KPMG Australia recorded revenue of $2.022 billion ($1.911bn excluding recoverable expenses, YOY growth of 9.4%) last financial year, delivering strong growth and profitability despite the volatile market conditions.
For the first time, the 2021 financial year performance is contained in the firm’s Impact Report, in what will now be an annual assessment detailing KPMG’s activity to enhance accountability around financial, environmental, social, governance and community benchmarks.
KPMG Australia Chairman Alison Kitchen said: “As community and market expectations evolve, people quite rightly want to know more about the organisations they are working with. We believe that transparency helps clients, our people and partners, and other stakeholders better understand our values and priorities, laying the foundations for long-term, mutually beneficial relationships.”
KPMG CEO Andrew Yates said: “Our Impact Report represents a step change in transparency for our business, which I believe is critical for building trust in our brand and our profession. The Report provides markers on how we are performing, what we have achieved, where we need to improve and, just as importantly, where we want to be. We’ll now publish this report annually to allow comparisons across key areas of performance.”
In FY21, KPMG’s financial performance was strong in an uncertain environment. Revenues of $1.911bn represented 9.4% growth on FY20 (excluding recoverable expenses). The overall profitability of the business improved by 19% on the previous year, which was negatively impacted by COVID. After the fall in equity partner profits from budget of 12% in FY20, partner profits increased 17% on the prior year. This was after our first priority to recognise staff for what they contributed during the year, by repaying staff for a temporary salary reduction, making ‘thank you payments’ and increasing bonus pools for employees.
Andrew Yates said: “Considering the ongoing economic and human impacts of COVID-19 during the financial year, this was a remarkably strong performance. This allows us to further invest in our people as we seek to sustain and grow our business. It’s a testament to our decision to focus on delivering for clients despite all the challenges of the past 12 months. The pandemic continued to shape activity in the wider economy, but our people have embraced agile working to maintain consistently high levels of service. I’m proud of the resilience demonstrated by our people and partners in ensuring we retained the high levels of commitment in supporting clients.
“In the second half of the year, we benefited from a significant pickup in business confidence across the Australian economy and fortunately we were well positioned to capitalise on the increased activity in the market. Despite lockdowns still occurring in some parts of the country, we are seeing much more confidence from clients than a year ago, and I share that optimism.”
KPMG employed almost 10,000 people in Australia at the end of FY21, including 74 new partners and nearly 600 new graduates.
Off the back of the results, Andrew Yates today announced further workplace initiatives aimed at building KPMG as an employer of choice. His measures include:
- A new firmwide People Advisory Board to ensure the Board and National Executive Committee can hear directly from staff on issues that matter to them, and to provide a sounding board around initiatives leaders are considering.
- A firmwide review of reward strategy and pay policy to ensure greater flexibility, adaptive to individual’s needs and career stages and the agility to respond to market forces. The work is geared at rewarding and growing talent and sustaining the business. A ‘total rewards’ approach will be taken - considering financial rewards and as well as the other rewards that come with working at KPMG that are important at each stage of someone’s career and life. This includes extending parental leave to 26 weeks, introducing cultural leave and floating public holidays.
- A commitment to share the firm’s FY21 success directly with staff, by doubling the staff bonus pool above budgeted levels, and investing in learning. The ambition is for KPMG to be a place that people come to grow in their career and there would be increased investment in the skills of the future: digital, change, relationship, transformation.
Despite the pandemic, the firm’s commitment to contributing to the community remained strong, although the way this was provided changed fundamentally. COVID-19 restrictions enforced across the wider community prompted a shift in KPMG’s approach to volunteering as it canvassed virtual options to offer support. Reflecting the commitment of its people, KPMG’s pro bono support increased to 19,345 hours in FY21 (up from 18,113 hours in FY20), aiding more than 100 not-for-profit clients.
In breaking down the performance, total revenue generated in Australia was $1.900bn (excluding recoverable expenses), while total revenue generated in Papua New Guinea was $11m. During FY21, KPMG Australia acquired KPMG's Fiji practice and will be reporting on Fiji revenue from next year.
All divisions made important contributions to the firm’s results in FY21:
Audit, Assurance & Risk Consulting
FY21 revenue: $590m
(6.5% YOY growth)
The External Audit business delivered a solid performance in a challenging environment and the Risk Consulting business produced strong results across the board. Risk Strategy and Technology services continued to see high demand, with significant growth within the remediation business. Risk Assurance continued to perform strongly off the back of increased demand for internal control advisory services.
Deals, Tax & Legal
FY21 revenue: $449m
(-0.9% YOY decline)
The Deals, Tax & Legal service lines experienced mixed results. Transaction activity increased over the year, leveraging strong liquidity, infrastructure investment, and increasing M&A appetites. The Strategy business was merged into the Deals, Tax and Legal Division during the year. This enabled Strategy to better service clients by taking advantage of complimentary solutions and access to value creation and data diagnostic tools. The business invested heavily in technology and platforms to help clients with tax transformation requirements. KPMG Law experienced strong year on year growth and remains a key investment area for the firm.
FY21 revenue: $243m
(0.8% YOY growth)
Enterprise, KPMG’s specialised mid-market and private clients business had a strong year. This was led by significant growth in the Advisory service line, driven by increased client demand in mid-market businesses for technology-led transformation and integration services.
FY21 revenue: $629m
(12.5% YOY growth)
As the financial year progressed clients felt more confident to drive long-term projects. Management Consulting increasingly won larger engagements and enjoyed significant revenue growth. The Infrastructure, Government & Healthcare portfolio saw significant growth in FY21 and the Corporates industry grouping also saw strong year on year growth.
The KPMG Board acknowledged the contribution of former CEO Gary Wingrove over the past eight years, and particularly during the pandemic.
Alison Kitchen said: “The past financial year was like no other. Responding to the uncertainty of a global pandemic required agility and a willingness to change tack rapidly as external conditions shifted and evolved. The Board thanks Gary for the strong leadership during his tenure and believes Andrew and his new NEC are well positioned to build on the momentum.”
KPMG Australia Impact Report 2021
KPMG Australia’s first Impact Report represents the firm’s commitment to greater transparency, improved accountability, and performance. The firm’s financial, environmental, social and governance (ESG) commitments are outlined and their impacts assessed under four crucial categories: Planet, People, Prosperity, and Governance.
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