Annual Report 2012

ClarityKPMG Switzerland 2012

71%F&F

Annual Review 2012 KPMG Switzerland

ADAPTABILITY IS BECOMING A

KEY FACTOR IN SHAPING THE BUSINESS MODELS

OF THE FUTURE

Magazine

2 Foreword Change Roger Neininger talks about his new role as CEO, the past scal year and what changes mean.

4 Developments Ten major developments in Switzerland Jrg Marti, Director General of the Federal Statistical Office, discusses the ten most important developments in Switzerland.

10 Challenges on the markets Insights from the energy, trading and pharmaceutical markets Statements from Takeda Pharmaceutical Company, Cargill International SA and BKW AG.

16 Report Paths are made by walking them Coop: from an upside-down group to a single cooperative.

22 Commitment Innovation starts with an idea. And goes straight to the heart. Committed to education, science and culture to keep Switzerland competitive as a business location.

24 Corporate Social Responsibility Dedicated to society Contributing effectively to education, the community and the environment.

26 High performing people Cutting through complexi-ty to deliver clear solutions that our clients value Two new careers.

Facts and Figures 2012

F2 Management Report Focusing on clients Firmly establishing a competitive advantage in the market for the long term.

F4 Executive Committee Setting new standards and implementing strategic renements Becoming the most integrated rm.

F6 Infrastructure Having an efficient, modern infra-structure is a key success factor New technologies and mobility continue to pose a challenge.

F9 Markets Corporates market dimension strengthened Segment-based approach brings a sound understanding of the markets.

F12 Services Audit, Tax, Advisory a multidisciplinary range of services Competition, price pressure and market volatility.

F14 Financials Gross revenues at CHF 429.4 million ( 0.1 percent) Solid result achieved despite a challenging global environment.

F16 Quality and Risk Management High quality standards are part of our culture Quality and risk management are closely interlinked.

F20 Partners Committee and Structure Sustainable entrepreneurship with an organizational structure based on partnership KPMG Switzerland as part of a global network.

Foreword

Change

We are in the throes of political, economic and social renewal. The trend toward complexity has gathered speed. Although the focus in this regard is more on some sectors than others, the regulatory framework is being strengthened across the board, a move that is also affecting audit and consultancyrms. A companys ability to change, adapt andreinvent itself is becoming a key factor in shapingthe business models of the future.

I am delighted to have been at the head of KPMG as CEO since early October 2012 and to be leading such a exible, capable company into the future. I am particularly proud of our highly motivated employees, who are responsible for KPMGs successes and who have brought our company to where it is today. We are well placed and know exactly where we want to go. We have also implemented a number of signicant strategic renements and attracted new top talents, enabling us to exploit the added impetus for the future that these moves have generated.

With GDP growth at only around 1 percent, the entire economy is under pressure. In 2012, this pressure was reected

in the results, with gross revenues down 0.1 percent. This is unsatisfactory, despite the fact that it represents a solid result in view of the global and regional economic situation. Over the next few years, we intend to achieve signicant growth and rmly establish our competitive advantage in the market for the long term. For us, this means having to set out our services efficiently and providing auditing and advisory support in a targeted manner. In this regard, it will be crucial that we continue to achieve the best results for our clients by deploying the best employees and processes.

To maintain this high standard, we work closely with academia and take our role as a training facility for tomorrows

executives seriously. Every year, we recruit a large number of employees from universities. This allows us to build up our own talent pool while making a sustained contribution to Switzerland as an attractive business location.

I rmly believe that KPMG operates from a position of strength. We have set the right course and are ready for change, as it will allow us to grow steadily and be successful. I hope you enjoy reading this review.

Roger Neininger CEO KPMG Switzerland

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R O G E R N E I N I N G E RCEO KPMG Switzerland

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KPMG Switzerland Annual Review 2012

Developments

Ten major developmentsAnd their consequences for Switzerland

To be able to gauge where we are going, we need toknow where we have come from and place the present in a broader temporal and spatial framework. Theoptions for action available to us have increased in therecent past. Public statistics help bring order to the glut of information and reduce its complexity with suitable methods of categorization and concentration.They thus deliver the necessary fundamental information about developments and interrelationships on thebasis of which trends can be determined.

D E M O G R A P H Y

As of summer 2012, Switzerland was home to 8 million people. The countrys population growth is mainly due to increased life expectancy and immigration. That we are seeing an aging population is reected in both the youth and the old-age dependency ratios. At the beginning of the 20th century, Switzerland had 76 people aged under 20 for every 100 aged between 20 and 64. In a hundred years, this youth dependency ratio has halved and now stands at only 33.2, while the old-age dependency ratio has been steadily on the rise: currently, for every 100 people aged between 20 and 64, there are 28 people aged 65 and above. At the beginning of the 20th century, this gure was as low as 11. This trend is making its mark on the current political debate, with the key issues being the nancing of old-age and survivors insurance, the retirement age and family benets. The lives of future generations hinge on the outcome of this debate.

E N E R G Y

Total energy consumption is rising while consumption per capita is generally going down. The share of renewable energy is on the increase. In Switzerland, the gure is some 2.2 times higher than in France and nearly twice as high as in Germany and Italy, although it is one and a half times lower than in Austria.

The trend in greenhouse gas emissions has meant that Switzerland has not yet managed to meet its obligations under the Kyoto Protocol. The European Union is reducing its greenhouse gas emissions at a faster rate than Switzerland.

L E I S U R E

Over the past 20 years, the number of working hours demanded of a full-time employee has fallen by 35 minutes on average. This means more free time. Leisure activities are sometimes directly linked to work. This is particularly true of further training, where learning lan

guages is accorded top priority. Overall, 80 percent of the population is engaged in some form of further training.When we think of leisure, however, we often also think of vacations. Beach vacations are the most popular, followed by vacations in the mountains and city trips. People are also devoting their leisure time to cultural activities, whether this involves live performances or pursuing hobbies such as photography or playing a musical instrument. Leisure is also by far the main reason why the Swiss are on the move.

Recreational activities are also being increasingly inuenced by the new electronic technologies that are seeing signicant popularity among all age groups. However, watching movies and listening to music via the internet are pastimes enjoyed mainly by young people.

H E A L T H A N D L I F E E X P E C T A N C Y

Life expectancy of those born in Swit-zerland is currently among the highest in the world, due mainly to the sharp increase in the rate during the 20th century. It has almost doubled since 1900 from 46.2 to 80.3 years for men and from 48.9 to 84.7 years for women. However, this upward trend has tailed off slightly in recent times. Of course, increased life expectancy has an impact on social services and pension funds. However, it is also giving rise to new business models and new job proles, including in the care industry for the elderly.

I N D I V I D U A L I Z A T I O N A N D S E L F - D E T E R M I N A T I O N

Over the past few decades, lifestyles have become more diverse. More and more people are living alone or with their partner but with no children.

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Jrg Marti, PhD (Econ) HSGDirector General, Federal Statistical Office (FSO)

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ten majo

r

developm

ents

THE COMPLEXITY AND INCREASINGLY

RAPID PACE OF CHANGE ARE MAKING IT

HARD TO PREDICT ITS DIRECTION AND

TIMESCALE. STATISTICS PROVIDE A BASIS

FOR MAKING DECISIONS, SO THAT PLANNING THE FUTURE CAN BE BASED ON FACTS.

J R G M A R T I , P H D ( E C O N ) H S G

Director General, Federal Statistical Office (FSO)

Developments

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The traditional model of a married couple with children and the father as the sole breadwinner now covers a minority of relationships. With women staying longer and longer in education and employment, they are marrying signicantly later and also starting a family later. Among highly qualied women, more and more are choosing not to have any children at all. The high number of divorces is seeing children spend periods of their lives in single-parent homes or in patchwork families. Civil partnerships for gay and lesbian couples became legal in 2007 and, even though they are not yet allowed to adopt, they may still have children in what are known as rainbow families. How social systems will continue to develop depends on a range of factors, such as the political framework conditions, the number and cultural origins of immigrants and the economic situation.

M O B I L I T Y

The distance traveled each day by the average citizen increased by 17 percent between 1994 and 2010, an average increase of over 1 percent each year. In 2010 too, cars made up by far the largest share of the total distance traveled each day per head of population (just under 24 km out of a total of 37 km). Compared with 2005, however, the distance traveled by car did not change signicantly. What is remarkable is the sharp fall in the number of young adults holding drivers licenses: whereas as many as 71 percent of 18- to 24-year-olds held a license in 1994, the gure had dropped to just 59 percent by 2010. In contrast, public transportation usage saw a sizeable increase, with rail travel, specically, rising sharply by 67 percent between 1994 and 2010. Particularly striking is the 27 percent jump between 2005 and 2010.

