Creating sustainable growth in the “new normal”
PwC Luxembourg has reported revenues of EUR 463.1* million for the year ended June 30, 2020, up by 3.5% from EUR 447.4* million last year.
For the fourth year, PwC Luxembourg’s results are being released based on the GRI reporting standards, which provides detailed and transparent insight into the firm’s strategy, performance and societal contribution well beyond the historic financial results. Through our transparency on how we perform on these non-financial indicators, we would like to progressively make our business, and therefore the ecosystem in which we do business, more sustainable.
John Parkhouse, CEO of PwC Luxembourg commented on the performance:
“Our financial numbers this year reflect a combination of certain parts of our business growing very fast (like most of our services provided in the Alternatives industry), certain parts of our business being at maturity (like certain tax reporting services provided for investment funds) and, last, but not least, some dampening impact that COVID-19 had in the last months of our financial year.
It’s reassuring to note how much our continued investment for the past 5 years in the skills of our people and in technology demonstrated our resilience during the crisis, both for serving our clients and protecting our people in almost a seamless manner.
Living up to our purpose to build trust in society and solve important problems, with a long term view and a client-centric business strategy, has thus proven to be a very sustainable approach in times of trouble.”
*Compared to 2019, excluding PwC TASC, a subsidiary of PwC Société coopérative, which is responsible, on behalf of EMEA PwC territory offices, for the administration and logistics of training offered in multiple territories.
People in numbers
Workforce totals 2,796 from 77 different nationalities as of June 30, 2020 and is expected to reach 2,875 as of January 2021.
“On the people’s side,” commented John Parkhouse, CEO of PwC Luxembourg, “we see an overall stabilisation of our workforce. Our people are and will remain our main asset and we continue to invest in our digital upskilling programmes to be ahead of the curve and to develop our talents. As a socially responsible and inclusive firm, it is our duty to protect employment as much as possible in a complex and uncertain economic environment and to think about our people’s engagement in the long term.”
Lines of business
Our Core Business – Assurance
Our Assurance practice was very successful in the past year and delivered overall an impressive growth of 7.3%, fuelled especially by the Alternatives industry (Private Equity, Real Estate, Infrastructure and Hedge funds), in which our firm has – locally and globally – a leading position as auditor.
Quote: “These are challenging times and, as a profession, we are under increasing scrutiny. However, the pandemic has also opened new opportunities to deliver on our purpose and demonstrate our relevance in helping build trust in capital markets and wider society. Our two absolute priorities remain the quality of each and every assurance engagement and the digitisation of our delivery in all aspects, including the digital signature of our reports.”
Marie-Elisa Roussel Alenda, Assurance Leader, PwC Luxembourg
Our Core Business – Tax
Our Tax practice experienced a year of consolidation in terms of topline, with some client sectors showing growth (specifically again the Alternatives industry), while other client sectors (like multinational corporations) or specific services (like tax reporting services on investment funds) have reached maturity or are progressively phasing out.
Quote: “It has become extremely difficult for companies to keep up with the constant changes in tax, reporting, and accounting rules, in Luxembourg and globally. We are helping our clients to navigate this ever-increasing complexity, from sustainable strategy, to swift execution and full compliance. Due to the COVID-19 pandemic, governments and tax authorities will also be looking for new tax revenue sources. Tax audits, disputes and controversy will be on the rise. It will bring the topics of how tax risks and compliance are managed to the top of the tax executives’ agenda.”
Gerard Cops, Tax Leader, PwC Luxembourg
Our Core business - Advisory
Our Advisory practice had a successful year with a growth of 6.1% following already a good year last year. In the context of the COVID-19 pandemic, such a performance demonstrates the high level of trust that our clients have in our ability to continue to advise them and the relevance and impact of the advice that we are providing. It also shows the flexibility of our consultants to adapt quickly to new ways of working with our clients.
