EY, the professional services firm providing audit, tax, transaction and advisory services, has reported fee income growth of 8% to £2.010b for the year ending 3 July 2015, up from £1.868b in the previous year, with all service lines and regions reporting growth. Distributable profits increased by 6% from £412m to £437m.
EY recruits over 4500 people and breaks £2b milestone in the UK
EY continues to accelerate investment across the organisation, with the refurbishment of the majority of its 21 offices - including the opening of a new office in Canary Wharf - investment in enhanced technology, recruitment of over 4500 people and a record number of 95 new equity partners joining the UK Partnership, building on the 68 partners admitted last year. These investments reduced average distributable profit per partner to £700,000, down 3.7% from £727,000 in 2014.
Globally, the organisation reported annual revenues of US$28.7b for FY15 -- an 11.6% increase over the previous financial year in local currency. This is EY’s fastest growth globally since 2008. Developed market growth was led by the US, UK, Germany, Australia and Italy and the emerging market practices saw revenue growth of 12.3%.
The very strong performance of EY’s 167-strong Cambridge practice was in line with the UK firm’s expansion during FY15. Regional highlights from FY15 include:
- Hiring Stuart Wilkinson as a new direct entry equity partner from KPMG and internally promoting James Turner to Director.
- EY employs 167 people in the Cambridge office – a growth of 18% on the previous year.
- A record number of 26 graduates joined the Cambridge office in FY15.
- Increased transaction support capability in the region including Stuart Wilkinson’s transaction tax experience.
Cathy Taylor, Senior Partner at EY in Cambridge (pictured), said: “Investing and developing our people, as well as ensuring we have an inclusive culture, have been vital to our success in recent years, and this continued in FY15. We appointed a new partner and director to our senior leadership team in Cambridge, who along with the large number of graduate, school leaver and experienced hires we took on, will help to grow our business in the years to come.
“The East of England is an important market for EY; as confidence further increases, we’re seeing increased demand from our clients to help them drive growth in the UK and internationally.
“As a firm, and from an East of England perspective, we’ve got real momentum and over the coming years we’ll continue investing to help our clients, communities and people thrive.”
Steve Varley, EY’s UK Chairman, says, “I am very proud of the jobs that we have created this year, especially as we continue to provide more opportunities for school leavers as well as experienced hires and new graduates. We have recruited over 4500 people in the UK to fuel our growth and we plan to continue this level of investment as part of our ongoing global growth strategy. We remain committed to the things that are important to us – high quality service, an inclusive people culture, entrepreneurship and supporting an attractive and vibrant UK economy – all of which are central to our long-term strategy.
“We have built great momentum in the market and believe that by maintaining this momentum we will continue to retain and attract the best talent to serve our clients. Our global strength continues to give us significant competitive advantage when combined with our deep local connections across the 21 offices in the UK.
“I am feeling very positive about the health of the UK economy. Improved market conditions have provided us with a great platform to further accelerate our investment in the business. We are seeing an increased demand from our clients for our services to help them drive growth and trade in both the UK and internationally.”
In the UK, EY grew all of its four service lines. Assurance grew by 6.4% to £585m, driven by continued success in being appointed to serve as auditors to clients including The Co-operative Bank, BBC, London Stock Exchange, Sainsbury’s Plc and Sage. We expect this growth to continue following the recent additional wins of RBS, Royal Dutch Shell, RELX Group and Associated British Foods. EY are maintaining investment in the audit practice to ensure it continues to win in the market and enhance audit quality. There was also a strong demand for broader assurance services, including financial accounting and forensic services, which both grew by over 20%. The fierce competition in the market is driving significant innovation with growing demand for new data analytic solutions and additional assurance on areas such as the measurement of corporate integrity.
The Advisory business grew by 4.5% to £584m with good growth from infrastructure, local public services, telecommunications, media, technology and life sciences. Transaction Advisory Services (TAS) grew by 12.1% to £324m with strong performances throughout the year for all parts of its business, driven by the improving market conditions and deep industry expertise. Tax grew by 10% to £517m with all areas of the business growing strongly in a year that saw good progress across all of the UK and a strong market for tax work on private equity and corporate transactions.
Financial Services, EY’s largest industry sector, delivered its seventh consecutive year of growth. Highlights include the re-entry to the top end of UK banking audits with EY’s appointment as auditors to RBS. Combined with other appointments, this means that the banking assurance business will double in size. The insurance and wealth and asset management teams also contributed strong revenue growth this year. Investment in digital capabilities and new partners in strategy and operations, cybersecurity, IT, risk and compliance will continue to drive growth in financial services in 2016.
Private Equity had another strong year supported by exceptional growth in Life Sciences. There was also strong growth in the Middle Market and regional businesses.
Steve says, “We had several fantastic audit wins in FY15, which not only reflect our continued investment in improving quality but also the significant investment we have made into digital analytics and real-time assurance. We continue to invest in the same areas as last year - fraud investigation technology, corporate integrity and cyber security.”
The EY Foundation celebrated its first year as an independent UK charity. The Foundation was founded last summer to support disadvantaged young people in gaining entry into the labour market and education, employment or enterprise: it is just one of the manifestations of EY’s global purpose to build a better working world. Since inception the charity has helped over 400 young people and social entrepreneurs through its programmes – Accelerate, Our Future and Smart Futures – and the work of its charity partners, including Think Forward and the Social Business Trust.
Investing in people
EY recruited over 4500 people in FY15, including 1275 graduates, 609 undergraduates and 110 school leavers. A record 95 new equity partners, 30% of whom were women and 11% Black and Minority Ethnic (BME), were also admitted to the partnership - testament to the strong business growth EY experienced. Globally EY’s headcount increased to 212,000 people – an all-time high.
Steve comments, “We continue to invest in our people and provide them with great opportunities to develop and advance their careers. The record number of new equity partners this year is something of which I am particularly proud and we are moving in the right direction in our commitment to being more diverse at all levels. Our people are our business and the business performance achieved this year is a result of the continued investment in the right talent to help our clients succeed - from our school leavers and graduates through to our experienced hires and partners.”
To help EY people achieve their potential, EY promote initiatives such as shared parental leave and Career Watch - a leadership and mentoring programme for its high potential women and BME population. Flexible working is available to all people and EY were recently rated amongst the UK’s top ten (2014 Working Families bench-mark), offering employees greater choice over how, when and where they work.
Steve says: “We continue to have a leading people culture and a transformational approach to developing talent. We invested over £30 million on training in the UK and delivered over 800,000 learning hours to give our people the skills needed to deliver in this fast changing marketplace.
“We are also looking at new ways to widen access to our profession by transforming our recruitment selection process for graduates, undergraduates and school leavers by removing academic qualifications as an exclusion filter from the 2016 initial application process. We want individuals from all backgrounds to have the opportunity to succeed at EY and believe in levelling the playing field.”
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EY is a global leader in assurance, tax, transaction and advisory services. With over 400 employees in our Cambridge and Luton offices, our teams provide a range of services to a variety of sectors, including manufacturing, life sciences, consumer products and retail, technology, real estate and construction, health, and the public sector. The broad array of companies across the East allows us to bring real, relevant and key insights to our clients.