On Tuesday 18 October 2016, EY Luxembourg announced total net revenues for the Luxembourg practice of €178 million for the financial year ended 30 June 2016, up by 7.6% from the €165.5 million net revenues registered last year.

Alain Kinsch, Country Managing Partner, said “We are pleased to have achieved this year again, a very satisfactory revenue growth, which is fairly consistent compared to our last year growth of 8%. As businesses are facing unprecedented disruption to their business models due to the pace and scale of technological innovation, our sustained growth rate over the past several years is the result of the quality and value that our people are bringing to the market. Significant investment in our people and new technologies, including in our new working environment, have allowed us to respond to the new dynamic environment. Furthermore, as part of our Vision 2020, we’re embracing the change and disruption happening in the world today and see great opportunities for businesses to embrace transformational change. These opportunities are driving our focus on innovation, digital and cutting-edge technology – including across all our service lines and industries in Luxembourg – to ultimately bring the latest thinking and technology to our clients. Our audit practice has achieved this year a growth of 10.1%, which is a new chapter in our success story of market leading growth, which has been going on for more than 7 years now.  This growth enables us to consolidate this year again our position of second largest assurance practice in Luxembourg in terms of revenues. The future of Assurance is focused solidly on driving quality, innovating services and entrepreneurship and investing in data analytics and cyber. Our continued growth and strong performance this year again is evidence of our commitment to responding to the evolving needs of businesses, regulators and investors and beyond financial statement exposure. Our tax practice also recorded a strong growth at 8.3%. A key challenge facing our business this year was stakeholder demand for greater global transparency. This spurred growth in our services related to the OECD’s recommendations around base erosion and profit shifting (BEPS), as well as transfer-pricing work globally and increased cross-border activity. Our People Advisory Services businesses is also contributing to growth as our clients are more actively looking for services to manage mobility, organizational and compliance issues. After an exceptional growth of more than 32% in our Advisory practice last year, this past financial year has been a more difficult year with our advisory revenues decreasing by 7.3%, while we continued at the same time to invest in strategic areas such as digital technology, analytics and business transformation”.

Global key achievements

On a global level, EY has just announced combined global revenues of US$29.6 billion for the financial year ended 30 June 2016. Overall, financial year (FY) 2016 revenue grew by 9% in local currency (versus FY15). Since the launch of its Vision 2020 plan in 2013, EY has recorded a strong 9.2% compound annual growth rate.

Overall, headcount increased by 9.2% over FY15, reaching 231,000 people globally.

All of EY’s service lines delivered solid growth in FY16: Assurance grew 4.8%; Advisory 13.1%; Tax 9.6% and Transaction Advisory Services (TAS) 14.2%.

Revenue increased across all four of EY’s geographic areas: the Americas 9.7%; Europe, Middle East, India and Africa (EMEIA) 7.5%; Asia-Pacific 12.5% and Japan 6.4%. It should be noted that EY’s emerging market practices also recorded a second consecutive year of solid double-digit growth – up 12.8% overall (outpacing FY15 growth of 12.3%) – despite continued difficult economic conditions in key emerging market economies.

EY recorded strong, double-digit growth across five key industry sectors: the Banking & Capital Markets and Insurance sectors achieved double-digit growth, which was led by strong demand for services supporting regulatory change, cybersecurity, digital transformation and financial technology. Technology sector revenue was driven by strong M&A activity, transformative change in the industry tied to emerging and innovative technologies and increasing client engagements supporting the sharing economy. Health and Government & Public Sector growth was driven by transformational and regulatory services and new engagements in the areas of robotics and data analytics, among others.

Talent

“In September 2016, 180 professionals joined EY Luxembourg and we expect to recruit again more than 400 professionals in FY17. Our firm has reached 1,250 professionals representing 54 nationalities. We are very proud to maintain such a high level of recruitment of talented professionals this year again, which includes young graduates and experimented professionals of the advisory, tax, transactions and assurance across the industry from the commercial, industrial and financial sectors to the public sector”, said Alain Kinsch.

