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EY took longer than originally planned to clear the debts it built up from the failed spin-off of its consulting arm, according to annual financial statements filed by the Big Four firm.
A $700 million loan taken out to cover the cost of Project Everest — which would split the company in two and radically reshape the global professional services industry — still had $270 million outstanding at the end of EY’s financial year in June.
Including other loans, interest paid by EY’s global operating business during the year totaled $74 million, more than double the amount in the previous 12 months.
A note to the accounts, filed at Companies House in the UK, said the three-year loan was eventually repaid after the end of the financial year. A person familiar with the matter said the last payment was made in October.
“Through our financial planning and regular assessments that guide our capital decisions, we made the decision to pay off this loan 16 months early, instead of 20 months early,” the person said.
A year ago, EY he said that “the costs incurred during the Everest project will be almost fully paid by July 1, 2024.”
Like the rest of the Big Four, the company had more sluggish year than he had hoped. It increased revenue 3.9 percent globally to $51.2 billion, with audit and tax offsetting a flat year in its consulting business.
Project Everest is designed to accelerate the growth of both consulting and auditing by freeing them from conflict-of-interest rules that prevent cross-selling of consulting services to audit clients.
The ambitious plan collapsed in April 2023 after EY’s US leadership did not approve it.
Unlike a typical multinational, EY is a network of nationally owned partnerships linked through a global entity that sets strategy and manages shared services such as IT. The global operating company, based in the United Kingdom, operates on a break-even basis and is funded by levies on national member companies.
About $600 million was spent planning Project Everest before it was canceled. The 2024 accounts show a big drop in spending on professional fees, such as for lawyers, falling to $972 million from $1.4 billion in the year to June 2023.
The new global CEO, Janet Truncale, promised otherwise strategic approach to increase revenue, including new investments in units that advise clients on transformation and sustainability and the expansion of EY’s managed services business.
