Brexit boost for Ireland’s ‘big four’ as fee income jumps

Revenues up 9% at PwC, while KPMG enjoys a similar buoyant year

While audit fees have fallen from their dizzy highs in recent years, both PwC and KPMG saw income from their audit functions advance in 2016. Photograph: Getty Images

While audit fees have fallen from their dizzy highs in recent years, both PwC and KPMG saw income from their audit functions advance in 2016. Photograph: Getty Images

 

Fee income at Ireland’s ‘big four’ largest professional services firms rose substantially in 2016 on the back of renewed economic growth, continued foreign direct investment and growing uncertainty arising from the changing global tax agenda and Brexit.

PwC, which reports on an all-island basis, saw fee income rise almost 9 per cent to €407 million in 2016, figures provided to The Irish Times business database Top1000.ie show. According to its transparency report, fee income in the Republic rose 10 per cent to €270 million.

Fergal O’Rourke, managing partner, said PwC saw “robust revenue growth” in all areas of its practice right across the country in the last year.

“This reflects a growing economy, continued FDI flows, rising employment and business leaders who are focused on growth despite the uncertainties,” he said, adding that the firm has “ambitious growth plans for 2017 and beyond”.

Given the changing tax agenda, Mr O’Rourke said that helping companies deal with the move towards greater global tax transparency was one focus, while the UK’s departure from the EU was another.

“Companies should undertake a full review of all aspects of their operating model, and consider the full range of potential Brexit impacts,” he advised.

Fee income growth

KPMG Ireland, which also operates on a 32-county basis, had a similarly buoyant year, with fee income growth of some 7 per cent pushing the firm’s fee income up to €353 million for the year.

EY Ireland, formerly Ernst & Young, saw its revenues rise 16 per cent to €220 million in the 12 months to June 30th, 2016, or to €243 million on an all-island basis.

Deloitte, which recently changed its year-end to May 31st in line with its parent Deloitte Touche Tohmatsu Limited (DTTL) network, has yet to report its full-year 2016 results, but figures for the year to May 2016 show growth of 6.7 per cent to €250.2 million, according to its transparency report.

The growth in business corresponds with a similar growth in employee figures. Staff numbers at PwC, which counts Bank of Ireland and Smurfit Kappa among its audit clients, are also up by 9 per cent to 3,596 over the year. Over at KPMG, employment rose marginally, up by 1 per cent to 2,447, while EY grew its headcount by 4 per cent to 1,800.

Audit fees

Profitability among the big four firms is not known as partnerships are not required to disclose their financial information.

While audit fees have fallen from their dizzy highs in recent years, both PwC and KPMG saw income from their audit functions advance in 2016. According to its annual transparency report, fee income from audit clients rose by 8 per cent to €109 million at PwC, and by 7 per cent to €114 million at KPMG.

KPMG’s advisory function also reported strong growth, with revenues climbing 11 per cent to €122 million.

The contribution EY’s audit function makes to the partnership’s fee income fell during the year, however, down from 47 per cent in 2015 to 45 per cent in 2016, although non-audit contributed 16 per cent of total fee income in 2016, up from 13 per cent in 2105, according to the firm’s transparency report.