Because of their legal form, the Big Four never communicate on their net results. This is distributed among partners according to criteria specific to each firm. Library picture: Nader Ghavami

Because of their legal form, the Big Four never communicate on their net results. This is distributed among partners according to criteria specific to each firm. Library picture: Nader Ghavami

Even if the duration of the Big Four’s financial years does not coincide, the business trend for all of them seems to be converging on new heights.

The Big Four have earned €1.355bn in revenue over 12 months. Though the pandemic changed the operational backdrop in these companies, it didn’t impact the business and the growth momentum witnessed in recent years. This comes despite the fact that the four companies had remained very cautious in their forecasts.

In order of appearance in the news, PwC announced a 5.1% increase in net income to €432.3m for its 2021 financial year, which runs from 1 July 2020 to 30 June 2021. EY Luxembourg announced a 10.2% increase to €286m for the same period. At Deloitte, the 2021 financial year from 1 June 2020 to 31 May 2021 closed with a growth of 7.5% and a gross revenue of €380m. At KPMG, where the financial year ran from 1 October 2020 to 30 September 2021, the increase was 9% to €257m.

In order to measure the gap between the Big Four and their rivals, BDO Luxembourg said it was expecting a turnover of €64m for its 2020-2021 financial year, an increase of 6%.

Growth in all business lines

Although the business lines in each of these firms do not exactly overlap, the same so-called Holy Trinity of service lines can be found in all four companies, namely audit, consulting and tax activities. Each of these business lines recorded growth.

The audit business grew by 10% at EY, 9.8% at PwC, 9% at KPMG and 7% at Deloitte, where it is called “audit and assurance”. While auditing is the review of a company’s accounts as published in the financial statements, assurance activities consist of the evaluation and analysis of operations, processes and procedures. The two work hand in hand.

In the consulting business, growth was 11% at KPMG, 10% at Deloitte, 5.5% at EY and 4.4% at PwC. EY, in its typology, mentions a fourth service line called “strategy and transactions”, which showed an increase of 13% over 12 months. This line of business can be linked to consulting in the broad sense, and more specifically to strategy consulting, with a more developed valuation/transaction component. The idea is to “support companies looking to expand into new markets, seize the next M&A opportunity or realise their growth ambitions through better management of your capital”. In many countries, this activity is carried out under the brand name “Parthenon”.

Finally, for tax there was a growth of 11.8% for EY, 8% for KPMG, 4.6% for Deloitte and 0.7% for PwC.

Alternative, digitalisation, ESG and regulatory changes

From a dynamic point of view, the activity was driven by four major trends.

The first of these, cited by all four firms, is the growth of the “private” or “alternative” sector in Luxembourg, driven by the AIFM directive, and the resulting boom in the alternative investment sector. This boom is attracting new players and increasing the need for advice and reporting.

Digitalisation, and more specifically digital transformation, has also created strong demand and has been a major driver of growth.

There is also the breakthrough of ESG, which is increasingly integrated into the strategy and practices of companies, which implies a rethinking of the way they work.

The last of these trends is a long-term one: it is that of regulatory developments, particularly in the area of international taxation, which since 2008 has been a real business for consultancy firms.

These four trends are long-term trends that will sustain the activity of the Big Four.

Substance over form

This year, the communication of the results did not dwell on numbers. Because of their legal form, the Big Four never communicate on their net results. This is distributed among partners according to criteria specific to each firm.

Emphasis was placed on corporate citizenship, which is given a prominent place in the annual reports. At Deloitte, the results have been integrated into an Impact report. Although this report has been in existence for three years now, this is the first time it has included the firm's financial data. At EY and KPMG, it is a transparency report that is published. ESG is also the main theme of the annual report published by PwC.

The four firms insist on their commitments to the three pillars of ESG. The net zero policies of the four firms include participation in various green initiatives and the awarding of various labels. There is also a focus on human resources. None of the companies are stingy with training plans or teleworking.

But what is most notable is the emphasis placed on the well-being of employees. At PwC Luxembourg, the objective for the current financial year is to recruit 910 new staff “to reduce the pressure on staff”. Deloitte has the same philosophy, with a recruitment plan of 500 people for the year. At EY, 700 people are being sought and at KPMG 500, which, on the strength of its good results, has announced a 15% increase in the salary package for its employees.

At the end of their respective financial years, PwC Luxembourg employed 2,839 people, Deloitte 2,300, KPMG 1,800 and EY 1,700.

This story was first published in French on . It has been translated and edited for Delano.