as recruiting over 1,200 graduates
this year, we’ve taken on 112 school leavers
and apprentices, and a further 31 graduates
from our Flying Start degree partnership.
In addition, 795 students joined us on our
internship programme. We also recruited
over 1,400 experienced people this year,
and welcomed a further 98 from acquired
businesses. In the year ahead we’ll continue
to stay focused on recruiting, developing and
retaining a talented workforce. And we’ll
continue to build on what we’ve achieved in
creating an agile and adaptable workforce,
making sure we remain responsive to change
and offer varied and exciting career
opportunities to our people.
Higher apprentices Christy
Oliver, Holly Simms and
Luke Constable. All three
have just completed their
exams and have been
offered full-time roles.
Jennifer Duck from our
Newcastle of?ce is our
?rst director promotion
from the Flying Start
programme.
New partner diversity
25
men 53
FY13: 9 women,
46 men
women
This year 32% of our 78
new partners were women
16 PricewaterhouseCoopers LLP Annual Report 2014
The things we do to create value
Community and sustainability
Improving our environmental
performance
After almost two years of refurbishment, we
fully reopened our Embankment Place offce in
London, achieving the highest ever score under
BREEAM, the world’s foremost environmental
assessment method and rating system for
buildings. In conjunction with our More London
building, which itself achieved a BREEAM
Outstanding award, we now have 10,000
of our people located in some of the most
environmentally friendly buildings in the UK.
Our overall carbon footprint fell 4% this year
to 84,301 tonnes, aided by the mild winter and
our new Embankment Place offce trigenerator,
running on recycled cooking oil, which
combined to reduce our gas consumption.
Carbon emissions from fights now account for
more than half of our overall footprint, so our
campaign to promote online meetings as an
alternative to travel remains a priority. This year,
online meetings hosted per person rose by 201%.
We generated less waste again this year,
showing good progress towards our reduction
target of 50% by 2017. But much of the 31%
reduction is due to improvements in the way we
measure the amount of paper we recycle – our
largest waste stream. In turn, this affects our
overall recycling ratio, which fell from 74% to
68%. Consumption of paper and water remain
on track to meet our 2017 targets.
Having achieved the Carbon Trust Standard for
the third time in 2013, we’re also delighted to be
one of the frst three organisations to achieve the
new Carbon Trust ‘triple crown’ of certifcates
for good carbon, water and waste management.
Our Embankment
Place of?ce
achieved
the highest
ever score
Carbon footprint
4%
to 84,301
tonnes due to
reduced gas
consumption
Down
Online meetings
Waste generated
Recycling ratio
74%
68%
2013
2014
Environmental
impact
The Carbon Trust
Standard for the third
time in 2013
BREEAM
96%
201%
Hosted
per
person
Up
31%
Down
One of the ?rst three
organisations to
achieve The Carbon
Trust ‘triple crown’
Creating value through our community
and sustainability programmes is an
important part of our strategy. We are
committed to doing the right thing for
our communities and are constantly
looking for ways to eliminate as many
of our environmental impacts as
possible. We encourage our people to
share their skills and energy to support
groups and charities across the UK.
Building a sustainability mindset
benefts our people and the clients
and communities we serve.
Charities we support
The things we do to create value 17
Investing in our communities
Our community programmes continue apace
and we are engaging more of our people in
more ways.
We volunteered 51,000 hours during the year
– up 14% from 2013. For the frst time we held
a vote for our people to select three charities of
the year which will be supported by the PwC
Foundation. These three charities, together
with our two existing charities, Beyond Food
Foundation and Wellbeing of Women, formed
the basis of our annual frmwide volunteering
day. We are planning other fundraising events
throughout next year to enable our people to
pool their talents and energies to really make
a difference for these charities.
Our volunteering also continues in other areas.
We support education, social enterprise and
employability initiatives, making the most of
our professional skills to maximise our impact.
More than 50% of our volunteering is skills-
based this year.
Meanwhile, our social entrepreneurs’ club,
which provides mentoring and other support to
social entrepreneurs, has grown to more than
200 members across the UK, and we’re on track
to reach our 2017 target of 250. We’ve published
a review of our fve-year relationship with the
School for Social Entrepreneurs, and we ran
social impact measurement training for our social
entrepreneurs in London, Leeds and Scotland.
Measuring our impact
For many years we’ve actively encouraged our
people to volunteer in the communities in which
we operate. In recent years we’ve sought to
maximise the impact of these activities by
sharing our professional skills where possible.
So, this year we’ve published ongoing targets
for volunteering hours and skills-based
volunteering. And we’re also publishing the total
number of benefciaries of our volunteering.
We’ve been tracking our people’s expectations
about our social and environmental responsibility
for some time, too. So we’re also including
these metrics in our scorecard. See pages
71–72 for more details of our quality and ethics,
workplace and diversity, and community and
environmental targets and achievements.
Over the next year, we’ll continue to embed
sustainability more deeply into our supply
chain and client work, infuencing all the
elements of our value chain for greater social
and environmental impact, as well as setting
up additional programmes to help us achieve
our 2017 goals.
For more information visit www.pwc.co.uk/
corporatesustainability.
Getting our people
to think sustainability
This year, we developed
an online training called
‘Think Sustainability’ to
help our people and
contractors to understand
the implications of social
and environmental issues
in client work. With 94%
of them completing the
course, over half of those
surveyed* con?rmed that
it led to them adopting
more sustainable
behaviour. We’re proud
that the module received
external recognition,
being voted ‘best
internal engagement’
by the environmental
organisation 2degrees.
*629 people
One Firm One Day
On one day each year, we encourage all our people to
get involved with community projects. This year, many
took part in fundraising activities for local charities:
one group walked, jogged and ran dressed as the
popular character from the children’s book series
‘Where’s Wally?’ to raise money for the National
Literacy Trust.
Brigade at the
Firestation
Our own social enterprise
restaurant, Brigade, goes
from strength to strength.
Another 15 apprentices
joined the Beyond Food
Foundation programme
this year, bringing the
total apprenticeships
facilitated this way to 60
since it opened in 2011.
18 PricewaterhouseCoopers LLP Annual Report 2014
Assurance
With nearly 7,000 people, we have a strong
Assurance practice that works with many listed
companies and thousands of private and family
businesses, as they look to expand both in the
UK and globally.
We’re proud of our auditing heritage and work
with some of the UK’s leading organisations.
Our work extends beyond statutory audit
to encompass internal audit, risk assurance,
actuarial services and advice on capital market
transactions. Together, these services help
build trust and provide the confdence that’s
vital for decision-makers when they are faced
with complex problems.
As a result of legislative and regulatory
change, tendering activity in the audit
market is signifcantly increasing.
These measures have already led to an increase
in clients changing auditors. During the year,
we won the audits of HSBC, Vodafone, British
Land, Morrisons, Bunzl, Henderson and
Ladbrokes, and retained the audit of Lloyds
Banking Group. We’ve also seen our audit
relationship with clients including Unilever,
M&S and the London Stock Exchange come
to an end. Our focus remains the delivery
of high-quality services to all of our clients
during the transition period.
We were pleased with our 2013–2014 Audit
Quality Review results, which showed
continuous improvement on our previous
strong performance. We’re continuing
to make signifcant investments to ensure
our audit methodology remains best in class
and we’re introducing new technologies to
help deliver ever more insightful, effcient
and high-quality audits to our clients.
Our Risk Assurance business achieved double-
digit growth for the ffth consecutive year.
We provide insight and independent assurance
to help our clients protect and strengthen
every aspect of their business from people to
performance, systems to strategy and business
plans to business resilience.
Our actuarial practice provides the expertise
and experience needed to help clients manage
risk and capital more effectively. We provide
insights and solutions for all manner of
businesses that face signifcant and complex
risks, not just insurers.
Our capital markets and structuring teams
advise companies raising debt or equity in
global capital markets, including designing
the optimal deal structure. Our deals-related
revenue grew strongly in the year, thanks to
a resurgence of IPO and M&A activity.
Looking forward, we have an important role
in helping clients offer more transparency
through their corporate reporting. We are also
moving from a historical focus to provision of
assurance on a real-time basis. We’ve started
piloting our frst real-time assurance products.
We are fully committed to providing the skills
and qualifcations that future assurance
professionals will need to operate in the
changing assurance environment.
Our services
We offer our clients an integrated approach to our services.
Our core services are assurance, tax, deals and consulting.
Trust sits at the heart of everything we do for our clients.
Whether it’s trust in the relationship they have with us or the
trust we help them build with their stakeholders. Across our
business we have talented people who are innovative and
agile in their approaches. They have a common set of values,
and are empowered to take personal responsibility and do
the right thing.
Our services 19
Tax
We are proud to have the largest UK Tax
practice and the leading reputation, according
to the Global Tax Monitor.
1
But being the leading frm means more to us
than size and reputation. It also means taking
a leading role on the key issues that affect our
clients and markets, from pension changes and
executive reward to tax reform. As an example,
through our ‘Paying for tomorrow: future tax’
campaign, we’ve engaged with the public
through a Citizens’ Jury to come up with
reforms to the UK tax system. Our experts also
regularly provide commentary to the media,
bringing a business perspective to topical issues
through sharing their insights and opinions.
The world is changing, and our focus over the
last year has been to continue to adapt, transform
and diversify our business. To keep pace with the
evolving economic landscape we’ve refreshed
our global code of conduct. The code helps us
best serve our clients by ensuring we balance
their technical needs with reputational concerns.
Embracing change has allowed us to help
our clients – be they business, entrepreneurs,
private clients or public sector – to solve new
and increasingly complex problems, so they
can grow, employ new people and invest.
Our diverse business with over 3,500 talented
people brings together tax, HR and related
legal expertise to enable us to work alongside
our clients as they respond to the challenges
and opportunities they face. Over the last year,
we have increased our focus on helping clients
with the opportunities and challenges
presented by operating in a digital economy.
Projects have ranged from helping clients
manage rapid advances in technology in the
workplace to advising on the tax implications
of transacting online and across borders.
The diversity of our clients and our business, and
the strength of our global network means we can
give our people rewarding, varied experiences
and help them develop new skills. The range of
industry awards and qualifcations our practice
and people have achieved demonstrates our
breadth of skills and career paths. We’ve also
continued to invest directly in our people – over
500 moved within our business, and we made
more promotions and admitted more partners
than last year. We continue to recruit the most
talented people in the market to help us improve,
grow and diversify our offering to meet the
needs of our clients.
We’re looking forward with confdence,
committed to creating a sustainable business with
a lasting legacy built on responsible, proftable
growth. At the heart of this is our commitment
to continue bringing the very best of our diverse
practice, frm and global network to our clients.
The diversity of our
clients and business,
which brings
together tax, HR
and related legal
expertise, and
the strength of
our global network
means we can
give our people
rewarding, varied
experiences and
help them develop
new skills.
Candy Crush
In the past year, a team
drawn from a number of
our key service lines has
advised mobile game-
maker King on its multi-
billion-dollar ?otation
on the New York Stock
Exchange. Most famous
for its global hit Candy
Crush, King has more
than 180 titles in over
200 countries.
BAE Systems picks
Skyval
BAE Systems, the global
defence, security and
aerospace company,
has chosen Skyval to
manage and monitor
its pensions obligations
across all seven of its
UK schemes. Skyval is
a web-based pensions
analytics tool that gives
companies and trustees
access to real-time
information and analysis
on their schemes’
liabilities, assets, risk
and valuations. Visit www.
pwc.co.uk/annualreport
to read the story in full.
1 Launched in 2000, the Global Tax Monitor (GTM) is an independent survey conducted by research agency TNS, which examines the competitive position of the top
frms in the tax advisory market – globally, regionally, nationally and on an industry basis. It provides a comprehensive measure of frm reputation, client service
and brand health, gained currently from just over 4,000 telephone interviews annually with key decision-makers (CFOs and tax directors) in 40 key markets.
20 PricewaterhouseCoopers LLP Annual Report 2014
Deals
We have over 2,200 commercially focused
people supporting clients through transactions,
restructuring and crisis.
In an economy characterised by cautious
optimism, our focus for the last year has been
on delivering insight to help our clients get
the best outcome from complicated business
problems – be that realising the best value
from a transaction, restructuring businesses,
or providing advice on regulatory and
reputational risks.
A particular highlight has been announcing the
repayment of 100% to unsecured creditors of
Lehman Brothers International (Europe), with
over £40bn expected to be returned to creditors.
We have a strong and growing forensics team.
The fnancial and reputational risks of economic
crime and disputes can be huge. Our specialist
teams have been helping to investigate, analyse
and resolve potential issues by providing advice
to help prevent crises arising.
Over the year, the transactions market has
become more buoyant, particularly at the
mid-market level, and we’re seeing the benefts
of our recent investment in the regions.
The changing
focus from crisis
to growth has also
given our people
the opportunity to
develop and apply
their diverse skills
in new ways, which
will continue to be
a priority. CVC Capital Partners
When UK Transaction
Services’ director
Hugh Ellis was invited
to relocate to Hong Kong
to support CVC Capital
Partners in Asia, he said
‘I seized the opportunity
with both hands. The
past eight months have
been a whirlwind of deal
work and personal
development’.
Our specialist teams
have been helping
to investigate,
analyse and resolve
potential issues by
providing advice to
help prevent crises
arising.
We have had good success with our corporate
fnance teams seeing a growing range of
mandates. We’ve also been seeing an increasing
level of due diligence and transaction service
activity, together with the need for post-deal
implementation services.
The changing focus from crisis to growth
has also given our people the opportunity to
develop and apply their diverse skills in new
ways, which will continue to be a priority.
We are the largest Deals business in the PwC
network, which gives our people opportunities
to work on a wide range of international
assignments and experience secondments
to developing markets.
We are well positioned to continue to use
our diverse skills and deep sector knowledge
to help our clients respond rapidly to market
events, and will increase our focus on
developing original deal ideas to help
them grow and invest.
Our services 21
Consulting
Across the UK and the Middle East we now
have nearly 2,500 practitioners with a wide
and diverse range of skill sets. It’s been a year
of investment and change across our Consulting
business. Our focus continued to be on helping
our clients to work better and faster, and we
have invested further in our capabilities to
achieve this. Through our Strategy& and
Mokum investments and by investing in the
skills of our people, we seek to help our clients
improve how they operate, innovate and grow,
reduce cost, manage risks, build talent and
evolve the way they do business. We have also
established a New Business arm within the
Consulting practice, which is proving successful
as we explore new commercial models.
A recent industry report on consulting
describes our frm as occupying a positively
differentiated position in the UK market –
further evidence that our strategy is working.
We have embraced the potential opportunities
that digital integration offers clients and our
recently launched The World in Beta
campaign is showcasing our frmwide digital
capabilities. Our consulting insights and
propositions help clients think through the
radical implications for their business models
created by the digital world, execute change
and reassess the way they view customer and
supply-chain relationships. Our digital offering
is at the core of, and integral to, our Consulting
business and will shape our offering and client
conversations going forward.
Over the year we made a signifcant investment
in our people across all levels, with 800 new
recruits joining our Consulting business.
This is alongside our investment in Strategy&
– which Consulting Magazine described as bold
and shrewd, saying that it ‘may be the game-
changing move the consulting profession’s been
waiting on.’ It is a key element in our plans to
exploit the potential of large-scale international
projects that integrate strategy and delivery
across the client landscape.
The past year saw a number of achievements
for our people including four Management
Consultancies Association awards – more than
any other organisation. We were voted Graduate
Employer of Choice in Consulting in the Times
Top 100 Graduate Employers awards.
The consulting market has experienced
signifcant change over the past year and this
will continue. However, we have proved we
can anticipate change and adapt to new market
opportunities, and in the coming year we will
continue to deliver the transformational
outcomes that our clients need.
Ministry of Interior
In 2013, we helped the UAE’s Ministry of Interior
revolutionise security and safety services across the
country. Drawing on our understanding of the global
security arena, we combined complex crime analysis
with workforce expertise to create a tool to deploy
resources where and when they’re needed most.
Consulting
Magazine described
our investment in
Strategy& as bold
and shrewd, saying
that it ‘may be the
game-changing
move the consulting
profession’s been
waiting on.’
22 PricewaterhouseCoopers LLP Annual Report 2014
International network
Strength and depth of the PwC network
Supporting our clients
internationally
The combination of geographic reach and local
capabilities gives the PwC network strength
to service clients wherever they operate. Lead
partners on global accounts have responsibility
for mobilising talent to deliver the support that
clients need. Global market leaders also share
industry insight and best practice to make sure
that we have the latest thinking on key market
issues. Demand for expertise across territories
is high and increasing capacity in markets with
high potential is a key focus.
What is ‘PwC’?
PwC is the brand under which the individual
member frms of PricewaterhouseCoopers
International Limited (PwCIL) operate and
provide professional services, drawing on
common resources and methodologies.
PwCIL acts as a coordinating entity that focuses
on key areas, such as strategy, brand, and risk
and quality. The PwC network is not one
international partnership and the PwC member
frms are not otherwise legal partners with
each other.
The UK’s contribution
The UK frm is well-represented across PwC’s
network leadership teams and plays an active
role in contributing to the development of the
network’s strategy.
Network Leadership Team
The Network Leadership Team sets the overall
strategy for the PwC network and the standards
to which PwC frms agree to adhere.
Network Executive Team
The Network Executive Team is appointed by,
and reports to, the Network Leadership Team.
Its members are responsible for strategy and
the coordination of key aspects of PwC’s
Assurance, Advisory and Tax offerings, and
functional areas such as Risk & Legal, Human
Capital, Operations and Clients & Markets
across the PwC network.
Strengthening our network
The gradual return to economic growth in
developed countries is welcome news. But
we know that high growth is likely to come
from less mature markets. In response to this,
the UK frm began a strategy in 2009 which
connects those parts of our network that have
high-growth potential and which would beneft
from access to the UK’s developed talent pools
and product offerings.
