Big Four firm KPMG comes through bruising year with strong set of results
Big Four audit firm KPMG has pushed past the fallout from the collapse of outsourcer Carillion to deliver strong revenue and profit growth.
The UK arm of the firm boosted revenue eight per cent to £2.338bn and underlying profit 18 per cent to £356m in the year to 30 September.
The strong growth comes despite the collapse of its client Carillion in January and the widespread concerns about the audit sector that have led to multiple reviews of the industry.
Speaking to Morning Wire, KPMG senior partner Bill Michael admitted KPMG had gone “off piste a bit last year,” and said the firm’s performance in the current year has been “the result of tough decisions we have made throughout the year”.
“We have refocused on our core business,” he said, “assurance, audit, risk, regulatory, those types of technical areas, that is what our brand is excellent at, we want to build our business around that core.
"We are on the right trajectory and we are seeing growth right across those service areas. We are attracting talented people and winning important mandates across the piece.”
A strong M&A market gave a 14 per cent boost to revenue in the firm's deal advisory practice, audit grew by eight per cent after a number of major client wins, while tax, people services and legal grew seven per cent amid a turbulent global political environment that drove demand for advice.
Michael said calls from politicians such as Labour MP Frank Field to break up the Big Four were unwarranted.
“We have evaluated our business model and I don’t think it is right to split off audit,” he said.
Michael argued that the multi-disciplinary skills possessed by firms like KPMG were essential in performing effective audits.
“I am a strong supporter of the multi-disciplinary firm. One of the things I would temper, I don’t want to hide behind a banner that says a multi-disciplinary firm can do anything, you can’t be all things to all women and men given the demand for transparency around our public interest responsibilities.”
Last month KPMG said it would become the first of the Big Four to stop offering most non-audit services for the Ftse 350 customers it audits.
A review of the audit sector by the Competition and Markets Authority (CMA) and a government review led by Sir John Kingman are both expected to report before Christmas and next month the Business, Energy & Industrial Strategy select committee will begin its own probe of the sector.
Michael said he was looking forward to the findings of the various reviews but said “we would be naive to think there won’t be impact around our business model.”
In June KPMG was slammed by regulator the Financial Reporting Council (FRC) for a deterioration in the quality of its audits.
Michael said the firm is investing “tens of millions of pounds and hundreds of people into our audit process” and said he hoped for a “significant improvement this year”.