KPMG (the Firm) continued to grow profitably in Australia, generating revenues of $1.12 billion for the 12 months to 30 June 2012, up 5.3 percent from the previous year. Globally, KPMG’s revenue grew 10.1 percent for the 12 months to 30 September 2011 – making it the fastest-growing Big 4 firm internationally.
The Firm’s global, regional and Australian strategies are strongly aligned around three core elements:
||developing deeper, stronger relationships with clients|
||a disciplined focus on areas of significant future growth (Energy & Natural Resources (ENR); Healthcare; Government & Infrastructure; Financial Services; China; Tax Globalisation; Management Consulting)|
||innovation (new capabilities for clients; operational and workplace excellence for the Firm).|
During the year, global connectedness and capability played a key role in KPMG winning significant new client work in Australia.
Previously identified priority sectors such as Healthcare, ENR, Government and Infrastructure, in which KPMG has been investing and growing its expertise, outperformed other areas of the business. For example – all three ENR practices (Mining, Oil & Gas, and Power & Utilities) delivered double digit revenue growth during the year. Consistent with activity in these sectors, significant growth was also achieved in both Queensland and Western Australia during the year.
KPMG developed and introduced a suite of new service capabilities for clients during the year (refer to next page for details). Internally, the Firm introduced its Workplace of the Future initiative, which considers not only where its people work, but how teams and clients can work together and collaborate in new ways to deliver results. KPMG’s first-mover announcement to relocate to Sydney’s new financial and professional services hub, Barangaroo, is key to its plan to build an efficient and flexible workplace attracting the best people The introduction of new internal social media and technology contributed to workplace collaboration and efficiencies. Iphone productivity apps were introduced for the first time.
During the year KPMG published its third Reconciliation Action Plan, focusing on the Firm’s reconciliation journey over the past 7 years and increasing its commitment to closing the gap with Indigenous Australians. The Firm exceeded the milestone of 100 KPMG people seconded to work with Indigenous communities through the Jawun Indigenous Corporate Partnerships secondment program. KPMG CEO, Geoff Wilson continues as a board member of Jawun. National Chairman, Peter Nash, was appointed during the year to the board of Reconciliation Australia. KPMG’s commitment to supporting Indigenous economic progress extends to its suppliers. In 2012, KPMG was granted a Special Recognition Award by the Australian Indigenous Minority Supplier Council (AIMSC) for extraordinary contribution to Indigenous supplier diversity.
- A number of critical and related factors drove the result: global capability which allowed KPMG to bring the best knowledge and experts from the worldwide organisation to clients; outperformance by the Advisory practice; outperformance in key sectors such as Mining, Oil & Gas, Healthcare, Government and Infrastructure. KPMG bolstered its expertise with the appointment of 30 new partners and executive directors during the year including Greg Evans (Partner, M&A Advisory), Susan Williams (Partner, Healthcare), and James Scott (Partner, Innovation).
- Revenue growth was achieved across Advisory, Tax and Audit divisions. Advisory was the largest business in Australia, contributing 46 percent to overall Firm revenue; Tax contributed 19 percent; and Audit contributed 35 percent.
- Advisory: The Firm’s market-leading Advisory practice again made a significant contribution to the Firm’s growth, contributing 46 percent of revenues. Advisory revenue rose 9 percent from the previous year:
- Management Consulting delivered significant growth, with revenues up 17 percent on last year. The result is attributable to its strategy to invest in long-term relationships with clients, build deep expertise in key people, and focus on priority sectors such as Healthcare, Telecommunications, Government and ENR. Key demand came from areas such as people and change, economics and social policy, supply chain, technology advisory and large-scale business transformation.
- Risk Consulting revenues increased by 7 percent this year. Given the ongoing volatility in global markets and the impact of structural change in parts of the Australian economy, clients were focused on understanding the risk landscape and identifying opportunities to ensure their businesses are resilient and robust. The Firm’s focus on working with clients to turn risk into advantage enabled it to grow, with significant increases in demand for strategic risk analysis, internal audit, forensic accounting and advice on climate change and major projects.