A growing population on the one hand and changing travel behavior on the other have meant that people in

Switzerland are doing more and more traveling. One of the major challenges facing the current generation is how to reconcile spatial development, transportation policy and a growing population without impairing the quality of life in Switzerland.

E C O L O G Y

Soils and biodiversity remain under pressure. Although water quality in Switzerlands lakes has risen, many effects of micro-contaminations are still unknown. Air quality has also improved. However, exceptional weather conditions can lead to limit values being exceeded. Switzerland has overcome some of the environmental challenges of the past few years. Huge challenges in energy technology remain, however, which are inextricably linked to our own behavior in terms of living, mobility and consumption.

Natural disasters are another constant challenge that should not be forgotten: between 1990 and 2011, they caused material damage costing nearly 390 million francs each year.

S P A T I A L D E V E L O P M E N T A N D U R B A N S P R A W L

Population growth, smaller households and the desire for more and more space (an average of 2.5 people per single-family home) are driving a steady increase in areas used for housing. One of the consequences of this is that agricultural land is being squeezed out in favor of space used for residential property and infrastructure, a trend that shows no signs of abating. The political debate on high-density construction does not sit well with the romantic notion of having your own little house in the country. The Messeturm in Basel or the Prime Tower in Zurich may betoken a trend shift in urban planning in Switzerland.

T E C H N O L O G Y A N D R E S E A R C H

Since the 1990s, the use of information technology in Swiss homes has risen sharply. Switzerland is one of the bestequipped countries in the world in terms of information and communications technology. Research and development expenditure is also increasing, account-ing for nearly 3 percent of GDP in 2008. As far as science is concerned, Switzer-land is among the leaders: no country has more diplomas and doctorates per head of population. However, a shortage of specialists is leading Swiss companies and universities to rely increasingly on foreign researchers to meet their research and innovation needs.

I M M I G R A T I O N

In 2010, the number of foreigners in Switzerland (permanent and non-permanent residents) increased by 39,200 (2.2 percent) on the previous year to 1,837,100. In addition, as many as 252,000 cross-border commuters were working in Switzerland in 2011, up by 29.7 percent in ve years. Around fourfths of all cross-border commuters work in one of three areas: the Lake Geneva region (33.7 percent), Northwestern Switzerland (25.6 percent) or the Ticino (20.8 percent). Switzerland is one of the European countries with the highest percentage of resident foreigners relative to its total population. Foreigners (permanent and non-permanent residents) made up 23.1 percent of the countrys population in 2009. Switzerland will most likely remain highly cosmopolitan: since 2000, for instance, it has consistently been the case that around half of all marriages have involved someone who was not a Swiss citizen.

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Time for change

FALL BEHIND

ALL BEHIN

STAND STILLTAND STILLL BE

HILL BEHI

If we look at a clock, everything seems so simple: once the big hand has made it all the way round, that means an hour has passed. And by hour we mean one-twenty-fourth of a day, a day being how long it takes for the Earth to rotate once on its axis. In our daily lives, however, we nd over and over again that moments can last forever and days just y by.

So what exactly is time? Philosophers have lled whole libraries trying to answer this question. One thing is certain: time is something fundamentally important for us humans, because it allows us to say Thats NOW different from how it was BEFORE. Only in this way can we fully perceive the changes that go on in the world and actively shape our own lives.

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Clarity Change

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MAYBE YES? MAYBE NO?

YES!N

O!

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Challenge

BKW AG

The BKW Group is a leading Swiss energy company. With more than 2,800 employees, it covers the entire energy supply value chain: from production and transmission to trading and distribution.

SWITZERLANDS

FUTURE ENERGY

LANDSCAPE

NEEDS

RESHAPING.

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Urs Gasche

C H A I R M A N O F T H E B O A R D O F D I R E C T O R S

Switzerland benets from a sustainable, stable and reliable energy supply. Following the Fukushima nuclear disaster in March 2011, the framework conditions for the Swiss electricity industry changed with unprecedented speed. Discussions on the future of nuclear energy were dominated by more stringent regulatory requirements, the global nancial crisis, low energy and euro prices and dwindling income from the sale of peak electricity.

BKW has modied its strategy to take account of different ways in which the environment might conceivably develop. The main focus continues to be on preserving a healthy nancial future for the entire group. BKW has increased its organizational and nancial exibility and is developing new areas of business, particularly in the elds of energy efciency and renewable energies, in order to remain the largest vertically integrated energy supplier in Switzerland.

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Cargill International SA

Cargill International SA employs 650 people from about 35 different countries in its Geneva ofce, which is the hub for global commodity trading, risk and supply chain management, and ocean transportation.

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Hans Rueedi

V I C E P R E S I D E N T A N D C F O

As the food, agriculture and energy markets are

becoming increasingly interconnected, our

employees interact and share, analyze and use

information to gain insights into the global com-

modity markets which are critical to the business.

Cargills business faces a number of

challenges including the continuously changing

regulatory reforms; for example, the recent resur

gence in export restrictions, increased price of

soybeans and corn due to the severe drought in

the Midwest of the USA and the debate sur

rounding biofuel policies. In addition, the

US Commodity Futures Trading Commission

(CFTC) and related agencies are nalizing regula

tions that will implement the Dodd-Frank Wall

Street Reform and Consumer Protection Act. This

will create additional requirements regarding the

daily reporting of cash transactions for commercial

entities, nancial institutions, traders and risk man

agement providers in the commodity markets.

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Takeda Pharmaceutical Company

Takeda Pharmaceutical Company is a leading researchbased global pharmaceutical company based in Japanand present in 70 countries worldwide.

KEY IS THE FLEXIBILITY

TO ADAPT TO

DIVERSE CONDITIONS

BETWEEN MARKETS,

WHILST IMPLEMENTING

NEW GLOBAL PROCESSES.

Dominic Moorhead

C F O

The acquisition of Nycomed in October 2011 transformed Takeda into a truly global pharmaceutical company, by signicantly expanding its reach in Europe and in emerging markets. This has required a signicant cultural shift in the company as more than half of the business is outside of Japan, as well as a major restructuring effort to create the new organization.

With its new strategic direction, Takeda aims to outgrow the market, particularly by leveraging its footprint and portfolio in emerging markets. Key to these ambitious growth plans is the exibility to adapt to diverse conditions between markets, whilst implementing new global processes to ensure efciency and compliance. Despite these ongoing signicant changes in all parts of the organization, Takeda has successfully managed to achieve its targets.

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Clarity Challenge

Clarity Report

PATHS ARE MADE

BY WALKING THEM

With some 75,000 employees, Coop is the largest retailer and wholesaler

in Switzerland.

Key to its rise to the top was the bold decision to merge individual regional

cooperatives into one.

What was the background to the move, and what state is the company in today,

13 years after this turning point?

H A N S U E L I L O O S L I

Chairman of the Board of Directors

Coop headquarters in Basel

THE GREATEST PLAN AND NETHE BEST STRATEGY ARE USELESS

UNLESS EVERYONE INVOLVED VIS PULLING TOGETHER.

THIS IS WHY THE MERGER OF RTHE REGIONAL COOPERATIVES

PLAYED SUCH AN IMPORTANT ROLE TIN COOPS SUCCESS.

From the mid-19th century onward, in-dustrialization brought a radical change in consumer behavior. As self-sufficiency was not an option for factory workers, cooperatives started springing uacross Europe, selling food to their members at reduced prices. The growth of Coop in Switzerland is unusual in that the cooperatives did not just emerge as self-help organizations among groups of workers but were also founded by the middle classes. In 1890, 43 cooperatives joined together as the Verband Schweizerischer Konsumvereine (Federation of Swiss Cooperative Societies), later renamed Coop Schweiz (Coop Switzerland). By 1950, Coop was at its largest, numbering 572 local and regional cooperatives.

The problems of duplicationAlthough the number of individual cooperatives declined gradually after the war in the 1990s, there were just 14 left duplication remained a major issue. For instance, most cooperatives had their own logistics operation with bakeries and, in some cases, their own butchery halls. They each had an extensive back office with all the relevant functions such as nance and accounting, IT and construction and real estate departments.

