Ernst & Young UK (E&Y) has grown 9 percent to record revenue of £1.2 billion ($2.4 billion) for the year ended 30 June 2007. The results indicate E&Y should remain the smallest of the UK Big Four firms in terms of fee income. It is the third of the large firms to report its annual results – in recent months PricewaterhouseCoopers UK announced growth of 6 percent to record turnover of £2.1 billion and Deloitte UK reported growth of 15.6 percent for revenue of £1.8 billion. KPMG UK is yet to release its results, however it reported turnover of £1.5 billion for the year ended September 2006.
E&Y’s growth rate was well down compared to the year ended June 2006, when it recorded growth of 20 percent. This year it reported that its revenue growth over the past three years stands at close to 50 percent.
E&Y chairman Mark Otty said that for the past 12 months the firm has “given a clear indication that our revenue growth in the UK was going to be reduced from the Sarbanes-Oxley-inspired spike of 2006”. He claimed: “The increase in our UK revenues of nearly 50 percent over the last three years outperforms those of our three main rivals.”
The firm reported profits for the financial year increased by 7 percent to £328 million.
Otty said he was pleased with the “strong performance we achieved in all parts of our business in the UK in 2007”. “Despite the considerable investment we have made in recruiting a record number of new staff and partners, our revenues and profits have held up well,” he said. More than 3,000 people from 32 countries were recruited for the UK firm during the year.
E&Y UK now has close to 10,000 people in the UK. There are 6,000 staff and partners in the London office, making it the largest E&Y office globally. This autumn, the firm welcomed more than 750 graduates.
The firm reports that it has the highest number of female partners (15 percent) among its three major competitors and the second-highest proportion of female qualified accountants at 40 percent.
Otty said that the assurance and advisory business services practice “grew by a credible 8 percent in 2007, despite the decline in work relating to International Financial Reporting Standards and Sarbanes-Oxley compliance. In part, this was driven by a near 100 percent increase in revenues for our new business advisory services group.”
The tax practice and transactions advisory service practice both grew by 9 percent.
Otty said emerging markets and new services will drive growth for 2008. He commented: “The exceptional growth in the emerging markets also underline that our strategy of twinning more mature markets with those with great potential is already proving to be a successful one.”
In summarising the background for E&Y’s performance during the past year, Otty said: “London’s expanding role on the international stage for financial services and capital market activity has generated much opportunity for many of us working in this economy… We have seen the UK becoming more and more integrated with a global economy where traditional boundaries are fast disappearing. Whilst economic growth and activity continue to be strong, as a business we are faced with questions about issues such as climate change.”