KPMG UK revenues down 4% in pandemic

KPMG UK’s revenues dropped by 4% last year, from £2.4bn to £2.3bn, while profits fell 6% and partner pay was cut by 11%, during a year which also saw the firm celebrate its 150th anniversary

The last of the Big Four to report on its performance over a turbulent period, KPMG said the decrease in revenue for the financial year ended 30 September 2020 was driven in part by the sale of the firm’s pensions business, which completed in March 2020. Excluding the disposal of the pensions business, like-for-like revenue reduced by 2%.

Underlying profit (excluding the sale of the pensions business) decreased by 6% year on year, from £307m to £288m as Covid-19 disruption hit.

 Average partner distribution decreased by 11%, from £640,000 to £572,000, which KPMG said was the result of the firm’s decision to prioritise protecting jobs and supporting employees. The chair’s pay was cut by 14%, from £1.98m in FY19 to £1.7m.

The firm’s audit practice posted 3% year-on-year growth in net sales to £606m. The tax and legal team saw a decrease in net sales of 6% to £373m. 

Net sales in the consulting practice and deal advisory practice both saw a decrease of 2% to £574m and £400m respectively, as clients paused discretionary projects and M&A activity slowed at the beginning of the pandemic.

Bill Michael, senior partner and chair of KPMG in the UK, said: ‘This has been an extraordinary year. Throughout the pandemic our priority has been to protect the wellbeing of our people and maintain the long-term resilience of our firm.

‘We started the financial year strongly, recording high single digit growth prior to the onset of the pandemic. Like many businesses, our performance was then impacted by Covid-19. However, thanks to the hard work of our people, our business has remained resilient and our financial performance robust.

‘As we look ahead, we have started our new financial year strongly.

‘Our first quarter’s performance has been positive and our sales pipeline is strong. The M&A market has resurged, and clients are resuming discretionary projects as they adapt to the changes the pandemic has brought both to their business and market.’

People

At the onset of the pandemic, KPMG said the firm successfully moved all staff to remote working and introduced a special leave code, enabling people to take unlimited paid time off to care for family and friends during the pandemic. This remains in place.  KPMG did not furlough its staff nor access government Covid-19 loans.

The firm also continued to hire, adding over 900 graduates and apprentices, and 950 experienced hires during the year. KPMG has 582 partners and 15,595 full time equivalent employees. Over a quarter (27%) of KPMG UK’s board are from an ethnic minority background and 55% of the board are women.

KPMG UK’s gender pay gap for staff and partners improved by 5.2%, decreasing to 16.9% (median) and improved by 3.2%, decreasing to 36.2% (mean).

The firm’s ethnicity pay gap improved by 0.9% to 11.7% (median) and increased by 1.7% to 38.2% (mean). These figures include both employees and partners.

This year, in addition to its gender and ethnicity pay gap reporting, KPMG has voluntarily published its sexual orientation, disability and Black heritage pay gaps, as part of commitments to drive diversity and inclusion.

The firm reported a 3% median and 8% mean sexual orientation pay gap as of April 2020, including partners. It has a 9.6% median and 39.3% mean Black heritage pay gap as of April 2020, including partners and a 10% median and mean disability pay gap as of April 2020, including partners.

Hybrid working

Looking ahead, KPMG said it is now preparing for a future of hybrid working, and over the course of 2021 will roll out an additional £44m programme of investment to transform its offices and invest in new home working technology for staff.

The new hybrid working model will see KPMG staff work part of the week from home and part in KPMG offices or at client sites. The model will also enable the firm greater access to a broader and diverse workforce.

To deliver this, KPMG is undertaking office redesigns across the country, repurposing them to focus on facilitating collaboration. This redesign will challenge the traditional office layout, with space being repurposed to prioritise meetings, presentations and informal convening between colleagues, clients and the firm’s wider networks.

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