An upside-down groupAlthough the individual cooperatives were bound by Coop Switzerlands Articles of Association, they maintained their legal independence. From a legal perspective, therefore, Coop Switzerland was a subsidiary of all the autonomous regional cooperatives. The Coop Group was a kind of upside-down group an inverted pyramid as it were.In the dynamic retail sector, this convo-luted organizational structure was clearly

preventing it from focusing on its most important asset, the customer. In addition, once it became apparent in the late 1990s that erce competition from abroad would squeeze the Swiss market in both the food and non-food sector, Coop had to act decisively if it was to be in a position to tackle the challenges ahead.

CoopForte signals the start of a new eraWith the unanimous backing of all the boards of the regional cooperatives, the then CEO and current Chairman of the Board of Directors of the Coop Group, Hansueli Loosli, succeeded in 1999 in laying the groundwork for the groups merger into a single cooperative. As the structures that were to be replaced had grown up over time, this move met with signicant resistance, and it was far from inevitable that it would come to fruition. The merger into a single cooperative lay at the heart of an extensive strategy of reform called CoopForte.

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This aimed to preserve the companys competitiveness for the long term and, in particular, to enable it to respond to what was becoming an increasingly global Swiss market.

CoopForte made it possible to boost profitability by tapping into synergies, exploit the potential for growth with targeted investments, and thereby, introduce some scope for cutting prices. Investments were made where the market share was small. To increase revenue and protability, Coop also made some targeted acquisitions, including the Waro supermarket chain, EPA department stores, Fust, Carrefour and Transgourmet.

A further milestone only made possible by CoopForte was helping to set up the international procurement alliance Coopernic in 2006. A sufficiently large purchasing volume is essential if customers are to be offered a wide range of brand-name products and jointlyprocured own brands at favorable prices. An ability to be active on the price front with the necessary clout is vital, particularly since the onset of the debt crisis in Europe, the resultant fall in the euro and the strengthening of the Swiss franc.

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What has been achieved?If the key gures before, and a good ten years after, the launch of CoopForte are compared, it emerges that the transformation from what was once a rather unwieldy cooperative into a dynamic, successful and international company has been a success. Whereas revenue was only CHF 13.2 billion in 1999, it was over twice as high in 2011 at CHF 27.7 billion. ebitda virtually doubled in the same period, while the equity ratio increased to over 40%. The companys successful growth is also reected in the size of its workforce, which climbed from just under 46,000 employees in 1999 to 75,000 in 2011.

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Proximity to customers is crucial to successIn the fast-paced world of retail, the temptation to focus on quick returns instead of sustainability and tenacity is especially great. However, it is precisely by thinking long term that the Coop Group has become what it is today. For instance, even after undergoing far-reaching changes, Coop remains a cooperative in form. It has thus made a conscious commitment to its customers and not to any faceless shareholders seeking only to maximize their prots.

among customers to do some quick shopping at any time from early morning to late evening. Coop is therefore planning to build more of these stores, expanding its network from some 240 shops at present to 300 in future.

Today, Coop supplies its customers via the most extensive distribution network in Switzerland. With some 2,000 sales outlets, the company is so close to its customers that 99 percent of the Swiss population live or work within 10 minutes of their nearest store. Around a million people visit a Coop store in Switzerland every day. The success of the Coop Pronto store concept is a reection of the growing need

Sustainability as the top priorityThe issue of sustainability forms an integral part of Coops corporate strategy and plays a key role in how the group positions itself on the market. Over the past few years, the company has per-formed exceptionally well, growing to become the leader in this sector. A crucial factor in its success is the compa-nys understanding of sustainability in a broad sense: it must be economically, environmentally and socially sustain-able, part of which involves doing important work to raise awareness among consumers. After all, sustainability can only work if a large number of people understand the need for sustainable

behavior and practice it in their daily lives and in what they consume. Putting together a sustainable product range is therefore only part of Coops commitment: it is equally passionate about the efficient use of resources and climate protection, supporting its employees and producers and making a contribution to society.

When Oekom Research AG, a wellknown independent agency based in Munich, named Coop as the most sustainable retailer in the world in 2011, it was evidence that this commitment is paying off. It is important that Coop does not rest on its laurels but continues to invest in sustainability in a targeted manner. Although this is not easy in the current economic environment, it remains the companys declared objective, because Coop needs this strength to set itself apart and stand out from the competition.

Five milestones on the road to

becoming the worlds most sus

tainable retailer

99 PERCENT OF THE SWISS POPULATION

NOW LIVE OR WORK WITHIN

10 MINUTES OF THEIR NEAREST

COOP STORE

2001 2004 2007 2010 2011

Revenue from the sustainability-focused own brands and quality labels Coop Naturaplan, Coop Naturaline, Coop Oecoplan and Max Havelaar exceeds one billion Swiss francs for the rst time.

Publication of Coop Groups rst Sustainability Report.

First Coop supermar-ket to be certied according to the Minergie standard.

New logistics and bakery strategy 2015+ saves 4,800 metric tons of CO2 emissions per year, not least thanks to unaccompanied combined transport.

Named the most sustainable retailer in the world by Oekom Research AG.

With regard to fish farming, Coop is committed to sustainable aquaculture in accordance with Bio Suisse Bud guidelines.

Coop has supported Switzerlands mountain regions since 1942, introducing the Pro Montagna label in 2007.

Coop apprentices gain some first-hand experience of organic farming.

Organically farmed fairtrade cotton for Coop Naturaline products.

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Seite 23

INNOVATION STARTS WITH

AN IDEAK P M G . C H / C O M M I T M E N T

Being able to innovate quickly is crucial, particularly in fast-moving times. This is made possible by the creativity and specialist knowledge of select individuals. That is why KPMG

is involved in various areas of training and education to preserve Switzerlands competitiveness as a business location.

Promoting Switzerlands entrepreneurial spirit

U N I V E R S I T Y O F B E R N - I N S T I T U T E O F

M A R K E T I N G A N D C O R P O R AT E M A N A G E M E N T

Entrepreneurship is key to the success of any national economy, particularly in difficult economic times. For this reason, KPMG backs the CAS in Entrepreneurship course at the University of Bern, which is geared toward promoting entrepreneurship in Switzerland.

www.entrepreneurship.unibe.ch

Grassroots support for entrepreneurship

Y E S C O M P A N Y P R O G R A M & K P M G T E A M A W A R D

YES is a non-prot organization that develops and supervises practice-oriented economic education programs for young people. KPMG supports the Company Program, in which young people start up and run a real company for the duration of a year. In addition, the most successful team is presented with the KPMG Team Award.

www.young-enterprise.ch

Mastering complex risks

E T H R I S K C E N T E R

The economy, society and the scientic community are confronted with global systemic risks that are becoming increasingly extreme and complex. For this reason, the ETH Risk Center is working to establish an integrated risk management system. Natural, economic and social risks also have an effect on Zurich as an international nancial center. KPMG is therefore supporting ETH Zurichs risk initiative, the key element of which is the ETH Risk Center.

www.riskcenter.ethz.ch

Tackling challenges systematically

K P M G C H A I R F O R A U D I T A N D A C C O U N T I N G

In-depth specialist knowledge enables in-novation and a certain degree of foresight. Since 2005, KPMG has been a partner of the University of St. Gallen (HSG) and, with the KPMG Chair of Audit and Accounting, supported practice-oriented teaching and applied research. Professor Peter Leibfried, the incumbent chair, adopts a systematic approach to tackling the current and future challenges facing audit and accounting.

www.aca.unisg.ch

Lucerne Festival

Since 2005, KPMG has been a main sponsor of the lucerne festival in summer concert series, reecting its support for both classical and contemporary music. The lucerne festival has been running for 75 years and is now regarded as one of the worlds leading classical festivals.

Opra de Lausanne

The Opra de Lausanne has returned home after more than ve years in exile. The infrastructure has been completely replaced, allowing larger and even more innovative productions to be staged. KPMG has supported the Opra de Lausanne for over twenty years and is delighted to see it coming back to its roots.

INNOVATION STARTS WITH

AN IDEA

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Corporate Social Responsibility

DEDICATED TO SOCIETY

K P M G . C H / C O M M I T M E N T

Corporate social responsibility (CSR) refers to a companys responsible use of natural resources and its

obligation toward the community in which the company and its employees operate.

As an auditing and advisory rm, KPMG is closely linked to developments in society and the economy, a role that

requires responsible behavior day in, day out.That is why CSR forms an integral part of our corporate

values. Transcending its business activities, KPMG Switzerland has a long-term commitment to education,

the community and the environment.

