Profits dip for KPMG UK but Brexit uncertainty provides boost
KPMG UK has reported a dip in full-year profits as it ramped up tech investments, but the Government's lack of clarity around Brexit has provided a boost for business.
The accountancy giant said "essential" investments in IT and technology were among the costs that prompted a 2% drop in pre-tax profit to £374 million for the 12 months to September 30.
Turnover, meanwhile, rose nearly 6% to £2.07 billion.
UK chairman Simon Collins told the Press Association that the company was at a "crossover period" and said revenue would start outstripping corporate investments over the next calendar year.
He highlighted the performance of the company's specialist Brexit unit, which has been advising businesses on immigration, tax and supply chain management in the wake of the referendum.
"Our clients need the navigation and the insight more because there's not a clear path for them," Mr Collins said.
When asked whether the lack of Governmental direction on Brexit had caused companies to seek out KPMG's advice at a higher rate, he said it was ultimately a "benefit" to KPMG.
"Yes, I think whenever there's uncertainty, or whenever options need evaluating, or you need insight based on experience of operating in other countries ... then people turn for clear and objective advice."
The core Brexit team currently consists of "tens" of people "who do nothing other than think about Brexit" , but Mr Collins explained that "hundreds" of employees are incorporating Brexit into their work.
The company was able to reduce average partner pay from £623,000 to £582,000 this year, in part by ramping up retirements, and cut its UK chairman's pay to £1.8 million from £2.2 million a year earlier on the back of a partner vote.
"In a year where, albeit the partners are hugely supportive of the investment that has made that marginal reduction in our profits, I don't think it's right to take too much out of the business myself," Mr Collins said.
But profits could rise if business forecasts for 2017 are proven correct.
"This is the crossover period for us so I think you've started to see strong growth come through. We see growth accelerating but we don't see the match between investment top line (staying) the same - so top line will start to outstrip the investment and therefore profits will rise."
Earlier this week, KPMG's International business reported an 8% rise in full-year global turnover to 25.42 billion US dollars (£20 billion).
It comes after sector peer EY saw turnover leap 9% 29.6 billion US dollars (£23.3 billion) in the year ending June 30.
PwC reported a 7% rise in global revenues to 35.9 billion US dollars (£28.2 billion) over the past year, while Deloitte posted an 8% rise in annual revenues to 36.9 billion (£28.9 billion).