KPMG P/S Annual Report
KPMG P/SAnnualReportDenmark’s fastest growingprofessional services firmAnnual report 1 October 2016 – 30 September 2017kpmg.dkCVR no. 25 57 81 98KPMG P/SDampfærgevej 282100 København ØThe annual report was presentedand adopted at the Company’sannual general meeting on 25January 2018.
AnticipatetomorrowDelivertodayCONTENTSManagement's review3Company details and financial highlights4Denmark's fastest growing professional services firm5Building trust in the digital age – Audit15Addressing our clients' most critical challenges - Advisory25Redefining professional tax services – Tax49Exceptional talent requires exceptional development53We want to empower our communities60Statement by the Board of Directorsand the Executive Board65Independent auditor’s report67Financial statements1 October 2016 – 30 September 201771Income statement72Balance sheet1KPMG Annual report 201772-73Statement of changes in equity73Cash flow statement74Notes752
Management’sreviewCompany detailsBoard of DirectorsKPMG P/SDampfærgevej 282100 København ØAnette Harritz (Chairman)Anja Bjørnholt LüthckeDavid OlafssonBo JohansenDanny GolanTelephone: 45 70 70 77 60Website: www.kpmg.dkE-mail: kpmgdanmark@kpmg.comExecutive BoardCVR no.: 25 57 81 98Established: 11 December 2013Thomas Hofman-BangFinancial year:1 October – 30 SeptemberAuditorRedmarkStatsautoriseret RevisionspartnerselskabDirch Passers Allé 762000 FrederiksbergFinancial highlightsDKK’0002016/172015/1620159 months2013/14Key figuresKPMG in Denmark Revenue*575,358491,377279,056103,187Revenue KPMG P/SProfit/loss from financial incomeand expensesProfit for the 000Total assetsInvestment in equipment and leasehold 213,96415,6495,070560560560500Cash flow from operating activities-12,38842,677-21,63322,291Cash flow from investing activities-3,363-13,990-20,996-13,025Cash flow from financing activities-649-5,61419,12816,649Total cash flowOperating %Current ratioReturn on equity92.1%0.0%92.2%0.0%88.6%0.0%94.5%0.0%*KPMG P/S and Acor Tax P/SFinancial ratios are calculated in accordance with the Danish Society of Financial Analysts' guidelines on thecalculation of financial ratios "Recommendations and Ratios". For terms and definitions, please see the accountingpolicies.Our results for the financial year reflect our economic condition: our continued strong growth and the provisionof financial support by KPMG International. We have incurred costs in relation to our organic and continuedgrowth, especially in regard to our hiring processes, attracting new talents and further investing in our tools andstructures. These investments ensure the expanding delivery of high-quality services to our clients. This year’srevenue is in line with our goals, and our net result is as expected given the support we receive from KPMGInternational.3KPMG Annual report 20174
Denmark’s fastest growingprofessional services firm2017 was a strong year forKPMG in Denmark achieving a17% growth overall in revenueacross Audit, Advisory and Tax. Inaddition, we have increased ourworkforce by 15% and built anorganisation with more than 570talented people*. Our revenuegrew from DKK 492 million in2015/16 to DKK 575 million during2016/17. It makes us the fastestgrowing professional servicesfirm in Denmark among the BigFour based on organic growth.This shows that our strategyand the services we provideresonate well in the market.“I am proud to see that ouragility, business expertise and deeptechnological capabilities resonateso well in the marketplace. Our goalis not to be the biggest firm, but tobe the best professional servicesfirm, working shoulder to shoulderwith our clients.We have achieved profitablegrowth in all our business areasin accordance with our strategyand projections reaching 7%growth in Audit, 21% growth inAdvisory and 24% growth withinTax. Our goal is not to be thebiggest firm, but to be the bestprofessional services firm. Weare therefore proud to see thatclients value our agility, businessexpertise and deep technologicalcapabilities in a competitivelandscape, where companies areengaged in a must-win battle toexploit and commercialise theuse of disruptive technologies.“KPMG Annual report 2017We are servicing more than 75%of the companies in C20 and 15out of the 20 largest corporationsin Denmark within Audit, Advisoryand Tax. During 2016/17, we built astrong position as a trusted advisoron our clients' transformationjourneys in a world of radicalinnovation and opportunities.We have consolidated a marketleader position within our sharedservices and outsourcing advisory(SSOA) practice, winning anumber of significant dealswith new as well as existingclients, including DanmarksNationalbank, Banedanmark, theDanish Ministry of Transport,Building and Housing, Falck,Skandia, the Danish Agency forDigitalisation and a large Danishowned pharmaceutical company.Within Deal Advisory, ourexperts completed the largestnumber of due diligence dealsin Denmark with over 46announced deals since last year,working on transactions withcompanies such as McDonald's,TDC Hosting and Saxo Bank.In Audit, we built a solid clientbase in 2016/17 and had a numberof exciting wins, such as If, thelargest non-life insurer in