- Revenue from Transactions & Restructuring declined slightly, reflecting challenging global market conditions. Particularly evident was reduced volumes at the larger corporate end of the market. Despite this, transaction activity remained robust in the institutional, government and middle market, allowing the Corporate Finance practice to make strategic investments in a number of areas, including the Mining, Real Estate, Financial Services, Infrastructure and Energy sectors. The Restructuring Services business grew, supporting continued financial uncertainty, stress and distress across all sectors; whilst the Transaction Services business remained nimble to ensure it was well positioned to capitalise on volatile transaction flows.
- Tax: Tax saw growth from the resources sector and associated regulatory changes offsetting a more muted M&A market. Research and Development Incentives Services and International Executive Services continued to be key growth areas for the practice.
- Audit: Audit revenue grew 4 percent from the previous year in a difficult and highly competitive market. KPMG retained its strong focus on Audit Quality, appointing a dedicated Partner to oversee its service provision to clients. In FY12, KPMG in Australia voluntarily published its second Transparency Report: Unlocking Audit Quality. KPMG remains the only Big 4 accounting firm to publish such a report in this market. This year, bringing into focus the central governance role of directors, KPMG made specific recommendations for directors and audit committee members to help safeguard the integrity of their organisation’s financial reporting and corporate governance responsibilities.
- Private Enterprise: Private Enterprise had a successful year growing revenue by 9.3 percent. In its core market segments of private companies, family owned groups and high net worth individuals, the range of specialty services offered expanded during the year to include a family office offering and e-business advisory. The successful launch of the on line diagnostic tool, Future Focus, and growth in the migration advisory business places the business well for further growth this year.
KPMG was highly active in delivering innovative new services and expertise to clients during the year. For example:
- CFO Advisory is a new practice launched to support CFOs and finance teams. This service line includes finance vision and strategy, finance function interaction, quality close and reporting, business performance management, business intelligence, financial reporting and accounting standards advice, as well as resourcing and secondments.
- Management Consulting developed a new top-down planning tool to assist clients plan and estimate large-scale business transformation programs, lowering deployment risks. The practice also developed a methodology to support clients enhance employee engagement and staff productivity through the deployment of ‘Bring Your Own Device’ tools to work. KPMG is also prototyping and testing a new proprietary Cloud-readiness assessment method.
- The Firm bolstered its social media advisory capability by forming a strategic alliance with Australia’s leading social media intelligence and advisory firm, SR7. The partners assist clients understand their social media footprint, and develop and implement strategies to increase their customer base, manage their reputational risk and lower costs.
- KPMG’s strategic cooperation with the University of Sydney China Studies Centre jointly published two reports during the year examining Chinese company investment into Australia and opportunities for building relations between organisations from both countries.
- KPMG’s Demographics practice developed a new methodology for quantifying the size and distribution of the FIFO (fly in fly out) workforce across Australia. The workforce model provides companies with insight into the profile of their existing workforce, benchmarked with industry averages. This proprietary tool assists with workforce strategy planning and strategic planning for businesses.
- KPMG also launched forecasting tool, Infrastructure & Service Model (ISM), to identify additional demand for infrastructure and services based on the opening/closing of mines in a particular region. The ISM will provide mining companies with a tool to understand the impact mining activity is having on the demand for infrastructure and services at a local level. This tool will also assist companies to mitigate the impact of mining on communities and help mining companies work with local councils to deliver sustainable places to live.
- KPMG’s new High Performing Hospitals Tool analyses financial and clinical performance in hospitals, focusing on methodology and processes within hospitals, providing national and peer benchmarks aimed at assisting hospitals to adjust to new activity based hospital systems and performance based funding.
- KPMG’s Chief Executive Officers Leadership Program brings together the CEOs of the top 45 hospitals around the country, facilitating workshops and training to deepen their management capability and widen their exposure to health systems from around the globe.
KPMG continued as a public voice on key issues that challenge Australia’s future prosperity: audit transparency and reform, Australia-China investment relations, tax reform, health and aged care transformation, funding future energy needs, food security, and Indigenous relations.
While Australia’s economic fundamentals are robust, KPMG’s expectation for the 2012-13 financial year is for continued market volatility. Assisting clients to manage and prosper in this environment is a key strategic focus for the Firm.
KPMG will continue to invest for future profitable growth.