This strategy began with an alliance with the
PwC frm in the Middle East and has been
extended during 2014 through investment in
PwC Central and Eastern Europe. We have also
recently announced a further alliance relationship
with PwC in Central and Southern Africa.
Seplat Petroleum
A combined UK and
Nigerian transactions
team has advised Seplat
Petroleum on its historic
dual listing on the
London and Nigerian
stock exchanges.
The $535m deal is one
of the largest ?otations
by an oil exploration and
production company
since the ?nancial crisis.
The PwC global network of frms operates in 157 countries,
with over 184,000 people. The geographic reach of the PwC
network and the depth and breadth of our services gives us
great strength in the professional services marketplace.
We are focused on how we can improve the delivery of this
expertise to our clients and maximise the opportunities for
developing our people.
International network 23
Middle East
The Middle East frm has continued to deliver
sustainable growth since the UK frm’s initial
investment in 2009. Certain local economies
continue to grow strongly across the Middle
East, with client demand for our services
in sectors such as capital projects and
infrastructure, oil and gas, government
and sovereign wealth funds.
The business has grown to over 2,600 people.
The frm promoted 617 people with 32 new
partners in the year and two new graduate
programmes were launched. Some 170
graduates joined across the region.
Central and Eastern Europe
We announced our investment strategy in PwC
Central and Eastern Europe (CEE) in October
2013. The CEE region spans 29 countries across
six time zones. The investment strategy is
designed to develop market opportunities
in the region for the beneft of both frms.
The UK has committed to invest in a number
of specifc initiatives including oil and gas,
consulting, cyber security and forensic services,
business recovery and transaction services, and
in strategy and operations consulting.
Africa
In July 2014, we also announced a strategic
investment with PwC frms in Central and
Southern Africa, to meet increased demand for
professional services as trade activity between
the two regions grows. It also gives our people
across the UK and Africa the chance to
experience different working environments.
PwC teams from the UK and Africa have a
strong track record of working together to
support businesses, governments and NGOs
across the region with expertise in felds such
as economic development, climate change,
education, infrastructure, natural resources,
and power and utilities.
To capitalise on our links and to be well-
positioned to respond to the potential economic
boom expected in the continent, the UK and
African frms are developing a robust and
fexible talent strategy.
Given our historical and cultural ties, we
have a strong cadre of people with African
backgrounds in the UK frm. We expect some to
take up learning or secondment opportunities
in Africa. The UK frm also wants to help the
African frm in recruiting and developing
a local workforce to grow and develop the
potential in local domestic economies.
Leading thoughts
PwC produces various reports and white
papers throughout the year to share insights
and stimulate debate on current and future
market issues.
Global CEO Survey
The PwC Global CEO Survey was published
for the seventeenth year. This annual survey
gives PwC a chance to fnd out what’s on the
minds of CEOs around the world. It puts us
in a better position to help them deal with
these challenges.
Global Entertainment and Media Outlook
Now in its ffteenth year, PwC’s annual Global
entertainment and media outlook (Outlook)
provides a single comparable source of fve-year
forecast and fve-year historic consumer and
advertiser spending data and commentary, for
13 entertainment and media segments across
54 countries.
Leading network
The UK frm continues proactively to help
develop and support the PwC network. It is
of vital importance for our ability to service
our clients, share knowledge and insight,
and develop our people.
Paul Cleal, UK partner,
will join the Africa
leadership team on
secondment and will be
based on the continent.
PwC Middle East has
grown to over 2,600
people. Some 170
graduates joined
across the region.
24 PricewaterhouseCoopers LLP Annual Report 2014
1 Ian Powell
Chairman and Senior Partner
Ian joined the UK frm’s Executive Board in 2006
and was elected chairman and senior partner
in 2008. He joined the UK frm as a graduate
trainee in 1977 with a degree in economics from
Wolverhampton Polytechnic. He became a partner
in 1991. Before becoming chairman, he was Head
of Advisory. He has an honorary doctorate
in business administration, awarded by the
University of Wolverhampton Business School.
2 Kevin Ellis
Managing Partner
Kevin graduated in industrial economics from
Nottingham University, joined the frm in 1984
and became a partner in 1996. Before he joined the
Executive Board in 2008, he headed up our Business
Recovery Services and between 2008 and 2012 he
was Head of Advisory. During his time with the frm
Kevin has been on two secondments, one with an
overseas bank and the other with a major UK
fnancial institution.
3 Gaenor Bagley
People
Gaenor graduated from Cambridge University
with a mathematics and management degree.
She trained in audit and spent three years in
an investment bank corporate fnance team.
In 1992, she joined the Tax practice and in 2000
became a partner, continuing to work in M&A,
and specialising in Private Equity. She joined
the Executive Board in 2011 and is responsible
for our people, communities and sustainability.
Our Board is chaired by Ian Powell, whose term of offce runs for four
years from July 2012 to June 2016. The chairman appoints the other
Executive Board members, all of whom are partners in the frm.
Each board member has responsibility and accountability for a specifc
aspect of our business. Our Executive Board meets at least monthly,
and conducts formal business at additional meetings, as necessary.
Keith Tilson was a member of the Executive Board until 30 September
2013, when he retired from the frm.
The Executive Board is responsible for developing and
implementing the policies and strategy of our frm, and for
its direction and management. It sets and communicates
our frm’s strategic priorities, which feed into our business
planning process. The contribution of each part of the frm
is monitored through balanced scorecard reporting.
4 James Chalmers
Assurance
James graduated from Oxford University with an
engineering degree and joined the frm in 1985.
He became a partner in 1997. Before joining
the Executive Board in 2008 as Head of Strategy
and Talent, he was a member of the Assurance
leadership team. During his time in Assurance
he worked with multinational clients and has been
on long-term secondments to clients in the banking
and healthcare sectors.
5 Margaret Cole
General Counsel
Margaret graduated from Cambridge with a degree
in law. She joined the Executive Board on 1 January
2013 and was previously Managing Director of
Enforcement and Financial Crime and a board
member of the FSA. She has over 20 years’
experience in private practice, specialising in
commercial litigation with an emphasis on fnancial
services. She has held positions with Stephenson
Harwood and White & Case.
6 John Dwyer
Deals
John graduated from University College Dublin
with a commerce degree. He has worked in most of
the businesses under the Deals umbrella including
Business Recovery and Corporate Finance. He
became a partner in 1997 and ran the Transaction
Services business between 2007 and 2011. He
joined the Executive Board in 2012.
Leadership
The Executive Board
2 1
7
Leadership and governance 25
7 Warwick Hunt
Chief Financial Offcer
Warwick graduated from the University of the
Witwatersrand in Johannesburg with a bachelor
of accountancy. He is responsible for the leadership
of the UK Firm’s Finance and Operations functions.
Before joining the Executive Board in October 2013
he was PwC Middle East senior partner. He was
territory senior partner and Chief Executive
Offcer in PwC New Zealand from 2003 to 2009.
8 Stephanie Hyde
Regions
Stephanie graduated from Brunel University with a
mathematics and management degree. She joined the
frm in 1995 and became a partner in 2006. Before
joining the Executive Board in 2011, she led our
Assurance practice in Reading and our mid-cap market
in the South East. Stephanie has worked in a number
of our offces in the UK with clients ranging from
private businesses through to FTSE 100 companies.
9 Kevin Nicholson
Tax
Kevin joined the Executive Board in 2008 as Head
of Regions after spending four years leading the
Entrepreneurs and Private Clients practice on
the Tax Leadership Team. He graduated from
Newcastle-upon-Tyne Polytechnic, joined the frm
in 1991 and became a partner in 2000. Over this
period he worked in the North East, the Midlands,
London and Hong Kong, and also spent two years
working with Global Tax Leadership in New York.
10 Richard Oldfeld
Strategy
Richard graduated from the University of York with
an economics degree. He joined the frm in 1992
and became a partner in 2003. Before joining the
Executive Board in 2011, he led our Banking and
Capital Markets business within Assurance. He has
worked in London, Zurich, Paris, New York and most
recently Sydney, on both audit and non-audit clients.
11 Dan Schwarzmann
Clients and Markets
Dan has a masters degree in Business
Administration from City University and became a
partner in 1998. Before joining the Executive Board
in January 2014 he was responsible for the Business
Recovery Services team in the UK from 2008. Dan
has been involved in a number of high-profle UK
and international assignments, mainly in the
fnancial services sector.
12 Ashley Unwin
Consulting
Ashley graduated from Sheffeld University in 1991
with a degree in business; he also gained an MSc in
organisational development. He joined the frm in
2009 to lead our Consulting practice. Ashley’s early
career was spent with Arthur Andersen where he
made partner in 1998. Before joining the frm, he
worked in private equity and held senior positions
in EMI. He joined the Executive Board in 2012.
3 4 5 6
8 9 10 11 12
26 PricewaterhouseCoopers LLP Annual Report 2014
Governance
Supervisory Board, Audit and Risk Committee,
Public Interest Body
Supervisory Board
This has been my frst full year as Chairman
of the Supervisory Board and it has been a busy
12 months, refecting the many developments
within our frm. Sound governance remains
a key principle of our partnership and over the
year we were focused on having the right level
of constructive conversation and reporting
between the Executive Board, the Supervisory
Board and the wider partnership. The principal
communication channels were through regular
discussions and meetings.
We have also worked closely so that any
concerns of the partnership or individuals
are dealt with quickly and the right level of
guidance is provided to the Executive Board.
The relationship between the two bodies is
positive and works well, with both boards
taking their responsibilities to represent the
partnership seriously.
On a fnal point, a key strength of the
Supervisory Board is the experience and
diversity of members; this has aided the quality
of discussions and ability to represent the
partnership effectively.
Matthew Thorogood
Supervisory Board Chairman
What does the Supervisory
Board do?
The principal roles of the Supervisory Board
are to hold the frm’s Executive Board to
account and to represent the interests of
partners, and as such it is a vital part of the
frm’s governance structure.
The Supervisory Board is made up of 12
partner members, who are elected for a term
of four years by our partners.
In addition to the 12 elected members, UK
Chairman Ian Powell serves as an ex-offcio
member, along with two partners who have been
elected to the Board of PricewaterhouseCoopers
International Limited, the global Board of the
PwC Network. The Supervisory Board elects its
own Chairman.
Partners use the Supervisory Board as a formal
communication channel with the Executive
Board. This is achieved by holding regular
meetings with partners to get their views on
the frm’s overall strategy and any other issues
that may be of concern.
The Supervisory Board is also responsible for
approving the Annual Report and the choice
of auditor, for approving the admission of
new partners and for approving transactions
and arrangements outside the ordinary course
of business.
It also has the ability to consult partners on
any proposed signifcant change in the form
or direction of the LLP. It has responsibility for
managing the process leading to the election
of the frm’s Chairman.
Our Supervisory Board
The current members of
the Supervisory Board are:
Matthew Thorogood, Chair
Pauline Campbell††,
Deputy Chair
Christine Adshead~†
Dave Allen~
Colin Brereton*~
Paul Clarke~†
Duncan Cox~*
Katharine Finn**
Mark Hudson~~
Rob Hunt*†
Sue Rissbrook*
Caroline Roxburgh†
Ex of?cio members
Simon Friend^†
Gerry Lagerberg^
Ian Powell
* Partner Affairs Committee
member
** Partner Affairs Committee
Chairman
† Audit and Risk Committee
member
†† Audit and Risk
Committee Chairman
~ Strategy and Governance
Committee member
~~ Strategy and Governance
Committee Chairman
^ Member of the Board of
PricewaterhouseCoopers
International
27
There are four subcommittees of the Supervisory
Board: Partner Affairs, Senior Management
Remuneration, Strategy and Governance and
Audit and Risk.
The Partner Affairs Committee is responsible
for making sure that the frm’s policy on
partners’ remuneration is being properly and
fairly applied. It also has oversight of partner
admissions and retirements.
The Senior Management Remuneration
Committee makes recommendations to the
Supervisory Board, which sets the Chairman’s
proft share and approves the Chairman’s
recommendations for the proft share of other
members of the Executive Board.
The Strategy and Governance Committee
provides oversight of both the development
of the UK frm’s strategy and any material
acquisitions or disposals. Its role is also to
provide the Supervisory Board with a forward
agenda to assist it to effectively commit time
to strategic issues facing the frm as well as
to routine operational issues.
The Supervisory Board works closely with
the frm’s Public Interest Body (PIB). During
the year Matthew Thorogood and Pauline
Campbell, until she stepped down in April
2014, in their capacity as members of the
Supervisory Board, sat on the PIB to make
sure that there is effective communication
between the two bodies.
Audit and Risk Committee
Role
The Audit and Risk Committee is a committee
of the Supervisory Board. The Committee
comprises six members of the Supervisory
Board, having both audit and non-audit
backgrounds. The Committee met 11 times in
the year ended 30 June 2014 (2013: 10 times).
The Chief Financial Offcer, the General
Counsel, the Head of Internal Audit and the
external auditors, Crowe Clark Whitehill LLP
(CCW), attend the Committee’s meetings
by invitation. Both the internal and external
auditors meet privately with the Committee
without management presence.
We have also
worked closely so
that any concerns
of the partnership
or individuals are
dealt with quickly
and the right level
of guidance is
provided to the
Executive Board.
The principal roles
of the Supervisory
Board are to hold
the frm’s Executive
Board to account
and to represent the
interests of partners,
and as such it is a
vital part of the
frm’s governance
structure.
The Committee monitors and reviews the:
• effectiveness of the Group’s internal control
and risk management systems
• frm’s policies and practices concerning
compliance, independence, business conduct
and ethics including whistle-blowing and
the risk of fraud
• scope, results and effectiveness of the frm’s
internal audit function
• effectiveness and independence of the frm’s
statutory auditor, CCW
• reappointment, remuneration and engagement
terms of CCW including the policy in relation
to, and provision of, non-audit services
• planning, conduct and conclusions of the
external audit
• integrity of the Group’s fnancial statements
and the signifcant reporting judgements
contained in them
• frm’s Transparency and Sustainability reports.
Internal control and risk management
systems
The Committee’s review of internal control
includes considering reports from the frm’s
Risk Council and internal and external auditors.
A member of the Committee attends the Risk
Council meetings throughout the year. Also,
during the year the Committee considered and
approved the internal audit work programme
including its risk assessment, proposed audit
approach and coverage, and the allocation of
resources. The Committee reviewed the results
of audits undertaken and considered the
adequacy of management’s response to matters
raised, including the implementation of
recommendations. The effectiveness of the
frm’s internal audit function was also assessed.
The Committee also considered reports from
other parts of the frm charged with governance
and the maintenance of internal control including
in respect of independence, compliance, ethics,
whistle-blowing, fraud, data security, business
continuity management and the management
of the frm’s own tax affairs.
The Committee also reviewed and considered
the statements on page 32 in respect of the
systems of internal control and concurred
with the disclosures made.
Leadership and governance
28 PricewaterhouseCoopers LLP Annual Report 2014
Financial reporting
The Committee carried out its responsibility
for monitoring and reviewing the integrity of
the Group’s fnancial statements by reviewing
formal updates provided by management on
key accounting developments and by reviewing
the fnancial statements with both management
and the external auditors.
The signifcant issues the Committee considered
in relation to the fnancial statements for the
year ended 30 June 2014 are set out below.
The Committee has discussed these with CCW,
together with CCW’s areas of particular audit
focus described in the independent auditor’s
report on pages 38 to 40.
• Critical accounting estimates and
judgements
The Committee reviewed management’s
process for considering the appropriateness
of critical accounting estimates and
judgements. These encompassed revenue
recognition, the fair value of unbilled
revenue on client assignments, provisions in
respect of client claims and the assumptions
adopted in valuing the frm’s defned beneft
pension schemes for the purposes of fnancial
reporting. The Committee is satisfed that
appropriate estimates and judgements have
been made in the preparation of the
consolidated fnancial statements.
• Goodwill impairment
Management’s process and methodology for
assessing the carrying value of goodwill was
reviewed by the Committee. This included
considering key assumptions, resulting
headroom and the sensitivities applied
by management in forming its assessment.
The Committee agrees with management
that there was no impairment of goodwill
in the year.
• Defned beneft pension schemes
Consideration was given to the accounting
policy change resulting from the adoption
of IAS 19 (revised) ‘Employee benefts’ and its
effect on the consolidated fnancial statements.
Following consideration of the matters
presented to it and discussion with both
management and CCW, the Committee is
satisfed with the judgements and disclosures
included within the fnancial statements.
The Committee has also reviewed the form
and content of the Group’s 2014 Annual Report.
External audit
The Committee undertakes an annual review
of the qualifcation, expertise, resources and
independence of the external auditors and the
effectiveness of the external audit process by:
• reviewing CCW’s plans for the audit of the
Group’s fnancial statements, the terms of
engagement for the audit and the proposed
audit fee
• considering the views of management and
the CCW engagement partner on CCW’s
independence, objectivity, integrity, audit
strategy and its relationship with the Group,
obtained by way of interview
• taking into account information provided by
CCW on its independence and quality control.
The external auditors are engaged to provide
non-audit services where there are business
benefts in doing so, their objectivity and
independence would not be compromised
and no confict of interests would be created.
Suitable approval processes are in place to
ensure that these criteria are met before CCW
is engaged to provide non-audit services. Fees
paid to CCW for audit and non-audit services
are set out in note 4 to the fnancial statements.
The non-audit assurance services provided
during the year related to sustainability
reporting, grant claims and regulatory
compliance. Non-audit services constituted
13% (2013: 15%) of CCW’s total fee for the
fnancial year.
The fnancial year to 30 June 2014 was the
Audit Engagement Partner’s frst year in role,
following completion of a fve-year term by
the previous Audit Engagement Partner.
