East of England, 17 December 2020 - Following a strong performance over the first nine months of its financial year, pre COVID-19, EY has reported 5% UK revenue growth and hired over 3,000 people as the firm continues to invest in talent, technology and audit quality.
EY continues to invest in the regions, supporting its people, clients and local communities
EY’s UK fee income grew to £2.6bn in the financial year ending 3 July 2020, increasing from £2.5bn the previous year. Revenues in Strategy and Transactions grew 9.4%, Tax grew 8.1% and Assurance grew 7.8%. Growth in EY’s UK Consulting practice declined on previous years by 4.7%.
Hywel Ball, EY’s UK Chair, said: “At a time of intense disruption, our focus has been, and will continue to be, on doing the right thing for our people, our clients and our business. We have grown significantly while continuing to invest across the region, progress our ambitions on social mobility and diversity, and support the well-being of our people during what has been a difficult time for many.
“The first nine months saw a strong period of trading. COVID-19 dramatically changed the business environment during the last quarter of our financial year but we continue to take prudent steps to ensure we are well positioned for the future. We have however not used the Government’s furlough scheme or lending facilities.
“I’m really proud that EY has been able to play its part during the pandemic, whether that’s helping pharmaceutical companies to ensure the effectiveness of their supply chains, the various central, devolved and local governments to manage their unprecedented level of support for people and businesses or the NHS to build new hospitals and deliver the best possible coordinated response.”
East of England growth and investment
Despite a challenging economic backdrop, EY has continued to expand its headcount and has hired over 3,000 people in the UK over the past financial year, with 30% based outside of London. In addition, over 1,000 graduates and apprentices joined EY in September this year, with 45% based outside of London.
In Cambridge, EY grew staff numbers by 13%, investing in its people and teams. Over FY20, EY made several strategic appointments, including Adrian Bennett, who joined the business as a Partner in the Assurance team, to help support growth in the Cambridge office and across the wider region. Lee Morrissey joined the business as a Senior Manager and Natasha Brunlehner, Hamza Khna and Zehra Raza, all joined EY in Cambridge as Managers. James Turner also returned to EY Cambridge as a Director.
This year, the Cambridge office has been further strengthened by the appointment of Carolyn Norfolk, as an Associate Partner in the Indirect Tax team, to lead growth in the function across the city and wider region.
The Cambridge office also recruited 18 new graduates and apprentices in FY20, as part of EY’s ongoing investment in the region. EY recruited the same number in this years’ graduate and apprenticeship intake in September 2020, despite the COVID-19 pandemic.
Stuart Wilkinson, Office Managing Partner for EY in Cambridge, said: “I’m incredibly proud of the team in Cambridge and the way they have adapted to the challenges of COVID-19, to support our clients and people through challenging times.
“In addition to making several strategic hires to focus on expanding our support to clients across the region’s business community, our recruitment of graduates and apprentices is testament to our commitment to investing in the next generation at EY. The health and wellbeing of our staff has always been key focus for EY in the East of England, even more so during the global pandemic. Supporting our staff to transition to work in a virtual world, maintaining a proper work life balance and staying motivated to deliver the best audit quality to our clients has been absolutely critical to our continued success.”
Supporting Diversity and Inclusion
Across the UK as a whole, EY appointed 65 new equity Partners between 1 July 2019 to 3 October 2020, of whom 26% are women and 19% are from an ethnic minority.
As part of a commitment to diversity and inclusion, EY announced a series of new actions on anti-racism this summer. These included a target for 15% of its ethnic minority Partners to be Black. 30% of the work experience places on the EY Foundation’s Smart Futures/Our Futures programmes will be offered to Black young people for the next five years from September 2021. Additionally, EY has set a target of offering at least 30% of places on its school leaver pathways to Black alumni from the Smart Futures and Our Futures programmes from next year.
As of 3 October 2020, EY’s UK partnership stands at 23% female and 12% ethnic minority (3% are Black Partners). 64% of positions on EY’s UK LLP Board are also held by women. In addition, 43% of EY’s student intake in September 2020 were female and 41% were from a Black or ethnic minority background, up from 39% and 38% respectively last year.
Today, EY has also published its Black pay gap figures. This is in addition to EY’s regular annual pay gap reporting on gender, ethnicity, sexual orientation and disability, and its CEO Pay Ratio. These metrics go beyond the government’s current requirements. EY’s median gender pay gap has improved to 15.3% from 20.1% last year but there is still more to do. The firm’s median Black pay gap is 21.4% and Ethnicity pay gap is 15.8% (13.9% in FY19). EY has increased ethnic minority talent at each level of the firm, with the highest increase of 5% being in more junior levels which now make up 40% of the workforce. This has impacted the Ethnicity pay gap in the short term, but it should reduce in the long run – particularly when combined with new targeted actions on diversity and anti-racism. The full report can be found here.
EY’s approach to diversity and inclusion also includes a focus on social mobility. The EY Foundation - EY’s independent charity, which works directly with young people, employers and social entrepreneurs to create or support pathways to education, employment or enterprise - has supported almost 7,000 young people and worked with over 340 employers over the last financial year.
