Ernst & Young, the accountancy firm that last month announced plans to merge with rival KPMG, saw total UK fee income rise 15 per cent to pounds 525m last year, according to Nick Land, a senior partner. Average profit per partner rose by twice as much, to pounds 259,000, with Mr Land's own total pay package rising from pounds 426,926 last year to pounds 515,902.
Global fee income rose by 17 per cent, to $9bn (pounds 5.3bn), making the firm the world's largest tax practice and the second largest management consultancy.
Nevertheless, Mr Land, who was presenting the firm's second published annual report, repeated his assertion that the organisation had to link up with a firm such as KPMG if it was to keep up with rivals. "For us the business logic is ensuring that we're not at a competitive disadvantage," he said. Doubling the size of the firm, to create an organisation with revenues of about $18bn, would help ensure it had the funds to do that, he added.
Though he acknowledged that it would be some months before regulators around the world decided on the fate of the unions being planned by E&Y and KPMG and Coopers & Lybrand and Price Waterhouse, he claimed he was more confident than ever both would be cleared.
Further consolidation at the top of the accountancy profession had been expected for some time. But the announcements, first by PW and Coopers in September and, then last month, E&Y and KPMG, of plans to create firms far bigger than Arthur Andersen, the current world leader with gross revenues last year of about $10bn, have shocked observers and led to concern among finance directors and chief executives about the threat to competition and the effect on fees.
But even in the field of audit, which has attracted the most speculation about such issues, there would still be sufficient choice for companies, Mr Land added. Arthur Andersen and Deloitte & Touche, the other two Big Six firms, would together audit about 35 per cent of the world's top companies.
Elsewhere, especially in management consultancy and corporate finance where accountancy-based firms competed with a variety of suppliers, it was not really a problem.
Moreover, even if the planned mergers were blocked, fundamental changes to the make-up of the profession were inevitable. Pointing out that the accountancy profession had become unstable, he predicted the forming of alliances, joint ventures and other arrangements. In addition, certain offices or practice areas might opt to leave one big firm for another or go out on their own. Arthur Andersen and Deloitte & Touche, in particular, could be expected to try to "peel away people, offices or practices".
Indeed, E&Y's business - like that of other similar firms - is already changing. Yesterday's figures showed that audit and other traditional accounting services accounted for a smaller share of income than last year, down from 37 to 34 per cent, while management consultancy's share rose from 17 to 21 per cent.
Meanwhile, Coopers and PW announced that "the first key milestone" in their plan to create a $12bn global firm had been reached with the distribution of the 88-page merger proposal document and voting forms to their 8,500 partners around the world.
Voting is due to be completed by the end of this month, and the results announced in the middle of next month. If supported, detailed integration planning could then begin, but implementation will wait until it is known whether the regulators have announced their approval.
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