EY Luxembourg can boast a total revenue of 325 million euros for the financial year ended 30 June 2022, an increase of 12.3% year-on-year. The consulting and auditing firm recorded revenue growth of 10.2% the previous year and 13% in 2020.

This recent increase is due “both” to the overall growth of the Luxembourg market and to the fact that the firm “has taken market share in a number of areas”, said Olivier Coekelbergscountry Managing Partner and CEO of EY Luxembourg, during a press conference on Tuesday 29 November.

Last week, his counterpart Deloitte reported a 7% increase in annual revenuewhich reached 405 million euros for the 2022 financial year. PwC posted 11% revenue growthfranchisor for the first time the bar of half a billion euros.

EY’s strategy and transactions segment, one of the company’s smallest, was up 44.2% year-on-year. According to Olivier Coekelbergs, the appointment of two new partners, the increase in real estate transactions and “the advantage of recurring mandates” are at the origin of these gains.

Its consultancy business is known for its share of a “cruising record” of 26%. Partnerships with technology providers such as Microsoft and SAP have been key job drivers and the division now employs around 200 people.

The audit segment grew by 11.1%, largely driven by the investment fund business. According to Olivier Coekelbergs, the growing importance of assurance on non-financial information has become significant for the company.

Its tax practice grew by 9%, in part due to its new line of operational tax sub-services.

EY employs around 1,800 people in Luxembourg.

Split for more profitability

Globally, EY plans to split its audit and advisory businesses. Although Olivier Coekelbergs said no decision had been made in Luxembourg, executives at the press conference seemed to imply that a split would likely take place here as well.

Arguments in favor of the split include regulatory pressure to reduce potential conflicts of interest between audit clients and other clients, the tendency to enter into multi-year consultancy contracts which in turn increase the risk of conflicts of interest, EY’s accumulated reliance on alliances with technology providers and the need for the company to push back on its technology investments, which would “be facilitated” by a spin-off, said Olivier Coekelbergs. In addition, a split would “bring more confidence in the business environment” and “more profitability” to both entities, he argued.

Room for maneuver

Two independent firms would increase client prospects, confirm Jose Longree, Head of Managed Services Leader EY Luxembourg. Currently, the firm cannot perform a number of tasks, such as recurring services and secondments, for audit clients. This rule would disappear if the split took place.

The newly freed services company would be able to enter into deeper alliances with technology companies, which would expand professional development opportunities for EY staff, according to Adriana Boixados Prio, responsible for human resources of the firm. The consulting company resulting from the split could make “acquisitions more easily”, adds José Longrée. Two separate companies will have “more success” in recruiting young graduates and experienced staff, notes Olivier Coekelbergs.

About 1,000 current employees of EY Luxembourg would remain in the audit company, and around 800 in the consulting company, underlines Olivier Coekelbergs.

Adriana Boixados Prio met before the company will eventually hire more staff to “duplicate” centralized service and support roles, such as finance, HR and marketing. Olivier Coekelbergs estimates that more than 30% additional staff could eventually be hired.

Also during this same press briefing, Olivier Coekelbergs declared that between a third and a half of the current income would be allocated to a separate consulting activity.

Decision in the first quarter of 2023

EY’s partners in each country, including the 65 partners in Luxembourg, will vote on the split in the coming months, “at some point during the first quarter”. However, the partners will “discuss internally” before the vote, in order to reach “a common decision” before the official ballot.

From the internal conversations ignored so far, Olivier Coekelbergs concluded that “everyone is convinced that this is the right thing to do”.

This article was written by Delano in English, translated and edited by Paperjam in French.