Having considered a number of factors
including audit effectiveness, business insight,
tenure and approach to audit partner rotation,
the Committee concluded that it was
appropriate to reappoint CCW as auditor.
members, we fnd the relationship between the
frm’s Executive and the PIB to be a very open
one. The frm surfaces issues of potential public
interest for our attention and is receptive to our
requests for topics to be discussed. Matters we
have particularly focused on in the last year are
set out below:
• The PwC network acquisition of
Strategy& (formerly Booz & Co)
We discussed with the frm’s leadership
and the Head of Consulting the public
interest aspects of this strategic investment.
In particular, we discussed how this
development would impact on the balance
between Audit and Assurance and other
services in the frm’s business. We also
discussed how these activities are being
integrated within PwC’s network of frms.
We will revisit this area in the next year as
the integration of these activities proceeds.
• Implementation of the reforms to the
audit market arising from the Competition
Commission and EU audit reform process
We debate on a regular basis with the
frm’s Head of Assurance and the leader for
Regulatory Affairs, how the frm is addressing
the challenges of both the market-driven
and regulatory-driven changes in the audit
market. We believe that the frm is adopting
an appropriate balance in maintaining
expertise in both audit and non-audit services
in key industry sectors, and that the frm’s
commitment to audit quality remains
paramount in tendering activity.
29
A report from the Public
Interest Body
This is my fourth annual report on the
operation of the Public Interest Body (PIB)
since it was established in 2010. For the
independent non-executives, this means
we have each now begun our second term
of appointment. An appropriate time, then,
to take stock. This is something we will be
doing for ourselves, as the PIB plans to have
an external effectiveness review later this year.
It is also something the Financial Reporting
Council (FRC) is doing, as it has begun its
review of the application of the Audit Firm
Governance Code. I will return to these subjects
later in my report, but frst want to deal with
the work we have undertaken this year.
Just before doing this, it is worth reiterating
that the PIB’s membership and activities
refect the objectives of the Code, which states
that the independent non-executives should
improve confdence in the public interest
aspects of the frm’s decision-making, dealings
with stakeholders and management of
reputational risks.
The public interest and reputational risks
In the corporate world, businesses and their
auditors are being encouraged to report with a
greater emphasis on the principal areas of risk.
Hence, I thought I would begin my commentary
this year by reporting on – from the perspective
of the public interest and the frm’s reputation
– the key areas we have discussed with the
frm’s leaders. Speaking for the non-executive
Our Public Interest
Body
The ?rm established
the Public Interest Body
following the introduction
of the Audit Firm
Governance Code, which
applied to PwC UK for
the ?rst time for the year
ended 30 June 2011.
The Public Interest
Body’s purpose is to
enhance stakeholder
con?dence in the public
interest aspects of the
?rm’s activities, through
the involvement of
independent non-
executives.
Independent non-
executives
Sir Richard Lapthorne
(Chairman)
Sir Graeme Davies
Dame Karen Dunnell
Sir Ian Gibson (to April
2014)
Paul Skinner OBE
PwC members
Ian Powell^
Pauline Campbell†
(to April 2014)
James Chalmers^
Matthew Thorogood†
^ Member of the Executive
Board
† Member of the
Supervisory Board
Leadership and governance
30 PricewaterhouseCoopers LLP Annual Report 2014
• How the frm manages the reputational
risks around providing tax advice
Given the continued spotlight on corporate
taxes, we carried on our dialogue begun
last year with the frm’s Head of Tax on
how the frm manages the reputational
risks around providing tax advice and how
it has contributed ideas and evidence to the
debate on how much tax companies pay.
• Signifcant claims and litigation affecting
the UK frm
We receive regular reports from the frm’s
General Counsel on the most signifcant
cases affecting the frm. We are satisfed
that these are being appropriately handled
by the frm and its external legal advisers.
• The management of risk in the frm’s
Public Sector advisory business
At our request, the frm’s Government and
Public Sector leader discussed with us how
risks are managed in PwC’s work for the public
services, in particular in the health sector.
In all of our discussions on the above matters,
the frm’s leaders have welcomed input from
the independent non-executives and
acknowledge that we have infuenced their
thinking, for example by challenging them to
see alternative perspectives. The independent
non-executive members are satisfed that the
frm’s processes for raising matters of public
interest for the PIB’s attention are appropriate,
and that our questions have been answered in
a considered and effective manner.
External inspections of audit quality
We continue to spend substantial time engaging
with the frm’s annual inspection reports from
the Audit Quality Review Team (AQRT) of the
FRC. For the second successive year, I attended
a ‘clearance meeting’ with the frm’s Head of
Assurance and senior AQRT staff, so that we
could hear about their inspection fndings prior
to publication. This interaction is very helpful
and enables us to better understand how the
regulator’s priorities compare with our own.
I would like to see this engagement with the FRC’s
inspection unit evolve to resemble more closely
the relationship between a public company and its
external auditors. This would become a two-way
process, such that the frm could also provide
input to the FRC on the inspection process.
Stakeholder engagement
Within the frm, it is important that the PIB has
links to the wider body of the partnership, who
are the owners of the business. In addition to
hearing at each meeting from the chairman of
the Supervisory Board, we meet with all the
members of that Board at least once a year.
The non-executive members continue to meet
partners and staff through other forums, for
example by attending the annual Partner
Meeting and other events.
Externally, the Code identifes institutional
shareholders and the corporate community as
primary constituencies. During the year several
independent members of the PIB and the frm’s
Head of Assurance participated in a meeting with
a wide range of representatives of institutional
shareholder organisations. We also met with some
shareholder representatives on an individual
basis. We devoted substantial time in these
meetings to explaining PwC’s governance model
and how the PIB provides advice to the frm’s
leaders, as well as discussing current changes in
the audit market. These meetings were positive
and helpful and there is a willingness on all sides
to continue this engagement on a regular basis.
As always, if any of PwC’s stakeholders would
like to raise issues related to the Code or our
work, do please get in touch.
Reviewing the effectiveness of audit
frm governance
As indicated above, the FRC is in the course of
reviewing the Code in the light of several years’
implementation in practice. The FRC has, as
part of its evidence-gathering for its review,
held meetings with the independent non-
executives and, separately, with the frm’s
Executive to gain their respective thoughts
and experience of applying the Code.
It is too early to predict what changes, if any,
will emerge from the FRC’s review. However,
speaking from the perspective of the non-
executives, we believe that the Code has
generally worked well and that it should
continue to be suffciently fexible to
accommodate the different governance and
network structures of the major audit frms.
That is not to say that there are no
improvements that we can make in our
operations. We are planning an effectiveness
review of the PIB in the second half of 2014.
This will be externally facilitated and will build
on the work of the internal effectiveness review
that was conducted in 2012.
Changes in our membership
We were informed in April that PwC had been
successful in its tender for the audit of WM
Morrisons Supermarkets PLC. Sir Ian Gibson,
chairman of Morrisons, was one of the
independent non-executives on the PIB (he was
not involved with any aspect of the audit tender
process or decision-making). Upon hearing that
PwC would be appointed for the 2015 audit of
Morrisons, Ian immediately resigned as a
member of the PIB.
Ian’s resignation leaves four independent
non-executives on the PIB. In order to remain
compliant with the provision in the Code
requiring that independent non-executives
should have the majority on such a body, it was
decided that Pauline Campbell (one of two
representatives from the frm’s Supervisory
Board members) should also step down.
I would like to record, on behalf of all members
of the PIB and the frm, our sincere thanks
to Ian for his signifcant and thoughtful
contributions to our meetings. His wise advice
and counsel were valued by all of us and we
wish him well for the future.
Sir Richard Lapthorne
Chairman of the Public Interest Body
31 Leadership and governance
32 PricewaterhouseCoopers LLP Annual Report 2014
Managing and controlling risk
We have a clear business strategy. In
implementing this strategy it is vital that
we also manage the risks associated with
it. As a result we have a defned process for
assessing, monitoring and controlling risk.
The Executive Board takes overall responsibility
for establishing systems of internal control and
for reviewing and evaluating their effectiveness.
The day-to-day responsibility for implementation
of these systems and for ongoing monitoring of
risk and the effectiveness of controls rests with
senior management.
The systems, which have been in place
throughout the fnancial year and up to the
date of approval of these fnancial statements,
include the following:
• The Risk Council, an Executive Board
subcommittee, is responsible for making
sure that the controls are in place to
identify, evaluate and manage risk.
• Our lines of service and our internal
frm services, which document risks
and the responses to them, carry out risk
assessments annually and report to the
Risk Council on how effectively they
have managed risk during the year.
• Periodic reviews of performance and
quality are carried out independently
by the PwC network.
• Our internal audit team reviews the
effectiveness of the fnancial and operational
systems and controls throughout the Group,
and reports to the Executive Board and the
Audit and Risk Committee.
• Our risk and quality functions oversee our
professional services risk management
systems and report to the Executive Board.
We take client acceptance procedures extremely
seriously and we do not automatically take
on new client engagements or new work for
existing clients. Understanding properly both
who we are working with and the nature of
the work requested is central to protecting
our reputation for quality.
We have procedures to assess the risks
associated with new clients. We seek to serve
only those clients we are competent to serve,
who value our service and who meet appropriate
standards of legitimacy and integrity. We also
establish upfront whether we are able to comply
with independence requirements and to address
any potential conficts of interest. In addition, we
conduct annual risk reviews of all audit clients.
Internal control assessment
Our internal control systems are designed to
manage, rather than eliminate, the risk of failure
to achieve business objectives or, in the case of
fnancial controls, the risk of material misstatement
in our fnancial statements. Accordingly, they
provide reasonable but not absolute assurance
against such failure or material misstatement.
The Executive Board has reviewed the systems
of internal control in operation during the year
and is satisfed with their effectiveness.
Our principal risks
The key risks faced by our business and the
management response are summarised on
the opposite page.
Quality and risk
management
Managing risk is a clear strategic priority for the Executive
Board and senior management of the frm.
Quality and risk management 33
Risk Response
Quality: Signi?cant quality failure
in the UK ?rm or the PwC network
due to either engaging with an
inappropriate client or inadequate
delivery of services leading to a
potential service failing, litigation
and/or regulatory action.
Our internal quality management systems, which are designed to maintain and enhance quality,
include:
• Recruitment standards and staff development procedures.
• Client engagement and acceptance processes.
• Client engagement standards supported by methodologies and tools.
• Quality reviews of PwC network ?rms including the UK ?rm.
• Monitoring and review of key performance indicators by the Executive Board.
People and talent: Failure to
engage fully with our people,
impacting our ability to attract,
develop and retain the best talent
and provide quality services.
• Regular reviews of the market for student and experienced talent to understand the ?rm’s
relative competitive position.
• Embedding the PwC Experience for our people.
• The deal framework supporting staff engagement.
• The PwC Professional framework, which includes our investment in training.
• Use of various communication and discussion channels to engage with our people.
• Monitoring and review of key performance indicators by the Executive Board including staff
surveys, external Brand Health Index and regular client feedback.
Public perception and reputation:
Failure to respond in a transparent
manner to issues raised by the
‘public interest’ debates.
• Embedding a culture of ‘doing the right thing’ for our people, our clients and our
communities, as a matter of strategic intent.
• Open and active engagement in serious debate with relevant stakeholder groups on trust-
related and public interest issues to inspire change.
• Sharing of knowledge and insights on trust to sustain, widen and enrich the discussion.
• Actively participating in, leading on and collaborating on initiatives to restore trust such as the PwC
Building Public Trust programme, the World Economic Forum’s ‘Leadership, Trust and Economic
Performance’ project and the UK ?rm’s consultation ‘Paying for Tomorrow – The Future of Tax’.
Independence and regulatory
requirements: Failure to comply
with relevant independence, legal,
ethical, regulatory or professional
requirements.
Established compliance and independence management systems including:
• Clear policies, procedures and guidance.
• Mandatory annual training for all partners and staff.
• Client and engagement acceptance procedures.
• Annual independence and compliance submissions for all partners and staff enforced by
penalties for non-compliance.
• Regular monitoring and reporting to the Executive Board.
Data compromise: Failure to
safeguard con?dential information.
• Information Governance and Security committee, chaired by a member of the Executive Board,
which provides overall strategic direction, framework and policies for information security.
• The ?rm operates an ISO/IEC 27001:2013 certi?ed information security management system,
which includes:
– governance and policies for client data and other information
– physical, technical and human resource controls
– incident response capability
– regular monitoring and independent review systems.
Client assets: Failure to
appropriately manage client
assets including major client
administrations.
Well-established procedures for dealing with client assets and related matters including:
• Portfolio diversi?cation policy.
• Daily monitoring of credit and related ratings and maturities.
• Internal controls and procedures.
• Monitoring and independent review.
• A Treasury Committee that receives regular updates on the above.
New business: Failure to manage
risks created by new business and
other innovations in service delivery.
Firmwide process for reviewing new business so that relevant risks are identi?ed promptly
and addressed.
Acquisitions: Failure to integrate newly
acquired business, non-realisation of
expected synergies and inadequate
on-boarding of new partners and staff.
• Regular reviews of commercial and risk management lessons learnt from recent acquisition
experience.
• Clear objective-led management of the integration process for all acquisitions.
• On-boarding processes designed to handle the large number of lateral hires created by acquisitions.
Digital disruption: Failure to use
advanced technology to underpin
new business models and cost
structures for existing services.
• Signi?cant investment in new and innovative technology solutions for existing services.
• Commitment to new platforms to allow delivery of quality services at a highly competitive
pricing point.
Regulatory change: Failure to
respond to regulatory changes in the
various environments in which we
operate (UK, Europe and global),
which will impact our business.
• Regulatory Affairs team works to anticipate and understand changes in applicable regulatory
regimes.
• Timely consideration by the Executive Board of forthcoming changes and the potential for
strategic impact.
• Regular interaction with regulators to understand regulatory change and expectations for
implementation.
• Timely updating of the ?rm’s processes and procedures to ensure compliance with current
and developing regulation.
• Communication and training programmes to ensure our people and our clients are kept informed.
34 PricewaterhouseCoopers LLP Annual Report 2014
Financial
Understanding our financial performance
Members’ report
The Executive Board submits its report and
the audited consolidated fnancial statements
of PricewaterhouseCoopers LLP for the year
ended 30 June 2014.
This report should be read in conjunction
with the other sections of this annual report.
Financial performance
Our revenue grew 5% to £2,814m in a
challenging but improving market. This follows
the 3% revenue growth recorded last year. Risk
assurance, direct tax, HR advisory, corporate
fnance, transaction services and our Middle East
businesses all grew strongly. The core Assurance
business continued to see intense competition,
pricing challenge and increased levels of audit
tendering, with more modest growth, but some
high-profle wins, while the business recovery
and insolvency business saw a slight decline in
revenues. Consulting has continued to grow its
market footprint and presence including the
ability to provide full ‘strategy to implementation’
consulting through our investment in Strategy&.
Operating costs
Our total staff costs increased 5% across the year,
refecting a 4% increase in overall staff headcount
and the impact of 1 July 2013 pay awards.
Staff bonuses across the Group increased 8% to
£94m, including National Insurance (2013: £87m).
Other operating charges increased by 5%,
mainly as a result of the increased costs of
tendering and business development activity,
continued investment in new technology and
property, and the growing Middle East frm.
Proft for the fnancial year
Total proft for the fnancial year of £772m
(2013: £750m), comprises proft available
for division among members of £711m (2013:
£690m) and proft attributable to non-
controlling interests of £61m (2013: £60m).
The proft distributed to partners is calculated
after deducting their personal obligations to
make annuity payments to certain former
partners and after certain equity adjustments,
and is now calculated before the impact of
partner and corporation tax. Actual distributable
proft per partner, before tax, increased 2% from
£711,000 to £722,000 for the year ended 30
June 2014.
Average proft per partner based on the profts
shown in these statutory accounts, which is
stated after corporation tax and excludes the
impact of members on overseas secondment,
increased from £821,000 to £873,000.
Staff pensions
Just over 13,000 of our staff are active members
of the frm’s defned contribution pension
arrangements. The frm also has two defned
beneft schemes that are now closed to future
service accrual and new members.
As more fully disclosed in note 1 to the fnancial
statements, the Group has adopted the revised
version of the IAS 19 accounting standard
relating to its defned beneft schemes.
This has led to the restatement of a number of
pension-related balances within the fnancial
statements, the most signifcant of which is to
decrease members’ reserves at 1 July 2013 by
£282m to a restated balance of £346m.
Up 2% this year: FY13
£711,000, up 3%
£722,000
Up 5% this year: FY13
£2,689m, up 3%
£2,814m
Group revenue
Distributable proft
per partner
2012 2013 2014
2.6
2.7
2.8
£bn
Group revenue
Financial results 35
is made by the Executive Board, once their
individual performance has been assessed
and the annual fnancial statements have been
approved. The Supervisory Board approves
the process and oversees its application.
Each member’s proft share comprises three
interrelated proft-dependent components:
• Responsibility income – refecting the
member’s sustained contribution and
responsibilities.
• Performance income – refecting how a
member and their team(s) have performed.
• Equity unit income – refecting the overall
proftability of the frm.
Each member’s performance income, which
in the current year represents on average
approximately 39% of their proft share (2013:
38%), is determined by assessing achievements
against an individually tailored balanced
scorecard of objectives, based on the member’s
role. These objectives include ensuring that
we deliver quality services and maintain
our independence and integrity. There is
transparency among the members over the
total income allocated to each individual.
Drawings
The overall policy for members’ drawings is to
distribute a proportion of the proft during the
fnancial year, taking into account the need to
maintain suffcient funds to settle members’
income-tax liabilities and to fnance the
working capital and other needs of the business.
