KPMG Europe LLP (‘ELLP’), the professional services firm providing audit, tax and advisory services, reports today that combined turnover grew by 13 percent to reach €4,589 million in the year to 30 September, 2011 (2010: €4,065 million).
On a like-for-like, pro-forma basis and at constant exchange rates, revenues were up 5 percent to €4,718 million (2010: €4,490 million).
This strong performance was fuelled by revenue growth in Russia (CIS) and Turkey, with Spain also performing highly. In the two largest practices in ELLP, revenue grew by 7 percent in the UK to €1,965 million (2010: €1,843 million), while in Germany revenue was flat at €1,179 million (2010: €1,187 million).
During the financial year, KPMG firms in Norway and Saudi Arabia voted to join ELLP. This takes the number of countries represented in ELLP to 18, with 32,800 partners and staff.
John Griffith-Jones and Rolf Nonnenmacher, ELLP joint chairmen, said:
“This was a robust performance by ELLP firms in a challenging economy. ELLP has continued to expand and has demonstrated the resilience of our business model, which has enabled us to deliver continued growth. At the same time, the financial crisis has sparked a fierce debate about the future of auditing. Proposes reforms have huge implications for our profession, the high standards of audit quality we have always worked so hard to maintain and the continued development of relevant multi-disciplinary services for our clients. We have approached this debate from a very clear standpoint. We are not interested in special pleading. This is not an argument about our profitability or about protecting the status quo. Instead it is an argument about the functioning of the capital markets and about building better defences against future financial shocks in the modern world.”
Group financial highlights
The strongest performing function in the firm was Risk Consulting, reflecting the need of clients for strategic advice in a challenging business environment. Within Risk Consulting, Financial Risk Management and IT Advisory were the key drivers of growth. Management Consulting also grew strongly, as sales benefited from an expansion in Financial Services work and also from acquisitions during the year. Audit remained broadly constant, while Tax achieved growth consistently across geographies. The trading environment was difficult however for the Audit and Transactions businesses, though Restructuring performed strongly. Among markets, growth across Financial Services, Private Equity and Corporates offset the decrease in work in the Public Sector which was the result of public expenditure cutbacks in many countries.
Group pro-forma revenues by functionAudit: €1,889 million – down two percentTax: €1,003 million – up nine percentRisk Consulting: €479 million – up 16 percentManagement Consulting: €443 million – up 11 percentTransactions & Restructuring: €654 million – down two percent
Group net-sales by market sector, as reported internally
Financial Services: €1,357 million – up seven percentCorporates: €2,613 million – up four percentPublic Sector: €351 million – down 14 percentPrivate Equity: €147 million – up 18 percent
Richard Bennison, ELLP Chief Operating Officer, said:
“This year has seen a very creditable performance in difficult economic conditions. Our focus throughout the year has been on striving to understand our clients’ needs, to exceed those needs and consistently add value while doing so. Looking ahead, we remain committed to investing in our growth areas and priority sectors. No imminent recovery is expected in the M&A and IPO markets and our plans are built around an expectation of continuing volatility in the financial markets. However we expect our Risk Consulting and Management Consulting businesses to continue to capitalise on the market opportunities that are likely to exist across all sectors.”
ELLP made some significant acquisitions during the year, mainly in the Management Consulting business. These included EquaTerra, a market-leading advisory business in sourcing with a strong US-presence; Plexus, a specialist healthcare consultancy business based predominantly in the Netherlands; Xantus, an IT consulting firm based mainly in the UK (this completed just after year end); and the integration of the personnel of several legal boutique practices in Spain.
Other highlights in the year included:
Leading the way amongst accountancy firms in corporate reporting
With corporate reporting a key issue for organisations across sectors, this year’s KPMG Europe LLP Annual Report is more transparent than ever before on strategy, risks and performance. Although ELLP firms are not listed entities and therefore not subject to the same reporting requirements as organisations with external shareholders, this year’s ELLP report mirrors best practice from the quoted corporate sector in complying with the Audit Firm Governance Code. Key new disclosures include:
The Annual Report also includes for the first time a report from the Public Interest Committee, the committee of independent non-executive directors which has just completed its first year in operation.
Sir Steve Robson, Chair of the Public Interest Committee, said: “The external environment is clearly unusually challenging at present in terms of both economic growth and volatility, and regulatory developments. The Public Interest Committee has encouraged management to be guided in these difficult times by a clear and determined focus on audit quality.”