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December 18, 2014

KPMG UK revenues up 5% but profits are down

By Vincent Huck

KPMG UK has reported revenues of £1,874m ($2.9bn) in the year to 30 September 2014, up 5%, while profits before tax have dropped by 9% and average partner pay remained flat.

Assurance revenues were up 3% to £495m and represented 26% of the firm’s overall fees earned in the past year. Tax revenues increased by 1% to £381m and advisory revenues were up 8% to £998m.

However the firm profit before tax and member’ profit shares saw a 9% decrease from £455m to £414m and the firm said the drop was due to the large investments made in the past year.

Despite 5% growth the gap between third ranked KPMG UK and fourth largest UK accounting firm EY UK has been reduced to only £6m as EY UK reported fee income of £1,868m in the year to 30 June 2014.

Commenting on the performance KPMG UK chairman Simon Collins said: "We have invested substantially across our business: in people training and development, in an improved staff reward package, in new technology and in new offices in Manchester and London."

Collins said a highlight of the year is the firm’s new approach to audit reporting. To that effect, KPMG UK has formed a strategy alliance with McLaren Group to integrate the technology provider’s predictive analytics into its audit and advisory services.

"Our efforts are being recognised and accordingly we have secured some fantastic audit wins this year, for iconic companies such as Compass, the Royal Mail and Smith & Nephew," he said. "We have won more FTSE 100 audit tenders and retained more FTSE 100 audits put out to tender than any of our competitors."

KPMG UK staff numbers have slightly increased (less than 1%) in FY14 with a total of 11,341 employees in the UK including 588 partners, compared to 11,300 employees and 583 partners in FY13. Similarly, average partner pay increased marginally by 0.3% from £713,000 to £715,000 in 2014.

In its financial results KPMG UK also includes the Saudi Arabia firm, which reported £35m in revenues, bringing the overall revenue of the firm to £1.9bn.

Earlier this month, KPMG reported global revenues of $24.82bn in the year to 30 September 2014, up 6.3% in local currency terms and up by just under 5.9% in US dollar terms.

Related article:

KPMG global revenues up 6% after two years of sluggish growth

KPMG and McLaren Group partner on audit technology

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