In a market characterized by enormous uncertainty and digital transformation, KPMG has achieved record highs in all of its functions and boosted its market share even further. Gross revenues were increased to a total of CHF 541.0 million (+8.9%) and net revenues to CHF 401.9 million (+3.6%). Audit posted a rise in its net revenues to CHF 200.0 million (+1.2%). At CHF 116.0 million (+5.6%), Tax succeeded in improving on its already excellent results from the previous year. Advisory also managed to set a new record with CHF 85.9 million (+6.9%). KPMG’s fiscal year was additionally characterized by key investments in the future.
In the past fiscal year ended 30 September 2015, KPMG Switzerland once again delivered outstanding results with all functions contributing to this record performance. Net revenues were boosted to a total of CHF 401.9 million (+3.6%) and gross revenues rose to CHF 541.0 million (+8.9%). The hotly contested audit and advisory market is characterized by extremely challenging regulatory requirements, considerable economic and legal uncertainty as well as the ongoing digital transformation which is taking place in every industry. Against that backdrop, KPMG made key investments in new areas of business, optimized structures and processes as well as new technologies in order to boost its market share and further solidify its standing as one of Switzerland’s leading audit and advisory services firms.
Audit succeeded in growing its net revenues to CHF 200.0 million (+1.2%) in a saturated market. One driver behind this impressive result was the Swiss National Bank’s (SNB) decision to abandon its Swiss-euro peg and introduce negative interest rates. This resulted in immediate examinations of valuations and business plans. In a large number of different industries, the strong Swiss franc increased pressure on companies to take a critical look at their sites, structures and processes. Audits yield valuable information which helps lay a solid, reliable foundation for decision making. Furthermore, the past fiscal year saw the implementation of the Minder Initiative which brought quite a bit of extra work not only for listed companies but for auditors, as well.
Many large and medium-sized companies are working on structuring their business processes more internationally with the help of modern technologies. That, in turn, drastically reduces the number of shared service centers required to support financial, HR, procurement and sales processes. The assessments needed to ascertain the potential consequences of such changes as well as strong demand for assurance services during this change process also had a positive impact on the result of the Audit function.
The use of state-of-the-art IT technologies, particularly data analytics, has ushered in one major change in auditing activities: The increasingly global networking of enterprise resource planning systems (ERP) has allowed us, in our capacity as auditors, to centralize and therefore perform our audits across national borders, thus boosting the consistency, quality and meaningfulness of the data and audit results.
Tax surpassed its previous year’s result yet again with net revenues of CHF 116 million (+5.6%). One factor contributing to this outstanding result was the need for companies to understand the consequences they might be facing in light of the federal government’s current Corporate Tax Reform III (CTR III) as well as the OECD’s Base Erosion and Profit Shifting (BEPS) regulation.
Other increasingly stringent transparency and compliance requirements have been a driving force behind the Tax business, as well: Banks, for instance, are having to offer greater levels of transparency regarding foreign clients and their assets. Soon a reality, the automatic exchange of information will solidify these obligations and the wave of voluntary disclosures, particularly by Italian clients, is a direct consequence of this. The OECD’s call for country-by-country reporting means that companies will have to provide ever higher levels of transparency on tax-related issues. Given the topic’s importance from a reputational standpoint, the matter is no longer the sole concern of a company’s tax specialists; a growing number of board members are now also taking a greater interest in it.
Tax pressure from abroad continues unabated and the climate in Switzerland has become harsher, too. Businesses now have to assume that every tax ruling and every tax declaration could be made public. Accordingly, they are working on focusing their leadership, financial, R&D and other key functions on just a few countries. This translates to nothing less than a rewriting of the global rules on tax competition and also a growing focus on standard tax rates. Switzerland holds a very good hand in this respect; while intercantonal tax competition is due to become fiercer in the course of CTR III, it will do so in such a way that this will benefit the tax competitiveness of Switzerland as a whole. Other tax-related drivers of growth included developments in transfer pricing and indirect taxes (e.g. VAT and customs duties) as well as international employee assignments.
Advisory improved even further over the previous year’s results to post net revenues of CHF 85.9 million (+6.9%). Key drivers of this performance were technological in nature: Digitization has now affected nearly every industry, thus prompting companies to develop new business models, products and services as well as to completely restructure their processes. Although data and analytics has opened up entirely new opportunities (e.g. sharing economy), there are always two sides to a coin, the other one being the ever-present threat from cyberspace which is now a reality. Financial service providers forced by new regulations to engage in increasingly comprehensive international data exchanges are faced with extremely tough challenges in terms of the confidentiality of their client data.
Despite Switzerland’s restrained M&A market in an extremely dynamic global environment, demand for transaction advice was high. The torrent of new regulations and their cost consequences as well as the strong Swiss franc continued to lend momentum to existing consolidation trends in the private banking sector or forays into new areas of business in other industries.
More stringent regulations and increased pressure from regulators and authorities prompted heavy demand for advisory services, particularly in the financial services and life science industries. Anti-bribery regulations from the US increased the pressure put on companies with international operations even further. Major issues among Swiss banks included US sanctions, the requisite quality of client information as well as future regulations in the area of money laundering and the automatic exchange of information. Last but not least, the Advisory business benefited from heavy demand by corporations and SMEs for help in efforts to optimize their value and supply chains – something that should actually be done on an ongoing basis but which has gained new urgency due to the strength of the Swiss franc.
During the year under review, KPMG once again made major investments in the future: Both national and international initiatives were launched in the areas of cybersecurity, data and analytics, strategy, regulatory compliance and transformation. These investments included acquisitions of and cooperative arrangements with specialized companies like America’s Norse Corp., one of the leading manufacturers of anti-cyber-attack solutions, or the matchi.biz online FinTech platform. Moreover, KPMG made considerable investments in the recruitment of new talents and highly skilled specialists in areas such as sustainability. Other key investments concerned growth programs at the regional KPMG offices throughout all areas of Switzerland.
|Share of revenues||Change||2015 in CHF million||2014 in CHF million|
|Audit||49,7 %||1,2 %||200,0||197,6|
|Tax (incl. Legal)||28,9 %||5,6 %||116,0||109,8|
|Advisory||21,4 %||6,9 %||85,9||80,4|
|Total 1,3||100 %||3,6 %||401,9||387,8|
|Change||2015 in CHF million||2014 in CHF million|
|Total 2,3||8,9 %||541,0||496,8|
|Change||FTE 2015||FTE 2014|
|Total FTE, as of September 30 2015
||7,4 %||1 746||1 625|
1 Net revenues refer to services rendered by KPMG Switzerland.
2 Gross revenues include out-of-pocket expenses and services of subcontractors and other KPMG member firms charged through KPMG Switzerland.
3 In the past fiscal year, the Regulatory Competence Center Financial Services was moved from Tax to Audit. The figures for the previous year have been adjusted accordingly.
© 2017 KPMG Holding AG is a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss legal entity. All rights reserved.