KPMG profits dented by investment as northern revenues rise to £200m

Mick Thompson, office senior partner at KPMG's Newcastle base said it had been a period of expansion in the region

Mick Thompson of KPMG
Mick Thompson of KPMG

Accountancy giant KPMG says revenues across its Northern region grew to £200m in its latest financial year.

The firm’s nationwide pre-tax profits fell 9% due to the impact of investment in recruitment, new business lines and new offices in Manchester and London, but overall revenues for the big four auditor increased by 5% to £1.9bn.

Mick Thompson, office senior partner at KPMG’s Newcastle base, said it had been a year of expansion for the firm in the North East.

Commenting on a period in which the firm won audit appointments for the likes of Royal Mail, Mr Thompson said: “The year under review was another period of expansion for our practice in the North East, enabling more investment in our people, including key promotions across our audit, tax and advisory practices.

“Our success in working together across all disciplines in the best interests of our clients in the enterprise, PLC and public sector arenas was highlighted when we took the titles of both branch and employer of the year at the North East Accountancy Awards.

“With the range of service lines we can offer continuing to expand, we are seeing a growing number of opportunities in the enterprise market space. Our listed clients, including tender success stories at Grainger plc and Greggs plc, also remain key to our business and we continue to provide a broad range of value adding work to public sector clients across health, education, social housing and local government.

“Finally, we’ve had a stunning start to our new financial year as an advisor to the £100m flotation of Quantum Pharma – 2014’s largest AIM flotation in the pharmaceutical sector.”

Advisory services saw a 5% annual increase in contribution to profits from £308m to £324m, while audit saw a 2% increase from £178m to £181m and tax saw a reduction of 8% from £140m to £129m.

Elsewhere KPMG’s results stated the employee bonus pool increased by 9.6% from £73m to £80m, and average partner pay increased by 0.3% to £715,000.

The firm said it had received 38,000 graduate applications in 2014 for 850 places. Recruitment for 1,120 graduates and school leavers will also take place in 2015.

KPMG chairman Simon Collins, who received pay of £2.5m, said investment in items like an online accounting tool for small businesses was crucial to the future of the business.

He added: “During a time of transformation and investment, our business has advised on some of the most exciting infrastructure projects which are shaping the future of the UK, including HS2, the new nuclear power station at Hinkley Point, Thames Tideway Tunnel, and airports expansion in the south-east.

“We have even greater ambitions for the future, not least as our advisory business is also working closely with McLaren to apply data and analytics know-how to consulting work such as supply chain management.

“Our tax practice, which has one of the largest indirect tax teams, was disproportionately affected by changes in the indirect tax market and forthcoming EU reforms on supplying non-audit services.

“However, the tax practice is on a firm footing for the future by diversifying and innovating with good growth in our corporate tax business, the development of new technology such as ‘KPMG Fusion’, a pension modelling tool, and with the launch of our multi-disciplinary legal services business. Further investments in our ‘centres of excellence’ in Glasgow and Birmingham are also strengthening our tax offering and creating jobs.”

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