"Growth and change are two realities that no business can afford to ignore. Sustainable strategies that help a business innovate and grow while reducing costs and leveraging talent are just as essential as having the agility and creativity to respond to rapidly changing environments. Our Deals, Consulting and Forensics business units making up our Advisory practice have in the last 12 months been proactive in assisting our clients to address the challenges brought about by rapid change and to achieve sustainable growth in an increasingly complex business environment."
Joseph Muscat
Head of Advisory
In 2019, the local economy has maintained its strong growth trajectory with the expectation that real annual GDP growth will exceed 5% for the sixth consecutive year and that public finances will record another year of fiscal surplus. This performance continues to be driven by sustained growth in several sectors, particularly the services sector including remote gaming and tourism, which in turn drive the ensuing multiplier effect on other productive sectors.
The latest national economic estimates suggest that economic conditions will remain broadly stable - albeit a lower rate of economic growth is projected in the coming years when compared to the exceptional performance experienced in the recent past. On their part, the authorities are seeking to maintain the forward thrust in the economy through the formulation of a legislative framework and an ecosystem that foster the creation of new digital industries such as DLT/blockchain and artificial intelligence, the launch of new manufacturing segments, such as in the production of cannabis for medicinal and research purposes, as well as through further investment in education to upskill the local workforce to address the skills gaps. In addition, several large-scale investment projects, particularly in the transport and aviation, tourism, IT, telecommunications, real-estate and health sectors are expected to gain traction in the near future, contributing to further economic growth.
What we've done
- Deals
- Consulting
- Cyber Security
- Systems Audits in the blockchain space
Deals
The steady growth maintained by the local economy over the past year has continued to fuel the demand for specialist corporate finance services, particularly those relating to transaction M&A and capital markets activity.
Over the past year, we have been very active in assisting clients who selected to raise and list corporate bonds or in undertaking corporate restructuring transactions on the Malta Stock Exchange. We have also assisted various clients in assessing the feasibility of listing on the MSE and in carrying out the necessary preparedness reviews. Furthermore, our Deals team is following closely local and international developments in relation to the application of innovative methods of raising funds such Initial Coin and Security Token Offerings (ICOs and STOs) within a venture’s funding mix.
We continue to be involved in assisting clients in some of the most significant local transactions. Together with PwC network firms, we also continue to be involved in a number of due diligences, valuation and tax M&A engagements supporting a number of cross border transactions, which include both foreign companies targeting the acquisition of companies based in Malta, as well as local companies venturing overseas. In such cross border transactions, we leverage on the power of our international PwC Deals practice, which is the largest deals practice by volume in Europe.
We continue to be involved in the preparation of a number of valuations supporting company share transactions, potential capital market transactions, mergers and divisions. Our Deals practice continues to be involved in the valuation of complex financial instruments and intellectual property, particularly in the asset management and igaming sectors. Besides providing such services directly to our clients, we also work closely with our Assurance practice and provide extensive support in fair value assessments and impairment testing in a seamless manner for our clients. In addition, we also provide expert support to our Assurance practice in other specialised areas such as in the reporting in terms of the EU directive on Non-Financial Reporting by Public Interest Entities on the social and environmental impact of their activities.
We continue to invest heavily in the transformation of our Deals practice in order to leverage more on the use of tools to digitalise our service offering. In the past twelve months, we launched a comprehensive training program in relation to the deployment of data analytics and presentation tools, which will equip our staff with the skills necessary to provide more valuable insights to our clients through digital solutions.
Consulting
During the 12 months under review, our Consulting practice has continued to register increased growth across a broad range of traditional and innovative services. This is also evidenced by the significant intake of subject matter graduates across the broad spectrum of the specialised services provided by our firm.
In the Digital Consulting space, we have been involved on a number of high profile digital transformation initiatives including the QA role in the introduction of a major corporate financial management solution in the public sector, project management and IT consulting for the introduction of a Digital Tourism Platform, the business analysis and design of the digitisation of the merchant shipping regulatory management framework, the study for blockchain use cases within the public sector and support for implementing Digital Transformation across the public service.
