KPMG UK revenues soar to £2.72bn as chief rules out split
KPMG’s UK business today posted double digit revenue growth for the second year in a row on the back of fast-paced expansion in its consulting and M&A deals advisory divisions.
In an interview with City A.M., KPMG UK’s chief executive said the “very strong financial performance” signalled the strength of KPMG’s “multidisciplinary” model, as he rejected notions the firm might follow EY in pursuing a global split.
Holt doubled down on KPMG’s multi-disciplinary model, which involves the firm’s audit and advisory arms working as a single unit, arguing that it, “helped us weather the ups and downs of the economic cycle.”
The KPMG chief, who took away a payout worth £2.72m last year, said the firm’s multidisciplinary model also let it help clients deal with “complex problems”.
The Big Four accountancy firm grew its revenues 16 per cent to £2.72bn during the financial year ending 30 September 2022.
The uptick in revenues saw KPMG’s pre-tax profits increase by three per cent, to £449m and the average payout given to KPMG’s 786 partners increased 10 per cent £757,000.
Partners at KPMG’s Big Four rivals, PwC and Deloitte, received handouts of over £1m in their most recent round of results.
The firm-wide growth was driven by double-digit revenue increases across all four segments of KPMG’s business, including the firm’s audit, tax and legal, consulting, and M&A deals advisory units.
KPMG’s M&A deals advisory arm posted the sharpest growth, with revenues increasing 24 per cent to £443m, while income from the firm’s consulting arm increased 22 per cent to £811m.
The UK accounting firm also saw revenues from its audit segment increase 10 per cent to £695m and income from its tax and legal business increase 13 per cent to £455m.
Holt argued KPMG’s multi-disciplinary model had helped it win top talent in offering new recruits the opportunity for a “varied career”. “We’re not splitting up our business,” the KPMG chief said.
He also rejected notions that splitting KPMG would boost audit quality amid claims separating audit and advisory businesses would reduce any potential for conflicts-of-interest. “I do not believe splitting the business will improve audit quality,” Holt said.
The Big Four chief said KPMG was investing in increasing the quality of its audit work and also warned the cost of audits would be increasing.
“As a sector, auditors are facing a number of upward cost drivers including increased regulatory requirements, new standards and a range of inflationary pressures,” Holt said.
Holt said the main driver in increasing the cost of audits is “new standards” that increase the amount of work auditors must carry out by up to 10 per cent.
The uptick in KPMG’s revenues came after the firm made record levels of investment in its own business over the past financial year, including £130m into new hires.
The investment saw KPMG promote 2,649 employees and hire a further 3,638 with pay rises of £2,000-to £4,000 awarded to staff firm wide.
Holt vowed to “continue to invest” in KPMG’s business as he noted the firm is “always looking for great talent”.
Looking forward, Holt said KPMG plans to continue growing its business by capitalizing on demand for advice in the face of widespread economic volatility.