KPMG reports 5% increase in revenues, but drop in profits
Despite this, the firm reported a 19.5% reduction in profits
Big Four firm KPMG has seen 5% growth in revenues from £2.07bn to £2.17bn for the financial year ended 30th September 2017.
Despite this, the firm reported a 19.5% reduction in profits due to a series of investment write-offs and one-off costs.
Growth across service lines
The firm saw growth across several key service lines, particularly audit, which had 10% growth and several key new audits secured through audit retendering, including BT, Legal and General and Micro Focus, and more. This led to KPMG securing the number one auditor spot for FTSE250 and FTSE350 companies.
KPMG’s management consulting practice also saw double-digit growth, with an 11% increase.
The European M&A market reached its “most intense levels since the financial crisis,” which included advising a number of mergers such as of Booker and Tesco.
Implementing international regulatory initiatives such as the OECD’s Base Erosion and Profit Shifting project drove the demand for tax compliance services, a boost of 4%.
Bill Michael, chairman of KPMG UK 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.”
Drop in profits
Despite revenue increases, profits decreased by 19.5% due to investment write offs and one-off items, resulting in a drop from £374m to £301m.
Michael explained: “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.”
Resources & Whitepapers
Accounting Software The power of customisation in accounting systems
KPMG UK also continued to contribute to global investments made by the firm, with over £744m invested globally in new services, technologies, alliances and acquisitions.
Total tax payable to HMRC was £824m.
People and pay
Michael added: “We are confident about the strength of the UK economy and have plans to recruit an additional 2,500 colleagues in the forthcoming months.”
Currently, KPMG has around 600 partners, a similar figure to last year.
Due to the decrease in profits, average partner remuneration fell from £582k to £519k. The chairman was paid £1.4m.
KPMG’s gender pay gap was reported at 22.3%, while the ethnicity pay gap was reported at 13.9%.
Michael explained that building diverse teams was of utmost importance to the firm moving forward, as “teams with diverse perspectives deliver better outcomes to clients.”
He added: “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.”
The firm recently announced the promotions of 174 senior staff.