Partners take hit
KPMG starts year strongly as hybrid future beckons
KPMG profits and revenue fell last year
KPMG said it has started its current financial year strongly after a decline in revenue and profit caused by the pandemic.
Partner payouts were cut for the year to the end of September as underlying profit at the big four accountancy firm fell to £288 million from £307m in 2019.
Average partner distribution was down by 11%, from £640,000 to £572,000 as the firm prioritised protecting jobs and supporting employees.
Despite the pandemic’s impact on seven months of the firm’s financial year, revenue decreased by just 4% from £2.4 billion to £2.3bn.
The decrease 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%.
The 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, UK senior partner and chairman, said: “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.
“We have an important role to play to help our clients recover from the aftermath of this health crisis and rebuild their businesses for growth.”
The firm 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 introduce a more flexible way of working, tailored to individuals’ roles and lives.
It 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.
Work on the offices will begin in the spring and take place over the course of the year.
KPMG will also roll out a programme of investment in technology as it upgrades its workforce’s digital tools. Staff will be supplied with devices to enhance their experience and suit an increasingly flexible way of working.