KPMG profits hit by writedowns as partners endure pay cut
KPMG UK said that profits tumbled 19.5% to £301 million in the year to September 30.
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 that 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 historic 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.
Chairman Bill 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.
“While this meant taking a one off hit in our profits this year, it has left us well placed to achieve profitable growth next year and our sales pipeline is strong.”
KPMG UK also revealed its gender pay gap, which was 22.1% on a median basis and 22.3% at mean.
Mr Michael added: “In order to achieve our ambitions for the year ahead, we must continue to attract the brightest and best to our firm from all walks of life. This is both a social imperative and a bottom-line issue – teams with diverse perspectives deliver better outcomes to clients.
“We are making progress but the pay gap data that we have also published today shows that, like many businesses, we need to go further to improve the gender and ethnicity balance, particularly among our senior people. Achieving this is a top priority for me and my leadership team.”