Make a Difference Day

Make a Difference Day offers KPMG employees the opportunity to devote one working day a year to a range of projects in the elds of education, the

community or the environment. In 2012, over 200 employees took part in 22 projects of different kinds across Switzerland.

[ T O P L E F T ] getting stuck in at the nature reserve [ T O P R I G H T ] construction work at the adventure playground in Olten[ B O T T O M R I G H T ] visiting the zoo with people with disabilities

Award-winning projects for the future

KPMG presented not one but two awards in 2012. The Sandmeyer Award 2012 went to a team of researchers from Solvias, while a KPMGs Inspiration Grant was awarded to a team of researchers from ETH Zurich for developing a new method of tackling insulin resistance and Type 2 diabetes.

Offering long-term support as a Job Caddy

Adolescence and all the changes it brings with it can cause problems for young people, particularly when the time comes to opt for an apprenticeship or job as a way of nding a suitable profession. KPMG employees volunteer their time to act as mentors, supporting young people experiencing difficulties before or during their apprenticeship or when starting out in their career. Their support ranges from help with homework or looking for a job through to interview coaching.

Being carbon-neutral

KPMG Switzerland has been carbonneutral since 2011. Greenhouse gas emissions that have been identied but cannot be reduced are offset through the purchase of high-quality Gold Standard CO2 certicates.

www.axpo.ch/nr (Nachweis-Nr. 1137039)

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contr ibu

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effectiv

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Founded in 2007

Supports education, integration and emergency relief __Twenty projects supported in the fiscal year 2011/12

F O U N D A T I O N

P R O J E C T S

In order to put the motto of Making an impact

into practice, the KPMG Foundation supports

small and medium-sized charities and projects

with a community focus.

Its donations are intended to make a

tangible contribution and improve the current

situation of the organizations and

projects supported.

A K T I O N D E M E N Z

D E M E N T I A I N I T I A T I V E

Purchase of special beds for the Herbschtzytlos home, enabling the best

possible care to be given.

H I L F S W E R K S C H W E I Z

E L S A L V A D O R

A I D O R G A N I Z A T I O N

Support for the aid organization, which gives

young people in El Salvador the chance of

an apprenticeship in a variety of professions.

H U U S G L N

C L O W N A S S O C I A T I O N

Support for the association, enabling its

clowns to continue to visit chronically ill and disabled

people at home.

E M P L O Y E E I N I T I AT I V E S

Employees and Partners of KPMG also start

their own initiatives on behalf of the KPMG Foundation. You can

follow these projects and offer your support via the interactive website

www.kpmgfoundation.ch.

M O V E M B E R

Everyone taking part in Movember grows the most impressive moustache they

can over the period of a month. Through their commitment and the

support of their sponsors, they raise money for the

Swiss Cancer League.

C H A R I T Y R U N 2 0 1 2

Twenty-two employees covered a total of over

350 km between them for Kids Kidney Care.

kpmgfoundation.ch

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-

Page 26


High performing people

Reto EberleAudit Partner

After a successful 20-year career at KPMG, Reto Eberle was appointed Associate Professor for Auditing and Internal Control at the University of Zurich with effect from 1 September 2012. He divides his time equally between this post and continuing to work as a Partner in the Department of Professional Practice (DPP) Audit at KPMG.

G R E A T E S T C H A L L E N G E

What have been your greatest challenges since 1 September?

Its certainly been a challenge time-wise to juggle both com-mitments. My passion for KPMG is too great to be just a 50% commitment. At the same time, as well as enjoying initiating over 150 students into the mysteries of auditing, Im also com-pletely overhauling the professorship.

T R A N S F E R R I N G E X P E R T I S E

To what extent can you transfer the expertise and experience you need for your work at the

University of Zurich to KPMG, and vice versa?

My 20 years of professional experience at KPMG was one of the prerequisites for making the change: the University of Zurich was looking for someone well versed in the auditing practice and the profession. One particular benefit for KPMG is the opportunity to work with potential future employees.

H I G H P E R F O R M A N C E C U L T U R E

We embrace a culture of high performance at KPMG. To what extent is the same true of the University of Zurich?

The university pursues a strategy of excellence in its teaching and research. The Faculty of Economics, Business Adminis-tration and Information Technology is one of the leading es-tablishments in Switzerland and among the best in Europe. In addition, a recently published league table rated the Depart-ment of Business Administration, where I have been working since 1 September, as one of the three best in Europe. It fills me with pride to be able to make a contribution to the success of the department, just as I have done and will continue to do at KPMG.

Andr VonarburgAudit Assistant

Since 1 September 2012, Andr Vonarburg has been working for KPMG in Central Switzerland and is training to qualify as an auditor. The former top sportsman can look back on a successful career as a rower, with the icing on the cake being the two Olympic diplomas he received in Sydney and Athens. A graduate in business administration from the University of St. Gallen, Andr Vonarburg is now about to embark on a new phase in his life.

G R E A T E S T C H A L L E N G E

What have been your greatest challenges since you started at KPMG?

Nowadays, my day-to-day work primarily involves using my brain. Finding time for physical exercise isnt easy and re-quires a lot of discipline, as it now has to be fitted in before or after work instead of during it. I have a fairly good idea of what my body needs to recover after its been under a lot of strain. As far as being mentally tired is concerned, Im still discovering what is good for me and what is less so.

T R A N S F E R R I N G E X P E R T I S E

To what extent can expertise and experience be transferred from elite sport to KPMG?

Team sport taught me how to work very intensively and single-mindedly with other people, something that I can also use to my advantage in my current job. Ultimately, in both fields there are shared interest groups that are thrown together more or less at random and need to perform. Ive also learned how to handle high-pressure situations and celebrate successes accordingly.


We embrace a culture of high performance at KPMG. What does that mean?

Its easy to see what high performance means in elite sport. At world championships or the Olympics, participants obtain firsthand experience of what is meant by a world-class performance. As a KPMG employee, its harder to get clear feedback on whether youve put in a top performance or not. In a high-performance culture, you need to define exactly what a top performance is and then target it constantly as a benchmark.

Page 27

Clarity

Our Brand Proposition

HIGH PERFORMING

PEOPLE

CUTTING THROUGH

COMPLEXITY

TO DELIVER

CLEAR SOLUTIONS

THAT

OUR CLIENTS

VALUE.

Page 28


E X A M I N A T I O N P A S S R A T E S F O R C E R T I F I E D P U B L I C A C C O U N T A N T S

I N S W I T Z E R L A N D

National pass rate: 71%

KPMG pass rate: 82%42 of 51 employees passed the examination in 2012.


In a ercely competitive environment, we want to be the best. For this reason, we embody a high-performance culture. This means setting ourselves the daily challenge of combining specialist knowledge and performance with social competence. We promote open, honest interaction and strive to view our results from our clients perspective at all times.

For KPMG, one thing is clear: by creating added value for our

clients, we always add value for ourselves too.

4 6 N A T I O N A L I T I E S A T K P M G S W I T Z E R L A N D

SWITZERLAND 71.7 %GERMANY 11.0 %

FRANCE 3.7 %UNITED STATES 2.1 %

ITALY 2.1 %UNITED KINGDOM 2.0 %

AUSTRIA 0.8 %NETHERLANDS, SPAIN 0.7 %

BELGIUM 0.5 %AUSTRALIA 0.4 %

CANADA, PORTUGAL 0.4 %BULGARIA, POLAND 0.3 %

ROMANIA, TURKEY, CZECH REPUBLIC, GREECE, RUSSIA 0.2 %CHINA, DENMARK, HUNGARY, INDIA, KOSOVO, LIECHTENSTEIN,

MALTA, SWEDEN, TAIWAN, ALBANIA, BELARUS, BOLIVIA, BOSNIA AND HERZEGOVINA, BRAZIL,

CHILE, COLOMBIA, CROATIA, FINLAND, IRELAND, ISRAEL, LATVIA, MOROCCO, NORWAY, PERU, SERBIA, UKRAINE 0.1 %

162,000 hours invested in further education and training.