theNordics. These wins form a strongplatform for continued growth.Thomas Hofman-Bang,CEO and Senior Partner, KPMG in Denmark5Becoming theclear choice* KPMG P/S and KPMG Acor TaxFrom our offices in Copenhagen,Aarhus, Aalborg and Kolding, wehave increased our activities andfurther enhanced our deliverymodel to the mid-market segment.As companies classified aspublic interest entities (PIEs) areincreasingly adapting to the EUAudit reform by managing theirprofessional service providers,we see a larger flow of tax workbetween the major players inthe market, which has increasedthe demand for our tax services.In addition, it has becomeincreasingly complex to navigatethe tax landscape, both in a Danishand international context, driving astrong demand for our tax services.A successfulone-firm approachWe are successfully working witha one-firm approach to ignitepotential and create most valuefor our clients. In 2016/17, ourone-firm approach resulted ina significant win, when KPMGwas chosen as an outsourcingpartner as part of a larger financetransformation project involvingAudit, Advisory and Tax. Theengagement involves cliententities in up to 40 countriesfor one of Denmark's largestindustrial companies and entailstaking over direct tax reporting,tax accounting and statutoryfinancial statements preparation.6
Best practice withinrobotic processautomationKPMG is experiencing a significantdemand in the market for adviceand implementation support withincognitive technologies. Clientshave only just begun to realise thepotential of digital transformation,and we expect a surge in thedemand for our NewTechservices in the next few years.Global KPMG member firmsand clients acknowledge oursolid capabilities within newand disruptive technologies,looking to KPMG in Denmarkfor inspiration on developingrobotic process automation(RPA) solutions and strategydevelopment. For example, weoffered customised solutions totelecommunications operator TDCwhen they were looking for thebest way to roll out RPA and builda Robotics Centre of Excellence.Fostering a strongecosystemIt is important for KPMG tofoster a strong ecosystemand connect our clients withentrepreneurs and start-ups todrive innovation and ignite value.7KPMG Annual report 2017We recognise the importance of aflourishing start-up community inDenmark that can drive sustainablegrowth and bring value for ourclients and society as a whole.EngagingentrepreneurialnetworksIn 2016/17, several partnerswere active as experts and jurymembers in entrepreneurialnetworks and forums suchas Copenhagen Fintech,Børsen's Disruption Panel(Børsens Disruptionspanel)and the Danish Tech Challengearranged by The Danish IndustryFoundation (Industriens Fond).During 2016 and 2017, we hosted16 events and 9 third-partyevents engaging close to 1,400participants, focusing on a broadrange of pressing topics spanningartificial intelligence, machinelearning, anti-money-laundering,trends within the insurancesector and cyber security. Inaddition, we sponsored CFOof the Year with Berlingske andTechBBQ, Denmark's largesttech and innovation summit.Enabling ourextraordinary peopleOur ability to work as One Firmand be the clear choice for ourclients stands firmly on the factthat our people are extraordinary.Professional services firmsare all about people, and wetherefore strive to attract thebest talent in the market whoignite potential in themselves,their colleagues and our clients.Furthermore, KPMG employeesare committed to making apositive difference in society.In 2016/17, we worked withNGOs such as UNICEF, Save theChildren, Dyrenes Beskyttelseand Gigtforeningen. We alsostrengthened our collaborationwith the NGOs Plastic Change andMind Your Own Business. Whetherit is keeping plastic away fromthe Baltic Sea or mentoring youngentrepreneurs in Copenhagen andAarhus, we are proud of our peopleimproving our local communities.We constantly aim to offer anattractive workspace for ourKPMG employees. This year wehired 219 agile specialists andlaunched an enhanced two-yeargraduate training programme,the Future Focus GraduateProgramme, for which we receivedmore than 1,000 applications andattracted 35% more graduatesthan in 2015/16. Furthermore,we promoted 62 outstandingcolleagues who bring our highperformance culture to life.Quality and trustQuality and trust are at the coreof everything we do. During therecruitment process, all new KPMGpeople learn the importance ofliving our values each and everyday, and the role they individuallyplay to earn and sustain public trust.Diversity is criticalto our successDiversity and equal opportunitiesare high on the leadership agendain KPMG. We value diversity andprovide equal opportunities to bothgenders regardless of backgroundin recruitment and promotionprocesses, which is stronglyrecognised by our employeesin our annual people survey.A diverse and inclusive workforceis critical to our success; it defineshow we work and who we are. Byfostering a welcoming environmentfor all people, we can leveragethat diversity to deliver exceptionalclient services. Today, 39% ofall our employees are women.We aim to continuouslyimprove our diversity targets inManagement over the comingyears to reach a