Profits rise 53% at KPMG
KPMG UK today announced its strongest growth in a decade, with pre-tax profits rising 53% from £301m to £462m.
Reporting on the year to 30 September 2018, KPMG UK said that revenues increased 8% from £2.1bn to £2.3bn, with underlying profit increasing by 18% year on year, to reach £356m.
Average partner remuneration rose to £601,000 – increasing from £519,000 in 2017. The growth comes after KPMG last year suffered a severe drop in profits from the £374m it reported in 2016.
The firm, which has Leeds office and a Sheffield presence, said that a buoyant M&A market fuelled the firm’s deal advisory practice, which grew by 14%, while KPMG’s audit practice also posted growth of 8%. Regulatory change and trends within global politics, such as Brexit and US tax reform, drove demand for advice, which saw KPMG’s tax, people services and legal practice grow by 7%. Meanwhile, the firm’s consulting business achieved growth of 5%.
Chris Hearld, North regional chairman, said: “Our Northern business has had another year of impressive growth, increasing revenues by seven percent, cementing our market share and advising on key transformational projects in both the private and public sectors.
“This great result is a reflection of two things. First, it is testament to the talent and unwavering commitment of our people. Each and every one of our staff has had a part to play, and I could not be more proud of their efforts over the year. And second, that we continue to operate in a strong and vibrant regional economy where organisations, large and small, regardless of sector, can disrupt, innovate and grow, in turn creating opportunities for us.
Hearld added: “Our Enterprise business is also going great guns helping privately-owned companies across the patch unlock their growth potential. We’re particularly excited about some of the work the team is doing supporting fast-growth tech and digital businesses, from Liverpool to Sheffield and beyond, advising on their funding and scale-up strategies.
“Looking ahead, we know that economic and geopolitical uncertainty is having a creeping impact on confidence, which in turn is starting to bear on investment decisions. We remain laser-focused on supporting Yorkshire businesses through this uncertainty, ensuring that they are resilient to the challenges ahead while remaining alive to those opportunities by which they can grow and fulfil their potential.
“And of course, our own profession is undergoing a period of scrutiny, self-reflection and change as it strives to re-build trust with the public, investors and regulators. Collectively, we know there is much work to do, and we will continue to play our part in shaping the debate and advocating for change.”
KPMG hired 1,365 new graduates and apprentices across the UK to support the firm’s growth.
Bill Michael, Chairman and Senior Partner at KPMG in the UK, said: “These results are the product of the tough decisions we have made and the hard work of our 16,000 people across the UK.
“Since taking on this role, together with my leadership team, I have refocused the business on our core strengths aligned to the firm’s public interest responsibilities. These actions have put us on the right trajectory. We are seeing growth right across our service lines, attracting talented people and winning major mandates. Our pipeline is strong and I am excited about the future.”
Amidst the debate around the future of the profession, KPMG recently became the first UK firm to voluntarily stop providing ‘non-audit’ services to the FTSE 350 companies it audits and in the firm’s submission in response to the Competition and Markets Authority’s (CMA) market study, KPMG recommended the ban is rolled out across all audit firms in the UK. Bill Michael said: “I have been clear that our wider profession faces challenges. In order to safeguard against any perceptions of conflict of interest, we have drawn a clear line between our advisory and audit work for UK listed businesses.”
The firm also suggested in its CMA submission that ‘graduated audit findings’, which provide more detailed insight to investors and the public around the key risks and challenges the company audited faces, become mandatory in FTSE 350 audits. KPMG is already working towards the adoption of graduated findings in its own audits of the FTSE 350, for 31 December 2019 year ends.
