KPMG UK today announced its strongest growth in a decade. Revenues increased by 8% from £2,172m to £2,338m for the financial year ended 30 September 2018 and underlying profit increased by 18% year on year, to reach £356m.
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”, said Mr Michael.
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%, following several important wins. 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%.
KPMG hired 1,365 new graduates and apprentices across the UK to support the firm’s growth. This was a record number since its 2011 intake and an increase of 22% in student recruitment on last year, with 48% of new roles based in the firm’s offices outside London. KPMG also introduced eight new specialist graduate technology training routes, offering graduates the opportunity to specialise in some of the most cutting-edge technological sectors, such as cyber security.
“Beyond our financial results, the aspect that has pleased me most about the course of the year is the firm’s work to increase social mobility”, said Mr Michael. “We’re investing across the United Kingdom, recruiting people from all backgrounds, straight from school and university, to support our growth. I firmly believe that no matter who you are or where you are from, everyone should have equal access to opportunities which enable them to go as far as their ability will take them. I was proud to see our work recognised in the Social Mobility Employer Index – which ranked us number 1. I am passionate about making further strides this year.”
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.
“I welcome the reviews of our profession launched by the CMA and BEIS”, Bill Michael commented. “They are an opportunity to consider how we can best serve the capital markets and broader stakeholders as their needs develop. Finding solutions will be challenging and there is a lot at stake. Success will require constant collaboration from all major stakeholders. I look forward to the Reviews’ conclusions and delivering the right result for investors and wider society.”
Karl Edge, Midlands Regional Chairman at KPMG, highlighting some key successes within the region over the past year, said: “Our Midlands practice has had another year of impressive growth building on the solid performance of the last few years.
“I am really proud of our financial performance and the investment we have made in our people. The results that we are seeing are testament to the talent and dedication of each and every person in our Birmingham, Leicester and Nottingham offices. We are operating in a market where disruption is prevalent in every industry, but I truly believe that the Midlands has a strong and vibrant regional economy, so opportunity will abound for those who are innovative and ready to adapt.
“We’ve grown at a faster pace in the Midlands practice than in previous years with six new partners and 18 new directors, and we have promoted a further 121 people across the business. We’ve also invested heavily in recruiting top talent, welcoming 112 new graduates, apprentices and school leavers.
“Our commitment to our communities is crystal clear and I’m delighted that we have contributed and worked together with our local partner charities: Cure Leukaemia, St.Basils, ThinkForward and TwentyTwenty over the last 12 months. Across the region, our people have dedicated almost 5,000 hours of their time to help others through various initiatives, such as volunteering and mentoring. It’s so important that we continue to work together to tackle important issues such as homelessness and lifelong learning as we lead the social mobility agenda to help make a difference and drive inclusive growth across our towns and cities.
“Nationally, the firm has achieved its fastest growth in a decade, an achievement which in no small part has been powered by the work of our Deal Advisory teams. I’m delighted that our Midlands M&A practice has played an integral role in this, advising on some of the region’s most significant transactions including the sale of GCI to Mayfair Equity Partners, CM Downton to EmergVest and M&J Evans Construction to Freshstream.
“Our Consulting practice, which includes our regional cyber business, has grown from a 100 person team, to 150, over the last twelve months. The team has had a tremendous year, and I have no doubt that demand for their services will continue to increase as organisations grapple with burgeoning data security and privacy issues.
“Both our Private and Public sector teams have had a successful year. We’re particularly proud of the work we’re doing in the healthcare sector, as we were recently reappointed to help deliver the NHS Leadership Academy Programme for a further five years. Already almost 4,000 NHS colleagues have been taken through this transformational programme.
“Looking ahead, we know that economic and geopolitical uncertainty is having an impact on confidence, which in turn is starting to affect investment decisions. We continue to focus our efforts on supporting businesses across the Midlands 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.”