Profits plunged at KPMG after the accountancy giant took the “tough decision” to clear the decks and write off poor performing investments.
Boss Bill Michael admitted the firm had gone “off piste” with some its recent technology acquisitions.
Average pay packets for the firm’s 600 UK partners shrank from £582,000 to £519,000, KPMG revealed this morning. Annual profit before tax slumped 19.5 per cent to £301m.
But the firm was extremely positive about its own prospects and "very confident" about the UK economy, unveiling plans to go on a hiring spree in the next few months and recruit 1,300 new staff on top of its annual 1,200 graduate intake.
“If I look back on the last few years… we went off piste a bit,” Michael, who took over as UK chairman this year, told City A.M.
We bought a whole bunch of things over the last three or four years, really diverse types of investment in the technology space and really bespoke things... They did not work out as well as we would have liked.
We tried an operating model over the last couple of years. It did not work.
The hit to profits and pay – which Michael said “the partners fully understand” – was also as a result of new investments in tax and assurance services, made while KPMG benefitted from revenue “tailwinds”.
“From my perspective, growing from where we are strong is more important than anything else,” Australian Michael, basking in this morning's Ashes success, added.
KPMG hailed the performance of a number of its key divisions. The firm snared a number of high-profile audits, including BT, Legal & General and Micro Focus. And with European M&A, markets reached their “most intense levels since the financial crisis”, boosting corporate finance and transaction services returns, the company said.