The Executive Board, with the approval of the
Supervisory Board, sets the level of members’
monthly drawings, based on a percentage of
their individual responsibility income.
Tax policy
The frm is committed to being a responsible
and compliant taxpayer in the countries where
it operates. We conduct our own tax affairs in
accordance with our Code of Conduct. We
maintain appropriate processes and controls,
which are intended to avoid the risk of non-
compliance with tax laws, fling and disclosure
requirements. We engage openly with HM
Revenue & Customs.
Responsibility for the conduct of the frm’s tax
affairs lies with the frm’s chief fnancial offcer
and is subject to scrutiny by the Executive and
Supervisory Boards.
The accounting valuations undertaken for the
purpose of these fnancial statements at 30
June 2014 indicate a combined defned beneft
pension defcit of £57m, compared with £33m
in the prior year. The increase in the defcit
primarily refects a decrease in the discount
rate used to value liabilities, offset by asset
returns and cash contributions in the period.
The 31 March 2014 triennial funding review
is currently underway. Due to the different
actuarial assumptions used, the funding
defcit arising from this review is likely to be
substantially larger than the £57m accounting
defcit shown in these fnancial statements.
Net assets and fnancing
Notwithstanding the restatement brought
about by the change in pensions accounting
standard mentioned above, the Group’s
balance sheet remains healthy, with total
members’ interests of £566m (2013: £516m).
The Group is fnanced through a combination
of members’ capital, undistributed profts and
borrowing facilities. Members’ capital
contributions totalling £208m (2013: £189m)
are determined by the Executive Board with
the approval of the Supervisory Board, having
regard to the working capital needs of the
business. They are set by reference to an
individual member’s equity unit proft share and
are repayable following the member’s retirement.
The Group’s working capital loan facilities
totalled £376m at the year-end (2013: £322m).
The Group’s principal facility was renewed
in June 2011 under a £225m four-year
arrangement, which expires in June 2015.
The Group’s facilities are spread across a
number of banks and are maintained at a
level suffcient to cover the expected peak
cash requirements of the business.
Our treasury focus is on making sure that there are
suffcient funds available to fnance the business
and on managing foreign currency exposure.
Surplus cash is invested in short-term money
market deposits. Hedging is undertaken to
reduce risk. No speculative activity is permitted.
Members’ proft shares
Members are remunerated solely out of the
profts of the frm after adjusting for annuity
payments to certain former partners and other
equity adjustments. The fnal allocation and
distribution of proft to individual members
Just over 13,000 of our
staff are active members
of the ?rm’s de?ned
contribution pension
arrangements.
2012 2013 2014
393
516
566
£m
Total members’ interests
36 PricewaterhouseCoopers LLP Annual Report 2014
Total UK tax contribution
Our frm makes a signifcant contribution to the
UK public purse through the taxes paid by our
members, the business and employees. In total,
this is estimated to be £984m in respect of the
past year (2013: £960m).
The Group and its members contribute to UK
government fnances through taxes borne
and taxes collected. We pay a range of taxes
including income tax, capital gains tax,
employment taxes, corporation tax, property
taxes, indirect taxes and environmental taxes.
The largest tax borne by the members
of the LLP is on the profts distributed to
them. Distributable proft per partner is
now calculated on a proft before tax basis.
Consequently, the taxes borne by partners
include both income tax as well as the
corporation tax on subsidiary profts.
Partner income tax and National Insurance
contributions payable by partners of the LLP on
current year distributable profts, together with
their share of corporation tax on subsidiary
profts, is estimated at £276m (2013: £261m).
This gives an effective tax rate for partners
of the LLP of approximately 47% (2013:
approximately 43%). The LLP administers the
payment of partner taxes and makes periodic
allocations of proft to cover payment of these
tax liabilities.
In addition to partner and corporate taxes,
a further £129m (2013: £129m) of UK
business taxes was borne by the Group, with
the largest element being National Insurance
contributions, refecting the fact that people
are essential to our business.
As well as taxes borne, the Group collected
taxes on behalf of the UK government of
£579m (2013: £570m), comprising employment
taxes and indirect taxes. These taxes are an
indication of the value we add in society
through our business activities. They
demonstrate our wider economic impact
and overall contribution to the economy.
Creditor payment policy
We seek to agree commercial payment terms
with our suppliers and, provided performance
is in accordance with these terms, to make
payments accordingly. The number of days
outstanding between receipt of invoice and
date of payment, calculated by reference to
the amount owed in respect of the Group’s
trade payables at the year-end as a proportion
of the total amounts invoiced by suppliers and
overseas PwC member frms during the year,
was 31 days (2013: 30 days).
Political donations
The frm has no political affliation and does
not make any cash donations to any political
party or other groups with a political agenda.
However, in the interests of the frm and its
clients, we seek to develop and maintain
constructive relationships with the main
political parties. In pursuit of this objective, we
may, subject to the agreement of the Executive
Board, provide limited non-cash assistance to
those parties in areas where we have
appropriate expertise.
Our people provide limited and fully disclosed
technical support to the main political parties
in areas where our expertise and knowledge
of the business environment can help them
better understand technical matters and the
consequences of their policy proposals. We
do not develop policy on their behalf. Areas
of assistance may include observations on
the improvement of legislation or proposed
legislation, and the exchange of information
relevant to effective policy development. In
considering any assistance, the Executive Board
has regard to the possible impact on clients of
the frm and the frm’s overall reputation.
Total UK tax contribution to 30 June 2014
30 June 2014
£m
30 June 2013
£m
Taxes paid/payable
Partner tax and NIC payable on current
year distributable pro?ts
258 257
Corporation tax on subsidiary pro?ts 18 4
Employers’ NIC 99 97
Business rates 18 22
PAYE/NIC on bene?ts 6 6
Other 6 4
405 390
Taxes collected
Net VAT 307 297
PAYE 216 218
Employees’ NIC 56 55
579 570
Total 984 960
In addition to the above, taxes paid/payable by other entities included in these consolidated
fnancial statements totalled £18m and taxes collected by these entities totalled £14m.
2012 2013 2014
975
960
984
£m
Total tax contribution
• make judgements and estimates that
are reasonable and prudent
• state whether applicable accounting
standards have been followed, subject
to any material departures disclosed
and explained in the fnancial statements
• prepare the fnancial statements on
the going concern basis, unless it is
inappropriate to assume that the LLP
or Group will continue in business.
The members are also responsible for keeping
proper accounting records that disclose with
reasonable accuracy at any time the fnancial
position of the LLP and the Group, and enable
them to ensure that the fnancial statements
comply with the Companies Act 2006, as
applied to limited liability partnerships.
They are also responsible for safeguarding the
assets of the LLP and Group, and for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
These responsibilities are fulflled by the
Executive Board on behalf of the members.
The Executive Board confrms that it has
complied with the above requirements in
preparing the fnancial statements.
On behalf of the Executive Board
Ian Powell
Chairman and Senior Partner
Warwick Hunt
Chief Financial Offcer
Financial results 37
The frm is
committed to being
a responsible and
compliant taxpayer
in the countries
where it operates.
We conduct our
own tax affairs in
accordance with our
Code of Conduct.
We completed the
refurbishment of our
Embankment Place
of?ce in London during
the year. It achieved the
highest ever BREEAM
accreditation for
environmental credentials.
We are also upgrading
a large number of our
regional properties.
In the period covered by this report, we
provided a total of some 6,004 hours of free
technical support to political parties during
the year (2013: 4,827 hours). The value of
this work, as reported to the parties using
the principles established by the Electoral
Commission, was £0.4m (2013: £0.5m) and
comprised 4,493 hours to the Labour Party
and 1,511 hours to the Liberal Democrat Party.
Over the years we have supported requests
from each of the main political parties.
Throughout this period the trend has been that
we have provided more hours to the opposition
parties as they have less support infrastructure.
Designated members
The designated members (as defned in the
Limited Liability Partnerships Act 2000) of
PricewaterhouseCoopers LLP during the whole
of the year were Ian Powell and Kevin Ellis.
Keith Tilson was a designated member until
his retirement on 30 September 2013. Warwick
Hunt was appointed a designated member on
1 October 2013.
Auditor
The independent auditor, Crowe Clark
Whitehill LLP, has indicated its willingness
to be reappointed.
Going concern
The Executive Board has a reasonable
expectation that the Group has adequate
fnancial resources to meet its operational
needs for the foreseeable future and therefore
the going concern basis has been adopted in
preparing the fnancial statements.
Statement of members’
responsibilities in respect of
the fnancial statements
The Companies Act 2006, as applied to limited
liability partnerships, requires members to
prepare fnancial statements for each fnancial
year, which give a true and fair view of the
state of affairs of both PricewaterhouseCoopers
LLP and the Group, and of the proft or loss of
the Group for that period. In preparing those
fnancial statements, the members are
required to:
• select suitable accounting policies and
then apply them consistently, subject to
any changes disclosed and explained in
the fnancial statements
38 PricewaterhouseCoopers LLP Annual Report 2014
Independent auditor’s report to the members of PricewaterhouseCoopers LLP
Report on the ?nancial statements
Our opinion
In our opinion:
• the ?nancial statements, de?ned below, give a true and
fair view of the state of the Group’s and of the parent LLP’s
afairs as at 30 June 2014 and of the Group’s pro?t and
of the Group’s and parent LLP’s cash ?ows for the year
then ended;
• the Group ?nancial statements have been properly
prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the
European Union;
• the parent LLP ?nancial statements have been properly
prepared in accordance with IFRS as adopted by the
European Union and as applied in accordance with the
provisions of the Companies Act 2006, as applied to
limited liability partnerships; and
• the ?nancial statements have been prepared in
accordance with the requirements of the Companies Act
2006, as applied to limited liability partnerships.
This opinion is to be read in the context of what we say below.
What we have audited
The Group ?nancial statements and parent LLP ?nancial
statements (the ‘?nancial statements’), which are prepared
by PricewaterhouseCoopers LLP, comprise:
• the Group income statement and statement of
comprehensive income for the year then ended;
• the Group and parent LLP statements of ?nancial position
as at 30 June 2014;
• the Group and parent LLP statements of cash ?ows and
statements of changes in equity for the year then ended;
and
• the notes to the ?nancial statements, which include a
summary of signi?cant accounting policies and other
explanatory information.
The ?nancial reporting framework that has been applied
in their preparation comprises applicable law and IFRS as
adopted by the European Union and, as regards the parent
LLP, as applied in accordance with the provisions of the
Companies Act 2006, as applied to limited liability
partnerships.
What an audit of ?nancial statements involves
We conducted our audit in accordance with International
Standards on Auditing (UK and Ireland) (ISAs (UK &
Ireland)). Our responsibilities under those standards are
further described below under Respective Responsibilities of
Members and Auditor. In performing our audit, as required
by those standards, we complied with the Financial
Reporting Council’s Ethical Standards for Auditors including
those requiring us to be independent and objective.
An audit involves obtaining evidence about the amounts and
disclosures in the ?nancial statements sufcient to give
reasonable assurance that the ?nancial statements are free
from material misstatement, whether caused by fraud or
error. This includes an assessment of:
• whether the accounting policies are appropriate to the
Group’s and parent LLP’s circumstances and have been
consistently applied and adequately disclosed;
• the reasonableness of signi?cant accounting estimates
made by the designated members; and
• the overall presentation of the ?nancial statements.
In addition, we read all the ?nancial and non-?nancial
information in the Annual Report to identify material
inconsistencies with the audited ?nancial statements and
to identify any information that is apparently materially
incorrect based on, or materially inconsistent with, the
knowledge acquired by us in the course of performing
the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the
implications for our report.
Overview of our audit approach
Materiality
In planning and performing our audit we applied the concept
of materiality. An item is considered material if it could
reasonably be expected to change the economic decisions
of a user of the ?nancial statements. We used the concept
of materiality to both focus our testing and to evaluate the
impact of misstatements identi?ed.
When assessing the level of materiality we considered the
revenue, pro?ts before taxation and the net and gross assets
of the Group. We determined overall materiality for the
Group ?nancial statements as a whole to be £25m. We
conducted our audit of particular groups of balances or
transactions at a level of materiality lower than overall
materiality (‘performance materiality’). We agreed with
the Audit Committee to report to it all identi?ed errors in
excess of £0.5m. Errors below that threshold would also
be reported to it if, in our opinion as auditors, disclosure
was required on qualitative grounds.
Overview of the scope of our audit
The Group and its material subsidiaries are accounted for
from one central operating location with the exception of the
Middle East group of subsidiaries. Our audit was conducted
from the main operating location and all material subsidiary
companies were within the scope of our audit testing.
A member of the Crowe Horwath International network
undertook speci?ed audit procedures in the Middle East
under our direction.
Financial statements 39
Areas of particular audit focus
In preparing the ?nancial statements, the Executive Board,
on behalf of the members, made a number of subjective
judgements, for example in respect of signi?cant accounting
estimates that involved making assumptions and considering
future events that are inherently uncertain. We focused our
work primarily on these areas by assessing the Executive
Board’s judgements against available evidence, forming
our own judgements and evaluating the disclosures in
the ?nancial statements.
In our audit, we tested and examined information, using
sampling and other auditing techniques, to the extent we
considered necessary to provide a reasonable basis for us
to draw conclusions. We obtained audit evidence through
testing the efectiveness of controls, substantive procedures
or a combination of both.
We considered the following areas to be those that required
particular focus in the current year. This is not a complete list
of all risks or areas of focus identi?ed by our audit.
The Audit Committee’s consideration of these matters is set
out on page 28.
Area of focus How the scope of our audit addressed the area of focus
Revenue recognition and the valuation of unbilled amounts
for client work
The Group increasingly enters into a broader range of client
contract types, with difering revenue recognition criteria.
The timing of revenue recognition on these contracts is
dependent on the ful?lment of contractual terms, which can
be complex and involve subjective judgements on contract
completeness and recoverability. Judgements are also
required in assessing the fair value of unbilled amounts
for client work.
We selected a sample of client assignments focusing on
material contracts and contracts that met certain identi?ed
risk criteria. Contract terms were examined and relevant
information obtained from the client engagement team.
The justi?cation for the stage of contract completeness of
an engagement, revenue recognised, provisions held against
work in progress and the assessment of the fair value of
unbilled revenue at the year end were appropriately
challenged, reviewed and discussed with management
and supporting evidence obtained.
Client claims
Client claims are received in the normal course of business.
We focused on this area because of the potential ?nancial
impact that a major claim could have on the Group and
because of the uncertainties involved, including the need to
exercise judgement.
The Audit Engagement Partner met with management to
discuss signi?cant claims. We reviewed these claims,
including legal advice in relation thereto, minutes and risk
assessment processes for assessing the risk of unrecorded
claims. We reviewed the terms of the Group’s insurance
arrangements and considered the impact of those terms and
the level of cover on the provisions made.
Goodwill
When assessing the carrying value of goodwill, management
make signi?cant judgements about strategy, future results
and pro?tability and the assumptions underlying these.
We reviewed, in comparison to the requirements set out in
IAS 36, management’s assessment as to whether goodwill
was impaired. We challenged, reviewed and considered, by
reference to external evidence, management’s impairment
model and key estimates, including the discount rate. We
reviewed the appropriateness and consistency of the process
for making such estimates.
Risk of management override of internal controls
International Standards on Auditing (UK and Ireland) state
that this risk must always be treated as signi?cant because
management, in all businesses, are in a position to be able to
override internal control systems established to prevent
fraud or error.
We examined whether there was any evidence of
management bias in the preparation of the ?nancial
statements. This included an examination, review and
challenge of critical estimates and judgements covering,
in addition to the areas noted above, receivables valuation,
onerous property costs and the assumptions used in the
determination of the de?ned bene?t pension de?cit.
We also performed analytical procedures and testing on
a sample of journal entries to assess and test the risk of
management override of controls.
40 PricewaterhouseCoopers LLP Annual Report 2014
Independent auditor’s report to the members of PricewaterhouseCoopers LLP
continued
Going concern
As noted in the members’ statement, the members have
concluded that it is appropriate to prepare the Group’s and
parent LLP’s ?nancial statements using the going concern
basis of accounting. The going concern basis presumes that
the Group and parent LLP have adequate resources to remain
in operation, and that the members intend them to do so,
for at least one year from the date the ?nancial statements
were signed. As part of our audit we have concluded that
the members’ use of the going concern basis is appropriate.
However, because not all future events or conditions can be
predicted, these statements are not a guarantee as to the Group’s
and the parent LLP’s ability to continue as a going concern.
Other matters on which we are required
to report by exception
Adequacy of accounting records and information
and explanations received
Under the Companies Act 2006, as applied to limited liability
partnerships, we are required to report to you if, in our
opinion:
• we have not received all the information and explanations
we require for our audit; or
• adequate accounting records have not been kept by the
parent LLP, or returns adequate for our audit have not
been received from branches not visited by us; or
• the parent LLP ?nancial statements are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this
responsibility.
Other information in the Annual Report
Under ISAs (UK & Ireland), we are required to report to you
if, in our opinion, information in the Annual Report is:
• materially inconsistent with the information in the
audited ?nancial statements; or
• apparently materially incorrect based on, or materially
inconsistent with, our knowledge of the Group and parent
LLP acquired in the course of performing our audit; or
• is otherwise misleading.
We have no exceptions to report arising from this
responsibility.
Responsibilities for the ?nancial
statement audit
Our responsibilities and those of the members
As explained more fully in the Members’ Responsibilities
Statement set out on page 37, the members are responsible
for the preparation of the Group and parent LLP ?nancial
statements and for being satis?ed that they give a true and
fair view.
Our responsibility is to audit and express an opinion on the
Group and parent LLP ?nancial statements in accordance
with applicable law and ISAs (UK & Ireland). Those
standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
This report is made solely to the LLP’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act
2006 as applied to limited liability partnerships. Our audit
work has been undertaken so that we might state to the LLP’s
members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the LLP and the LLP’s
members as a body, for our audit work, for this report or
for the opinions we have formed.
