- Revenues up 3.2 percent to €3.62 billion in year to 30 September 2008
- First phase of merger successfully completed
- Dutch and Belgian practices vote to join Europe's largest fully integrated accountancy firm
The results are contained in the firm's first set of consolidated accounts, also published today, and underline its position as Europe's largest fully integrated accountancy firm.
Growth was similar in local currencies across all three practices. At constant exchange rates, pro forma revenue in the UK rose three percent to €2.17 billion, in Germany it was four percent higher at €1.26bn while Switzerland saw a four percent increase to €255 million.
John Griffith-Jones and Rolf Nonnenmacher, joint chairmen of KPMG Europe LLP, said: "This was a creditable performance in our first year of operation as a fully merged business, especially as the period under review included a full twelve months of the global credit crunch. Indeed, we have completed the first phase of our merger in the most severe market conditions we can remember. While it is still early days, these results demonstrate that our first year of operation has proved conclusively that the initial rationale for merging was sound."
Overall, top-line performance was adversely affected as the economic climate deteriorated.
- Audit continued to see relatively good volume growth but with little or no change in prices, revenues increased by four percent to €1.31 billion. New client wins included audit mandates for TUI Travel and Metro Group. In 2008 the firm audited 67 percent of companies in the DAX 30, 24 percent of the FTSE-100 index and 30 percent of SMI companies
- The strongest performer by function was Tax, where revenues rose by eight percent to €908 million. Growth was particularly strong in Germany. While demand for tax services remained strong, the focus shifted to areas like managing tax costs and tax risks or managing acquisitions and disposals in a tax efficient way
- Advisory was static at €1.41 billion. A 30 percent contraction in the volume of European M&A transactions resulted in revenue declines of 10 and 17 percent in Transaction Services and Corporate Finance respectively, albeit from a very high base. This was offset by a 12 percent rise in Restructuring revenues, a 15 percent increase at Performance while Forensic advanced by 24 percent.
John Griffith-Jones and Rolf Nonnenmacher acknowledged that the unprecedented market turmoil had raised questions about whether fair value accounting, which highlights the current market value of assets rather than their expected long-term value, had made the crisis worse:
"While we understand the anxiety it has caused some companies, we believe fair value accounting creates better transparency for investors and policy makers - exactly the sort of clarity they need to assess the real depth of any credit or liquidity crisis.
"We firmly believe auditors are part of the solution, which is why we support the International Accounting Standards Board's attempt to improve the overall financial information provided by companies. Changing accounting standards in the midst of a crisis would not help restore order."
On 1 October 2008, the KPMG member firm in Spain formally became part of KPMG Europe LLP and this month the Dutch and Belgian firms also voted to join.
John Griffith-Jones and Rolf Nonnenmacher said: "The decision of the Belgian and Dutch firms to join builds on the foundations formed when the UK, Germany, Switzerland and Spain member firms agreed to merge.
"We are delighted that they wish to become part of our ambition to create the most successful professional services firm in Europe, for the benefit of both our clients and our people. We look forward to other member firms joining in due course."
The firm's approach to corporate social responsibility is founded on one simple principle: responsible business is good business. KPMG Europe LLP has built on the firm's strong international credentials in this area by further engaging with local communities, managing its operations and environmental impacts, working with suppliers; and working with clients.
For example, in 2008 more than 5,500 KPMG Europe LLP people contributed 57,000 hours of volunteering work, an investment of almost €15 million in local communities.
Looking ahead, Rolf Nonnenmacher and John Griffith-Jones said the credit crisis has some way to run and it was clear that the year ahead would be a tough one for business the world over:
"However, we have established a solid base for future growth and we firmly believe that, as a merged firm, KPMG Europe ELLP is better equipped to deal with the current market turmoil and to help our clients through these turbulent times."