EY, the professional services firm, has achieved £2bn of annual revenues from its UK operations for the first time, as changes in the audit market enabled it to pick up business from large UK groups.
UK fee income in the year to July 31 grew 8 per cent compared with the previous 12-month period to reach £2.01bn, helping to boost distributable profit by 6 per cent from £412m to £437m. Revenues rose across all operations and regions, with double-digit increases recorded in the transaction advisory services and tax units: income was up 12.1 per cent and 10 per cent respectively. In assurance services — which carries out financial reporting and auditing work for clients — revenues rose 6.4 per cent. Advisory fees grew 4.5 per cent.
Within the assurance division, financial accounting and forensic services both grew fastest, increasing their income by more than 20 per cent. Steve Varley, EY’s UK and Ireland chairman, said expansion in these areas was an “incredible opportunity” for the firm.
EU regulation that will come into force next year is already bringing more competition for auditing contracts.
Mr Varley said: “We’ve seen higher demand from clients for an extended assurance service that not only looks at economic performance but also areas like corporate culture and integrity.”
Winning new auditing work with Royal Bank of Scotland, Sainsbury’s and the Co-operative Bank helped EY’s audit revenues grow 8 per cent to £407m.
EY’s performance stands in contrast to that of rival Deloitte, which last month warned that continued fee pressure and less special project work was making it difficult to achieve growth in the audit market.
Average distributable profit per partner was £700,000, a 3.7 per cent fall from £727,000 in 2014. However, EY attributed the decline to a record number of new equity partners, which Mr Varley said was a sign of the firm’s confidence in its UK business.
“We’re feeling very good about the UK as a great place for a global company to do business, and it can serve as a bridge into the United States, Europe and India.”
Globally, EY’s revenue reached $28.7bn in the year to June 30. Although this represented an 11.6 per cent increase, continued growth at this rate will not be enough to achieve the company’s stated goal of $50bn revenue by 2020.
Nevertheless, Mr Varley maintained that “an increase of almost 12 per cent in volatile markets is very impressive,” and said he expected future revenue volatility to decrease.