gender balanceranging between 40-60% inManagement levels below theBoard of Directors (i.e. LeadershipTeam and other Leaders withdirect reference to the CEO).Today, our top managementlevel consists of eight people,of which five are men and threeare women, corresponding toa total of 38% women. Ourpolicies to increase this numberinclude recruitment, retention,maternity programs, promotionsand career plans etc. This workis headed by our Senior Partnersupported by a dedicated groupof women at all levels. We haveset up KPIs to measure progress.Strategic outlook– ONE in 22Our success in 2016/17 is animportant stepping stone towardsour new strategy and vision ofbecoming ONE in 22. ONE in 22captures three dimensions: Ourability to work seamlessly acrossour organisation as One Firm,working shoulder to shoulderwith our clients and settingthe right teams with diversecapabilities, aiming to be theleader in selected market areasand to reach a revenue of DKK1 billion no later than in 2022. Itis an ambitious and realistic goaland one that we are confidentwe can reach. Our journey so faris a testament to our ability toexecute our strategy successfully.Our Board consists of five highlyskilled partners, of which two are Whare are we going from here?women, including the Chairmanof the Board, and three are men.We are proud to have achievedgender diversity on our Board.in 22ONE FirmONE Billion#1ONE in Markets 2017 KPMG P/S, a Danish limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rightsreserved.1Document Classification: KPMG Confidential8
Principal activities andfinancial positionPrincipal activities of the CompanyFinancial riskOur principal activities are the provision ofprofessional services to Danish and foreignbusinesses within the technical expertise areas ofaudit, advisory and tax services. We do this acrossa wide and growing range of services, includingthe audit of financial statements, other assuranceengagements, management consulting, riskconsulting and deal advisory.We have received funding in two ways: grantsfrom KPMG International which do not requirerepayment/reimbursement and loans denominatedin USD. KPMG International will continue this formof support, and we acknowledge that this potentiallyexposes us to minor risks related to the USDexchange rate variations. We are also exposed tocredit risk though we do not have material credit riskon individual debtors.Operational riskThe operational risks facing our business includethose we have in common with other professionalservices firms. This is notably a deterioration inmarket conditions, claims and reputational damagecaused by either an actual or suspected failure todeliver services of appropriate quality, or by takingon inappropriate clients or engagements. We haveimplemented a system of quality control basedon KPMG International’s Quality Framework. OurTransparency Report, issued on 30 January 2018,describes the key elements of our quality controlsystem. We are committed to consistently achievingthe highest standard of quality, ethics and integrity inday-to-day activities as a responsibility we bear to ourclients, regulators, communities and capital markets.Find the Transparency Report on our website,www.kpmg.dk.Increase in revenueKPMG P/SKPMG ACOR TAX P/S15112374Events after the balance sheetdateNo events have occurred after the balance sheet datethat could significantly affect the financial statementsfor 2016/17.4063Reporting on our carbon footprintKPMG in Denmark aims to operate in anenvironmentally friendly way. Our headquarterson Dampfærgevej 28 in Copenhagen uses energyefficient technology; most of our lights are LED lightbulbs that automatically turn off after 30 minutes ofinactivity.We collaborate with Meyers Kantiner, who use 40%of organic fresh produce to cook our lunches fivedays a week. We sort our waste according to theirtype, as well as recycle paper, ink cartridges andused coffee grounds.205369424103 279 492 5752014Globally, KPMG aims to run on 100% clean energy by2020. In Denmark, we too wish to align with KPMGInternational's ambitions and plan on running on100% green energy by 2020.2015(9 months)20162017Combined revenue of KPMG P/S and KPMG Acor Tax P/S, DKK million9KPMG Annual report 201710KPMG P/S Annual report 201710
Our Global networkAbout KPMG in DenmarkKPMG is a global network of professional services firms providing audit, advisory and taxservices. We operate in 154 countries and have 197,000 people working in member firmsaround the world. We work closely with a broad range of clients, such as business corporations,governments and public sector agencies and not-for-profit organisations. We support themin mitigating risks and exploiting business opportunities.In Denmark, KPMG is organised in two separate legal entities that provide services through across-functional collaboration between KPMG P/S (licence to provide audit and advisory servic
The annual report was presented and adopted at the Company’s annual general meeting on 25 January 2018. kpmg.dk Annual report 1 October 2016 – 30 September 2017 Denmark’s fastest growing professional services firm KPMG P/S Annual Report
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