Revenues rise as profit dips at Ernst & Young

Marion Dakers
BIG Four auditor Ernst & Young said today that spending on expansion has dented partner profits this year, though UK revenues have risen 11.3 per cent.

E&Y said its turnover of £1.63bn for the twelve months to 29 June was the highest in six years. However, it conceded that profits per partner had suffered “a slight drop”.

The professional services giant gave no further details, but appears to have gone into reverse after a five per cent rise in average profit per partner to £663,000 during 2011.

“I am very proud of what we have achieved in an uncertain market,” said UK chairman and managing partner Steve Varley.

The company said it has seen a surge in demand from UK companies expanding overseas, as well as returning from offshore bases in the wake of the coalition’s move to cut corporation tax.

Varley added: “We’ve seen some exceptional growth across our business from advising UK companies on exporting, particularly to the BRICs.”

The firm said its UK business added 1,200 jobs in the year.

E&Y’s tax division enjoyed the strongest expansion within the firm, as revenues jumped 16 per cent to £431m.

Its audit and assurance practice saw more modest growth, with revenues rising 7.7 per cent to £478m.

Ernst & Young will appear before the Competition Commission alongside other auditors this week, as part of its investigation into the audit market. The commission’s interim findings are due in November.

The firm said today the net loss of one FTSE 100 audit client during the year showed that the market is “highly competitive”.

Meanwhile it picked up several smaller mandates including Dyson.