Olivier Lemaire, People Partner at EY Luxembourg, explained “Firstly, with regard to our assurance activities, our firm confirms its commitment to continue to carry out selective recruitment of highly qualified resources, which will help us play an active role in regulating the financial markets, as we face increased regulation. Once again this year, more than 100 young auditors with a bright future ahead of them, striving for a high-potential career, have decided to join EY Luxembourg for a truly unique experience. With regard to our tax activities, our tax transformation project is well advanced to respond to the changing global tax environment. We are proud to assist our clients in navigating through this changing environment with the technical and industry expertise of our experienced professionals, who can understand the most critical issues. Within our advisory and transactions practices, we will continue to consolidate our investments, as it offers a platform for strong growth in the future”.

"In practice, the transformation of our profession - whether audit, tax, transactions or advisory - drives our talent strategy. Understanding the aspirations of the Millenials is key to succeed in the war for talent and gender diversity will continue to be a priority. Nurturing and growing the engagement and giving a sense of purpose to our people is the commitment of the 80 Partners and Directeurs Associés of EY Luxembourg. Our entrepreneurship spirit, combined with our strong sector focus in the most globally integrated firm composed of professionals providing exceptional service to our clients remains the centrepiece of our corporate culture and of our DNA. At EY, we want to make sure our people feel, and are valued. It is no coincidence that EY was voted Universum’s most attractive professional services employer globally and 3rd overall,” added Olivier Lemaire.

POINTS OF VIEW

New technologies

Blockchain technology (sometimes referred to as distributed ledger technology or DLT) is high on large corporates’ leadership agenda. Though still in the early stages of development, it is becoming arguably the hottest topic, particularly in financial services, with the potential to streamline and accelerate business processes, protect data integrity and transform institutions’ business model. As blockchain gains wider recognition, more companies are looking to understand the benefits and potential technology opportunities. This realization presents challenges and opportunities for an industry focused on data management, operational efficiencies, cyber security and regulatory compliance. Asset servicing companies, in particular, are evaluating and investing in disruptive technologies at a faster pace than anyone expected. In fact, more than US$1.1 billion of venture capital has been invested in blockchain in the past five years. Yet, wider mainstream adoption is still a vision that requires upheaval, risk containment and investment in infrastructure and people. It may take years to overcome the hurdles and complexities but it is not too soon to begin the initially painful process of developing a strategic platform and collaborating on how wider adoption can be achieved. Initial efforts will result in a new level of transparency and accountability — and prove to be a competitive differentiator. Capturing data at inception and managing that data through the value chain is a benefit that will result in a continuous cycle of innovation and disruption. The ability to track transactions securely and transparently also establishes a level of trust in the data. A network of trust is a key prerequisite for using DLT and is a critical enabler for building confidence in financial services processing, promoting greater efficiencies, and serving as a catalyst to support business activities.

It can ensure the integrity of data traded among billions of devices without a trusted third party or intermediary involved in each transaction. We believe that reinforcing the trust provided by such a networked process will result in substantial gains and long-term strategic benefits, while the intermediaries help maintain access controls to support the network participants’ trust.

EY is there to help navigate this new digital world. “We help our clients make sense of the digital revolution. We work with them on the impact for their business model. We assist them in building better customer experience, adjusting their processes and technology platforms and changing their culture and organization,” said Olivier Maréchal, Financial Services Advisory Leader at EY Luxembourg.

“Thanks to its leadership position in financial services, Luxembourg has built a strong Fintech ecosystem over the last years. In the last 12 months in particular, many initiatives have been launched to consolidate this position, including several consortium initiatives on blockchain, PSD2 for example. In addition, Luxembourg should be considered as an attractive marketplace for start-ups that want to benefit from the presence of financial institutions. Even though globally FinTech companies still need to confirm the hopes placed by their investors, Luxembourg is now ready to scale its capacities to benefit from the Fintech opportunities in multiple areas such as digital payments, crypto currencies, wealth management and blockchain,” said Gaël Denis, Fintech Leader at EY Luxembourg

"Our EYnovation programme goes hand-in-hand with our guiding principles, these being innovation and performance. This programme is aimed at supporting start-ups with their growth plans from both a technical and commercial or a strategical point of view and offering them customised services adapted to their needs. More particularly, the EY novation programme identifies and assists the flagship businesses of tomorrow and is one of the cornerstones of our commitment to support our local community, while being part of our corporate responsibility strategy at the same time. “Here is exactly how Building a Better Working World becomes a reality at EY, as it also stimulates the entrepreneurial spirit and innovation among our people and within our company,” said Olivier Lemaire, Telecom, Media and Technology Industry Leader at EY Luxembourg.