KPMG RANKED THE

SECOND MOST ATTRACTIVE EMPLOYER

WORLDWIDE

For the third year in a row, KPMG has been ranked the second most attractive employer in the world. Over 75,000 business students from the worlds leading academic institutions took part in the annual study entitled Worlds Most Attractive Employers.

kpmg.ch/culture

71%

Page 29

Clarity High performing people

KPMGBadenerstrasse 172P.O. BoxCH-8026 Zurich

[email protected] +41 58 249 31 31Fax +41 58 249 44 06www.kpmg.ch

Clarityis published in English, German and French

Order CodeEnglish: E-KP003-G12German: D-KP003-G12French: F-KP003-G12

Concept, Editing and DesignKPMG

Pictures

[Page 3] Jorma Mueller, Zurich

[Page 5] Patrice Schreyer, Neuchtel

[Pages 17, 18, 19, 21] Coop

[Page 24] KPMG Archive, ETHZ, Prof. Leibfried, Opra de Lausanne, Lucerne Festival, University of Bern

[Page 27] Aktion Demenz, Hilfswerk El Salvador Schweiz, Huusgln, KPMG Archive, Daniel Hager

[Pages 26,30] KPMG Archive

[Cover, Pages 10, 11, 12, 13, 15, 27] Getty Images

PrintDAZ, Druckerei Albisrieden AG, Zurich

The information contained herein is of a general nature and is not intended to address the circum-stances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such informati-on without appropriate professional advice after a thorough examination of the particular situation.

2012 KPMG Holding AG/SA, a Swiss corpora-tion, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent rms afliated with KPMG International Cooper-ative (KPMG International), a Swiss legal entity. All rights reserved. Printed in Switzerland. The KPMG name, logo and cutting through com-plexity are registered trademarks or trademarks of KPMG International.

KPMG in Switzerland does not offer internal audit outsourcing services to its U.S. SEC-registered nancial statement audit clients.

kpmg.ch

T W O T H O U S A N D A N D T W E L V E

Content

F2 Management Report Focusing on clients Firmly establishing a competitive advantage in the market for the long term.

F4 Executive Committee Setting new standards and implementing strategic refinements Becoming the most integrated firm.

F6 Infrastructure Having an efficient, modern infrastructure is a key success factor New technologies and mobility continue to pose a challenge.

F9 Markets Corporates market dimension strengthened Segment-based approach brings a sound understanding of the markets.

F12 Services Audit, Tax, Advisory a multidisciplinary range of services Competition, price pressure and market volatility.

F14 Financials Gross revenues at CHF 429.4 million ( 0.1 percent) Solid result achieved despite a challenging global environment.

F16 Quality and Risk Management High quality standards are part of our culture Quality and risk management are closely interlinked.

F20 Partners Committee and Structure Sustainable entrepreneurship with an organizational structure based on partnership KPMG Switzerland as part of a global network.

KPMG Switzerland Facts and Figures 2012

ON A PAR WITH

THE PREVIOUS YEARS

RESULTJ R G W A L K E R

Chief Operating Officer

Page F1

Management Report

SWITZERLAND IS BATTLING WITH TENSIONS IN THE EUROZONE AND IS FEELING THE EFFECTS

OF A WEAK GLOBAL ECONOMY.

Momentum on the marketWe are confronted with more and more challenges in the global market environment. In the past fiscal year, KPMG Switzerland achieved a robust result, virtually on a par with the previous year with gross revenues of CHF 429.4 million ( 0.1 percent) as of 30 September 2012. The adverse market envi-ronment was characterized by intense compe-tition, increasing regulatory requirements and delayed investment decisions. Audit succeeded in boosting its earnings to CHF 233.5 million (+ 4.3 percent) in a hotly contested market while Tax generated CHF 125.2 million ( 1.9 percent), slightly short of last years record result. Advisory posted revenues of CHF 70.7 million ( 9.9 percent). This func-tion has modified its service portfolio to better suit the markets new requirements, however, and has now reported growth of +2.0 percent after adjustments. Financial Services, where KPMG maintains a leading position across Switzerland, yielded good results once again. Small and medium-sized enterprises (SMEs) are responsible for over one-third of revenues. These companies are also closely linked to

the international markets and benefit from accessing KPMGs global expertise locally. The current client portfolio provides a solid foundation for the next fiscal year.

Focusing on clientsWe intend to firmly establish our competitive advantage in the market for the long term and achieve growth once again. For us, this means having to set out our services efficiently and providing auditing and advisory support in a targeted manner. In this regard, it will be cru-cial that we continue to achieve the best results for our clients by deploying the best employees and processes. To maintain this high standard, we work closely with academia and take our role as a training facility for tomorrows executives seriously. Every year, we recruit a large number of employees from universities. This allows us to build up our own talent pool while making a sustained contribution to Switzerland as an attractive business location. We can only be strong if we work together with our clients. For this reason, we are committed to providing the highest quality of service possible.

Page F2

S T R A T E G I C F O C U S

FINANCIAL SERVICESBanking

Insurance

Investment Management

CORPORATESPower & Utilities

Commodities & Energy Trading

Healthcare

MANAGEMENT CONSULTINGFinancial Management

Shared Services & Outsourcing

Supply Chain Management & Procurement

TAX GLOBALIZATIONGlobal Tax Management

International Private Clients

ATIONAL MARKETS & GOVERNMENTAll Regions

Integrated Services

HEADQUARTERSSwiss Headquarters

International Headquarters [Inbound: Brazil, China and USA]

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Facts and Figures 2012KPMG Switzerland

Page F3

E X E C U T I V E C O M M I T T E E

Roger Neininger Chief Executive Officer

Jrg Walker Chief Operating Officer Chief Financial Officer Deputy CEOStphane Gard

Head of CorporatesLukas Marty Head of AuditStefan Pfister

Head of AdvisoryDaniel Senn Head of Financial ServicesPeter Uebelhart

Head of Tax

Page F4

Executive Committee

IN THE COURSE OF THE FISCAL YEAR 2012, KPMG WORKED ACTIVELY TO SET NEW STANDARDS

AND IMPLEMENTED A NUMBER OF STRATEGIC REFINEMENTS. FOR INSTANCE, INNOVATIONS WERE

INTRODUCED THAT WILL PROPEL KPMG EVEN FURTHER TOWARD ITS GOAL OF BEING THE

MOST INTEGRATED FIRM.FURTHERMORE, MARKET FOCUS IS A MATTER OF

KEY IMPORTANCE TO NEW CEO ROGER NEININGER. IN OTHER WORDS, KPMGS OFFERING MUST

ALWAYS BE AS RELEVANT AS POSSIBLE AND ITS SERVICES MUST CREATE ADDED VALUE.

Market dimensions strengthenedThe market dimensions have been given ex-tra weight: in addition to Financial Services under the leadership of Daniel Senn, a new Corporates line of business has been set up, headed by Stphane Gard. The new segment structure has a geographical as well as a sector-based dimension in the form of the 11 locations. The business lines remit extends across Audit, Tax and Advisory to enable KPMG to focus its offering on the market in a targeted way.

High-caliber specialist expertiseAs a pioneer of the profession and an extremely experienced and capable auditor, Lukas Marty, the new Head of Audit, has proved his worth in a host of international mandates. Leading Tax, we have Peter Uebelhart, a highly innovative

and seasoned expert with an impressive track record. They will work together with Stefan Pfister, Head of Advisory, to develop multi-disciplinary responses to clients challenges.

Operational excellenceWe have also introduced the new role of COO. Jrg Walker will head up Business Operations and also be responsible for the four areas of Marketing & Communications, Human Resources, Finance & Controlling and Infrastructure. The Corporate Center is investing heavily in boosting efficiency: processes and structures are being developed to a greater professional level to improve flexibility of the cost base and enable a quick response to changes in the economic environment.

Page F5


Infrastructure

FOR KPMG, HAVING AN EFFICIENT, MODERN INFRASTRUCTURE IS

A KEY SUCCESS FACTOR UNDERPINNING OUR DRIVE FOR INNOVATION.

Proactive digital strategyWith regard to its digital activities be they social media such as blogs or apps or elec-tronic communication channels in general KPMG has adopted a proactive strategy and is among the pioneers in its sector. The new technologies are allowing us to break new ground in planning for the future, both in terms of our internal procedures and in our dealings with clients. This includes a mod-ern CRM system that enhances the quality of our services.

Data security, our top priorityAt the same time, data security is our top pri-ority. Our cutting-edge security technologies provide protection for our data and, naturally, that of our clients too. We therefore deliver not only effective services but also effectively secured services.

