EY’s UK partners were paid a record average of £749,000 this year as the accounting group benefited from a strong rebound in corporate dealmaking and demand for advice from its consultants.
The Big Four accountant said fee income had increased 7.3 per cent to £2.75bn in the 12 months to July 2, with profits rising more quickly partly because of lower travel costs during the pandemic.
EY’s 781 partners shared pre-tax profits of £533m, up from £479m a year earlier. Sales rose across its four main business lines, resulting in the highest payout per partner since it began disclosing the figures in 2002.
It is the latest set of strong UK results from the Big Four accounting groups. The industry has benefited from a flurry of M&A activity as companies reshape and digitise their operations in response to the pandemic.
PwC’s UK partners were paid a record average of £868,000 in the 12 months to June while booming demand and a one-off windfall from the sale of its restructuring division allowed Deloitte to hand partners more than £1m on average in the year to May. KPMG, the other Big Four firm, is expected to report its results in December.
EY’s almost 17,000 salaried employees shared an £83m bonus pool, including a one-off payment for their work during the pandemic. Partners at the firms are not paid a salary but instead share in the profits of the business, with individual payouts influenced by seniority and performance.
Hywel Ball, EY’s UK chair, said his firm would continue investing in high-growth sectors such as technology and sustainability consulting after making five acquisitions in the past six months.
He said the firm’s strong financial performance continued into the first three months of its current financial year, which began in July, after a weak corresponding quarter last year. “We’re confident that we’ll have a good growth year again this year,” he said.
However, he added there was a risk that rising interest rates and supply chain squeezes could cause difficulties for companies and damp demand for consultants in the first half of 2022.
The biggest jump in revenues was in EY’s strategy and transactions division, which grew 12.1 per cent, followed by consulting, where sales rose 9.5 per cent.
EY’s tax division increased sales by 4 per cent, while revenues in the assurance business rose by 5.8 per cent as rising prices across the audit market outweighed concerns over the quality of the firm’s work.
EY is under investigation by the UK regulator over its audits of three collapsed companies: NMC Health, Thomas Cook and London Capital & Finance. It was fined £2.2m in August for failings in its audits of Stagecoach, the London-listed transport company.
It has pledged to invest about $2bn globally to improve the quality of its audits after its reputation was tarnished by audits of Germany’s Wirecard and China’s Luckin Coffee, which are at the centre of fraud scandals.
EY’s revenues from UK government and infrastructure clients rose 18.5 per cent last year but Ball said his firm had focused on work where it could provide insight and had not been “body shopping” government by providing large numbers of consultants.
The UK government has faced scrutiny over the amount it has paid consultants during the pandemic. A report from MPs last week criticised the number of consultants used on England’s coronavirus test and trace service.
EY’s UK results followed the announcement in September that its network of firms globally had increased their total revenues by 4 per cent to $40bn. EY does not disclose its global profits.
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