Nigel Bostock
(Senior Statutory Auditor)
For and on behalf of
Crowe Clark Whitehill LLP
Statutory Auditors
London
8 August 2014
Financial statements 41
Consolidated income statement for the year ended 30 June 2014
Note
2014
£m
2013
Restated
£m Increase
Revenue 2 2,814 2,689 5%
Expenses and disbursements on client assignments (331) (320) 3%
Net revenue 2,483 2,369 5%
Staf costs 3 (1,197) (1,142) 5%
Depreciation and amortisation 4 (41) (35)
Other operating charges 4 (447) (427) 5%
Operating pro?t 798 765 4%
Finance expense 5 (5) (7)
Pro?t on ordinary activities before taxation 793 758 5%
Tax expense in corporate subsidiaries 6 (21) (8)
Pro?t for the ?nancial year before members’ pro?t shares 772 750 3%
Pro?t available for division among members 21 711 690 3%
Pro?t attributable to non-controlling interests 21 61 60 2%
Pro?t for the ?nancial year 772 750 3%
Consolidated statement of comprehensive income for the year ended 30 June 2014
Note
2014
£m
2013
Restated
£m
Pro?t for the ?nancial year 772 750
Other comprehensive (expense) income
Items that may be reclassi?ed subsequently to pro?t or loss:
Cash ?ow hedges 23 (3) (1)
Translation of foreign operations (2) –
Items that will not be reclassi?ed to pro?t or loss:
Remeasurements of retirement bene?t obligations 20 (45) 49
Other comprehensive (expense) income for the ?nancial year (50) 48
Total comprehensive income for the ?nancial year 722 798
Total comprehensive income for the ?nancial year attributable to:
Members 663 738
Non-controlling interests 59 60
Total comprehensive income for the ?nancial year 722 798
There is no tax on any component of other comprehensive (expense) income.
42 PricewaterhouseCoopers LLP Annual Report 2014
Consolidated statement of ?nancial position at 30 June 2014
Note
2014
£m
2013
Restated
£m
2012
Restated
£m
Non-current assets
Property, plant and equipment 8 190 172 153
Intangible assets 9 24 30 19
Goodwill 9 47 43 41
Interests in joint ventures 11 1 1 –
Other investments 12 86 8 5
348 254 218
Current assets
Trade and other receivables 13 839 824 788
Cash and cash equivalents 14 261 236 159
1,100 1,060 947
Total assets 1,448 1,314 1,165
Current liabilities
Trade and other payables 15 (654) (600) (547)
Corporation tax (17) (13) (13)
Borrowings 16 (46) (41) (23)
Provisions 17 (3) (4) (5)
Members’ capital 18 (9) (18) (13)
(729) (676) (601)
Non-current liabilities
Borrowings 16 (6) (10) (13)
Provisions 17 (42) (52) (54)
Deferred tax liabilities 19 – (1) –
Members’ capital 18 (199) (171) (152)
Other non-current liabilities 15 (64) (41) (34)
Retirement bene?t obligation 20 (57) (33) (79)
(368) (308) (332)
Total liabilities (1,097) (984) (933)
Net assets 351 330 232
Equity
Members’ reserves 21 365 346 249
Non-controlling interests 21 (14) (16) (17)
Total equity 351 330 232
Total members’ interests
Members’ capital 18 208 189 165
Members’ reserves 21 365 346 249
Amounts due from members (included in trade and other
receivables) 21 (7) (19) (21)
Total members’ interests 21 566 516 393
The ?nancial statements on pages 41 to 70 were authorised for issue and signed on 8 August 2014 on behalf of the members
of PricewaterhouseCoopers LLP, registered number OC303525, by:
Ian Powell Warwick Hunt
Financial statements 43
Note
2014
£m
2013
Restated
£m
2012
Restated
£m
Non-current assets
Property, plant and equipment 8 – 1 1
Intangible assets 9 3 5 7
Goodwill 9 6 6 6
Investments in subsidiaries 10 68 50 49
Other investments 12 65 8 5
142 70 68
Current assets
Trade and other receivables 13 637 610 595
Cash and cash equivalents 14 214 204 130
851 814 725
Total assets 993 884 793
Current liabilities
Trade and other payables 15 (382) (311) (290)
Provisions 17 (3) (3) (4)
Members’ capital 18 (9) (18) (13)
(394) (332) (307)
Non-current liabilities
Provisions 17 (15) (22) (25)
Members’ capital 18 (199) (171) (152)
Other non-current liabilities 15 (23) – –
Retirement bene?t obligation 20 (57) (33) (79)
(294) (226) (256)
Total liabilities (688) (558) (563)
Net assets 305 326 230
Equity
Members’ reserves 21 305 326 230
Total equity 305 326 230
Total members’ interests
Members’ capital 18 208 189 165
Members’ reserves 21 305 326 230
Total members’ interests 21 513 515 395
The ?nancial statements on pages 41 to 70 were authorised for issue and signed on 8 August 2014 on behalf of the members
of PricewaterhouseCoopers LLP, registered number OC303525, by:
Ian Powell Warwick Hunt
Parent LLP statement of ?nancial position at 30 June 2014
44 PricewaterhouseCoopers LLP Annual Report 2014
Statements of cash ?ows for the year ended 30 June 2014
Group LLP
2014
£m
2013
Restated
£m
2014
£m
2013
Restated
£m
Cash ?ows from operating activities
Pro?t after taxation 772 750 668 688
Tax on pro?ts 21 8 – –
Adjustments for:
Depreciation and amortisation 41 35 4 3
Loss on disposal of property, plant and equipment 1 2 – –
Loss on disposal of intangible assets 1 1 – –
Finance income – – (1) (1)
Finance expense 5 7 2 3
Changes in working capital (excluding the efects of acquisitions):
Increase in trade and other receivables (27) (36) (27) (15)
Increase in trade and other payables 28 51 46 21
(Decrease) increase in provisions and other non-current liabilities (12) 3 (7) (4)
Movement in retirement bene?ts (23) – (23) –
Cash generated from operations 807 821 662 695
Tax paid by corporate subsidiaries (25) (25) – –
Net cash in?ow from operating activities 782 796 662 695
Cash ?ows from investing activities
Purchase of property, plant and equipment (50) (52) – –
Proceeds from sale of property, plant and equipment – 3 – –
Purchase of intangible assets (6) (18) (1) (1)
Purchase of other businesses (net of cash acquired) (5) (4) – –
Purchase of investments (31) (3) (31) (4)
Proceeds from sale of investments – – 4 –
Purchase of interest in joint venture – (1) – –
Interest received – – 1 1
Net cash out?ow from investing activities (92) (75) (27) (4)
Cash ?ows from ?nancing activities
Payments to members (644) (641) (644) (641)
Payments to non-controlling interests (57) (59) – –
Interest paid (2) (3) – –
Movement in borrowings 1 15 – –
Compensating payment by members 18 20 – –
Capital contributions by members 37 34 37 34
Capital repayments to members (18) (10) (18) (10)
Net cash out?ow from ?nancing activities (665) (644) (625) (617)
Net increase in cash and cash equivalents 25 77 10 74
Cash and cash equivalents at beginning of year 236 159 204 130
Cash and cash equivalents at end of year (note 14) 261 236 214 204
Financial statements 45
Statements of changes in members’ equity for the year ended 30 June 2014
Group LLP
Available for
division among
members
£m
Attributable to
non-controlling
interests
£m
Total
£m
Total
£m
Balance at 30 June 2012 – as previously reported 590 (17) 573 571
Efect of adopting IAS 19 (revised) (341) – (341) (341)
Balance at 30 June 2012 – restated 249 (17) 232 230
Pro?t for the ?nancial year – restated 690 60 750 688
Other comprehensive income for the ?nancial year – restated 48 – 48 49
Total comprehensive income – restated 738 60 798 737
Allocated pro?t in the ?nancial year (641) (59) (700) (641)
Transactions with owners (641) (59) (700) (641)
Balance at 30 June 2013 (note 21) – restated 346 (16) 330 326
Pro?t for the ?nancial year 711 61 772 668
Other comprehensive expense for the ?nancial year (48) (2) (50) (45)
Total comprehensive income 663 59 722 623
Allocated pro?t in the ?nancial year (644) (57) (701) (644)
Transactions with owners (644) (57) (701) (644)
Balance at 30 June 2014 (note 21) 365 (14) 351 305
46 PricewaterhouseCoopers LLP Annual Report 2014
1 Basis of preparation
Notes to the ?nancial statements for the year ended 30 June 2014
These ?nancial statements consolidate the results and ?nancial position of PricewaterhouseCoopers LLP (‘the LLP’) and its
subsidiary undertakings (together ‘the Group’).
Accounting policies that relate to the ?nancial statements as a whole are set out below, while those that relate to speci?c
areas of the ?nancial statements are shown in the corresponding note. All accounting policies have been consistently applied
to all the years presented.
The ?nancial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and
IFRS Interpretation Committee (IFRS IC) interpretations, as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to limited liability partnerships (LLPs) reporting under IFRS.
The ?nancial statements have been prepared on a going concern basis under the historical cost convention, except
as otherwise described in the accounting policies.
As permitted by section 408 of the Companies Act 2006, as applied to LLPs, no separate income statement is presented
for the LLP.
New standards adopted in the year
During the year, the Group adopted IFRS 13 ‘Fair value measurement’ and the amendments to IFRS 7 ‘Financial instruments:
Disclosures on ofsetting’ and IAS 36 ‘Recoverable amount disclosures for non-?nancial assets’. These changes have had no
signi?cant impact on the ?nancial statements.
The Group also adopted IAS 19 (revised) ‘Employee bene?ts’ during the year. This standard makes signi?cant changes to the
recognition and measurement of the de?ned bene?t pension expense and termination bene?ts and to the disclosures for
employee bene?ts. The most signi?cant changes to the Group are that actuarial gains and losses are recognised immediately
in other comprehensive income, the full net pension de?cit or surplus is recognised in the statement of ?nancial position and
interest cost and expected return on assets are replaced by a single net interest amount calculated using a common discount rate.
Restatement of previously reported results
The following table summarises the adjustments made to each of the ?nancial statement line items on the adoption of IAS 19
(revised):
Group LLP
2013
£m
2012
£m
2013
£m
2012
£m
Finance income – as previously reported 81 98 82 97
Restatement of interest income (6) (8) (6) (8)
Reclassi?cation of interest income (75) (89) (75) (89)
Finance income – restated – 1 1 –
Finance expense – as previously reported (98) (94) (94) (89)
Reversal of amortisation of actuarial losses on retirement bene?ts 16 2 16 (2)
Reclassi?cation of interest income 75 89 75 89
Finance expense – restated (7) (3) (3) (2)
Other comprehensive (expense) income – as previously reported (1) 1 – –
Restatement of return on assets 6 8 6 8
Recognition of remeasurement gains (losses) for the ?nancial year 43 (158) 43 (158)
Other comprehensive income (expense) – restated 48 (149) 49 (150)
Retirement bene?t asset – as previously reported 249 262 249 262
Recognition of cumulative remeasurement gains (losses) (282) (341) (282) (341)
Retirement bene?t obligation – restated (33) (79) (33) (79)
Members’ reserves – as previously reported 628 590 608 571
Recognition of cumulative remeasurement gains (losses) (282) (341) (282) (341)
Members’ reserves – restated 346 249 326 230
Financial statements 47
New standards and interpretations not yet adopted
The following IFRS standards and amendments and IFRS IC
interpretations have been issued by the IASB, have not been
early adopted and are not expected to have a material impact
on the Group’s results:
• IFRS 9 ‘Financial instruments’ addresses the classi?cation,
measurement and recognition of ?nancial assets and
?nancial liabilities and replaces IAS 39. IFRS 9 will
become efective for the accounting period to June 2019,
subject to EU endorsement.
• IFRS 10 ‘Consolidated ?nancial statements’, IFRS 11 ‘Joint
arrangements’, IFRS 12 ‘Disclosure of interests in other
entities’, IAS 27 ‘Separate ?nancial statements’ and IAS 28
(revised) ‘Investments in associates and joint ventures’
become efective for the accounting period to June 2015.
• Amendment to IAS 32 ‘Financial instruments: Presentation’
clari?es some of the requirements for ofsetting ?nancial
assets and liabilities. The amendment will become efective
for the accounting period to June 2015.
In addition, IFRS 15 ‘Revenue from contracts with customers’
will become efective for the accounting period to June 2018,
subject to EU endorsement. The impact of the standard is
currently being assessed.
Critical accounting estimates and judgements
The preparation of consolidated ?nancial statements
in conformity with IFRS requires management to make
estimates and assumptions that afect the reported amounts
of revenue, expenses, assets and liabilities. The estimates
and judgements are based on historical experience and other
factors, including expectations of future events that are
believed to be reasonable, and constitute management’s best
judgement at the date of the ?nancial statements. In the
future, actual experience could difer from those estimates.
The principal estimates and judgements that could have
a signi?cant efect upon the Group’s ?nancial results relate
to the fair value of unbilled revenue on client assignments,
receivables valuation, provisions in respect of client claims,
onerous property costs and goodwill impairment. In
addition, the net de?cit or surplus disclosed for each de?ned
bene?t pension scheme and subsidiary undertaking annuity
provisions are sensitive to movements in the related actuarial
assumptions, in particular the discount rate, in?ation and
mortality. Where appropriate, present values are calculated
using discount rates re?ecting the currency and maturity
of the items being valued. Further details of estimates
and judgements are set out in the related notes to the
?nancial statements.
Consolidation
Subsidiary undertakings are entities over which the Group
has the power to govern the ?nancial and operating policies.
Subsidiary undertakings are fully consolidated from the date
on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account
for business combinations by the Group. The consideration
transferred for the acquisition of a subsidiary undertaking
is the fair values of the assets transferred and the liabilities
incurred by the Group, including those from any contingent
consideration arrangement. Acquisition-related costs are
expensed as incurred. Identi?able assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The excess of the consideration transferred,
the amount of any non-controlling interest in the acquiree
and the acquisition date fair value of any previous equity
interest in the acquiree over the fair value of the Group’s
share of the identi?able net assets acquired is recorded as
goodwill. If this is less than the fair value of the net assets
of the subsidiary acquired in the case of a bargain purchase,
the diference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains
and losses on transactions between Group companies are
eliminated. Accounting policies of subsidiary undertakings
have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Foreign currencies
Transactions in foreign currencies are recorded at the rate
of exchange ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies are
retranslated using the rates of exchange at the reporting date
and the gains and losses on translation are included in the
income statement.
The individual ?nancial statements of the Group’s subsidiary
undertakings are presented in their functional currency. For
the purpose of these consolidated ?nancial statements, the
results and ?nancial position of each subsidiary undertaking
are expressed in pounds sterling, which is the functional
currency of the LLP and the presentation currency for these
consolidated ?nancial statements.
The assets and liabilities of the Group’s foreign undertakings
are translated at exchange rates prevailing on the reporting
date. Income and expense items are translated at the average
exchange rates for the period. Exchange diferences arising
on consolidation on the retranslation of foreign undertakings
are recognised in other comprehensive income.
1 Basis of preparation continued
Notes to the ?nancial statements continued
48 PricewaterhouseCoopers LLP Annual Report 2014
2 Revenue
Revenue represents amounts recoverable from clients for professional services provided during the year. It is measured at
the fair value of consideration received or receivable on each client assignment, including expenses and disbursements and
excluding Value Added Tax. Revenue is recognised when the amount can be reliably measured and it is probable that future
economic bene?ts will ?ow.
Revenue recognition occurs in the period in which services are rendered by reference to the stage of completion, which is
assessed on actual services provided as a proportion of total services to be provided.
Revenue in respect of contingent fee assignments (over and above any agreed minimum fee) is recognised when the
contingent event occurs.
Unbilled revenue on individual client assignments is included as unbilled amounts for client work within trade and other
receivables. Where individual on-account billings exceed revenue on client assignments, the excess is classi?ed as progress
billings for client work within trade and other payables.
3 Staf costs
Group
2014
£m
2013
£m
Salaries, including termination bene?ts of £5m (2013: £9m) 1,015 971
Social security costs 106 102
Pension costs in respect of de?ned contribution scheme (note 20) 76 69
1,197 1,142
Salaries include wages and salaries, bonuses, employee bene?ts and termination bene?ts.
The Group recognises termination bene?ts when it is demonstrably committed to terminating the employment of current
employees before their retirement or providing termination bene?ts as a result of an ofer made to encourage voluntary
severance.
The average monthly number of employees during the year was 18,096, including practice support staf of 3,445
(2013: 17,420, including practice support staf of 3,333).
LLP
There were no employees in the LLP during the year (2013: nil).
Financial statements 49
4 Other operating costs
Depreciation and amortisation
2014
£m
2013
£m
Depreciation of property, plant and equipment (note 8) 31 28
Amortisation of intangible assets (note 9) 10 7
41 35
Other operating charges
Other operating charges include:
2014
£m
2013
£m
Operating lease rentals:
Land and buildings 64 68
Plant and machinery 8 8
72 76
Leases in which a signi?cant portion of the risks and rewards of ownership are retained by the lessor are classi?ed as
operating leases. Rental payments made under operating leases are charged to the income statement on a straight-line basis
over the period of the lease. Lease incentives are recognised on a straight-line basis over the lease term as a reduction of
rental expense.
Total fees and expenses payable to the auditors, Crowe Clark Whitehill LLP, for the year ended 30 June 2014 were £0.5m
(2013: £0.4m). This comprised audit fees of £0.4m (2013: £0.3m) relating to the LLP and Group consolidation and other
service fees of £0.1m (2013: £0.1m) relating to the audit of subsidiary companies and audit-related assurance.