Mobility shaping the working environmentAs KPMG employees travel regularly within Switzerland and abroad to visit clients and thus constitute a highly mobile group of people, providing suitable office space is a complex challenge. This means that, for both IT and office infrastructure, we need solu-tions that clearly address these requirements and permit a flexible approach to working areas. KPMG systematically researches efficient ways to ensure streamlined structures and effective processes. For instance, the innovative Bring your own device concept now allows employees to work on their tablet computer or smartphone, giving them even greater freedom of movement and bringing us one step closer to our goal of paperless meetings. In addition, our first client office is set to open in the city of Lucerne in 2013, providing a central facility for client meetings in the region.

Page F6

Social Media

We interact with our clients every day increasingly online. Social media in particular offer a wide range of opportunities for finding out about the latest industry trends and current issues. We intend to take part in this dialog and make the most of the various channels available.

KPMG Blog

Our experts write about current issues and trends on the KPMG Blog.

www.blog.kpmg.ch

V I S IT S

28,298

KPMGnews

Every two weeks, our popular e-newsletter packages our experts knowledge and presents

it to you in a compact form.

www.kpmgnews.ch

S U B S C R I B E R S

8,392

KPMG Knowledge

The iPad app Knowledge gives you access to our experts knowledge wherever you are and whenever you need it.

www.kpmg.ch/knowledgeDOW

N L OA D S

3,866

Twitter

Be the first to find out the latest KPMG news

in only 140 characters.

www.twitter.com/KPMG_CH

F O L L OW E R S

2,070

Facebook

Keep up to date about KPMG and job opportunities at KPMG on Facebook.

www.facebook.com/KPMGcareersF A N

S 1,736

Page F7


Organization

Clients

Mar

kets

Line

s of

Bus

ines

s

Financial Services

Corporates

National Markets (SMEs)

Corporate Center Audit Tax Advisory

Marketing & Communications

Human Resources

Finance & Controlling

Infrastructure

National Quality & Risk Management Executive Committee

ServicesFunctions

Page F8

THE SWISS MARKET

IS DIVERSE.

Markets

__

THE SWISS MARKET

IS DIVERSE.TO ENSURE WE MEET THE NEEDS OF

DIFFERENT-SIZED COMPANIES FROM A RANGE OF SECTORS, WE ACTIVELY PURSUE A

SEGMENT-BASED APPROACH THAT ALLOWS US TO DEVELOP AN IN-DEPTH

UNDERSTANDING OF THE MARKET AND OUR CLIENTS REQUIREMENTS.

Page F9


Financial Services

NEW REGULATORY REQUIREMENTS, SUCH AS THOSE IMPOSED BY THE FEDERAL COUNCILS

PLANNED WHITE-MONEY STRATEGY, ARE FORCING CLIENTS

TO MODIFY THEIR BUSINESS MODELS.

When it announced its white-money strategy last year, the Federal Council signaled a change of course in its financial market policy. As a result, financial services providers are having to grapple with new regulatory requirements, particularly international ones. These new requirements have initiated a long-term process of change.

Banks, Insurers, Investment ManagementThe financial services providers have respond-ed to the new situation. They are pressing ahead with their internal adjustments in order to ensure they comply with the law. This includes aligning internal structures and is a very cost-intensive process. With the Swiss franc exchange rate remaining persistently low against the key currencies and risk appe-tite generally on the decline, margins have come under increased pressure. Companies have reacted by systematically reviewing and modifying their business models. Their efforts have centered on becoming more focused with regard to their target groups, target markets,

products and services. However, this is lead-ing inevitably to greater market consolidation. The response from the banks, insurers and asset managers has placed extraordinary demands on financial services specialists in terms of innovation and creativity. Yet the interdisciplinary collaboration between our specialists has enabled us to support our clients proactively with customized strategies for finding solutions.

Regulatory ChallengesImplementation of the EU Alternative Invest-ment Fund Managers Directive (AIFMD) and the gradual adoption of Basel III will mean that constructive, effective approaches to find-ing solutions will be required in the coming year too. We are optimistic about the future and will continue to pursue the strategy we have successfully adopted. With this client-focused, innovative approach, Financial Ser-vices at KPMG succeeded in strengthening its market position in the past fiscal year.

Page F10

Corporates

The new Line of Business (LoB) Corporates focuses on a few defined segments. In addition to global companies, headquarters, government and small and medium-sized enterprises (SMEs), three sectors are targeted.

GovernmentThe Federal Government and the cantons are attempting to meet the call for an enhanced public service on the one hand and for keeping taxes as low as possible on the other with a long-term public corporate governance strate-gy, including in the areas of road construction and maintenance, real estate management, energy and transport infrastructure. The state is also experiencing the increased vulnerability of modern society in the form of the heightened threats it faces from cyberspace.

National Market (SMEs)The strong franc and the European debt crisis are continuing to make life difficult for Swiss SMEs. Although the exchange rate floor is providing a modicum of planning security and is strengthening earnings power, virtually all companies are being forced to continue optimizing costs. One particular challenge is how to promote and further strengthen inno-vation, a task that some SMEs are tackling in cooperation with research institutions.

Power & Utilities

and supply autonomy and between competi-tive energy prices and climate targets are on the horizon. Added to these are the liberal-ization of the energy market, a move adopt-ed but not yet implemented, the replacement of outdated infrastructure and the upcoming investment in transmission and distribution networks.

The shift in energy policy initiated by the Federal Council and Parliament will pose major challenges for the economy and society. Conflicts of interest between supply security

Commodities & Energy TradingCommodities and energy trading companies derive their potential for growth from in-creasing urbanization, particularly in the growth markets in Asia and Africa. They boost their competitiveness by broadening their value creation chains and extending them further toward extraction of raw materi-als or storage and distribution. The issues of sustainability and national and international regulations are proving to be just as chal-lenging as finding and retaining highly qualified employees.

HealthcareHealthcare has undergone many changes, particularly in terms of how hospitals are financed via case-based flat-rate payments, as well as more stringent quality and cost settlement requirements. e-Health, which includes measures such as centralized insurance and patient information, promises major innovations and changes. Although it will open up new opportunities in terms of providing more efficient and more effective treatment, it also raises data protection issues.

Page F11


Audit

G R O S S R E V E N U E 2 0 1 2 I N C H F M I L L I O N

234

Over the past few months, gover-nance issues have dominated the audit market environment at both a national and international level due not least to a greater need for security and sustainability. Company executives are becoming ever keener to ensure that the professionalism of their business is never called into question. This trend is also discern-ible in the public sector: cantonal and municipal financial directors and supervisory bodies are coming under ever closer scrutiny in terms of the relevant accounting and reporting regulations and the call for greater transparency. The role of the auditor and the issue of assur-ance are thus increasingly gaining in importance.

The audit and advisory industry has moved center stage worldwide. The most far-reaching demands at a polit-ical level last year were the proposals put forward by the European Com-mission to enforce the strict separa-tion of audit and advisory services. The ongoing discussions in the Euro-pean Parliament indicate that the pro-posals are unlikely to be implemented in this radical form. The industry needs to keep the quality of its audits high by continuing to apply multidisciplinary approaches. The interplay between auditing on the

one hand and tax advisory and man-agement consultancy on the other always within clearly defined pa-rameters is crucial, also for KPMG. We exchange knowledge every day with experts from many different fields, knowledge that we then incor-porate into our auditing.

In order not only to meet but also, if at all possible, to exceed our clients high expectations, we rely on excep-tional employees. We provide them with targeted support and a constant stream of new challenges, such as a more in-depth sector specialization and the opportunity to gain experi-ence in the countries in which our clients operate. Knowledge acquired in this way is incorporated into their routine work with clients.

The economic environment is stretching us in our day-to-day activities, forcing us to continuously carve out new competitive advan-tages. Our unwavering client focus, efficient procedures, a productive working environment and highly motivated employees will form the basis for our work next year too.

Tax

Is Switzerland still attractive enough as a place for companies to do busi-ness? The number of multinationals relocating here every year would suggest that it is. The solid infra-structure, the attractive labor market and the comparatively low rate of corporate tax have not yet lost their allure. However, it has never been more challenging for Switzerland to assert its competitiveness as a business location in the face of growth markets such as Singapore and others. The authorities, industry associations and political parties are therefore all under pressure to preserve the attractive fiscal and other regulatory framework condi-tions. This applies particularly but not exclusively to the ongoing negotiations with the EU.

