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.”
Key points from the 2018 annual results:
- KPMG UK generated its fastest annual growth in revenue for 10 years, achieving an 8% year on year increase.
- The firm has 635 partners.
- It has 14,587 FTE employees.*
- Total tax paid and collected of £885.8m to HMRC.
- Average partner remuneration rose to £601k, increasing from £519k in 2017.
- The Chairman’s pay was £2.1m. (This is the first full year of Bill Michael’s tenure as Chairman.)
- KPMG UK’s gender pay gap was 28% (median) and 42% (mean). The firm’s ethnicity pay gap was 14% (median) and 36% (mean). These figures include both employee and partner pay.
- KPMG remains one of the most popular employers in the UK, ranking top 10 in the Times Top 100 Graduate Employers survey for 2018.
- The firm also ranked 1st in the Social Mobility Employer Index compiled by the Social Mobility Foundation, Social Mobility Commission and the City of London Corporation.
* This number represents the average number of FTE employees for FY18. The spot count as at 1st October 2018, including our Partners, was 16,323.
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About KPMG in the UK
KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 16,300 partners and staff. The UK firm recorded a revenue of £2.338 billion in the year ended 30 September 2018. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.