5 Finance expense
2014
£m
2013
Restated
£m
Interest payable 2 3
Unwinding of discount on provisions (note 17) 1 1
Net interest expense on pension scheme (note 20) 2 3
5 7
Notes to the ?nancial statements continued
50 PricewaterhouseCoopers LLP Annual Report 2014
6 Tax expense in corporate subsidiaries
Certain companies consolidated in these ?nancial statements are subject to corporate taxes based on their pro?ts for the
?nancial year. Income tax payable on the pro?ts of the LLP and other LLPs consolidated within the Group is solely the
personal liability of the individual members of those LLPs and consequently is not dealt with in these ?nancial statements.
The charge to tax, which arises in the corporate subsidiaries included within these ?nancial statements, is:
2014
£m
2013
£m
Current tax on income of corporate subsidiaries for the year 28 25
Compensating payment due from LLP members (6) (18)
Deferred tax movements (note 19) (1) 1
Tax expense in corporate subsidiaries 21 8
In accordance with UK transfer pricing legislation up to 24 October 2013, the UK corporation tax expense in subsidiary
undertakings included an additional amount in respect of the taxable pro?ts of those subsidiaries, the cost of which is being
met by compensating payments made by LLP members direct to the relevant subsidiaries. Following changes to the transfer
pricing legislation, which took efect from 25 October 2013, and consequential changes to the terms of business between the
LLP and its subsidiaries, the full UK corporation tax charge is being borne by the relevant subsidiaries and no additional
amounts in respect of taxable pro?ts or compensating payments have accrued since that date.
The following table reconciles the tax expense at the standard rate to the actual tax expense:
2014
£m
2013
£m
Pro?t on ordinary activities of corporate entities before tax 85 27
Tax expense at UK standard rate of 22.5% (2013: 23.75%) 19 6
Impact of items not deductible for tax purposes 6 7
Adjustment to tax charge in respect of prior years (2) (4)
Efect of diferent tax rates in which the Group operates (2) (1)
21 8
7 Members’ pro?t shares
Excluding members on secondment overseas, the average pro?t per member based on these ?nancial statements was
£873,000 (2013 restated: £821,000), calculated by dividing the total pro?t available for division among members by
the average number of UK members.
The Chairman is the member with the largest entitlement to pro?t. The Executive Board represents key management
personnel for the purposes of these ?nancial statements.
The ?nal allocation and distribution of pro?t to individual members is made after the ?nancial statements have been
approved. Based on the pro?ts shown in these ?nancial statements, the estimated pro?t attributable to the Chairman is
£4.5m (2013 restated: actual £4.2m, estimated £4.2m). The full-time equivalent number of members serving on the
Executive Board during the year to 30 June 2014 was 11.5 (2013: 11.9). The estimated pro?t attributable to the members
of the Executive Board amounts to £25.8m (2013 restated: actual £25.1m, estimated £25.0m).
Financial statements 51
7 Members’ pro?t shares continued
The actual distributable pro?ts per member are calculated after deducting their personal obligations to make annuity
payments to certain former members and after equity adjustments. As from the ?nancial year ended 30 June 2014,
distributable pro?t shares are presented on a before tax basis as this is considered a more relevant measure of the
Group’s pro?tability. Tax comprises members’ personal tax and National Insurance contributions, payable on current year
distributable pro?ts, and corporation tax on subsidiary pro?ts. The distributable pro?t shares before tax for the year to
30 June are:
Distributable pro?t share before tax
2014
Estimate
2013
Actual
Average per member (excluding members on secondment overseas) £722,000 £711,000
Chairman £3.7m £3.6m
Executive Board (2014: 11.5 members; 2013: 11.9 members) £21.1m £21.5m
The average estimated distributable pro?t per member disclosed in the ?nancial statements for the year to 30 June 2013 was
£705,000 and was calculated after charging the tax expense in corporate subsidiaries. The estimated after tax distributable
pro?t for the Chairman and 11.9 members of the Executive Board was £3.6m and £21.5m, respectively, for the year to
30 June 2013.
The average monthly number of LLP members during the year was:
2014
Number
2013
Number
UK members 814 840
Members on secondment overseas 40 34
854 874
8 Property, plant and equipment
Group
Freehold
property
£m
Leasehold
property
£m
Fittings,
furniture and
equipment
£m
Total
£m
Cost
At beginning of prior year 6 68 183 257
Additions – 13 39 52
Disposals – (11) (19) (30)
At end of prior year 6 70 203 279
Additions – 9 41 50
Disposals – (1) (33) (34)
At end of year 6 78 211 295
Accumulated depreciation
At beginning of prior year 1 21 82 104
Depreciation charge for the year – 4 24 28
Disposals – (10) (15) (25)
At end of prior year 1 15 91 107
Depreciation charge for the year 1 4 26 31
Disposals – (1) (32) (33)
At end of year 2 18 85 105
Net book amount at end of prior year 5 55 112 172
Net book amount at end of year 4 60 126 190
Notes to the ?nancial statements continued
52 PricewaterhouseCoopers LLP Annual Report 2014
8 Property, plant and equipment continued
Property, plant and equipment is measured at cost less accumulated depreciation and any recognised impairment loss.
Depreciation is provided on a straight-line basis from the point the asset is available for use over the following estimated
useful lives:
Freehold property 50 years
Leasehold property 50 years or shorter leasehold term
Fittings and furniture 10–20 years or shorter leasehold term
Equipment 3–5 years
Repairs and maintenance costs arising on property, plant and equipment are charged to the income statement as incurred.
Group capital commitments relating to property, plant and equipment contracted but not provided for at 30 June 2014
amounted to £1m (2013: £14m); there were no capital commitments in the LLP. Included within property, plant and
equipment are £23m (2013: £11m) of assets under construction. The capital commitments contracted but not provided for
and assets under construction relate principally to the refurbishment of certain regional ofces.
LLP
Leasehold
property
£m
Cost
At beginning of prior year 15
Disposals (9)
At end of prior year 6
Disposals (1)
At end of year 5
Accumulated depreciation
At beginning of prior year 14
Disposals (9)
At end of prior year 5
Depreciation charge for the year 1
Disposals (1)
At end of year 5
Net book amount at end of prior year 1
Net book amount at end of year –
Financial statements 53
9 Intangible assets and goodwill
Group
Customer
relationships
£m
Computer
software
£m
Total
intangible
assets
£m
Goodwill
£m
Cost
At beginning of prior year 8 64 72 46
Exchange diferences 1 – 1 1
Additions – 18 18 –
Acquisition of subsidiaries – – – 3
Final fair value adjustments on prior period acquisitions – – – (2)
Disposals – (4) (4) –
At end of prior year 9 78 87 48
Exchange diferences (1) – (1) (2)
Additions – 6 6 –
Acquisition of subsidiaries – – – 6
Disposals – (1) (1) –
At end of year 8 83 91 52
Accumulated amortisation/impairment
At beginning of prior year 3 50 53 5
Amortisation charge for the year 1 6 7 –
Disposals – (3) (3) –
At end of prior year 4 53 57 5
Amortisation charge for the year 1 9 10 –
At end of year 5 62 67 5
Net book amount at end of prior year 5 25 30 43
Net book amount at end of year 3 21 24 47
Intangible assets
Customer relationship intangible assets are recognised at fair value on the acquisition of a business and are amortised on a
straight-line basis over the expected useful economic life of the relationship, typically three to ten years.
Computer software comprises purchased software licences and costs directly associated with the development of software for
internal use, which will generate future economic bene?ts. Computer software is measured at cost less accumulated
amortisation and any recognised impairment loss. Amortisation is provided on a straight-line basis over the expected useful
economic lives, typically three to ?ve years.
Goodwill
On the acquisition of a business, fair values are attributed to the identi?able assets, liabilities and contingent liabilities
acquired. Goodwill arises where the fair value of the consideration given for a business exceeds the fair value of such assets,
liabilities and contingent liabilities. Goodwill arising on acquisitions is capitalised with an inde?nite useful life and tested
annually for impairment. For the purposes of impairment testing goodwill is allocated to the cash-generating units that are
expected to bene?t from the business combination in which the goodwill arose.
The largest element of the goodwill held within the Group is £28m in respect of the ?rm’s strategic alliance in the Middle
East, which is considered to be a single cash-generating unit. The recoverable amount for goodwill has been determined
based on value in use, being the present value of future cash ?ows based on three-year ?nancial budgets approved by
management. An average annual revenue growth assumption of 15% has been used (2013: 18%). Cash ?ows for the periods
beyond the approved ?nancial budgets have been extrapolated using a 5% historic long-term GDP annual regional growth
rate (2013: 5%). The discount rate applied against the anticipated future cash ?ows is based on a pre-tax estimated weighted
average cost of capital of 12% (2013: 12%). A reasonable change in the key assumptions does not have a signi?cant impact
on the diference between value in use and the carrying value.
Notes to the ?nancial statements continued
54 PricewaterhouseCoopers LLP Annual Report 2014
9 Intangible assets and goodwill continued
Impairment of non-?nancial assets
Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount
by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identi?able cash ?ows (cash-generating units). Non-?nancial assets, other than goodwill, that
have sufered impairment are reviewed for possible reversal of the impairment at each reporting date.
Acquisitions
During the year, the Group acquired a 100% interest in Mokum International Limited (subsequently renamed PwC Change
Management Limited), a leading Oracle consultancy in Europe, and a 92% interest in GeoTraceability Limited, which ofers
specialised global tracking and data collection technology for natural resources. The combined consideration of these
acquisitions was £6m, of which £1m is contingent on future revenue targets being achieved. The fair values of assets and
liabilities recognised on acquisition have been estimated and approximate to the pre-acquisition carrying values based on the
respective accounts, prepared as at the acquisition dates. There were no separately identi?able intangible assets recognised
in respect of these acquisitions. The combined net asset value, pending ?nal valuation, was £1m. The Group recognised £6m
of goodwill in respect of these acquisitions, which is attributable to the companies’ existing workforce.
In the prior year, the Group acquired 100% interests in PRPi Consulting Limited and Vantage Performance Solutions Limited
(renamed PwC Performance Solutions Limited) for a combined consideration of £5m. The Group recognised £3m of
goodwill in respect of the acquisition.
LLP
Customer
relationships
£m
Computer
software
£m
Total
intangible
assets
£m
Goodwill
£m
Cost
At beginning of prior year 1 13 14 6
Additions – 1 1 –
At end of prior year 1 14 15 6
Additions – 1 1 –
At end of year 1 15 16 6
Accumulated amortisation/impairment
At beginning of prior year 1 6 7 –
Amortisation charge for the year – 3 3 –
At end of prior year 1 9 10 –
Amortisation charge for the year – 3 3 –
At end of year 1 12 13 –
Net book amount at end of prior year – 5 5 6
Net book amount at end of year – 3 3 6
Financial statements 55
10 Investments in subsidiaries
2014
£m
2013
£m
Shares in subsidiary undertakings
Cost
At beginning of year 53 52
Additions 22 1
Capital repayments (4) –
At end of year 71 53
Accumulated impairment
At beginning and end of year 3 3
Net book amount at end of prior year 50 49
Net book amount at end of year 68 50
Investments in subsidiaries are measured at cost less impairment.
The ?nancial statements consolidate the results and ?nancial position of the Group, including all subsidiary undertakings.
The subsidiary undertakings whose results or ?nancial position principally afected the ?gures shown in the Group’s ?nancial
statements are listed below. A full list of all subsidiary undertakings is annexed to the Annual Return of
PricewaterhouseCoopers LLP ?led at Companies House.
Companies Principal activity
PricewaterhouseCoopers Services Limited Service company and employment of staf
PricewaterhouseCoopers (Resources) Employment of staf
PricewaterhouseCoopers (Middle East Group) Limited Professional services
PricewaterhouseCoopers Overseas Limited Professional services
PricewaterhouseCoopers Advisory Services Limited Professional services
PwC Change Management Limited Professional services
PwC Consulting Associates Limited Professional services
PwC Performance Solutions Limited Professional services
PRPi Consulting Limited Professional services
Fire Station Operating Company Limited Social enterprise
GeoTraceability Limited Natural resource tracking
Limited Liability Partnerships Principal activity
PricewaterhouseCoopers CI LLP Professional services
PricewaterhouseCoopers Legal LLP Legal services
All principal subsidiary companies are 100% owned, except for GeoTraceability Limited which is 92% owned.
All principal subsidiary companies are incorporated in Great Britain, except for PricewaterhouseCoopers (Middle East
Group) Limited which is incorporated in Guernsey, with the Group owning 100% of the ordinary shares and the local Middle
East partners owning ‘B’ shares. The ‘B’ shares provide certain income access rights for local Middle East partners.
Additions to investments in subsidiaries during the year to 30 June 2014 comprise primarily a capital investment of £21m in
PricewaterhouseCoopers ME Holdings No. 1 LLP, relating to the Group’s investment in PwC Strategy& Parent (UK) Limited,
as described in note 12.
Following the Solicitors Regulation Authority’s approval of an Alternative Business Structure, PricewaterhouseCoopers LLP
became a member of PricewaterhouseCoopers Legal LLP during the year.
The non-controlling interest pro?ts and capital attributable to the members of PricewaterhouseCoopers Legal LLP and
PricewaterhouseCoopers CI LLP and to the Middle East partners of PricewaterhouseCoopers (Middle East Group) Limited are
shown as non-controlling interests in the consolidated ?nancial statements.
Notes to the ?nancial statements continued
56 PricewaterhouseCoopers LLP Annual Report 2014
11 Interests in joint ventures
The Group’s interest in jointly controlled entities is consolidated using the equity method of accounting. The investment is
initially recognised at cost and the carrying value is increased or decreased to recognise the Group’s share of the pro?t or
loss of the joint venture after the date of acquisition. The Group’s share of pro?t or loss is recognised in the income statement
with a corresponding adjustment to the carrying amount of the investment.
In the prior year, the Group acquired an interest in a joint venture, Skyval Holdings LLP, for a total consideration of £1m.
Skyval develops, maintains and licenses pension-related software and is incorporated in the United Kingdom. The Group has
50% voting control and owns 20% of the equity, with a 50% share of the pro?ts and losses over the ?rst three years, reducing
to 20% thereafter. The Group also paid £9m to acquire licences for the exclusive use of Skyval software, which are recognised
within intangible assets.
At 30 June 2014, Skyval Holdings LLP had assets of £5m (2013: £1m) and liabilities of £3m (2013: nil). For the ?nancial
year to 30 June 2014, Skyval Holdings LLP’s revenue was £5m (2013: nil) and pro?t was nil (2013: nil).
12 Other investments
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Cost
At beginning of year 8 5 8 5
Additions 78 3 57 3
At end of year 86 8 65 8
Accumulated impairment
At beginning and end of year – – – –
Net book amount at end of prior year 8 5 8 5
Net book amount at end of year 86 8 65 8
Other investments are measured initially at the fair value of the consideration paid on acquisition. Where there is no active
market and no reliable measure of their fair value, they are measured at cost less impairment. Income from these investments
is recognised in the income statement when entitlement is established.
Other investments include equity holdings in, and preference shares and subordinated loan notes from, entities in the PwC
global network.
During the year the Group acquired an equity holding in PwC Strategy& Parent (UK) Limited for £71m, comprising an initial
payment of £23m and a commitment to provide further capital funding, currently estimated at £48m, over the next four
years. Strategy& is a global strategy consulting ?rm.
During the year the Group also invested in £3m of preference shares issued by the PwC Central and Eastern European ?rm as
part of a strategic investment plan. In addition, the Group acquired £4m of additional subordinated loan notes from an entity
in the PwC global network.
In the prior year the Group acquired an equity holding of £3m in PwC Network Holdings Pte Limited, a company which
invests in the member ?rms of the PwC global network.
Financial statements 57
13 Trade and other receivables
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Client receivables 420 404 348 336
Due from PwC network ?rms 35 42 31 38
Trade receivables 455 446 379 374
Amounts due from members 7 19 – –
Other receivables 32 27 5 6
Prepayments 45 58 2 4
Unbilled amounts for client work 300 274 251 226
839 824 637 610
Trade receivables are measured initially at fair value and held at amortised cost less provisions for impairment.
Provisions for impairment represent an allowance for doubtful debts that is estimated, based upon current observable
data and historical trends.
Unbilled amounts for client work are measured initially at fair value and held at amortised cost less provisions for
foreseeable losses.
Group and LLP trade receivables are primarily denominated in sterling. £79m of the Group’s trade receivables are denominated
in US dollars/US dollar-linked currencies (2013: £79m) and £14m are denominated in euros (2013: £17m). The carrying
value of trade and other receivables in the Group and LLP is consistent with fair value in the current and prior year.
The other classes of assets within trade and other receivables are primarily denominated in sterling and do not contain
impaired assets.
The ageing and credit risk relating to trade receivables is analysed as follows:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
30 days or less, fully performing 282 291 246 248
31 to 180 days, past due and fully performing 166 152 132 123
More than 180 days, past due and impaired 22 19 13 15
Impairment provision (15) (16) (12) (12)
455 446 379 374
Movements in the impairment provision on trade receivables were as follows:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Balance at beginning of year (16) (15) (12) (11)
Charged to the income statement (9) (11) (6) (8)
Released unused during the year 6 7 3 4
Utilised during year 4 3 3 3
Balance at end of year (15) (16) (12) (12)
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above.
The Group does not hold any collateral as security.
Notes to the ?nancial statements continued
58 PricewaterhouseCoopers LLP Annual Report 2014
14 Cash and cash equivalents
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Cash at bank and in hand 38 27 6 2
Short-term deposits 223 209 208 202
261 236 214 204
Cash and cash equivalents include cash in hand, deposits held at call with banks and other short-term highly liquid
investments with original maturities of three months or less. Fair values of cash and cash equivalents approximate to carrying
value owing to the short maturity of these instruments.
