In 2019, as in every year, we committed to quality, integrity and technological advancement. This was achieved by constantly investing in our greatest asset, our people. We have also ensured that we equipped our members of staff with the right tools to enable them to offer advanced, leading services to our clients
Christos Vasiliou, Managing Director
I am very pleased to present to you our 2019 Transparency Report. The report contains insightful information about our strategy, our performance, our corporate governance and quality control systems for 2019.
Despite another challenging and difficult year, our Firm managed to grow by 5,3% during 2019. The main driver of our growth was advisory, which grew by 29% followed by Tax, which expanded by 10%. Audit has recorded a decline of 3%.
As stated before, the challenges faced by our profession and especially the audit function were quite tough. This related to the increased regulation, the need to rotate out of a number of Public Entity Companies, as well as the need to adopt more rigorous risk management procedures.
The above success of our Firm was not brought about without the related cost. In doing so, we continued to invest heavily in maintaining and recruiting specialised and dedicated staff, who can live up to the expectations and the needs of our clients.
This was achieved by grasping the market needs and being able to offer value for money, innovative services to our clients.
In 2019, as in every year, we committed to quality and integrity and we have set our standards very high.
We managed to adapt our Firm’s model in line with the changed economic model of our country.
We have also committed resources in our Corporate Social Responsibility activities and offered to our society and to those in need.
We have also managed to expand our portfolio of service offerings in line with our strategic priorities. This will be achieved by constantly investing in our greatest asset, our people and in extending and enhancing our technological capabilities across the Firm.
Our strategy is fully-aligned with our Global Firm’s strategic priorities, tailor-made to the Cyprus market’s needs.
All our partners are working hard to maintain KPMG to be the Clear Choice for our clients, our people and the society in general.
Audit is the foundation of the KPMG brand and has been the backbone of our business throughout our 70 years of existence. Our actions are guided by our values, vision and purpose. We aim to live up to the high standards we set for ourselves, while continually building upon our sound audit quality foundations, in terms of how we manage both our Firm and our audit engagements. We are determined to set the standard for quality across our profession and establish this as the foundation for our growth.
While significant challenges, both for our Firm and our profession, continue to be present, it is vital that we continue to demonstrate to the wider public why stakeholders place their trust in us. Robust quality audits are key to providing objective assurance over the data on which stakeholders can rely. That is why we are listening to them as we maintain our focus on audit quality, which is the key measure on which our professional reputation stands.
We take our responsibility seriously. We recognise that no organisation can afford to stand still, whatever line of business it is in. That is why we embarked on our program of investment to drive our audit practice forward.
We have dedicated significant resources toward a comprehensive review of our protocols and practices, to ensure the utmost consistency in our audit quality and client experience. We have committed to an ongoing investment in our system of quality management, global monitoring of audit quality, enhanced support and providing best-in-class technology and tools for engagement teams. While our people lead the way, we believe that audit quality is best achieved when inquiring minds and professional skepticism are matched with the power of smart technology. We are empowering our audit teams with advanced, innovative tools, support and guidance. Through our smart audit platform, KPMG Clara, we are integrating a new workflow and methodology along with powerful technology to enhance the audit process.
With this as our guide for ongoing investment in audit quality and keeping what audit quality means to the public and our clients front of mind, we will continue to drive an approach to audit quality that not only meets the requirements of the standards, but fulfils our responsibility to serve the public interest. Consistently providing exceptional quality across all our audit engagements is fundamental to our continued success.
Our vision to lead the way in audit quality is clear. We are taking action, we are investing and we are determined to make it happen.
Sylvia A. Loizides, Board Member, Head of Audit
* staff numbers as of 31st December 2019
Continuing from 2018, 2019 was also a very challenging year for the tax function. The fast pace of international developments and the constant change in the tax environment have increased the level of complexity for the tax function. Our teams participated in numerous large-scale transactions at the local and multinational level both in terms of advisory and compliance. Through the determination and passion of our people, we’ve managed to achieve a 9,5% growth for the practice.
The quick and rigorous development of the tax framework internationally created the need for new tools to facilitate compliance especially considering the stepping up of expectations by tax administrations. As such, our team has relentlessly focused on the servicing of clients while creating new paths of service to allow us to cater for their needs.
2020 is forecasted to be rigorous; the international rules are expected to change significantly in 2020 and the need to think about the transformation of our business is more imminent than ever. We need to ensure that we are ready to tackle the hurdles of tomorrow by reimagining client tax processes and enhancing compliance ability.
Diversified skills should be sought whilst leaning towards a more integrated mode of working. In order to face the challenges ahead, we expect to grow, recruit and invest in different sets of capabilities with the aim to diversify the services offered and provide more integrated solutions to our clients.
Further, we should be looking into attracting diversified minds, thinking outside the box and engaging in a productive dialogue concerning the needs of the future business professional as regards tax compliance, tax reporting and regulation. The function will drive towards a multi-disciplinary approach in response to market demand.
In the light of the new challenges that call for greater transparency, we do not forget our responsibility towards the society and not just our clients. We will continue to act with integrity in relation to tax, thereby enhancing the trust placed in the quality of our services.
Our commitment to leadership is granted. In 2020 we plan to be working towards making our tax services a CLEAR CHOICE for our clients, the society and our people, our most valuable asset.
