EY’s UK fee income grew to £2.45bn in the financial year ending 30 June 2019, increasing from £2.41bn the previous year. Despite a challenging business environment, revenues in Transaction Advisory Services and Tax grew strongly by 9% and 8% respectively, while Advisory and Assurance revenues declined on previous years by 3% and 5%. Over the last five years, EY has achieved a UK Compound Annual Growth Rate (CAGR) of 6%.
Steve Varley, EY’s UK Chairman commented: “We are very clear about the crucial role that our work plays in building and sustaining trust and confidence in the capital markets and helping to improve the attractiveness of the UK as a centre for business. That’s why it’s important that we have continued to invest in the right places, despite the uncertain economic environment. This year alone we’ve hired over 2,600 people, with more than a third of all roles in our regional business, invested around £31m in training and development, and have made significant investments in our tech capabilities.”
Growth in the East of England
EY has continued to invest in its regional business across the UK with 31% of its 2,600 new recruits based in its regional offices and 55% of its graduate and student hires based outside of London. In the East of England, the headcount of EY’s offices in Cambridge and Luton reached nearly 400 people.
Highlights from the East of England:
- Stuart Wilkinson appointed Office Managing Partner in Cambridge, taking over the role from Nick Gomer.
- Continued investment in senior talent with a new Partner, three Associate Partners and two new Directors.
- Across both offices, EY recruited 22 university graduates and 28 apprentices on EY’s Business Apprenticeship Programme.
- The EY Foundation’s Smart Futures programme supported 19 students from disadvantaged backgrounds across the East by offering paid work experience.
- Martin Frost of Cambridge-based CMR Surgical won the Disruptor award at the EY Entrepreneur Of The Year™ UK final.
- The 13th year of EY Charity Quiz raised over £8,000 this year for Cancer Research and Arthur Rank Hospice.
Stuart Wilkinson, Cambridge Office Managing Partner at EY (pictured), commented: “This year, EY has seen growth both nationally and across the East of England. EY’s continued commitment to the region is once again illustrated this year by our growth in headcount, bolstered by our recruitment of university graduates and apprentices. Our regional leadership team also continues to expand with a number of senior hires, as they play a key role in driving growth for our clients and for our business.”
Anup Sodhi, Luton Office Managing Partner at EY, added: “Our East practice – comprised of our Cambridge and Luton offices – continues to grow in response to increased demand for our services in the market. Looking forward, we will continue to build upon our presence in the regional market, enabled by investing in the very best talent.”
Investing in audit quality
EY established a long-term audit quality programme and a dedicated Audit Quality Board in the UK in 2014 and continues to make significant investments to drive ongoing improvement. EY has increased its investment in audit quality in the UK to £25 million per annum, while the number of people dedicated to its audit quality programme has grown by 25% over the last 12 months alone. EY has also continued to invest heavily in new technology and training for its people, recruiting around 30% more UK graduates and school leaver apprentices in audit than last year.
Investments in audit quality have contributed to a number of significant audit wins this year including: BGL Group, Vodafone, Cobham, The Rank Group, Burberry, SSE, Imperial Brands, Beazley, Aston Martin Lagonda, Intermediate Capital Group, Keller, SIG, Tullow Oil, Brewin Dolphin.
Steve Varley commented: “After multiple years of strong UK growth, we have continued to prioritise the infrastructure needed to deliver high quality audits by investing in compliance, our people and new technologies. While there’s more to do, I’m encouraged by the improvements in our latest audit quality scores from the Financial Reporting Council (FRC). The FRC inspections looked at 18 of our audits this year, with 89% of the nine FTSE 350 audits rated in the top category.
“We audit around 5,000 organisations in the UK and are increasing our focus to ensure that every one of these audits meets the highest standards. I’m confident that we are taking the steps needed to build on these results in the future.”
Investing in people - strengthening the focus on diversity and inclusion
Earlier this year, EY set ambitious new targets to double the proportion of female and Black and Minority Ethnic (BME) Partners in its UK business to 40% female and 20% BME by July 2025, as part of a new strategy to radically accelerate its progress on diversity and inclusiveness.
To achieve these targets, EY is increasing investment in its Accelerate and Future Leadership Programme for senior female and BME talent respectively and CareerWatch, a sponsorship programme for mid-career talent. A focus on programmes such as EY Reconnect, which provide a bridge for professionals re-entering the workplace after an extended career break, are also key to attracting and retaining talent. In January, EY also launched a new guide on domestic abuse, introducing tools and resources provided by Everyone’s Business and a period of special leave. These initiatives are in addition to EY’s ongoing focus on culture, flexible working, mental health and wellbeing, and its six employee networks such as the EY Women’s Network.