Next year, tax issues will again be right at the top of economic policy and corporate agendas. Many coun-tries have come under enormous pressure and are now attempting to boost their tax revenues by increas-ingly aggressive means. The resulting risks are complex, requiring compa-nies to proceed with a great deal of prudence, foresight and diligence. KPMG is responding to this trend with initiatives such as its Global Compliance Management Services (GCMS). We are helping companies

Page F12


125

get a handle on the far-reaching requirements and achieve greater security and compliance. Thanks to its extensive expertise and innovative technology, KPMG is also doing its part to deliver efficient tax reporting and effective tax risk management. In this, we are supported by the global KPMG network, an invaluable resource especially when it comes to accurately evaluating structural trends and their potential risks at international level.

Our work is geared toward trans-parency. For this reason, we will continue to highlight the importance of helping our clients anticipate significant changes early and tackle identified risks with tangible, effec-tive measures. This is a task in which Legal and Business & Outsourcing Services play a major part because only complete clarity creates the necessary insight and allows our clients to fulfill both their own requirements and societys call for good corporate citizenship. Acting in compliance with the law at all times has always been the best way of handling reputation risks in a pre-cautionary and sustainable manner, and those risks are today arising ever more frequently under pressure from the authorities, the media and the general public.

Advisory


71

Global markets are currently in the throes of stagnation: the eurozone crisis is preventing a recovery in Europe, the engine of US growth has been sputtering for some time now, and even the emerging economies that have achieved impressive expan-sion year after year will most likely have to get used to single-digit rates of growth.

The slowdown in the markets and the heightened caution being shown by companies are illustrated particu-larly clearly by the fall in M&A numbers. Many firms are reluctant to invest and are choosing not to pursue strategic acquisitions of other companies. The same is true in Switzerland, although Swiss compa-nies are an attractive proposition for foreign businesses due to their high quality standards and the opportunities for diversification they provide. Investment in the real estate sector, by contrast, is actually more popular in times of uncertainty, with the need for advisory services in this sector correspondingly high.

The national and international chal-lenges experienced by companies on a daily basis are diverse. It is there-fore all the more important for them to keep their structures lean and thus their costs as low as possible.

The effective management of the value-creation chain and the targeted optimization of the supply chain and purchasing remain key elements in the quest for profitability. Faced with more unforgiving conditions, many companies are being forced to re-vamp their business models to inject new momentum. Ever more complex regulatory requirements are calling for greater operating efficiency, increasing corporate needs for the kind of expertise and international networks that KPMG offers.

The challenges will not get any easier in future, and the regulatory requirements including for auditors and consulting firms are continu-ing to increase. Over the past year, Advisory has adapted in line with the challenging market and undergone a root-and-branch overhaul in order to embed its services even more firmly in the market. To get in shape for the future, we have modified our internal structures while also expanding our sector-specific knowledge. In order to boost our competitiveness further, we intend to increase our capacities, not least in western Switzerland.

Tax

Page F13


Financials

Gross Revenuesby function

Share of revenue Change 2012 in CHF million 2011 in CHF million

Audit 55% 4.3% 233.5 223.8

Tax (incl. Legal) 29% 1.9% 125.2 127.7

Advisory 16% 9.9% 70.7 78.5

Total 100% 0.1% 429.4 430.0

Gross revenues include out-of-pocket expenses and services of subcontractors and other KPMG member firms charged through KPMG Switzerland.

Certain activities were moved from Advisory to Tax during the past fiscal year and figures from the previous year have been adjusted accordingly.

Net Revenuesby function

Share of revenue Change 2012 in CHF million 2011 in CHF million

Audit 57% 1.4% 204.4 201.6

Tax (incl. Legal) 29% 3.8% 105.2 109.4

Advisory 14% 9.0% 49.8 54.7

Total 100% 1.7% 359.4 365.7

Net revenues refer to services rendered by KPMG Switzerland.

Certain activities were moved from Advisory to Tax during the past fiscal year and figures from the previous year have been adjusted accordingly.

Staff

Change FTE 2012 FTE 2011

Total FTE, as of 30 September 2012 0.9% 1,505 1,519

Page F14

SectorsNet revenues as of 30 September 2012 in percent

8

9

9

12

75

12

38

Financial Services

Consum

er Mark

ets

Technology &Business Services

Chem

icals &

Industrials

Diversified

Pharm

aceuticals

Hea

lthca

re,

Gov

ernm

ent &

Infras

truc

ture

Ener

gy &

Natural

Resources

Others

Page F15


Quality and Risk Management

HIGH QUALITY STANDARDS ARE AN INTEGRAL PART OF KPMGS CULTURE

NOT ONLY BECAUSE THEY FORM THE BASIS FOR HIGH LEVELS OF CLIENT SATISFACTION,

BUT ALSO BECAUSE THEY REDUCE THE RISK OF LOSSES AND SECURE OUR LICENSING

AS A STATE-SUPERVISED AUDITING FIRM. AS A RESULT, QUALITY AND RISK MANAGEMENT

ARE INEXTRICABLY LINKED.

The global financial and economic crisis has presented us with a regulatory and business environment that looks set to remain fragile and volatile for a good while yet. These days, the role of the auditor or financial advisor means taking on a lot of extra responsibility. The capital markets are demanding more se-curity, more transparency and more reliability in corporate reporting. This does not just relate to financial statements but also to ques-tions of governance, compliance, sustainability and companies risk profiles. Because auditors act in the public interest, they are required to consider not only the concerns of their clients but of all other stakeholders too. This means that high demands are justifiably being made of our profession in terms of quality, ethics and independence demands that are en-

shrined in a raft of national and international guidelines and audit oversight with which we must comply in our day-to-day work.

At KPMG, we are aware of this important responsibility and invest substantial resources in our quality control system. Every December, we publish our annual Transparency Report of this system on our website. The report de-scribes the iterative process that we apply based on the International Standard on Quality Control (ISQC) 1.

The key element of our quality control system is the tone at the top, i.e. how our leadership goes about making quality a strategic issue and demonstrating it in their daily work. At KPMG Switzerland, this duty is performed

Page F16

by the Executive Committee, which also acts as the legal board of directors and thus bears the ultimate responsibility for ensuring that everyone in the company knows what values are important to us and that appropriate pro-cesses and internal controls are in place for all risks arising out of the work we do. In fall 2012, we updated our Code of Conduct and made it available to our employees and the general public. The core values that support us in our day-to-day work remain unchanged, and the most important value of all for us is, and will always be, integrity.

The other elements of our quality control system comprise: the process for accepting clients and

engagements, which includes, in partic-ular, compliance with all applicable independence guidelines

the various elements that ensure the high-quality handling of our engagements, including internal directives and pro-cesses, optimum deployment of em-ployees and ongoing quality checks at engagement level

monitoring compliance with all control measures and processes at firm level, in-cluding systematic retrospective quality reviews of selected engagements.

We also manage financial, operational, profes-sional and liability risks as part of this system. We draw up an annual risk map to identify and analyze the key risks in the Swiss environment, the probability of their occurrence and their

potential impact. Here too, we attach great importance to quality risk. The risk map is re-viewed annually by the Executive Committee in line with the Swiss Code of Obligations, a process which also includes deciding how to respond to new trends in the risk landscape and to ensure the continuous improvement of our processes.

At the clients end, the engagement leader has overall responsibility for the quality and timelines of our service delivery. Our company supports its employees in their daily work with extensive training and con-tinuing education programs, information resources and tools. Our central quality and risk management system is set up to support our business, define safeguards and identify potential solutions for any issues raised. In this regard, a trust-based, open-door cul-ture, our employees ability to exchange ideas candidly on equal terms and, ultimately, a willingness to consult others before making a high-impact, discretionary decision play an inestimable role in safeguarding top quality. At KPMG, this culture is lived out every day.

Quality and risk management starts at the engagement level and

is ultimately the responsibility of every employee.