Group cash and cash equivalent balances are primarily denominated in sterling, with £20m being denominated in US dollars/
US dollar-linked currencies (2013: £21m) and nil being denominated in euros (2013: £12m).
15 Trade and other payables
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Current
Trade payables 105 96 – –
Amounts owed to Group undertakings – – 217 157
Other payables including taxation and social security 148 137 50 48
Accruals 282 256 10 8
Progress billings for client work 119 111 105 98
654 600 382 311
Trade and other payables are measured at amortised cost.
Group trade payables are primarily denominated in sterling, with £32m being denominated in US dollars/US dollar-linked
currencies (2013: £33m) and £16m being denominated in euros (2013: £17m). The carrying value of trade and other
payables in the Group and LLP is consistent with fair value in the current and prior year. Group current trade payables
include amounts owing to PwC network ?rms totalling £70m (2013: £63m).
Other current payables including taxation and social security comprise:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Other taxes and social security 92 83 – –
Deferred capital investment payment 25 – 25 –
Other payables 31 54 25 48
148 137 50 48
The Group is committed to make further investments in PwC Strategy& Parent (UK) Limited, a member of the PwC global
network. The investment is variable based on the future costs incurred by PwC Strategy& Parent (UK) Limited. The current
estimate of this investment is £48m to be paid over four years, of which £25m is to be paid within one year. The committed
capital provision is based on estimated future cash ?ows that have been discounted to present value using an average
discount rate of 0.8%.
Other non-current liabilities
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Capital loans provided by non-controlling interest partners
in subsidiary undertakings 41 41 – –
Deferred capital investment payment 23 – 23 –
64 41 23 –
Financial statements 59
16 Borrowings
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Current
Bank borrowings 34 26 – –
Other loans 12 15 – –
46 41 – –
Non-current
Bank borrowings – 1 – –
Other loans 6 9 – –
6 10 – –
Total borrowings 52 51 – –
Borrowings are initially measured at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost; any diference between the proceeds (net of transaction costs) and the redemption value is recognised in the
income statement over the period of the borrowings using the efective interest method. The carrying values of borrowings
approximate their fair value.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent
there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a
prepayment for liquidity services and amortised over the period of the facility to which it relates.
The Group’s borrowings at 30 June 2014 and 30 June 2013 were unsecured and denominated in US dollars.
All non-current borrowings mature within one to ?ve years.
17 Provisions and contingent liabilities
Group
Annuities
£m
Client claims
£m
Property
£m
Total
£m
Balance at beginning of prior year 18 17 24 59
Income statement:
Charge for the year 2 5 3 10
Released unused during the year – (2) – (2)
Unwinding of discount 1 – – 1
Cash payments (3) (3) (6) (12)
Balance at end of prior year 18 17 21 56
Income statement:
Charge for the year 1 6 3 10
Released unused during the year – (3) (1) (4)
Unwinding of discount 1 – – 1
Exchange gains (2) – – (2)
Transfer to accruals – – (5) (5)
Cash payments (1) (6) (4) (11)
Balance at end of year 17 14 14 45
Notes to the ?nancial statements continued
60 PricewaterhouseCoopers LLP Annual Report 2014
17 Provisions and contingent liabilities continued
LLP
Client claims
£m
Property
£m
Total
£m
Balance at beginning of prior year 17 12 29
Income statement:
Charge for the year 4 2 6
Released unused during the year (2) – (2)
Cash payments (3) (5) (8)
Balance at end of prior year 16 9 25
Income statement:
Charge for the year 6 2 8
Released unused during the year (3) – (3)
Transfer to accruals – (3) (3)
Cash payments (6) (3) (9)
Balance at end of year 13 5 18
Disclosed as:
Group LLP
2014
£m
2013
£m
2014
£m
2013
£m
Current 3 4 3 3
Non-current 42 52 15 22
45 56 18 25
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is
probable that an out?ow of resources will be required to settle the obligation and the amount can be reliably estimated.
Non-current provisions are measured at their present value. The discount rates used are based on the yield on corporate
bonds, adjusted for risk.
Annuities
The Group ?nancial statements consolidate the provision made for the annuities payable by certain subsidiary undertakings
to the non-controlling interest partners in those undertakings, principally in relation to the Middle East. These partners are
not members of the LLP and the annuities are unfunded. The provision re?ects the present value of the obligations arising
from service to date. Any changes in the provision for these annuities arising from changes in entitlements, ?nancial
estimates or actuarial assumptions are recognised in the income statement. The unwinding of the discount is presented in
the income statement as a ?nance expense. When the entitled individuals retire and their annuities come into payment,
these payments are shown as a movement against the provision.
The principal actuarial assumptions that have been used in calculating the annuities provision are an assumed retirement
age of 57 (2013: assumed retirement age of 57), with a discount rate of 4.3% (2013: 4.6%) and in?ation rates of 2.3% for
US dollar-denominated annuities (2013: 2.5%) and 3.3% for sterling-denominated annuities (2013: 3.3%).
Members of the LLP are required to make their own provision for pensions and do so mainly through contributions to
personal pension policies and other appropriate investments. Members, in their capacity as partners in the
PricewaterhouseCoopers United Kingdom Partnership, have agreed to pay pension annuities and other post-retirement
payments to certain former partners of that partnership and the widows and dependants of deceased former partners.
These annuities and other post-retirement payments are personal obligations of the individuals and are not obligations of,
or guaranteed by, the LLP or its subsidiary undertakings. Accordingly, these annuities are not recognised within
these ?nancial statements.
Financial statements 61
17 Provisions and contingent liabilities continued
Client claims
In common with comparable professional practices, the Group is involved in a number of disputes in the ordinary course of
business which may give rise to claims. Provision representing the cost of defending and concluding claims is made in the
?nancial statements for all claims where costs are likely to be incurred and can be measured reliably. The Group carries
professional indemnity insurance and no separate disclosure is made of the detail of claims or the costs covered by insurance,
as to do so could seriously prejudice the position of the Group.
Property
Provisions are recognised for obligations under property contracts that are onerous and to restore premises to their original
condition upon vacating them, where such an obligation exists under the lease. The provisions are based on estimated future
cash ?ows that have been discounted to present value, with the unwinding of that discount presented in the income
statement as a ?nance expense. The onerous lease provision covers residual lease commitments up to the end of the lease
and is after allowing for existing or expected sublet rental income, with most of the provision expecting to unwind over the
next ?ve years.
The property provisions are based on estimated future cash ?ows that have been discounted to present value at an average
rate of 3.5% (2013: 3.8%).
Contingent liabilities
Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events or present
obligations where the out?ow of resources is uncertain or cannot be measured reliably. Contingent liabilities are not
recognised in the ?nancial statements, but are disclosed unless they are remote. The Group’s policy on client claims is
disclosed above.
Where ?nancial guarantees are recognised, they are initially measured at fair value and subsequently measured at the higher
of their initial fair value, less amounts recognised in the income statement, and the best estimate of the amount that will be
required to settle the obligation. The current fair value of the guarantees disclosed below is nil (2013: nil).
Together with other entities in the PwC global network, the LLP has cross-guaranteed the aggregate commitment to invest
further capital in PwC Strategy& Parent (UK) Limited. At 30 June 2014, the amount guaranteed by the LLP was US $76m
(2013: nil).
The Group is committed to provide funding to two entities in the PwC global network. At 30 June 2014 the Group has
committed, subject to certain investment conditions, to make additional payments of up to US $105m (2013: US $55m).
The Group has entered into US $14m (2013: US $12m) of guarantees with third-party banks in connection with work
performed in foreign territories, predominantly the Middle East.
The LLP has entered into a US $52m (2013: US $52m) loan guarantee with a third-party bank in connection with a loan to
an entity in the PwC global network.
The LLP has provided guarantees in respect of the future lease commitments of a subsidiary company, totalling £724m over
the remaining lease terms (2013: £744m). The majority of these commitments relate to the ofce premises at 7 More London
and 1 Embankment Place.
The LLP guarantees the bank borrowings of a subsidiary company, which is included in the consolidated statement of
?nancial position. At 30 June 2014, the relevant subsidiary company bank borrowings were nil (2013: nil).
Notes to the ?nancial statements continued
62 PricewaterhouseCoopers LLP Annual Report 2014
18 Members’ capital
Group
and LLP
£m
Balance at beginning of prior year 165
Contributions by members 34
Repayments to members (10)
Balance at end of prior year 189
Contributions by members 37
Repayments to members (18)
Balance at end of year 208
Capital attributable to members retiring within one year is shown as current as it will be repaid within 12 months of the
reporting date. Total members’ capital analysed by repayable dates is as follows:
Group
and LLP
2014
£m
Group
and LLP
2013
£m
Current 9 18
Non-current 199 171
208 189
Members’ capital, which is measured at fair value, is classi?ed as a ?nancial liability.
Members’ capital contributions are determined by the Executive Board with the approval of the Supervisory Board, having
regard to the working capital needs of the business. Individual members’ capital contributions are set by reference to equity
unit pro?t share proportions and are not repayable until the member retires. Members are required to provide one year’s
notice of retirement.
The carrying value of members’ capital liabilities (Group and LLP) is consistent with fair value in the current and prior year.
19 Deferred tax
The movements in the Group’s deferred tax liabilities during the year were as follows:
2014
£m
2013
£m
Balance of deferred tax liabilities at beginning of year (1) –
Charged to the income statement 1 (1)
Balance of deferred tax liabilities at end of year – (1)
Deferred tax liabilities relate to temporary diferences at the reporting date between the tax bases of assets and liabilities and
their carrying amounts for ?nancial reporting purposes, recognised using the liability method.
Deferred tax assets are recognised to the extent that it is probable that future taxable pro?t will be available against which
the temporary diferences can be utilised.
Deferred tax is measured at the tax rates that are substantively enacted at the reporting date and expected to apply in the
periods in which the temporary diferences reverse.
Deferred tax is calculated using a tax rate of 23% for the period to 31 March 2014, 21% for the period to 31 March 2015 and
20% thereafter (2013: 24% for the period to 31 March 2013 and 23% thereafter).
The Group has no deferred tax assets (2013: nil).
There was no deferred tax arising in the LLP for the years to 30 June 2014 and 30 June 2013.
Financial statements 63
20 Retirement bene?ts
De?ned contribution scheme
As at the end of June 2014 there were 13,283 members of the ?rm’s de?ned contribution scheme (2013: 13,129), of which
3,111 members were auto enrolled (2013: 2,739). The Group’s contributions to the scheme are charged to the income
statement as they fall due. Costs of £76m (2013: £69m) were recognised by the Group in respect of the scheme. Costs of the
de?ned contribution scheme in the LLP were nil (2013: nil).
De?ned bene?t schemes
The Group’s two de?ned bene?t pension schemes are the PwC Pension Fund (the “Fund”) and the DH&S Retirement and
Death Bene?ts Plan (the “Plan”). Both of the Group’s de?ned bene?t pension scheme arrangements are closed to future
service accrual, although certain current employee member bene?ts remain linked to ?nal salary. Both schemes are funded
and their assets are held separately from those of the Group. The liabilities arising in the de?ned bene?t schemes are
assessed by independent actuaries, using the projected unit credit method. Both schemes are valued formally every three
years, with the last valuation dated 31 March 2011. The 31 March 2014 valuation is currently underway.
The net de?cit or surplus in each scheme is calculated in accordance with IAS 19 (revised), based on the present value of the
de?ned bene?t obligation at the reporting date, less the fair value of the scheme assets. The Group adopted IAS 19 (revised)
‘Employee bene?ts’ during the year and the impact of this change has been detailed in note 1 to the ?nancial statements.
The Group’s income statement includes the current service cost of providing pension bene?ts, the expected return on scheme
assets and the interest cost on scheme obligations, calculated using a single discount rate. Past service costs arising from
changes to scheme bene?ts are recognised immediately in the income statement, unless the bene?ts are conditional on the
employees remaining in service for a speci?ed period of time, in which case the past service costs are amortised over that
vesting period.
Actuarial gains and losses are recognised in full in other comprehensive income in the period in which they arise. Other income
and expenses associated with the de?ned bene?t schemes are recognised in the income statement.
Assumptions
The principal actuarial assumptions used for the purposes of these ?nancial statements prepared under IAS 19 (revised) are:
2014 2013 2012
Discount rate 4.3% 4.6% 4.4%
In?ation (RPI) 3.3% 3.3% 2.8%
In?ation (CPI) 2.3% 2.3% 2.1%
Expected rate of increase in salaries 2.9% 2.8% 2.8%
Expected rate of increase in pensions in payment 2.8% 2.8% 2.5%
The majority of liabilities for the Fund and the Plan are indexed on an RPI basis, while future increases to deferred member
pensions before retirement increase using CPI.
Sensitivity analysis
The following table shows the sensitivity of the present value of the de?ned bene?t obligations to changes in each of the
individual principal actuarial assumptions:
Fund
Increase
£m
Plan
Increase
£m
Total
£m
0.25% decrease to discount rate 60 34 94
0.25% increase to salary increases 4 1 5
0.25% increase to in?ation 35 23 58
One year increase to life expectancy 22 13 35
The methods and assumptions used in the sensitivity analysis above are consistent with those used in the prior year ?nancial
statements.
Notes to the ?nancial statements continued
64 PricewaterhouseCoopers LLP Annual Report 2014
20 Retirement bene?ts continued
The ?gures used in these ?nancial statements assume that the mortality of the schemes’ members will be in line with
nationally published S1NA mortality tables, adjusted to re?ect the longer life expectancy of members of the Group’s
schemes versus the standard table by a one-year age rating for males and a half-a-year age rating for females, and with
future improvements in line with Continuous Mortality Investigation (CMI) 2009 projections, with a 1.25% long-term rate.
The following table illustrates the actual life expectancy for a current pensioner member aged 65 at 30 June and a future
pensioner member aged 45 at 30 June:
2014 2013
Fund
Years
Plan
Years
Fund
Years
Plan
Years
Life expectancy of current pensioners at age 65:
male 23.3 23.3 23.2 23.2
female 25.2 25.2 25.0 25.0
Life expectancy of future pensioners at age 65:
male 25.1 25.1 25.0 25.0
female 27.2 27.2 27.0 27.0
Income statement
The amounts recognised in the consolidated income statement are as follows:
2014 2013 Restated
Fund
£m
Plan
£m
Total
£m
Fund
£m
Plan
£m
Total
£m
Net interest expense (2) – (2) (3) – (3)
Past service costs (3) – (3) – – –
(5) – (5) (3) – (3)
Scheme assets and de?ned bene?t obligation
The amounts recognised in the Group and LLP statements of ?nancial position and the analysis of the movement in the
de?ned bene?t scheme assets and obligations are as follows:
Fund Plan
Scheme
assets
£m
De?ned bene?t
obligation
£m
Total
£m
Scheme
assets
£m
De?ned bene?t
obligation
£m
Total
£m
Total
£m
Fair value at beginning of prior year 1,110 (1,175) (65) 611 (625) (14) (79)
Net interest on de?ned bene?t
obligations 48 (51) (3) 27 (27) – (3)
Remeasurement gains (losses):
Return on plan assets excluding
amounts included in net interest 52 – 52 24 – 24 76
Changes in ?nancial assumptions – (20) (20) – (7) (7) (27)
Bene?ts paid (30) 30 – (15) 15 – –
Fair value at end of prior year 1,180 (1,216) (36) 647 (644) 3 (33)
Net interest on de?ned bene?t
obligations 54 (56) (2) 30 (30) – (2)
Past service costs – (3) (3) – – – (3)
Remeasurement gains (losses):
Return on plan assets excluding
amounts included in net interest 44 – 44 19 – 19 63
Changes in ?nancial assumptions – (71) (71) – (37) (37) (108)
Contributions by employer 17 – 17 9 – 9 26
Bene?ts paid (33) 33 – (17) 17 – –
Fair value at end of year 1,262 (1,313) (51) 688 (694) (6) (57)
Financial statements 65
20 Retirement bene?ts continued
The £26m of contributions paid during the year to 30 June 2014 comprise £23m of de?cit reduction contributions and £3m
of funding for past service costs.
The actual return on scheme assets during the year to 30 June 2014 was an increase of £147m (2013: £151m increase).
The allocation and market value of assets of the de?ned bene?t schemes were as follows:
2014 2013
Fund
£m
Plan
£m
Total
£m
Fund
£m
Plan
£m
Total
£m
Equities 346 155 501 359 159 518
Property 61 34 95 57 32 89
Hedge Funds 122 65 187 115 63 178
Bonds 280 187 467 258 178 436
Gilts 390 212 602 375 205 580
Cash 50 28 78 16 10 26
Other 13 7 20 – – –
1,262 688 1,950 1,180 647 1,827
Future cash funding
The most recent full actuarial valuations for both the Fund and the Plan were as at 31 March 2011, conducted under the new
Scheme Funding Regulations (Pensions Act 2004). These valuations formed the basis for the update to 30 June 2014 used in
these ?nancial statements. For the year ended 30 June 2014, Mercer Ltd was the actuary for the Fund and the Plan.
The Group expects to pay contributions of £20m in the year to 30 June 2015.
Notes to the ?nancial statements continued
66 PricewaterhouseCoopers LLP Annual Report 2014
21 Total members’ interests
During the year, the Executive Board sets the level of interim pro?t allocations and members’ monthly drawings after
considering the working capital needs of the Group. The ?nal allocation of pro?ts and distribution to members is made after
assessing each member’s contribution for the year and after the annual ?nancial statements are approved. Unallocated
pro?ts are included in reserves within members’ equity. To the extent that interim pro?t allocations exceed drawings, the
excess pro?t is included in the statement of ?nancial position under trade and other payables. Where drawings exceed the
allocated pro?ts, the excess is included in trade and other receivables. The same treatment is used for members who retire
during the year.