Following the appointment of Justine Belton to its UK LLP Board this summer, six of the 10 positions on EY’s UK LLP Board are now held by women. EY also appointed 57 new UK equity Partners in July, of which 34% are women (compared to 19% in 2018) and 22% BME (17% in 2018). As of 1 July 2019, EY’s UK partnership overall stands at 22% female and 11% BME. This is an increase of 2% and 1% respectively since 2018.
Steve Varley commented: “I’m proud of the steps we are taking to build diverse and inclusive teams. We’ve made positive progress but want to accelerate the speed of change, which is why we set ourselves ambitious new UK diversity targets at the start of the year. We see this as a business imperative and a key part of our future growth.
“Our approach to diversity and inclusion extends beyond gender and ethnicity targets. We’re committed to opening the doors of the profession to a broad spectrum of talent. In recent years we’ve launched new apprenticeship programmes such as a digital degree apprenticeship. This year alone we hired 918 graduates and apprentices across the UK.
“Our charity, the EY Foundation, also continues to grow from strength to strength. The Foundation worked with 4,061 young people and 322 employers this year, expanding to three new locations in Liverpool, Stoke and Wolverhampton.”
Committed to environmental sustainability
As part of a commitment to environmental sustainability, EY has taken steps to reduce plastic consumption across all of its UK offices – removing over 7.7m single-use plastic items. Around 47,000 branded plastic carrier bags and 6.5m disposable cups per year have been eliminated across its UK workplaces, following the introduction of reusable cups and bottles. Over 1.2m pieces of plastic takeaway food packaging from EY’s in-house coffee shops and restaurants each year have also been switched to plant-base sustainable alternatives. In addition, all heating and hot water - in buildings where EY purchases its energy from utility providers - is now generated using 100% certified renewable biogas.
EY’s approach to plastic reduction has also been recognised externally, with awards from the Institute for Workplace and Facilities Management and waste2zero.
Transforming EY’s business through data and technology
EY has continued to make significant investments in new technology to provide greater insights, services and efficiencies to its clients and its own business. Over the last financial year, EY has invested over £32m in the UK on technology. Globally, as part of its plan for combined investment of US$1b over two years in new technology solutions and capabilities,
EY has been transforming traditional services and launching new offerings with technology.
Future growth
Steve Varley adds: “I am feeling very optimistic about the future health and growth of our business. The economic environment over the next 12 months is likely to be challenging, as the UK economy adjusts to life outside the EU, but I’m confident that we have a resilient and flexible UK business that is well placed to adapt to a slower growth economy and is also able to draw on the strengths of EY’s global network. We have robust plans in place for our own business and remain focused on supporting our clients.
“We will also continue to play an active and constructive role in the current reviews into corporate reporting and the audit profession. We recognise the importance of the current dialogue around the profession and its regulation and are committed to ensuring that we continue to evolve to best serve business, investors and other public interest stakeholder needs. We believe the right set of comprehensive changes is needed to address corporate reporting, the scope of the audit, a strengthened regulator, and the accountability and regulation of both auditors and company directors.”
2019 financial highlights
- UK fee income growth of 1.5% in the financial year ending 30 June 2019 from £2.41bn to £2.45bn
- Five year compound annual growth rate of 6%
- Distributable profits before tax increased from £472m in FY18 to £477m in FY19
· Total tax contribution for 2019 is more than £927m
· Average distributable profit per Partner decreased from £693,000 last year to £679,000 in FY19
· Transaction Advisory Services grew strongly by 9%
· Tax grew by 8%
· Advisory and Assurance revenues declined by 3% and 5%.
- Growth in Financial Services was 0.2%
- Globally, EY reported annual revenues of US$36.4b for the financial year ended June 2019. This represents an 8.0% increase in revenues in local currency (versus 7.4% in FY18)
2019 non-financial highlights
- 57 new UK equity Partners: 34% women and 22% BME
- Hired 2,618 people: 41% women and 22% BME
- Hired 918 graduates and apprentices: 37% women and 41% BME
- Invested nearly £31m in learning and development
- Six of the 10 positions on EY’s UK LLP Board are now held by women.