KPMG UK yesterday announced that revenues increased by 3% from £2.34bn to £2.40bn for the financial year ended 30 September 2019.
A busy M&A and restructuring market fuelled the firm’s deal advisory practice, which grew by 3% net sales while KPMG’s audit practice posted growth of 10%. Continued geopolitical uncertainty and widespread regulatory change saw KPMG’s tax, pensions and legal practice grow by 3%.
This follows a year of unprecedented investment in core areas of the firm, including £45m from in-year earnings as part of a planned £200m investment in audit by the end of 2020. Bill Michael, Chairman and Senior Partner at KPMG in the UK, said:
“We are creating a business that stands ready for the fundamental changes we expect to see over the next few years, both from the reforms necessary to rebuild trust in our sector and as we pivot our business to meet the changing nature of the work we are doing for our clients.”
“We have undertaken a comprehensive overhaul of our audit practice, reappraising every aspect of what it does and how it interacts with the rest of the business. Central to that has been investing heavily in our capability and capacity to deliver the audit of the future.”
“Our advisory business is increasingly winning long-term, multi-year contracts that deal directly with the most challenging and complex areas of our client’s businesses and require significant up-front investment on our part. We are winning these mandates by combining content, expertise and understanding from right across our firm. Our firm now has a strong base from which to capitalise on these opportunities.”
The firm has established new hubs in Leeds and Glasgow, following exponential growth in the firm’s managed services offering this year driven by major contract wins within the Financial Services sector. Both locations have seen 500 new hires join the firm’s consulting practice over the last six months, with hiring set to continue through the first half of 2020 as further long term contracts come online.
It also completed a major investment in Manchester after launching a national technology innovation hub in the city and hiring specialist staff including data scientists, designers, software engineers, project managers and analysts. The new 12,000 sq ft space at the Manchester Technology Centre has been designed around collaboration and development, with access to the local technology and university communities. KPMG now employs more than 1,000 staff in the city. A similar centre will be opened over two floors of its Canary Wharf HQ in 2020. Thanks to IT’s Her Future, KPMG UK’s programme to improve gender diversity within technology, female representation in tech roles at KPMG rose from 26% to 36%.
The firm hired more than 700 experienced auditors and a record 1,900 graduates and apprentices, while £23m was spent on audit-specific training. In November 2018, KPMG became the first UK firm to voluntarily stop providing ‘non-audit’ services to the FTSE 350 companies it audits. In June 2019, the firm introduced new governance which creates greater separation between audit and the rest of the firm. And in September 2019, around 500 tech specialists moved from the advisory side of the business into audit full time, joining the existing audit data science team to create a standalone audit tech unit.
Bill Michael said: “We are making the changes necessary to sustain public confidence in our firm and our profession. We took the lead in ending non-audit work for FTSE 350 clients, and we put in place stronger and more independent governance for our audit practice. We will continue to introduce sweeping reforms designed to draw a clear line between our advisory and audit businesses, improve audit quality and rebuild trust in our profession.
“In January 2020, we will announce a new separate Board for our audit practice. It will have stewardship responsibilities over people, performance, remuneration and audit quality and is a vital next step in creating a more defined, easier to regulate business with a clear governance structure.”