In collaboration with the Drones Centre of Excellence team at PwC Poland, our firm also embarked on an innovative project to survey and analyse the condition of Malta’s road network and in turn prioritise the works’ improvement programme. This project, which was recently concluded, involved careful planning and coordination for the deployment of fixed wings drones flights, extensive data analytics on a dedicated geospatial cloud-based digital platform.
In recognising the importance of people and customers within our clients’ business agenda, we also have continued to invest in these areas. Our People & Organisation practice has advised a portfolio of clients primarily on strategic HR aspects particularly in relation to organisation design, job evaluation, performance management and rewards. In March 2019, we launched the Future of Work business breakfast series covering six HR topics to be delivered at intervals throughout the year. As in previous years, besides clients’ engagements, we continue to actively support the Foundation of Human Resource Development (FHRD) with the preparation of the annual HR Pulse Survey and the Annual Conference.
From a Front Office perspective, we have been active in raising the customer experience focus, offering insights from customer research to guide our client’s decision making for optimising their customer touchpoints. Across our consulting engagements, we increasingly use cross functional collaborative workshops to increase the agility with which we unearth client issues and reach consensus on solutions. We are also using service design to propel business transformation. A key engagement involved a BPR exercise addressing a customer onboarding process at a key financial institution.
We have also continued to develop and strengthen our strategic consulting competencies and have advised a number of well-established family businesses and organisations in the formulation of strategies and business plans. Earlier this year we launched the findings of our Family Business Survey 2019 that addressed a number of themes including the challenges and opportunities arising from the evolving world of work and the speed of technological developments. Within the public sector sphere, we have carried out a strategic and economic study focusing on the impact of the Alternative Fuels Directive in Malta. We were also appointed to update Malta’s National Electromobility Action Plan.
In this regard the deployment of the PwC Hub has proved to be fundamental in enabling us to deliver a distinctive consulting experience.
Cyber Security
Advances in technology mean that organisations are increasingly dependent on information, computer systems and networks to meet the needs of customers and citizens. An increasing number of cases show that organisations in Malta are not immune to threats to their business coming from cyberspace. Similarly, IT outages are becoming less tolerable to even the smallest of organisations.
The last year has seen a steady increase in demand for cyber security health checks to provide clients with confidence in their ability to protect against cyber risks or to identify and address gaps before they can be exploited. As more systems are migrated to the cloud and opened up to customers online, the increasing demand for penetration testing and vulnerability assessments reflects the need for peace of mind through practical rather than document-based assessments.
In addition to business continuity planning, the cyber security team also equipped clients to deal with cyber incidents through preparation and rehearsal.
Systems Audits in the blockchain space
Following the introduction of new legislation to regulate DLT/blockchain based business and cryptocurrency commerce, PwC Malta were the first recognised Systems Auditor by the Malta Digital Innovation Authority. Crypto Exchanges, ICO issuers and similar operators using smart contracts seeking a licence from the MFSA are required to undertake a systems audit based on rigorous set of controls addressing risks that the new technology presents.
Financial Services Survey
The Advisory practice continues to compile and publish the Financial Services Survey every six months. This joint initiative with Finance Malta provides a measure of business confidence sentiment within the Banking, Insurance and Asset Management sectors. The 4th edition of the FS Survey, published in August 2018, carries a supplement focussing on financial services firms’ readiness for the deployment of emerging Blockchain technologies in Malta.
Creating value beyond the deal
In November 2018, the PwC Deals practice published the results of a survey and research carried out to explore how organisations – both on the buyer and seller side – approach value creation throughout the deal cycle. The survey further explores what made some acquisitions and divestments successful whilst others not, as well as the importance of diligence and rigour around financials, operations, market positioning, technology, tax, legal and people matters to maximise value from a transaction.
This extensive #BeyondTheDeal study, which was conducted in collaboration with Mergermarket and Cass Business School, found that the modern value creation approach must be built around three core areas: (i) staying true to the transaction’s strategic intent; (ii) ensuring the value creation plan is a blueprint and not a checklist; and (iii) putting the organisation’s culture at the heart of the deal.
Our research has indicated that dealmakers are coming under increasing pressure to deliver more value from their M&A activity and that companies that establish rigorous criteria for value creation early on in the buying or selling process are best positioned to maximise the returns from the transaction. Also, it clearly emerges that the application of best practice and specialised expertise pre, during and post-deal ensures that companies leave no value on the table.
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