Hywel Ball commented: “Diversity and inclusion are key priorities for EY and I’m pleased by the progress we are making to improve the diversity of the firm. However, we know there’s more we must do which is why we have introduced more ambitious diversity targets and new anti-racism commitments.”
Investing in Audit Quality
EY has continued to invest in audit quality during FY20, adding 700 people to its UK audit team and investing in new technology.
As part of a further multi-year investment to improve the consistency of audit quality and to respond to the increased expectations placed on audit, EY has also launched a redesigned audit quality strategy. This includes a continued focus on developing a culture of professional scepticism, management support of audit partners, further investments in data-driven audit processes, and additional training for its teams.
Investments in audit quality have contributed to a number of audit wins in FY20. EY currently audits 24 companies in the FTSE 100 and 72 in the FTSE 350.
Hywel Ball comments: “Audit quality continues to be a priority for EY and we are making significant ongoing investments. Audit is fundamental to building trust and confidence in business and the capital markets, but even more so during a time of significant disruption and uncertainty. Many businesses are having to take difficult judgements about the future with limited precedent to draw upon. I’m proud of how our teams have responded, using EY’s global technology and drawing on specialists from across our business in areas such as restructuring and debt strategy to conduct high quality audits.
“In addition to COVID-19, we’ve also continued to work closely with our regulator on proposals for audit reform and have submitted plans for the operational separation of our audit practice. We recognise that change is needed to restore confidence in our profession, and we believe the steps we are taking are a clear signal of our willingness to do so. Operational separation is an important stepping-stone towards a reformed audit, corporate governance and corporate reporting ecosystem. However, these proposals alone will not deliver all the changes needed. A holistic package of reforms, including improved director accountability and changes to the scope of audit, is required to deliver effective and sustainable change.”
Committed to environmental sustainability
As part of a commitment to environmental sustainability, EY announced a 10-year zero carbon Power Purchase Agreement (PPA) in the UK this month. EY’s long-term commitment significantly contributes to a new solar power station project, based in Norfolk, being realised and commercially viable by providing certainty of revenue at a fixed price for 10 years. Over the term of the PPA, the renewable energy delivered by the utility scale solar power station will mean that nearly 100% of all electricity the firm purchases direct from energy providers will be counted as zero-carbon solar power.
By the end of this calendar year, in both the UK and globally, EY will be carbon neutral.
EY has also been working alongside the World Economic Forum and other large accountancy firms, to develop a set of common Environmental, Social and Governance (ESG) reporting standards. This includes metrics on carbon emissions, in addition to other ESG elements including pay, gender and ethnicity ratios. EY is also proud to have been involved in the development of the TCFD Report Playbook for Financial Institutions produced with the IIF and the UNEPFI, in addition to the ClimateAction 100+ Net-Zero Company Benchmark.
Concluding, Hywel Ball reflected on EY’s future growth prospects and the impact of the current economic environment. He commented: “With a global pandemic, the UK’s exit from the EU, as well as what could be the most significant change to our profession in a generation through operational separation, we are facing a period of significant change. However, I am confident in our ability to thrive through these challenges and we are continuing to make the investments needed for the future and to support our clients and communities.”
FY20 Financial Highlights
- UK fee income grew 5% to £2.6bn in the financial year ending 30 June 2020 (up from £2.45bn in FY19).
- FY20 benefitted from 53 weeks of results; 52 weeks in FY19.
- Compound annual growth rate of 5% over the last 5 years.
- Distributable profits before tax increased from £477m in FY19 to £479m in FY20.
- Average distributable profit per Partner decreased from £679,000 in FY19 to £667,000 in FY20. In addition, 10% of distributable Partner profits were retained due to COVID-19 uncertainty.
- Total tax contribution for 2020 is more than £975m.
- Strategy and Transactions grew strongly by 9.4%
- Tax grew by 8.1%
- Assurance grew by 7.8%
- Consulting revenues declined by 4.7%
- Key sector performance: Energy sector revenue growth of 27.4%, Technology, Media and Telecommunications 17% growth; Private Equity 10.3% growth; Health and Wellness 9.5% growth; and Financial Services (UK excluding Channel Islands) growth was 3.8%.
FY20 non-financial highlights
- Hired over 3000 people with 30% based outside of London.
- 65 new UK equity Partners: 26% women and 19% ethnic minority.
- Hired over 1000 graduates and apprentices: 43% women and 41% ethnic minority (up from 39% and 38% respectively last year).
- 64% of positions on EY’s UK LLP Board are held by women.
- Added an additional 700 people in UK audit. EY now audits 24 of the FTSE 100.
- Over 770,000 hours invested in learning and development.
- The EY Foundation supported almost 7,000 young people and worked with over 340 employers in FY20.
- Over 2,500 EY people in the UK have taken part in EY Ripples in FY20 – a global corporate responsibility programme.
- EY currently has around 17,500 people in the UK of which 37% are based outside of London.
- EY has not used the Government’s furlough or lending schemes.
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.