Write-off’s spoil KPMG UK's Christmas
Dec 19, 2017
Professional services firm KPMG UK saw its 2017 profits fall by nearly 20% to £301m on the back of a series of write-off’s related to unsuccessful investments. Chief among these was the data analytics business Flexeye which the group acquired for £3m in 2015. Underlying operational performance remained solid, albeit behind some of its major competitors such as EY ( see here ), with overall revenues up modestly by 5% to £2.2b. Average partner remuneration, however, shrank by 11% to £519k. KPMG UK’s recently released Annual Report, which covers the 12 months to 30th September 2017, presents a broadly upbeat view of its performance and prospects. The recent write-off’s, moreover, do not appear to have blunted the groups appetite for acquisitions ( see here ). Its Management Consulting business, which focuses on business and technology transformation activities and accounts for some 13% of group turnover, reported healthy growth with sales up 11% yoy. This was driven primarily by demand from its larger multinational and central government clients. Its profitability was, however, impacted by a small number of multi-year contracts in their early stages and poor performing contracts. Technology is also playing an increasingly pivotal role in KPMG’s overall client delivery, which it expects to be transformed within the next few years. It is a major focus for investment for the business going forward in areas including next generation digital audit tools, mass data analysis in tax and automated compliance methodologies. Successful execution of this group-wide digital reinvention, in particular the aggressive leverage of RPA and AI technologies being pursued by many of its competitors, will be a key determinant of the firm’s future prosperity.