Financial results showed an improvement in all segments of EY's business. The figures are based on the results of the firm's four service lines: audit, advisory, tax, and strategy and transactions.
Over the last two financial years, EY Luxembourg has achieved a combined growth of 24.4%. On the other hand, PwC announced a month ago that its net profit had risen by 5.1% to €432.3m. With these significant results, EY Luxembourg is now emerging as a challenger. While the Big Four have generally performed beyond their expectations in 2021, given the pandemic context at the beginning of the year, EY's progress in each service line is remarkable.
“Although the last two years have been particularly challenging--with the pandemic causing a shift to virtual work almost overnight in FY2020--I am proud that EY has again delivered excellent results in FY2021. Taking into account the last two financial years, during which the global economy was strongly impacted, EY Luxembourg achieved an exceptional combined growth of 24.4%, demonstrating its resilience in the face of unforeseen circumstances,” said Olivier Coekelbergs, in a statement, looking back on his first full financial year as country managing partner of EY Luxembourg.
Transactions and tax boosted 2021
The strongest growth came from the strategy and transactions (SaT) segment, which recorded a 13% increase in revenue, following a 30% increase the previous year. Based on these results, the department has added two additional partners and expanded the team to further develop its existing activities and to launch new advisory services such as real estate M&A and development projects.
“More difficult conditions in the M&A market at the beginning of the year were largely offset by a high level of activity in the second half of the year, reinforced by sustained growth in the other activities of the SaT department. Valuation and modelling services were boosted by positive trends in the alternative investment fund sector, as were our restructuring services focused on fund liquidations and insolvency projects,” said Christophe Vandendorpe, partner, strategy and transactions leader at EY Luxembourg.
EY Luxembourg continues to see significant growth in the alternative investment fund industry, particularly in private equity, real estate and credit funds, requiring advanced tax advice.
In second place is tax, a service that grew by 11.8%, mainly thanks to transactional activities, transfer pricing, (re)structuring support, digital taxation, indirect taxation and managed services. Recent regulatory changes have been driven by the profound transformation of the international tax environment, under the influence of the OECD's Beps project (concerning, among other things, minimum taxation for multinational corporations), the Chapter X recommendations, and the latest EU tax directives (CBCR, Atad 1 & 2).
“EY Luxembourg continues to see significant growth in the alternative investment fund industry, particularly in private equity, real estate and credit funds, requiring advanced tax advice. This trend, coupled with the profound transformations resulting from ESG regulations that will soon apply to all sectors, will fuel growth opportunities for the department in the months and years to come,” said Bart Van Droogenbroek, partner, tax leader at the firm.
ESG and managed services
Audit (10% growth) and consulting (5.5%) also recorded very positive results. Cross-line and managed services present in each service line boosted results, as did operations and services related to ESG funds, responding to strong client demand for support, particularly in the implementation of various directives such as CSRD (corporate social responsibility) and SFDR (sustainable financing).
“In the coming year, we will accelerate the development of our financial managed services platform, which provides state-of-the-art services to the alternative investment fund industry. Finally, we will continue to support our clients in many other areas, such as digital transformation, cybersecurity and ESG advisory services, to name but a few of the main topics of interest in the market,” said Laurent Moscetti, partner, consulting leader at EY Luxembourg.
The firm also intends to apply to itself what it recommends to its clients. EY Luxembourg’s first sustainable development report was published on 25 November, in conjunction with the announcement of the financial results.
Such results should allow partners and employees to benefit from certain bonuses, but no communication has been made publicly on the subject. Nevertheless, EY has announced the possibility, in 2022, for all employees to complete an MBA (two options, at their choice) financed by EY, at the prestigious Hult Business School (Massachusetts), without however specifying whether employees must sign an amendment to their employment contract obliging them to remain with the company once they have graduated, or whether the course will be followed face-to-face or virtually.
“I am convinced that this cutting-edge knowledge is a differentiating factor in our sector, where anticipation is what defines us, especially in the context of the unprecedented disruptions we are and will be facing,” said Coekelbergs.
Since the beginning of the 2022 financial year, EY Luxembourg has already added a record number of 450 new employees. By the end of the year, more than 700 professionals will join the firm, which currently employs 1,700 people in Luxembourg. Never before has the company hired such a large number of new recruits.
The number of employees worldwide increased by 4.4% to 312,250.
Globally, EY announced combined revenues of $40bn for the year ending June 2021, an increase of 7.3%. Asia Pacific is EY's fastest growing region at 13.8% (10.2% for Europe, within EMEIA). During the year, all service lines of EY global recorded growth: 5.8% for audit, 6.4% for advisory, 7.2% for tax and 14.6% for strategy and transactions.
This story was first published in French on Paperjam. It has been translated and edited for Delano.