KPMG has boosted its revenues over the £2bn mark, a 6% rise, but profits are down 2% and average partner pay has also dropped as a result of what the firm is calling ‘substantial investment’ to adapt to the market including set up costs for new technology-led services
Revenue for the financial year ended 30 September 2016 was £2.068bn, up from £1.958bn. However, average partner pay fell from £623,000 to £582,000, having been £715,000 in 2014. KPMG said the drop was partly because of the investment costs but also because the firm changed the partner mix by investing in external hires with skills in emerging services, making 40 internal promotions and accelerating the retirement of a number of partners, KPMG said.
The firm grew across all functions except risk consulting, which saw large bank remediation projects close. Highlights for the year included mid-market tax transaction services and management consulting which all achieved double digit growth.
Audit recorded £488m of total sales, up 3%, tax was up 4% at £410m, deal advisory rose 6% to £386m, with management consulting posted the biggest rise, up 13% to £257m. Risk consulting was down 5% to £236m.
Simon Collins, UK chairman of KPMG UK, said: ‘The shift in demand for professional services continues at pace. Stimulated by regulatory reform, audit tendering activity in 2016 was the busiest year for the FTSE 350 since the trend began in 2013.
Throughout this busy year of tendering, we have won some fantastic work, maintained a FTSE 350 share of 28% and continue to be the largest auditor of listed businesses overall.’
Collins was paid £1.8m in 2016, down from £2.2m in the previous year.
KPMG secured the audits of companies including John Lewis Partnership, Standard Life, Balfour Beatty and Wood Group over the year, and its management consulting team won large managed services projects such as the Civil Service Learning contract to provide up to 400,000 civil servants with their learning and development needs.
Collins said: ‘Our management consulting function saw a 13% increase in net sales as we saw huge demand for services such as “Powered Enterprise” where we use cloud-based tools to help companies create new and more cost-effective operating models for areas such as IT services, finance, people and learning.’
KPMG received 28,000 applications for 1,200 graduate and apprenticeship places and total staff numbers are now just over 13,000. The firm has around 600 partners, a similar level to the previous year.
KPMG’s 2016 annual report is here.
