The Swiss economy’s digital transformation process is in full swing. As an accounting and consulting firm, KPMG has once again provided its clients with effective support over the course of the past fiscal year and that fact is reflected in the firm’s extremely encouraging results: Net revenues rose to CHF 423.5 million (+4.9%) and gross revenues to CHF 555.0 million (+1,1%). Audit boosted its net revenues to CHF 212.1 million (+5.0%) while Tax generated CHF 120.6 million (+4.0%). Advisory also managed to set a new record with CHF 90.8 million (+5.7%).
In the past fiscal year ended 30 September 2017, KPMG Switzerland made an extremely good showing with all functions contributing to the new record high. Gross revenues rose to CHF 555.0 million (+1.1%) and net revenues to CHF 423.5 million (+4.9%).
The main driver in the audit and advisory market is the digital transformation process which is affecting every aspect of the Swiss economy. While digitalization brings many different risks, it also opens up huge business opportunities: the centralization of data and processes scattered around the globe, the systematic analysis and use of data, increasingly comprehensive compliance checks, targeted improvements in business performance, the development of new business strategies and the tapping of new client segments and fields of business.
To ensure that the firm can provide its clients with the effective support they need, and to strengthen its position even further in a fiercely competitive market as one of the driving forces on issues related to digital transformation, KPMG made major investments during the year under review: in staff development, in technological innovations and in key partnerships that will allow the firm to expand its business ecosystem. To this end, KPMG invested some 5% of its revenue in software and technology development during the past year as well as over CHF 7 million in training and further development opportunities. During the same period, 574 new experts were hired, most of whom from Switzerland. KPMG’s acquisition of Terria Mobile, an internationally successful software development company that specializes in mobile products and solutions, has enhanced the firm’s expertise in the areas of digital transformation and mobile experience while significantly expanding its range of digital services.
Another targeted expansion took place within the firm’s business ecosystem, namely through active involvement in numerous digital platforms including digitalswitzerland, Digital Festival and Hackathon in Zurich, Kickstart Accelerator as well as cooperative efforts with national, regional and specialized networks. The year under review also saw KPMG continue to pursue its close collaboration with several universities and solidify its standing as an opinion leader on key issues currently affecting the market and professional topics.
Audit improved its results yet again and boosted its net revenues to CHF 212.1 million (+5.0%). One key innovation driver in this business can be found in clients’ large-scale transformation projects which aim to consolidate all of a company’s financial and leadership processes, along with their control functions, under one global roof.
Digitalization has emerged as one of the strongest forces of change in this area, as well, and has a major impact on the day-to-day work done in Audit. Integrated financial processes permit an approach that is heavily based on digital data analytics. Accordingly, KPMG developed cutting-edge software and tools in 2017 that will allow its clients to benefit as much as possible from this trend. Making changes to core processes harbors new risks for clients, as well, which KPMG helps identify within the scope of its assurance services and also systematically addresses in reports it prepares for boards of directors and management.
Fundamental changes in the job description and skill requirements of auditors are yet another consequence of digitalization and are reflected in corresponding changes in both the training and further development opportunities we offer as well as how we select our new recruits. Demand for change management expertise is also on the rise. This adds yet another interesting aspect to the already multifaceted work of an auditor and has become an integral part of an auditor’s skill set.
The regulatory burden on providers of financial services has settled at an extremely high level and it seems that the past decade’s tidal wave of new regulations has come to an end. During the year under review, banks’ efforts focused on measures to prevent money laundering as well as commercial transformation in an improved macroeconomic yet persistently difficult low interest rate environment.
Tax succeeded in growing its net revenues to 120.6 million (+4.0%). This extremely good result was attributable in part to the requirements of foreign and domestic tax authorities as well as the accelerated pace of changes taking place in legislation and business practices, both of which are becoming increasingly challenging for taxpayers to deal with. Multi-year trends toward greater transparency, improved comparability and a more intense exchange of tax-related data continue unabated and are taking their toll on corporate and private clients alike.
KPMG offers comprehensive value chain management advice to help its clients pinpoint and manage their key value drivers. Doing so not only allows us to identify possible optimization potential but also address the fact that a company’s value chain is becoming increasingly significant in the international tax landscape. In the areas of tax consultancy and planning, trends toward digital automation, data analytics and the growing relevance of the entire value chain go hand in hand with a major broadening of tax advisors’ job descriptions, with this expansion in key topics and required skills making the task both more challenging and more enriching at the same time.
KPMG still sees a great need for advisory and explanatory services in response to uncertainties concerning the pending Corporate Tax Reform. Swiss companies with international operations, in particular, as well as the subsidiaries of multinationals want control over their fiscal situation and are calling for an end to the current legal uncertainty as a result.
Advisory increased its net revenues to CHF 90.8 million (+5.7%), a new all-time high. This growth was driven by large corporations’ and SMEs’ need for help on managing risks and seizing the opportunities opened up by digital and financial transformation.
These efforts focused on defining and implementing digital strategies, automation solutions and the use of digital tools and cognitive computing, and change management programs to sharpen clients’ focus and set up both new business models and supply chain management projects. Outsourcing services, such as for moving enterprise resource planning systems to the cloud, were also in high demand, particularly in the life science industry, at banks, at insurance companies and in public administration.
The digitalization of companies and administrations, the related increase in the value of the data stored, the rise in the number of cyber attacks and the draconian penalties that will apply to data protection violations in the future, generated brisk demand for cybersecurity, data protection and certification services.
The consistently high number of deals once again underscored the competitive edge of Swiss companies in the year under review. Despite the overall decline in the value of deals transacted in the Swiss M&A market, KPMG reported continued strong growth in the deal advisory business. In terms of forensic services for financial service providers, demand was greatest for services relating to financial crimes, improvements to compliance functions, the cleaning of customer data and cases of corruption. In the other sectors, the focus was on investigating fraud, improving compliance functions, corruption and third-party management.
You can find KPMG’s complete annual report here: Clarity on KPMG Switzerland
Business performance (JPG)
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