KPMG Integrated report 2022/2023

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. The Group has the following primary operating segments, which have been identified based on the way operations and financial information are organized and financial information is reported to the Board of Management:

Assurance;
Advisory.

The operating results of all operating segments for which discrete financial information is available is reviewed regularly by the Board of Management so that it can make decisions about resources to be allocated to the segment and to assess the segment’s performance.

As the Group operates in the Netherlands, there is only one geographic segment.

The pricing of intersegment transactions is determined in accordance with the applicable internal policies.

The Group’s operating segments are its reportable segments.

Information about reportable segments

Information related to each reportable segment is set out below. Net sales, Income and Operational results are used to measure performance as management believes this information to be the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries. In addition, average FTEs per segment are closely monitored.

Segmentation 2022/2023	Assurance	Advisory	Total reportable segments	Other segments and intersegment eliminations	Total
Net sales	378,268	271,790	650,058	–	650,058
Income	362,721	287,550	650,271	-2,073	648,198
Operational result	101,908	89,785	191,693	-111,492	80,201

The total of Net sales, Income and Operational result is reconciled to the amounts reported in the financial statements below. Other segments and intersegment eliminations include the elimination of revenues between operating segments on the one hand and central departments and support services on the other hand, on income level. On Operational result level, intersegment eliminations relate to the elimination of all costs of central departments and support services providing services to the operating segments.

	Assurance	Advisory	Total reportable segments	Other segments	Total

Average FTEs
Equity partners	94	69	163	5	168
Other professionals	1,841	1,340	3,181	7	3,188
Support staff	158	89	247	603^*	850
Total FTEs	2,093	1,498	3,591	615	4,206

Segmentation 2021/2022	Assurance	Advisory	Total reportable segments	Other segments and intersegment eliminations	Total


Net sales	342,005	250,765	592,770	-2	592,768
Income	330,189	261,640	591,829	-351	591,478
Operational result	94,025	91,121	185,146	-100,454	84,692

	Assurance	Advisory	Total reportable segments	Other segments	Total

Average FTEs^**
Equity partners	91	61	152	6	158
Other professionals	1,708	1,171	2,879	-	2,879
Support staff	156	70	226	534^*	760
Total FTEs	1,955	1,302	3,257	540	3,797

* This includes personnel working for KPMG International.
** For comparison reasons average FTEs for 2021/2022 have been restated.

Reconciliation of information on reportable segments to the amounts reported in the financial statements

EUR 000	2022/2023	2021/2022
Net sales and income
Net sales	650,058	592,768
Adjustment internal revenue	-1,860	-1,290
Income	648,198	591,478
Client related expenses	62,757	63,968
Consolidated revenue	710,955	655,446

Operational result
Operational result	80,201	84,692
Advanced fees paid to the Cooperative	40,158	37,606
IFRS 16 adjustments	2,439	1,976
Extraordinary results	-34,898	2,648
Consolidated operating result	87,900	126,922

Work performed by employees for internal purposes (adjustments internal revenue) is included in net sales for internal reporting purposes. This is excluded from income or consolidated revenue.

Income for internal reporting purposes is exclusive of client-related expenses, such as travel expenses, expense declarations or external client-related invoices. When these expenses are invoiced to the client, they are included in consolidated revenue.

Operational result presented for internal reporting purposes includes “notional” advanced fees paid to Coöperatie KPMG U.A. as a cost element, while they are not a cost element under IFRS. In addition, for internal reporting purposes, IFRS 16 is not followed and therefore the effects thereof are presented as a reconciling item. For internal reporting purposes, certain items that are considered one-off and non-operational are presented separately and are therefore not considered part of operational result, however they are included in consolidated operating result. In 2022/2023 these extraordinary results comprise, amongst others, expenses for claims and legal proceedings and non-operational expenses related to the PCAOB Settlement and costs of the answer sharing investigation.