Firm sees double digit growth in audit, establishing it as the no.1 auditor of the FTSE250 and FTSE350
The professional services firm KPMG UK has announced today a 5% increase in revenues from £2,068m to £2,172m for the financial year ended 30th September 2017.
With regulatory reform and geopolitical change stimulating increased demand for advice from clients, 2017 was another busy year for the firm. In particular, KPMG’s audit practice performed strongly in the wake of further rounds of audit retendering, posting growth of 10% and securing the audits of BT, Legal and General and Micro Focus amongst others, to become the number one auditor of the FTSE250 and FTSE350.
KPMG’s management consulting practice also grew strongly, posting an 11% increase, driven by clients seeking new and cost-effective operating models for areas such as IT services, finance, people and learning.
Activity in the European M&A market reached its most intense levels since the financial crisis, boosting the firm’s corporate finance and transaction services sales. KPMG advised on major deals during the year, including the merger of Booker and Tesco.
Meanwhile the implementation of international regulatory initiatives, such as the OECD’s Base Erosion and Profit Shifting project, stimulated demand for tax compliance services and advice, driving an increase of 4%.
Bill Michael, Chairman of KPMG UK, said: “We are operating in a period of unprecedented change and this creates great opportunity for our firm. Our clients are navigating complex regulatory and geopolitical change, while technology continually reshapes and disrupts their markets. I believe KPMG has a pivotal role to play to help businesses through this period, helping them to adapt, evolve and grow.”
However, despite this strong underlying growth, a selection of investment write offs and one off items saw the firm’s profits decrease by 19.5%. As a result, the firm’s profit before tax and members’ profit shares fell from £374m to £301m. This led to a reduction in average partner remuneration from £582k to £519k.
Bill Michael said: “This year our core business grew strongly to reach record revenues following some fantastic client wins. Our audit and consulting practices achieved double digit growth, while regulatory changes stimulated strong demand for tax advice. However, we also took some tough decisions, writing down our stake in a selection of historic investments where performance has not met expectations. While this meant taking a one off hit in our profits this year, it has left us well placed to achieve profitable growth next year and our sales pipeline is strong. We are confident about the strength of the UK economy and have plans to recruit an additional 2,500 colleagues in the forthcoming months.
“In order to achieve our ambitions for the year ahead, we must continue to attract the brightest and best to our firm from all walks of life. This is both a social imperative and a bottom-line issue – teams with diverse perspectives deliver better outcomes to clients. We are making progress but the pay gap data that we have also published today shows that, like many businesses, we need to go further to improve the gender and ethnicity balance, particularly among our senior people. Achieving this is a top priority for me and my leadership team.”
Key points from the 2017 annual results:
• KPMG generated 5% overall revenue growth, with a 19.5% reduction in profits;
• The firm has around 600 partners, a similar level to the previous year;
• KPMG UK continued to make significant contributions to a multi-year global investment program; this year KPMG International invested more than £744m in new services, technology, alliances and acquisitions, focused particularly on digital and analytics, strategy, cyber security, digital labour and audit;
• Total tax payable of £824m to HMRC;
• Average partner remuneration reduced from £582k to £519k;
• The Chairman’s pay was £1.4m, which reflects nine months remuneration for the former Chairman Simon Collins and three months remuneration for the current Chairman, Bill Michael;
• KPMG’s gender pay gap was 22.1% (median) and 22.3% (mean);
• The firm’s ethnicity pay gap was 11.7% (median) and 13.9% (mean).
• KPMG remains one of the most popular employers in the UK, ranking number 8 in the Times Top 100 Graduate Employers survey for 2017.
• KPMG ranked 10th in the 2017 Stonewall Workplace Equality Index;
• The firm also ranked 2nd in the inaugural Social Mobility Employer Index compiled by the Social Mobility Foundation, Social Mobility Commission and the City of London Corporation;
• KPMG was named in the Best Employer for Race list and awarded the Workplace Equality Award for Recruitment by Business in the Community;
• The firm was awarded The Queen’s Award for Enterprise: Promoting Opportunity through Social Mobility.
For press enquiries contact:
Zoe Sheppard, Head of Press Office at KPMG:
T:+44 (0)117 905 4337
About KPMG UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 14,500 partners and staff. The UK firm recorded a revenue of £2.2 billion in the year ended 30 September 2017.
About KPMG International
KPMG International is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 154 countries and have 197,263 people working in member firms around the world. For the fiscal year 2017 KPMG International recorded revenue of US$26.40 billion. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.