KPMG partners see 11% fall in distribution figures due to pandemic

Business adviser KPMG reported reduced revenues and profits, as well as an 11% decrease in average partner distribution figures, today.

Reporting figures for the year to September 30, 2020, including seven months of pandemic impacts, the business revealed a four per cent decline in revenues of £2.3bn.

It said this was driven, in part, by the sale of the firm’s pensions business, which completed in March 2020.

Excluding the disposal of the pensions business, like-for-like revenue reduced by two per cent.

Underlying profit decreased by six per cent year-on-year, from £307m to £288m, excluding the profit from the sale of the pensions business, as a result of the impact of the pandemic on the second half of the financial year.

As a result, average partner distribution decreased by 11%, from £640,000 to £572,000.

The firm’s audit practice posted three per cent year-on-year growth in net sales to £606m. The tax and legal team saw a decrease in net sales of six per cent to £373m.

Net sales in the consulting practice and deal advisory practice both saw a decrease of two per cent to £574m and £400m, respectively, as clients paused discretionary projects and M&A activity slowed at the beginning of the pandemic.

The firm, which has 582 partners and 15,595 full time equivalent staff, is now preparing for a future of hybrid working, and over the course of 2021 will roll out an additional £44m programme of investment to transform its offices and invest in new home working technology for staff.

The new hybrid working model will introduce a more flexible way of working, tailored to individuals’ roles and lives. It will see KPMG staff work part of the week from home and part in KPMG offices or at client sites. The model will also enable the firm greater access to a broader and diverse workforce.

To deliver this, KPMG is undertaking office redesigns across the country, repurposing them to focus on facilitating collaboration.

Senior partner and chair of KPMG in the UK Bill Michael, who saw his salary reduce by 14% to £1.7m, said: “This has been an extraordinary year.

“We started the financial year strongly, recording high single digit growth prior to the onset of the pandemic. Like many businesses, our performance was then impacted by COVID-19. However, thanks to the hard work of our people, our business has remained resilient and our financial performance robust.

“As we look ahead, we have started our new financial year strongly. Our first quarter’s performance has been positive and our sales pipeline is strong.

“The M&A market has resurged, and clients are resuming discretionary projects as they adapt to the changes the pandemic has brought both to their business and market. We have an important role to play to help our clients recover from the aftermath of this health crisis and rebuild their businesses for growth.”

Warren Middleton, office senior partner for KPMG in Manchester, said: “While our 150th anniversary didn’t pan out as we envisioned, we’re proud of the role our team has played in supporting businesses in Manchester and the North West region.

“And while challenging, it hasn’t been without some notable highlights – being appointed auditor to EG Group and advising on a wave of deal activity in Q3 as lockdown restrictions eased and the market accelerated.”

He added: “Despite a turbulent environment, our Manchester colleagues have shown agility, flexibility and resilience to not only ensure our clients’ services continue to be met to the highest standards, but that we give back to the communities we operate in. It’s our duty to recognise the hard work and commitment of our people, which we did through a raft of promotions announced throughout the year.

“2021 shows no signs of being any less challenging, but we see reasons to be optimistic. Our deals team is as busy as ever.”