Total net revenue
in CHF million
Comprehensive data analytics and IPOs
Audit improved its results even further, with net revenues now up to CHF 259.3 million (+1.9%). Increasingly extensive technological innovations, both on the clients’ side and on KPMG’s end, were instrumental in driving this positive development: Not only do they enable financial and leadership processes to be completely redesigned on the clients’ end, but also let KPMG standardize, automate and centralize key audit tasks. This enhances both the reliability of our Audit results as well as the relevance of our reporting even further. Comprehensive data analytics let us offer our clients complementary, innovative assurance services.
IPOs were also a positive driver during the past fiscal year, with KPMG guiding its clients throughout the entire IPO process and assisting them with specific aspects of it, such as the provision of relevant financial information and efforts to restructure their corporate governance systems. One encouraging observation is the fact that the Swiss capital market remains attractive for companies of various sizes, especially for companies reporting in accordance with the Swiss GAAP FER accounting standards.
Sustained appreciation pressure on the Swiss franc and uncertainties as to whether Switzerland will continue to have free access to the European single market (keyword: framework agreement) are prompting some businesses to put larger investment projects on hold. Companies are giving extremely careful consideration to the question of which investments should be made in Switzerland and which should not (or no longer) be made here. As a business location, Switzerland is well advised to adopt a targeted approach toward cultivating its location-specific advantages.
Tax & Legal
Total net revenue
in CHF million
Strong focus on employee mobility
Tax & Legal boosted net revenue to CHF 132.8 million (+2.8%). The function’s good results were partly attributable to sustained high demand for Global Mobility services. The firm uses mature technology solutions that enable clients to tackle complex tax challenges involving hundreds or thousands of expats in a legally compliant manner and leverage the benefits of global mobility. The tax advisory business also experienced strong demand for services related to large mergers and acquisitions as well as complex restructuring projects.
In Legal, services connected with employee mobility and within the framework of Swiss labor market regulation were in particularly high demand. Overall, however, various structural changes were needed in Legal, which negatively impacted the result of the function.
Total net revenue
in CHF million
Boosting numerous M&As and new digital strategies
Deal Advisory & Management Consulting posted net revenue of CHF 63.2 million (-2.7%). This drop in revenue was largely attributable to efforts over the past two years to realign and refocus the function within the consulting industry; this also involved a reduction in capacity. Demand for advisory services to master digital transformation, plan and implement ERP systems, optimize corporate finance functions, establish cyber security and optimize the entire value chain remained high among industry clients. Clients from the life sciences sector, in particular, required an enormous amount of support in their battle against white-collar crime and efforts to ensure all-round compliance with legal requirements in every country.
Deal Advisory, which supports clients through every phase of business (or business unit) acquisitions and sales as well as in the planning and creation of joint ventures, strategic partnerships and restructuring, has continued to develop very positively.
Ongoing transformation process
Numerous clients from the financial sector were focusing on the legally compliant implementation of new regulations, such as MiFID II, and integration of FINMA’s much more stringent corporate governance requirements.
Banks required special advisory services to answer questions on how to transform their risk management systems, which involves modernizing compliance processes and other processes, including new visualization methods, as well as support with M&As and on digitally transforming their companies’ finance functions. Many financial service providers haven’t finished coming to terms with their past, meaning that they need ongoing assistance in their efforts to establish mechanisms for combating money laundering. Preparations to correctly implement upcoming legislative changes, such as FinSA and FinIA, have attracted a great deal of attention – and triggered just as much demand.
Insurance clients, in particular, asked for help on their compliant introduction of the new IFRS 9 and IFRS 17 accounting standards and with cyber security threat mitigation. The trend toward digital business models continues unabated: That includes the automation of processes such as claims handling, the development of personalized products, as well as the use of AI-based algorithms to enable better predictions.
Positive development in the regions
KPMG reported positive business performance in the individual market regions as well. The SME market segment is one of KPMG’s key mainstays that generates around 40% of the firm’s net revenues. Business development in Audit as well as Tax & Legal and Advisory was extremely stable and sustainable. Over the course of the year, KPMG also succeeded in acquiring several high-profile new clients in the regional market.
KPMG invested heavily in this market again in 2019, not only in targeted measures to promote its young talent at the individual sites, but also in efficient, automated, digitalized processes and the development of multidisciplinary services from one source aimed at benefiting regional clients.
The main drivers and changes affecting regional clients are the challenges presented by current uncertainties on the market, including those stemming from ongoing efforts to negotiate bilateral relationships between Switzerland and both the EU and the UK, as well as numerous geopolitical uncertainties in key growth markets. Additional challenges include the implementation of the corporate tax reform in the cantons, digital transformation, the huge regulatory burden in areas like data protection and the struggle to recruit qualified employees.
KPMG is actively involved in the region in a number of different ways: through cooperative efforts with key networks and local companies on specific topics like cyber security and taxes as well as through its participation in trade associations and chambers of commerce.