George Markides, Board Member, Head of Tax
* staff numbers as of 31st December 2019
We are pleased to note that our Advisory business has experienced another successful year of growth. Our strategy has paid off swiftly for us, driving growth by 29%, from €9,7 million in 2018 to €12,6 million in 2019. Our unit has not only grown in terms of fees but also in terms of number of professionals reaching at the end of 2019 8 partners and 155 members of staff. This demonstrates the endorsement from our clients. And this means a lot to us. It means that they trust our obsessive focus on valuable outcomes. They trust that our approach delivers results which impact their businesses.
Our vision to continue working alongside our clients on their most difficult challenges, delivering value-added services that they can trust and which lead to measurable and sustainable business outcomes, is materialising. Our Advisory professionals work across all industries of the Cyprus economy and sectors and help clients boost their profitability, transformation, technology, risk, growth, structure and operations.
We continued winning valuable, challenging work that allowed us to demonstrate the depth of our talent and to help our clients overcome the challenges they face. For the Government of Cyprus, we have delivered a range of projects focusing on technology and service transformation and managing and delivering challenging transformative projects, including for the healthcare industry. For our Banking and Financial Services clients, we have delivered end to end digital transformation projects by assisting to manage and deliver digital transformation programs, data driven strategies, customer experience strategies and even developing and implementing digital solutions. For the same industry, we have provided deep knowledge in assisting our clients manage their non-performing loan portfolios and to manage risk and regulatory compliance.
We have also helped clients in the telecommunications and utilities sectors, the retail sector and many more and offered value for money services which enabled clients to either meet their regulatory obligations or boost their efficiency. At the core of our client portfolio though, always lie our Small and Medium Enterprises (SME) clients, the backbone of our economy that is now facing numerous challenges. We assist our SME clients to re-define their business models by re-thinking their service and client portfolio, leveraging technology and new human capital management models and optimising their operations.
Our Deal Advisory unit handled several acquisitions and facilitated clients in their expansion plans both in Cyprus and abroad. Our involvement in facilitating investments in the Cyprus economy has been outstanding during 2019.
Our clients often tell us that we work differently. That begins with the way we look at their organisations and approach their problems. We strive to connect and understand our clients and become one with their internal teams. Our professionals are trained to empathise hard with them and see their environment through their eyes and to think deeply about their problem, not just about the solution we want to deliver. To achieve this, we apply a multidisciplinary and connected approach to delivering engagements, comprising the right combination of expertise to work on the right solution. For us, this is our standardised approach of a more connected and collaborative business. Our clients tell us that this is a different way of working that resonates both with their employees and their management.
Our clients are extremely important to us. But our people are our most valuable and important asset. Our business is attracting great talent all the time and this year we welcomed more than 50 new Advisory hires. We are proud to employ highly-skilled and results-oriented professionals with experience from leading Advisory firms worldwide. In the year to come, we will focus on attracting even more talent and accelerating our growth, guided by our winning strategy. We will also continue to invest in technology and innovation on a scale which gives us a competitive advantage and renders our Advisory practice the first choice of employment.
Looking to the future, we will remain focused on both anticipating and responding to the disruption we see all around us. This means running our business in an agile way, embracing change and continuing to invest in talent and technology. All of this will be underpinned by a relentless focus on quality, integrity and trust.
Christos Vasiliou, Managing Director & Head of Advisory
* staff numbers as of 31st December 2019
Faced with induced changes to our profession affecting our business, we have no option but to develop our services in such a way so as to effectively respond to the demands of the stakeholders
Michael Antoniades, Chairman
We live in a Dynamic World!
We have seen major corporate failures happening in the recent past in leading countries. Our profession has been severely criticised for failing to have identified and alerted stakeholders accordingly. Regulators demand for quality and we have an obligation to deliver that. It is possible that we may be faced with induced changes to our profession and one way or another those will affect our business in Cyprus.
As professionals we have no option but to accept these changes and develop our services in such a way so as to be in a position to effectively respond to the demands of the stakeholders.
Our vision is to be the firm of choice by both companies and professional staff. Our strategy is to use our global knowledge and local expertise targeting the delivery of value-added services to our clients.
We believe that the way to achieve this is through investment in highly intellectual individuals, committed to work with integrity and aiming to deliver quality work. Transparency and accountability should always frame the way we deliver our work. We target a holistic approach on all of our projects by investing appropriate time to understand the needs of our clients, then develop a plan to address those effectively and finally execute delivery in a cost-efficient manner.
The implementation of new rules and regulations globally, challenges the way that certain international business has been traditionally performed. Naturally, the type of operations of foreign corporations that will be able to conduct business in Cyprus is directly affected by such changes.
We strongly emphasise the necessity of maintaining substance in Cyprus. Our island offers a unique opportunity for multinational corporations seeking a location for the establishment of a regional office in the area. The strategic location of our island is such that enables effective linking of operations from the far east to the far west. In addition, it provides a relatively simple but structured entrance to the EU. During 2019 we have seen a number of major corporations that were seeking an establishment in the EU to have selectively decided to set up their operations in Cyprus.
Adopting to international developments implies new opportunities as well. Compliance is a major initiative deployed and KPMG in Cyprus is well positioned to evaluate, develop solutions and support our clients to adopt to the requirements of today. We are one of the largest firms and one of the largest employers on the island. We do have an impact on our society and we want that to be positive!
Cyprus offices 6