Business Weekly - Cambridge, UK

It is the first such merger among firms representing global accounting networks. The merger takes advantage of the European Commission’s Eighth Directive legislation, which clarifies the duties of statutory auditors, sets clear principles to ensure objectivity and allows cross-border ownership of accountancy firms.

KPMG Europe LLP will be led by joint chairmen, John Griffith-Jones and Prof. Rolf Nonnenmacher, currently chairman of the managing board, KPMG Deutsche Treuhand-Gesellschaft AG.

Griffith-Jones said: “The approval to merge our two firms marks the growing significance of Europe’s capital markets and the importance of London and Frankfurt as global financial centres.

“It will allow us to serve global clients more effectively, provide our people with new and exciting opportunities and - by combining the strength and quality of our Audit practices - will help support the public interest and the capital markets.”

KPMG in the UK increased turnover 14 per cent to £1,454 million in the year to September 30. Operating profits rose 19 percent to £373m (2005: £314m).

Bonus and profit share payments to KPMG UK staff rise to a record £80m.

There has been growth across all of KPMG’s businesses. Its Audit practice grew two per cent. The Tax business grew 13 per cent, as companies continued to invest heavily in advice to help them maintain their tax position. More than 60 per cent of tax revenues were from non-audit clients.

KPMG’s Advisory practice grew 23 per cent, with exceptionally strong performances in Forensic (33 per cent), Corporate Finance and Risk Advisory Services (both 28 per cent) and Transaction Services (21 per cent).

The firm’s Restructuring practice grew six per cent – a creditable performance despite limited activity at a time of strong overall economic growth.

By market sector, the largest growth was in Private Equity (26 per cent) and Infrastructure and Government (24 per cent). Growth in other industry sectors was: Information, Communications & Entertainment – 16 per cent; Consumer & Industrial Markets – eight per cent; Financial Services – seven per cent.