Entrepreneurship

EY Luxembourg has launched the 5th edition of the “Entrepreneur of the Year” programme, which provides a unique opportunity for the entrepreneurs who are established in the Grand Duchy of Luxembourg to be awarded for their entrepreneurial spirit and outstanding achievement at a local and international level.

“The high potential of entrepreneurs is recognised as an important element of our economy. In the past few years, we have accompanied entrepreneurial companies starting as small and medium-sized enterprises and developing up to large multinationals. Furthermore, EY has continued to assist family-business owners in their efforts to make the transfer of their businesses to their heirs or successors a success and to secure their sustainability. Our commitment to providing support for developing successful business models particularly applies to financing and liquidity situations, refinancing or restructuring operations or even explorations of private or public capital injections. Not forgetting that sustaining growth and profitability, next generation planning, effective tax management, balancing risk as well as culture and responsibility are part of the main pillars of this model”, said Yves Even, Partner in charge of the Entrepreneur of the Year (EoY) - entrepreneurship/SME and family business department at EY Luxembourg.

EY Luxembourg has set-up a highly knowledgeable and experienced team focusing on the needs of family-owned businesses as well as small and medium sized companies over the last 15 years. This multi-disciplinary team, active in assurance, tax and advisory services includes Luxembourgish partners who have accumulated cultural and technical knowledge of the local market and who are strongly connected to the international EY competency centre for small and medium sized companies and family businesses.

Private Equity

With the transposition of the AIFM directive in national law and the profound modernization of its limited partnership two years ago, Luxembourg confirmed its strong commitment to be a leading centre for Private Equity funds. Those two key initiatives have proven to be highly beneficial for the financial centre with numerous SCSp and AIFM incorporated in Luxembourg. With the RAIF, Luxembourg has now opened the way to a new form of fund regulation and can pursue its efforts to build a first-class onshore private equity funds centre. Obviously, Brexit is another event which will require Private Equity firms to adapt their platforms, models and operations and possibly relocate some of their core activities. While many countries are positioning themselves after the Brexit, it is very clear that consistency and planning security will be key parameters of this new equation that Private Equity firms have to face.

“The Private Equity department has had another successful year at EY with revenue growth of 25%. This continuous success over recent years has led our Private Equity practice to become the single largest industry sector in our Luxembourg firm in terms of revenue and headcount. While our pioneering role in its early days has given our firm a unique brand and a leading position in this industry, our continuous commitment to the industry and focus  on designing and executing  an industry-focused  development strategy have enabled us to consolidate our leading position and maintain our unique brand, ” said Olivier Coekelbergs, Private Equity Leader at EY Luxembourg.

Tax 

The international tax landscape continues to undergo the most profound transformation in its history i.e. the implementation of the OECD’s BEPS action plans within the EU and worldwide, as well as the EU initiatives for more tax transparency and enhanced reporting while simultaneously combatting against illegal state aid and tax avoidance. All of which continues to reshape the fiscal environment of the future.

In this context of increasing international change, Luxembourg is set to redefine its longer term strategic fiscal policy, embracing transparency in accordance with the new international tax standards. The 2017 tax reform will continue to modernize the fiscal framework in order to ensure that Luxembourg will remain attractive to the international investor communities and competitive in comparison to other financial centres in that new international tax landscape.

"The government has adopted a strategy to gradually reduce the corporate tax rate  to compensate for the broadening of the domestic tax base  which is expected to arise from the harmonisation efforts at EU and OECD levels over the years to come" said Marc Schmitz, Tax Leader at EY Luxembourg. "In this framework of ongoing change and uncertainty, our tax services are in higher demand than ever in order to guide our clients through the growing complexity of the tax rules applying to their business affairs. The EY tax practice has continued to steadily grow with most of that growth generated by cross-border tax advice for multinational companies, banks and regulated and unregulated investment funds using Luxembourg as a hub. The attractiveness of Luxembourg for alternative investment funds (private equity and real estate) also still exists. The main service drivers supporting our solid growth in Tax were (re-)structuring support, transfer pricing, tax policy and controversy, private banking, M&A, tax compliance, transparency and risk management, as well as tax assistance to mobile workers."

Photo (L-R): Alain Kinsch, Olivier Lemaire, Marc Schmitz, Olivier Maréchal, Bernard Lhoest