“It’s a significant and exciting reorientation with renewed focus on the market and major plans to invest for growth. Critical for the success of our strategy is the introduction of an ambitious new cultural goal focused on really driving innovation. These are important steps forward for us,” said KPMG Australia CEO, Gary Wingrove.
From its traditional organic growth platform, KPMG’s new CEO has embarked on a proactive investment strategy, including the creation of dedicated investment funding. Investment is focused on both business and talent acquisition. During the year, acquisitions of social media risk consulting firm SR7, boutique mining consultancy Momentum Partners and a Karratha-based accounting practice were completed – with more active opportunities in the pipeline.
KPMG invested substantially in new capability including hiring the senior Melbourne team of boutique strategy consultancy Pacific Strategy Partners; as well as senior specialists to the Tax practice, including posting a new Australian Tax partner in Singapore to assist clients with increasing trade flows between Asia and Australia. Thirty-eight new partners and executive directors were appointed during the year, up from 35 last year, reflecting investment across all divisions. Twenty-four percent of new partners were women, with a healthy female representation in the future partner pipeline.
Peter Nash, Chairman of KPMG Australia, commented, “Globally there is unprecedented focus by the firm on investment, and aligning member countries to pursue common growth areas. Six new investment streams have recently been identified including cyber security, strategy and data and analytics. We are actively involved in an innovative global investment fund created to accelerate clients’ ability to unlock the tangible value of their big data. As part of this initiative, our Australian Management Consulting team is building a global customer experience analytics tool.”
Significant investment enabled a major IT upgrade supporting new working practices and future workplaces. This included new laptops for all staff – with staff able to choose their model; a new device-free national phone system that incorporates video and presentation sharing; the signing of new future office leases for Sydney, Melbourne and Adelaide; plus the expansion of the firm’s highly successfully agile working pilot program.
“Upon completion, our partners and people will be enabled by some of the best technology of any professional services firm in Australia.”
“We will be moving into new buildings and our workforce will be operating in a different way, allowing for more concentrated and creative collaboration,” said Mr Wingrove.
One of the hallmark changes of the new leadership team has been the introduction of a cultural goal to foster innovation and entrepreneurship, as well as support diverse thinking and ‘safe to fail’ experimentation.
“In order to achieve above-trend growth, businesses really have to do something disruptive and game-changing,” said Mr Wingrove. “Critical to driving our differentiation in the marketplace is our introduction of a new ethos aimed at sparking, nurturing and driving innovation and entrepreneurial thinking and behaviours at KPMG.”
“And we’ve achieved some great innovations this year. For our firm we launched an innovation competition, used gamification to improve learning and reverse tech mentoring to improve skills transfer and engagement. And for our clients, we introduced service enhancements including video and interactive report delivery, crowd sourcing, and social media risk analysis.”
KPMG invested in further developing leadership capability through the extension of two proprietary management programs, Magellan and Tasman.
From an industry perspective, Financial Services was the standout performer. A number of milestone transformational projects were won during the year including the firm’s appointment as project manager for the Australian Payments Clearing Association (APCA) to develop Australia’s future payments platform. KPMG’s Australia-based China Practice generated double digit growth for the second consecutive year.
Advisory remained the firm’s largest business, contributing 47 percent of revenues, with Audit 35 percent and Tax 18 percent.
Advisory saw steady growth in a year where market conditions were challenging, with revenues rising to $527 million.
- Risk Consulting achieved strong growth for the Advisory business, with revenues increasing to $148 million. The result was driven by Financial Risk Management and Actuaries – with KPMG now holding the number one position in the Life Insurance Actuarial market. New services including Investment Governance, Climate Resilience risk consulting and SR7’s social media risk consulting were successfully introduced during the year; and extensions were made to Treasury and Capital Markets offerings.
- Management Consulting revenues were flat at $261 million, holding steady in a difficult year. Australia is now the third largest Management Consulting practice for KPMG globally. Sector capability was deepened through senior appointments into Health, Defence and Digital. Acquisitions were completed, including Momentum Partners and a key team from Pacific Strategy Partners.
- Transactions & Restructuring revenues also grew strongly to $118 million during the year off the back of increasing IPO, merger and demerger activity. Valuations work grew with appointments including independent expert reporting for Westfield. KPMG’s Investment Consulting practice, launched in 2011 to provide independent expert advice to superannuation funds in the development and implementation of their alternative investment assets, reported significant revenue growth. It has now established itself as a lead adviser to pension and wealth management funds locally and internationally. Government-driven privatisations have provided a strong pipeline of future activity. KPMG’s acquisition of Makinson Cowell, one of Europe’s leading equity markets advisory firms, is expected to provide new opportunities for the Australian firm in the year ahead.
Audit performed well in a highly competitive year, with revenues growing to $392 million following some significant new client wins across all industry sectors including Downer EDI and Reserve Bank of Australia. Key existing audits which were put out to tender were also retained, such as Lend Lease and Toll. KPMG continued to invest heavily in audit quality. During the year this included a new coaching initiative further embedding data and analytics technology into audits and revamping training around the use of specialists in the audit. The firm’s CFO Advisory business continued to expand, with revenues achieving double digit year-on-year growth. Increased demand for these services was driven by the government and financial services sectors.
Revenues were slightly down against last year to $201 million, impacted by a slow-down in the ENR sector and low transactional volumes in the first six months of the year. The second half showed growth across all parts of the practice including corporate tax. The firm will continue to invest in key demand areas including Transfer Pricing (the fastest growing part of the Tax practice), International Tax, Indirect Tax and Tax Controversy & Dispute services.
KPMG’s Private Enterprise business had another successful year with sustained growth in all parts of the business, underpinned by the hiring of a number of new partners (partner numbers increased by more than ten percent year-on-year) and directors, and bolstering the team servicing family businesses and privately owned businesses. The practice has expanded its range of Management Consulting services, now offering enhanced strategy, business improvement, digital and growth services to their client base. Private Enterprise also expanded its geographic reach through the opening of an office in Karratha, Western Australia and establishing a practice in Canberra. The Immigration practice continues to grow, expanding its range and reach of services to corporates and individuals.
Peter Nash commented on the firm’s strong contribution to community, “KPMG believes that Australia can only reach its full potential when everyone has equal access to opportunity. We are particularly focused on helping to close the gap between Indigenous and non-Indigenous Australians. By utilising our business skills and resources, the firm works with Indigenous people to enable economic and social development.”
“KPMG’s third Reconciliation Action Plan (RAP) was launched in December, incorporating an assessment of both economic and social impact, which showed that for every dollar invested by the firm, $2.40 of social and economic value was delivered during the year,” he said.
KPMG’s RAP was recognised by Reconciliation Australia as the first by a professional services firm to achieve ‘Elevate’ status – a new standard for RAP report benchmarking and so far, awarded to only three companies in Australia.
KPMG’s people committed more than 16,000 hours of free professional services to not-for-profit organisations through the firm’s Honorary Work program, and volunteered an additional 14,000 hours to support student mentoring and tutoring programs, volunteering initiatives, and programs with Indigenous communities focused on Constitutional recognition, prosperity and empowerment.
“This was a year of two halves – with a slow first half giving way to a much stronger second half. We can see this positive momentum already flowing into the new financial year.”
“We believe this reflects well on our new strategy and leadership team. We have a very strong pipeline of opportunities and combined with our investment plans, we expect to achieve substantial topline growth this financial year,” concluded Mr Nash.