KPMG’s revenues are up by 2.6% at £1.96bn, but profits have dropped for the second year in a row at the firm, down 7%, partly as a result of spending on acquisitions, property and staff training and development, while partner pay has fallen by 13%
Overall profits for the financial year ended 30 September 2015, before tax and members’ profit shares, were down 7% from £414m to £383m, as the firm continued to invest in what KPMG described as a three-year ‘grip, build and grow’ strategy to reposition the business in its markets.
Average partner remuneration fell 13% from £715,000 to £623,000. There was also a pay cut for Simon Collins, UK chairman of KPMG, whose remuneration was £2.2m, down from £2.5m in 2014.
KPMG said the fall in profits was a result of investment in the business and a 5% decline in the advisory business’ contribution, which was down from £324m to £308m.
In contrast, audit saw a 9% increase in contribution to profits from £181m to £197m, and tax was up 17% from £129m to £151m. New audit wins in the year included Barclays, Experian and British American Tobacco, and KPMG says it now audits more listed businesses than any other firm.
Simon Collins, UK chairman of KPMG, said: ‘Our industry is in the midst of historical change: the statutory audit is being overhauled at home and internationally; the tax debate is hotly contested and the demand from business for independent consulting services in transformation, risk, technology and corporate finance is huge.’
KPMG has spent £196m in acquisitions, property and staff training and development, which Collins said was designed to ‘set it on the path to sustainable long-term profitable growth’ and included £49m of acquisitions to bolster the firm’s consulting business such as management consultancies Nunwood and Boxwood.
‘Though growth is not yet where we want it to be, we have held our nerve on our investments and I am pleased that we are now seeing returns come through,’ Collins said.
KPMG spent £120m during the year on property, plant and equipment, including fit-out of new offices, hubs and a plush client meeting space in London’s West End, as well as £27m in staff training and development.
However, although the firm has declared its commitment to improving diversity amongst its working population, Collins said he remained disappointed by the pace of change in some areas.
£623k
Average partner remuneration fell 13% from £715,000 to £623,000
‘For example, approximately a third of our internal partner promotions were female but our external hires reduced the increase in our overall female representation at our most senior levels.
'Having more male employees in senior roles than female employees has also affected our gender pay gap figures which showed a 5.8% average difference across the grades and 21.4% overall,’ Collins said.
Despite a lower percentage of female external hires, the overall percentage of women in the firm’s most senior positions rose to 21.5%, compared to 19.8% last year.
KPMG UK has 617 partners and employs 11,652 staff, an increase of 2.7% in 2014.
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