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’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.”
Yorkshire 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 last financial year, with 30% based outside of London. In addition, over 1,000 graduates and apprentices joined EY in September 2020, with 45% based outside of London.
Business growth enabled EY to invest in its people with a number of strategic hires and internal appointments across its 500-strong Yorkshire practice.
EY welcomed a total of 39 graduates and apprentices across Yorkshire in September 2020, reinforcing its investment in the region and a commitment to building a pipeline of talent.
The firm’s Leeds office welcomed 21 graduates and 11 apprentices, while three graduates and four apprentices joined its office in Hull.
EY adjusted its student recruitment programmes for a virtual environment to ensure graduates and apprentices were still able to undertake client work and work towards their professional qualifications, despite COVID-19.
Suzanne Robinson, office managing partner for EY in Yorkshire, said: “Young talent is essential to our future business success and to shaping the skills we will need to remain competitive. I’m really proud that we maintained our commitment to student recruitment this year, despite COVID-19, and that we’ve honoured all the conditional offers we made prior to A-level results.
“It’s a tough time for many young people right across the region at the moment, making our apprenticeship and graduate schemes even more important as they provide students and school leavers with the opportunity to gain hands-on experience, while also enhancing their skills and gaining a qualification.”
EY has also made a raft of senior appointments, investing in growing the local presence of a number of its service line teams.
In April 2020, Adam Barraclough joined as an Associate Partner and senior M&A and finance specialist in EY’s Strategy and Transactions team, based in Leeds. Adam was previously Finance Director at Jacksons Bakery, near Hull, part of the William Jackson Food Group, and the wider Group’s Corporate Development Director. Prior to this, he was a Director of Large Corporates at Lloyds Banking Group in Leeds for over six years, before being appointed as Head of Global Transaction Banking for the North East in 2016.
This August, Alexandra Fogal joined as an Associate Partner and Head of Private for Yorkshire and the North East following 17 years with Barclays. Alexandra was previously Head of Business Development for the Manufacturing, Transport & Logistics (MTL) sector at Barclays Corporate in Leeds. Her role at EY sees her developing and maintaining relationships with owner-managed, AIM-listed and PE-backed businesses right across the Yorkshire and the North East.
Andrew Jones joined in December 2019 as Associate Partner in the Yorkshire Indirect Tax team to work with businesses across the region, advising them on VAT and indirect tax matters such as betting and gaming duties. He previously spent 14 years at PwC in various senior tax and VAT roles. Meanwhile, Srini Lalapet joined in late March as a Director of Transfer Pricing within the Yorkshire practice’s International Tax Services team and was previously Head of Global Transfer Pricing at a global RPA/AI software company in the US.
This year, EY also appointed one equity Partner and one Associate Partner in Yorkshire from within EY. Kate Jarman, now a Partner in the firm’s Assurance team based in Leeds, joined EY from university in 2004, after completing a summer internship with the firm. She has been working in audit for over 16 years and has audited a wide range of clients from FTSE100 through to entrepreneurial and privately-owned businesses across a range of sectors and industries.
In addition, Penny Isbecque was promoted to Associate Partner. Penny has worked in EY’s Tax team in Leeds for 20 years where she initially founded the Yorkshire Global Trade practice. She advises companies on global trade and both customs and excise duty matters. She has helped businesses across a range of sectors to manage their customs compliance, international trade costs and improve the efficiency of supply chain operations. More recently, she has been helping clients prepare for the additional duty and compliance burden of Brexit, following the end of the Brexit transition period.
Suzanne Robinson said: “Across our service lines, we’re building teams with people who specialise in the sectors that are vital to our region, like retail, manufacturing and technology.
“These significant appointments demonstrate our long-term investment in our regional business, and mean we are well positioned to serve the North of England’s leading companies – both through the current economic challenges and through the next stage of recovery.”
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 said: “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 said: “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.
On EY’s future growth prospects and the impact of the current economic environment Hywel Ball said: “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.”