KPMG increases its lead in tough market

The Big Four accountancy firm extended its lead in the upper end of the market from 2010 when it audited 13 of the Yorkshire’s top 50 quoted companies. This rose to 17 in 2011 while rival PwC stayed flat with 12 of the top quoted firms audited in 2011.

Today KPMG’s UK practice reported revenues of £1.7bn for the year to September 30, 2011, representing growth of seven per cent. UK profit decreased by five per cent to £396m. Nationally, profit per partner was £683,000, down from £763,000 the previous year.

KPMG said this was as a result of a combination of investment in a higher number of partners and a slight drop in profit due to investment in staff and acquisitions.

Iain Moffatt, KPMG’s Leeds office senior partner, said: “It’s pleasing to record revenue growth of three per cent, to £215m, in the North – approximately £103m of which was generated in Yorkshire and the North East. This is a robust performance and a strong platform for gaining market share in 2012.”

The previous year, the firm’s revenues for Yorkshire and the North East were £101m.

Mr Moffatt said he was “very pleased” the firm, whose Leeds office employs around 750 people, had managed to increase its market share for big ticket audit work in Yorkshire in 2011, adding: “It’s about using audit to add value to businesses combined with superb people.”

He said: “Alongside many businesses in the region we shared the challenges of tough economic conditions in 2011 and are braced for more of the same in 2012 which will be characterised by continuing uncertainty.

“The relevance of our skills and the quality of our team stand us in good stead though, as we anticipate and work towards market share gain.”

Mr Moffatt pointed to a “continuing investment in resource”, particularly in areas such as management consulting, including in the financial services sector.

He added: “As businesses pursue efficiency and performance improvement programmes and financial organisations face unprecedented levels of change in their sector, strategic advice from these growing parts of our business will be called upon by clients in Yorkshire. And, while we would all wish for better trading conditions than those we are probably going to get, our risk management and restructuring skills will also be highly relevant to businesses in a flat, uncertain – and looking further afield, possibly turbulent – market.

“So, we have a good deal to achieve and significant potential for success, in terms of meeting and exceeding client needs in 2012, building on our creditable 2011 results.”

KPMG Europe LLP (ELLP) reported that combined turnover grew by 13 per cent to reach £4,589m in the year to September 30, 2011.

On a like-for-like, pro-forma basis and at constant exchange rates, revenues were up five per cent to €4,718m.

This firm said this “strong performance” was fuelled by revenue growth in Russia (CIS) and Turkey, with Spain also performing highly.

In the two largest practices in ELLP, revenue grew by seven per cent in the UK to £1,965m, while in Germany revenue was flat at £1,179m. During the financial year, KPMG firms in Norway, Saudi Arabia and Kuwait joined the ELLP group, and Jordan voted to join. This takes the number of countries represented in ELLP to 18, with 32,800 partners and staff.

John Griffith-Jones and Rolf Nonnenmacher, ELLP joint chairmen, said in a statement it was “a robust performance by ELLP firms in a challenging economy”.

The UK practice reported “substantial growth in risk consulting business, driven by clients’ need for risk advice in the uncertain climate, especially in financial services”. It also reported “siginificant growth in tax and pensions and in management consulting.

A highly competitive audit market with downward pressure on fees and a strong restructuring performance but a difficult market for transactions were also reported.

On the local economy, Mr Moffatt said: “Regionally, I think like every region in the UK our Yorkshire region is going to face a more difficult time over the next year or two. Having said that, we’ve got a great set of people with a great culture and great work ethic and we’ve got really good companies.

“If we capitalise on those assets there’s no reason we can’t not only get through the difficult period but actually come out of it in good shape.

“We really need to take the opportunity to position Leeds and Yorkshire in areas that are going to be of interest and growth over the next five years, whether that is in carbon capture and storage or in healthcare, those sort of things we need to desperately invest in and get organised in.”

Looking back on 2011’s highlights

Looking back on the 2010/11 financial year, Mr Moffatt referenced some of the Leeds office highlights.

He said it was lead adviser to the five West Yorkshire District Authorities on the creation of its proposed transport infrastructure fund.

In the field of M&A, its Corporate Finance team completed 13 deals, including the sales of Hill Hire, Dawsons and two SIG businesses.

Meanwhile the Transaction Services practice advised on fundraisings such as at R&R Ice Cream as well as sales including that of Daniels Group and North West based chemical company Multisol.

Mr Moffatt said the Restructuring practice “continued to lay claim to market leadership” with high profile insolvency appointments.

Its growing Financial Services Consulting team boosted its revenues by 40 per cent.