Specific drivers of that growth were large-scale business transformation projects, often with an important technology component, risk and regulatory projects to support our clients cope with a changing environment, but also increased demand for cybersecurity and digital services. Our client base continued to be very diversified including very large to small companies in all sectors of activities present in Luxembourg.
Quote: “We are in the midst of a period of doubts and uncertainties. Companies are in survival, adaptive or growth mode. Many of them have experienced a massive drop in client demand resulting in significant revenue decline, or severe disruptions to ongoing operations, exposing companies’ lack of flexibility in rising demand for services and solutions. In all cases, they have to go through a profound transformation, and need support from professionals able to show flexibility, agility, speed and innovation. For us, it represents tremendous opportunities to work closely with our clients and bring them the best of PwC.”
François Génaux, Advisory Leader, PwC Luxembourg
Investing in the future
PwC’s purpose is to build trust in society and solve important problems, but we need to do so with a long term view. What has been witnessed in the past year is a world that has moved on and COVID-19 has acted as a catalyst to propel businesses into a new reality, full of opportunities and challenges, while no one is entirely certain what the ultimate outcome will be or if there will ever be a “final outcome”.
In this “New Normal”, we need both to plan ahead and remain agile with the prospect of multiple sudden changes. For us, this implies that it has never been more important to put the client at the centre of everything, as we believe that as long as we are close to our clients, we will continue to be relevant to them in our core businesses.
Achieving that implies significantly accelerated digital change, both within PwC Luxembourg as well as at our clients’ organisations, and a new people-management approach to endorse remote work and virtual team set-ups in the longer run (and not just as a short-term reaction to the current situation).
That’s why our main challenges over the next 12 months will focus around adapting to new ways of working, digital transformation, understanding the evolving workforce, upskilling for new relevant skills, protecting remote workers and our clients as well as navigating a constantly evolving regulatory environment.
ESG – The growth opportunity of the century
Lastly, 2021 will be the year for sustainable finance in the EU. The EU action plan will start to formalise its compliance requirements with a first major milestone in March 2021 around the Sustainable Finance Disclosure Regulation. The consequences of the EU action plan are way beyond a pure compliance duty. The plan creates a level playing field between financial and non-financial (ESG) criteria to define financial products’ performance and disclosure standards. The response of the industry is far reaching and extends to:
- Strategic positioning within the new market circumstances
- Change in product and service approach
- Outside EU impacts for both investors and investments
For Luxembourg, the new development around ESG might be as important for our future as the transposition of the UCITS Directive in 1988.
Beyond the mere implementation and application of these upcoming regulatory changes, they offer Luxembourg as well the opportunity to position itself unequivocally as an EU frontrunner in building a sustainable economy. We as PwC have a responsibility to help and support these changes, which we fully endorse through our daily interactions with our clients, relevant business associations and the Government.
How the Global Reporting Initiative (GRI) and WEF/IBC “Towards Common Metrics and Consistent Reporting of Sustainable Value Creation “ helps deliver on our purpose
PwC’s Annual Review this year, based on the Global Reporting Standards (GRI) for the fourth time and in a fully digital format, adopts an additional layer of structure based on the World Economic Forum reporting standards, “Toward Common Metrics and Consistent reporting of Sustainable Value Creation”. The metrics and disclosures proposed have been organised in four pillars that are aligned with the UN Sustainable Development Goals (SDGs) and principal ESG domains: Principles of governance, People, Prosperity, Planet.
“By doing so we continue our journey and commitment towards a higher level of sustainability. We believe a company is more than an economic unit generating wealth. It fulfils human and societal aspirations as part of the broader social system. Performance must be measured not only on the return to shareholders, but also on how it achieves its environmental, social and good governance objectives. And as a demonstration of that, our global chairman was proud to share that we are making a worldwide science based commitment to reach net zero greenhouse gas emissions by 2030. In Luxembourg we’ve been focused on this goal for decades and we are committed to achieve that as well, maybe even faster.”
John Parkhouse, CEO, PwC Luxembourg