Group
Members’ interests Non-controlling interests
Members’
capital
£m
Reserves
Restated
£m
Amounts due
to (from)
members
£m
Total
Restated
£m
Reserves
£m
Amounts due
to (from)
non-controlling
interests
£m
Balance at beginning of prior year 165 249 (21) 393 (17) –
Pro?t for the prior year available for
division among members – 690 – 690 60 –
165 939 (21) 1,083 43 –
Allocated pro?t – (641) 641 – (59) 59
Movement on cash ?ow hedges – (1) – (1) – –
Remeasurements on retirement
bene?ts obligations – 49 – 49 – –
Introduced by members 34 – – 34 – –
Repayment of capital (10) – – (10) – –
Drawings and distributions – – (641) (641) – (59)
Movement in compensating payment
due to subsidiary undertakings – – 2 2 – –
Balance at end of prior year 189 346 (19) 516 (16) –
Pro?t for the current year available for
division among members – 711 – 711 61 –
189 1,057 (19) 1,227 45 –
Allocated pro?t – (644) 644 – (57) 57
Movement on cash ?ow hedges – (3) – (3) – –
Remeasurements on retirement
bene?ts obligations – (45) – (45) – –
Translation of foreign operations – – – – (2) –
Introduced by members 37 – – 37 – –
Repayment of capital (18) – – (18) – –
Drawings and distributions – – (644) (644) – (57)
Movement in compensating payment
due to subsidiary undertakings – – 12 12 – –
Balance at end of year 208 365 (7) 566 (14) –
Financial statements 67
21 Total members’ interests continued
LLP
Members’
capital
£m
Reserves
Restated
£m
Amounts due
to (from)
members £m
Total
Restated
£m
Balance at beginning of prior year 165 230 – 395
Pro?t for the prior year available for division among members – 688 – 688
165 918 – 1,083
Allocated pro?t – (641) 641 –
Remeasurements on retirement bene?ts obligations – 49 – 49
Introduced by members 34 – – 34
Repayment of capital (10) – – (10)
Drawings and distributions – – (641) (641)
Balance at end of prior year 189 326 – 515
Pro?t for the current year available for division among members – 668 – 668
189 994 – 1,183
Allocated pro?t – (644) 644 –
Remeasurements on retirement bene?ts obligations – (45) – (45)
Introduced by members 37 – – 37
Repayment of capital (18) – – (18)
Drawings and distributions – – (644) (644)
Balance at end of year 208 305 – 513
Amounts due to members represent allocated pro?ts not yet paid to members and are due within one year. In the event of a
winding-up, members’ reserves rank after unsecured creditors.
22 Commitments under operating leases
The Group’s total commitments under non-cancellable operating leases, together with the obligations by maturity, are
as follows:
2014 2013
Land and
buildings
£m
Other
assets
£m
Land and
buildings
£m
Other
assets
£m
Within one year 44 5 53 5
1–2 years 43 3 40 3
2–3 years 58 1 36 1
3–4 years 55 – 49 –
4–5 years 50 – 47 –
More than ?ve years 600 – 622 –
Notes to the ?nancial statements continued
68 PricewaterhouseCoopers LLP Annual Report 2014
23 Financial instruments
Financial instruments are initially measured at fair value. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date.
Derivatives, such as forward foreign-exchange contracts, are held or issued in order to manage the Group’s currency and
interest rate risks arising from its operations and sources of ?nance. The fair values of all derivatives are based on their
quoted price in an active market. Hedge accounting is applied where the relevant criteria are met. The efective portion of
changes in the fair value of derivatives that are designated and qualify as cash ?ow hedges is recognised in other
comprehensive income or expense within the statement of comprehensive income. The gain or loss relating to any inefective
portion is recognised immediately in the income statement. Amounts accumulated in equity are reclassi?ed to pro?t or loss
in the periods when the hedged item afects pro?t or loss (for example, when the forecast sale that is hedged takes place).
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is
ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative
gain or loss that was reported in equity is immediately transferred to the income statement.
Financial risk management and management of capital
The Group’s objectives when managing capital are to safeguard the Group’s ability to operate as a going concern and to
maintain an optimal capital structure to cover the expected peak cash requirements of the business. The Group’s capital
comprises the members’ capital, undistributed pro?ts and borrowing facilities. The Group holds or issues ?nancial
instruments in order to ?nance its operations and manage foreign currency and interest-rate risks arising from its operations
and sources of ?nance. The principal ?nancial instruments, other than derivatives, held or issued by the Group are:
• Trade and other receivables – The balance primarily represents billed and unbilled amounts in respect of services provided
to clients, for which payment has not yet been received.
• Cash and cash equivalents – The Group manages its cash resources in order to meet daily working capital requirements.
Cash and any outstanding debt are kept to a minimum and liquid fund deposits are maximised.
• Trade and other payables – The balance primarily represents progress billings to clients and trade payables and accruals in
respect of services received from suppliers, for which payment has not yet been made.
• Members’ capital – The Group requires members to provide long-term ?nancing, which is classi?ed as a liability.
• Debt – The Group’s policy permits short-term variable rate facilities with a maximum facility maturity of ?ve years and
long-term ?xed borrowing with a maximum maturity of ten years.
The Executive Board determines the treasury policies of the Group. These policies, designed to manage risk, relate to speci?c
risk areas that management wish to control, including liquidity, credit risk, interest rate and foreign currency exposures. No
speculative trading is permitted and hedging is undertaken against speci?c exposures to reduce risk.
Liquidity risk
The Group’s most signi?cant treasury exposures relate to liquidity. The Group manages the risk of uncertainty in its funding
operations by spreading the maturity pro?le of its borrowings and deposits. Committed facilities are arranged with minimum
headroom of 25% of forecast maximum debt levels. The Group’s facilities at 30 June 2014 totalling £376m (2013: £322m)
are predominantly held with seven leading international banks, with the main £225m facility due to expire in June 2015.
Credit risk
Cash deposits and other ?nancial instruments with banks and ?nancial institutions give rise to counterparty risk. The Group
manages this counterparty risk by reviewing their credit ratings regularly and limiting the aggregate amount and duration of
exposure to any one counterparty, taking into account its credit rating, market capitalisation and relative credit default swap
price. The minimum long-term credit rating of all banks and ?nancial institutions who held the Group’s short-term deposits
during the year was A-.
The Group’s other signi?cant credit risk relates to receivables from clients. Exposure to that risk is monitored on a routine
basis and credit evaluations are performed on clients as appropriate. The Group’s exposure is in?uenced mainly by the
individual characteristics of each client. Risk is managed by maintaining close contact with each client and by routine billing
and cash collection for work done.
Financial statements 69
23 Financial instruments continued
Interest rate risk
The Group’s borrowings and any surplus cash balances are held at variable interest rates linked to London interbank ofered
rate (LIBOR). Outstanding borrowings are in US dollars to re?ect the composition of the Group’s assets that the borrowings
are funding. A movement of 50 basis points in the interest rate on borrowings and surplus cash balances through the year
would have had an immaterial impact on the pre-tax pro?ts of the Group.
Foreign currency risk
The major part of the Group’s income and expenditure is in sterling. Other than the Middle East business, fees and costs
denominated in foreign currencies are mainly in connection with professional indemnity insurance and transactions with
PwC network ?rms. The Group seeks to minimise its exposure to ?uctuations in exchange rates by hedging against foreign
currency exposures. These hedges are designated as cash ?ow hedges where the necessary criteria are met. The Group’s
policy is to enter into forward or derivative transactions as soon as economic exposures are recognised.
Group ?nancial assets and liabilities by category
2014 2013
Loans and
receivables
£m
Available-
for-sale
£m
Derivatives
used for
hedging
£m
Other
?nancial
liabilities
£m
Loans and
receivables
£m
Available-
for-sale
£m
Derivatives
used for
hedging
£m
Other
?nancial
liabilities
£m
Assets
Trade and other
receivables 794 – – – 766 – – –
Investments – 86 – – – 8 – –
Cash and cash
equivalents 261 – – – 236 – – –
Liabilities
Trade and other
payables – – – 562 – – – 517
Borrowings – – – 52 – – – 51
Members’ capital – – – 208 – – – 189
Other non-current
liabilities – – – 64 – – – 41
Forward foreign-
exchange contracts
Cash ?ow hedges – – (3) – – – – –
Interest rate pro?le of ?nancial assets and ?nancial liabilities
Group short-term deposits with banks of £223m (2013: £209m) and Group borrowings of £52m (2013: £51m) are subject to
?oating interest rates. LLP short-term deposits with banks of £208m (2013: £202m) are subject to ?oating interest rates.
Group and LLP investments include ?oating rate subordinated loan notes of £6m (2013: £2m).
Currency pro?le of ?nancial assets and liabilities
The major part of the Group’s income and expenditure is in sterling. After taking into account forward contracts and known
US dollar and euro-denominated assets and liabilities, the Group had net US dollar-denominated assets at 30 June 2014 of
£27m (2013: £1m) and net euro-denominated assets at 30 June 2014 of £4m (2013: £13m).
Derivative ?nancial instruments
Forward foreign-exchange contracts all mature in less than two years, and have been valued using forward market prices
prevailing at the reporting date. The inefective portion of cash ?ow hedges recognised in the income statement was nil
(2013: nil). The efective portion of cash ?ow hedges recognised directly in other comprehensive expense was £3m
(2013: £1m in other comprehensive income). The notional principal amount of forward foreign-exchange contracts was
£83m (2013: £66m).
Notes to the ?nancial statements continued
70 PricewaterhouseCoopers LLP Annual Report 2014
24 Related party transactions
The LLP and the PricewaterhouseCoopers United Kingdom Partnership are related parties because they are both controlled
by the same group of individuals and the United Kingdom Partnership is the predecessor ?rm of the LLP. This controlling
group of individuals consists of all the members of the LLP who are also all the members of the United Kingdom Partnership.
Related party transactions with the United Kingdom Partnership and other related parties are summarised below.
Services provided to PricewaterhouseCoopers United Kingdom Partnership in respect of client assignments
Arrangements are in place for the LLP to supply services to the United Kingdom Partnership in connection with certain client
assignments. For the year ended 30 June 2014, the LLP provided services to the United Kingdom Partnership to the value
of £229,000 (2013: £201,000) under these arrangements. There were no balances outstanding at the end of the year
(2013: nil).
Administrative support to PricewaterhouseCoopers United Kingdom Partnership
On behalf of its members, the LLP provides certain administrative services to support the United Kingdom Partnership,
including the calculation of annuities and paying agent arrangements in connection with the pension annuities and certain
other post-retirement payments due to certain former members of that partnership. The LLP charged the United Kingdom
Partnership £200,000 for these support services for the year ended 30 June 2014 (2013: £200,000). There were no balances
outstanding at the end of the year (2013: nil). Amounts paid during the year to the annuitants on behalf of the continuing
members in their capacity as members of the United Kingdom Partnership totalled £91m (2013: £85m).
Transactions with joint ventures
Details of the Group’s interests in joint ventures are provided in note 11. During the year, Skyval Limited, a wholly owned
subsidiary of Skyval Holdings LLP, charged the Group £4,334,000 (2013: £640,000) for services provided. The Group
charged Skyval Limited £915,000 (2013: nil) for services provided. At 30 June 2014, the Group has an outstanding balance
of £143,000 receivable from Skyval Limited (2013: nil).
LLP
The subsidiary undertakings described in note 10 are related parties of the LLP. The transactions during the ?nancial year
with these related parties are as follows:
2014
£m
2013
£m
Purchase of services from related parties
PricewaterhouseCoopers Services Limited 1,527 1,433
Other subsidiaries 11 11
Provision of services to related parties
Other subsidiaries (27) (22)
1,511 1,422
The balances as at 30 June with these related parties are as follows:
2014
£m
2013
£m
PricewaterhouseCoopers Services Limited (234) (166)
Other subsidiaries 17 9
(217) (157)
71 Sustainability data
Firmwide non-?nancial sustainability data (assured to ISAE 3000 standard)
For full details and further explanation on performance and metrics, including Crowe Clark Whitehill LLP’s independent
assurance statement, see: www.pwc.co.uk/corporatesustainability
Quality & Ethics
Units
Ongoing
Target 2014 2013 Base Base year
Quality
Client advocacy
1
score out of 10 – 8.52 8.45 8.49 (2009)
Net promoter score
1
percentage – 49% 45% 47% (2009)
Ethics
Ethical culture
2
score out of 5 4.00 3.89 3.87 3.87 (2013)
Dismissals for misconduct
3
number – 8 9 14 (2011)
Independence
Breaches of external auditor independence regulations
4
percentage 0% 0.22% 0.22% 0.24% (2012)
Information security
5
ISO 27001: major nonconformities number 0 0 0 0 (2011)
ISO 27001: minor nonconformities number – 2 1 10 (2011)
1 Based on direct client feedback. Prior years restated as client feedback via online surveys and telephone interviews included in 2014
2 Results are derived from the ?rmwide staf youmatter survey. A score of 4 or above corresponds to a response of ‘agree’ or ‘strongly agree’
3 Data covers all permanent UK staf. Excludes dismissals for failed exams and missed performance standards
4 Breaches of the auditor personal independence regulations reported to the regulator, as a percentage of FTE. Prior year data restated to re?ect updated measurement method
5 A major nonconformity is a situation that raises signi?cant doubt about the ability of the ?rm’s information security management system to achieve its intended policy and
objectives. A minor nonconformity is a single identi?ed lapse which would not in itself raise signi?cant doubt as to the capability of the ?rm’s information security management
system to achieve its intended policy and objectives
Workplace & Diversity
Units
2017
Target
2015
Target 2014 2013 Base Base year
Talent attraction and retention
People engagement score
1
score out of 5 >4.00 >4.00 4.00 3.98 3.97 (2007)
Graduate retention (3 years) percentage 85% 83% 79% 78% 82% (2010)
High potential retention percentage 95% 90% 88% 90% 89% (2012)
Voluntary turnover percentage 12%–15% 12%–15% 13% 12% 14% (2008)
Employee sustainability expectations
1
Social responsibility score out of 5 >4.00 >4.00 4.12 4.08 4.01 (2010)
Environmental responsibility score out of 5 >4.00 >4.00 4.04 4.01 3.79 (2010)
Inclusion and diversity
New hire diversity: gender – women percentage 50% 44% 40% 42% 41% (2009)
New hire diversity: ethnicity – BME
2
percentage 30% 26% 26% 23% 21% (2009)
Partner admissions: women
3
percentage >30% 30% 32% 16% 16% (2007)
Senior management diversity: gender – women percentage 30% 20% 23% 22% 17% (2011)
Employee wellbeing
Absence through sickness percentage 50% 53% 80% 58% (2011)
Volunteering during working hours no. of occasions 6,503 5,320 2,900 (2007)
Volunteering during working hours no. of people 5,663 4,069 4,226 (2011)
Payroll giving participation percentage of staf 3.4% 3.2% 3.5% (2011)
Bene?ciaries: direct
3
no. of people 18,500 15,113 19,559 (2012)
1 Measured according to London Benchmarking Group (LBG) principles, including calculating in-kind contributions on an engagement basis
2 These ?gures exclude a signi?cant amount of work undertaken for charities and social enterprises, which is excluded because it does not meet LBG recording criteria
3 Bene?ciary numbers have been rounded down to provide a prudent representation of activity
Environment
Units
2017
Target
Progress
against
base year 2014 2013
2007
Base
Carbon emissions
1
Scope 1
2
tonnes CO
2
e – –45% 3,088 3,874 5,603
Scope 2 tonnes CO
2
e – –39% 15,460 16,182 25,546
Scope 3: Business travel
3
tonnes CO
2
e 0% –16% 56,669 57,869 67,775
Scope 3: Other
4,6
tonnes CO
2
e – –38% 9,084 9,818 14,685
Total tonnes CO
2
e –25% –26% 84,301 87,743 113,609
Operations
Energy million kWh –50% –37% 52 56 82
Paper procured tonnes –50% –51% 415 409 844
Water supply m3 (k) –50% –32% 140 141 206
Online meetings
5
meetings hosted per FTE – 2187% 3.22 1.07 0.14
5
Waste
6
Land?ll tonnes –100% –100% 0 0 587
Incineration to energy tonnes – –54% 642 773 1,408
Recycling
6
tonnes – –34% 1,366 2,149 2,059
Total
6
tonnes –50% –50% 2,008 2,922 4,054
1 Calculated using Defra conversion factors (May 2013)
2 Landlord operated ofces and 2007–2011 estimated on the basis of ofce area
3 Air and associated carbon emissions restated to re?ect new Defra emission factors which include radiative forcing (resulting in almost a 90% uplift)
4 Fuel and energy upstream emissions added as per new Defra emission factors
5 2010 data shown as earliest year available. Prior year data restated to re?ect updated measurement method
6 In 2014 we improved the accuracy for measuring our paper waste. The change has resulted in a signi?cant drop in our ?gures for recycling and total waste
All data excludes Middle East
Metrics are ?rm wide and cover all lines of service. FTE ?gures used are speci?c to individual metrics
For full details on performance and metrics, including Crowe Clark Whitehill LLP’s assurance statement, see: www.pwc.co.uk/corporatesustainability
© 2014 PricewaterhouseCoopers LLP. All rights reserved. ‘PricewaterhouseCoopers’ and ‘PwC’ refer to PricewaterhouseCoopers LLP
(a limited liability partnership in the United Kingdom) or, as the context requires, the PwC global network or other member frms
of the network, each of which is a separate and independent legal entity.
Unless otherwise indicated, either expressly or by the context, we use the word ‘partner’ to describe a member
of PricewaterhouseCoopers LLP.
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