Poor performing investments dent accountancy giant’s profits

Partners at KPMG are having to stomach a pay cut after profits at the accountancy giant were hammered by a series of investments gone sour.

KPMG UK said profits tumbled 19.5% to £301 million in the year to September 30, dragged down by what it called “investment write-offs and one-off items”.

Chairman Bill Michael said the firm took some “tough decisions”, writing down stakes in historical investments where performance had “not met expectations”.

It resulted in a reduction in average pay for the firm’s 600 partners from £582,000 to £519,000.

However, revenues at KPMG rose 5% to £2.2 billion as the group was boosted by increased client demand amid geopolitical ruptures and regulatory reform.

KPMG’s audit practice posted growth of 10% after it secured mandates from the likes of BT, Legal and General and Micro Focus to become the number one auditor of the FTSE250 and FTSE350.

Management consulting grew by 11% as companies sought cost-saving operating models.

Mr Michael said he remains confident about the strength of the UK economy and KPMG will recruit an additional 2,500 staff in the forthcoming months.

He added: “This year our core business grew strongly to reach record revenues following some fantastic client wins.

“However, we also took some tough decisions, writing down our stake in a selection of historic investments where performance has not met expectations.”