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Partners

Hubert Achermann Zurich

Thomas Affolter Zug

Ulrich Amberg Zurich

Anthony Anzevino Zurich

Philipp Arnet Zurich

Hlne Bguin Lausanne

Reto Benz Zurich

Patricia Bielmann Zurich

Jrg Birri Zurich

Michael Blume Zurich

Patrick C. Burgy St. Gallen

Peter Burnham Zurich

Herbert Bussmann Zurich

Debbie Carver Lausanne

John Carver Lausanne

Dominique Christen Zurich

Tara Collins Vieli Zurich

Patrick Conrady Lausanne

Nicolas Cottier Lausanne

Bryan DeBlanc Zurich

Reiner Denner Zurich

Ralph Dicht ZurichHanno Diethelm Zurich

Hieronymus T. Dormann Zurich

Reto Eberle Zurich

Jean-Luc Epars Geneva

Charles Errico Zurich

Michel Faggion Lausanne

Peter Fatzer Zurich

Philippe Fleury Geneva

Markus Forrer Lucerne

Stphane Gard Lausanne

Olivier Gauderon Geneva

Alex Geissbhler Zurich

Marc Olivier Gssi Zurich

Christoph Grbli Zurich

Ivo Gut Bern

Kurt Gysin Zurich

Daniel Haas Zurich

Philipp Hallauer Zurich

Rolf Hauenstein Zurich

Michel Heiniger Geneva

Charles Hermann Zurich

Michael Herzog Zurich

Christian Hintermann Zurich

Martin Hirsiger Bern

Claude Honegger Zurich

Lorenzo Job Lugano

Christian Kaiser Basel

Sibylle Kammer-Keller Zurich

Astrid Keller Zurich

Patrik Kerler Zurich

Jrg Kilchmann Zurich

Elisabeth Kruck Zug

Heiko Kubaile ZurichArmin Khne Zurich

Stefan Kuhn Zurich

Frank Lampert Zug

Orlando Lanfranchi Zurich

Daniel Lengauer Zurich

Mirko Liberto Zurich

Pablo Ljaskowsky Zurich

Ignacio Longarte Zurich

Silvan Loser St. Gallen

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hell

Fabien Lussu Lausanne

Lukas Marty Zurich

Brad Maxwell Zurich

Jrg Georg Meisterhans Zurich

Yvan Mermod Geneva

Peter Michael St. Gallen

Graham Middleton Zurich

Judith MitcLausanneDominique Morel Zurich

Andreas M. Mller Zurich

Douglas Mullins Zurich

Roger Neininger Zurich

David Peterson Zurich

Sean Peyer Zurich

Stefan Pfister Zurich

Hans-Ulrich Pfyffer Zurich

Pierre Henri Pingeon Geneva

Johannes E. Post Zurich

Ulrich Prien Zurich

James David Remick ZurichGiordano Rezzonico Geneva

Philipp Rickert Zurich

Antony Paul Rieveley Geneva

Stuart Robertson Zurich

Martin Rohrbach Basel

Franois Rouiller Basel

Dominik Rttimann Zurich

Andreas Russi Zurich

Simon Ryder Zurich

Martin Schaad Zurich

Lars Schlichting Lugano

Thomas Schmid Zurich

Michael Schneebeli Zurich

Thomas Schneider Zurich

Markus Schunk Zurich

Daniel Senn Zurich

Graham Seymour Zurich

Hans Stamm Zurich

Hans Jrg Steiner Bern

Daniel Steiner St. Gallen

Michael Sterchi Zurich

Hanspeter Stocker Zurich

Kurt Stocker St. Gallen

Kurt Stoll Bern

Thomas Studhalter Lucerne

Ian Sutcliffe Zurich

Peter Uebelhart Zurich

Tobias Valk Zurich

Anne van Heerden Zurich

Hans Vils Schaan

Jrg Walker Zurich

Regula Wallimann Zurich

Toni Wattenhofer Zug

Erik Willems Zug

Nicole Willimann Vyskocil Lucerne

Bianka Wilson Zurich

Grgoire Winckler Zurich

Markus Wyss Zurich

Pierre Zach Geneva

Andr Zemp Zurich

Reto Zemp Zurich

Marc Ziegler Zurich

Stefan Zwicker Zurich

NEW AS OF 1 OCTOBER 2012

Partners Committee and Structure

Shared success is the sign of a strong

partnership.

Jrg Georg Meisterhans Chairman of the Partners Committee

Members of the Partners Committee

Jrg Georg Meisterhans (Chairman) Zurich

Hlne Bguin Lausanne

Hieronymus T. Dormann Zurich

Peter Michael St. Gallen

Tobias Valk Zurich

Regula Wallimann Zurich

KPMG Switzerland The activities of KPMG Switzerland are com -bined under the umbrella of KPMG Holding AG. KPMG Holding AG, together with its subsidiar -ies, is the Swiss member of the KPMG Interna -tional Cooperative (KPMG International) net -work. KPMG Holding AGs shares are held by KPMG Europe LLP.

KPMG Europe LLP KPMG Europe LLP is a leading professional ser -vices group; ELLP firms provide Audit, Tax and Advisory services in 19 countries. As a group, KPMG Europe LLP is a UK limited liability part -nership, registered in London and based in Frankfurt am Main. KPMG Europe LLP enables the smooth conduct of its subsidiaries busi -nesses, enabling seamless and efficient coop -eration, as well as supporting their ongoing commitment to providing the highest quality services to ELLP firms clients. Member firms in each country handle their legal affairs inde -pendently.

KPMG International KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 156 countries and have more than 152,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (KPMG Inter -national), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and de -scribes itself as such.

Page F20

Impressum

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accu -rate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

2012 KPMG Holding AG/SA, a Swiss corporation, is a subsidiary of KPMG Europe LLP and a member of the KPMG network of independent firms affiliated with KPMG International Cooperative (KPMG International), a Swiss legal entity. All rights reserved. Printed in Switzerland. The KPMG name, logo and cutting through complexity are registered trademarks or trademarks of KPMG International.

KPMG in Switzerland does not offer internal audit out -sourcing services to its U.S. SEC-registered financial statement audit clients.

KPMG Badenerstrasse 172 P.O. Box CH-8026 Zurich

[email protected] +41 58 249 31 31 Fax +41 58 249 44 06 www.kpmg.ch

Clarity is published in English, German and French

Order Code English: E-KP003-G12German: D-KP003-G12 French: F-KP003-G12

Concept, Editing and Design KPMG

Pictures Daniel Hager, Zurich Patrice Schreyer, Neuchtel

Print DAZ, Druckerei Albisrieden AG, Zurich


Contacts

Head OfficeCH-8026 Zurich Badenerstrasse 172 P.O. Box Phone +41 58 249 31 31 Fax +41 58 249 44 [email protected]

Deutschschweiz CH-4002 BaselViaduktstrasse 42 Postfach Telefon +41 61 286 91 91 Telefax +41 61 281 91 [email protected]

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CH-9001 St. GallenBogenstrasse 7 Postfach 1142 Telefon +41 71 272 00 11 Telefax +41 71 272 00 [email protected]

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ClarityAnnual Review 2012 KPMG SwitzerlandMagazineForewordChange

DevelopmentsTen major developmentsDEMOGRAPHYENERGYLEISUREHEALTH AND LIFE EXPECTANCYINDIVIDUALIZATION AND SELF-DETERMINATIONMOBILITYECOLOGYSPATIAL DEVELOPMENT AND URBAN SPRAWLTECHNOLOGY AND RESEARCHIMMIGRATION

Time for change

ChallengeBKW AGUrs Gasche

Cargill International SAHans Rueedi

Takeda Pharmaceutical CompanyDominic Moorhead

ReportHANSUELI LOOSLIThe problems of duplicationAn upside-down groupCoopForte signals the start of a new eraWhat has been achieved?Proximity to customers is crucial to successSustainability as the top priority

CommitmentINNOVATION STARTS WITH AN IDEAMastering complex risksTackling challenges systematicallyPromoting Switzerlands entrepreneurial spiritGrassroots support for entrepreneurshipLucerne FestivalOpra de Lausanne

Corporate Social ResponsibilityDEDICATED TO SOCIETYMake a Difference DayAward-winning projects for the futureOffering long-term support as a Job CaddyBeing carbon-neutralcontributing effectivelyFOUNDATION PROJECTSAKTION DEMENZ DEMENTIA INITIATIVEHILFSWERK SCHWEIZ EL SALVADOR AID ORGANIZATIONHUUSGLN CLOWN ASSOCIATIONEMPLOYEE INITIATIVESMOVEMBERCHARITY RUN 2012

High performing peopleReto EberleGREATEST CHALLENGETRANSFERRING EXPERTISEHIGH PERFORMANCE CULTURE

Andr VonarburgGREATEST CHALLENGETRANSFERRING EXPERTISEHIGH PERFORMANCE CULTURE

Our Brand PropositionEXAMINATION PASS RATES FOR CERTIFIED PUBLIC ACCOUNTANTS IN SWITZERLANDHIGH PERFORMANCE CULTURE46 NATIONALITIES AT KPMG SWITZERLANDKPMG RANKED THE SECOND MOST ATTRACTIVE EMPLOYER WORLDWIDE

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Annual Report 2012

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