“Having navigated through substantial uncertainty in recent years, businesses are presently striving to put their strategic plans into action for the upcoming years, while still contending with persistent external factors like prolonged high inflation. Furthermore, many businesses are also actively assessing how developments in technology, such as the application of data analytics and artificial intelligence, and the increased focus on ESG, will influence their operations in the coming years. Our Deals, Consulting and Forensics business units that make up our Advisory practice have, in the last twelve months, continued to assist our clients to address these and the many other challenges that our clients are constantly facing”.
Following a strong rebound in 2021, Malta's economy continued to expand in 2022, growing at 6.9% in real terms. Economic growth is set to remain relatively robust in 2023 and 2024, with the government anticipating GDP growth of 3.9% and 4.4% respectively, primarily driven by net exports and domestic demand. At the same time, unemployment in Malta remains low at 2.8%. On the other hand, inflation remains high with prices expected to increase by 6.1% in 2023, after rising by 6.1% in 2022, largely on the back of strong services and food price inflation. Inflation is expected to begin to subside next year with official forecasts for 2024 ranging between 3% and 4%, in line with our European peers.
Deals
Our Deals team is dedicated to value creation for businesses, focusing on assisting organizations in identifying and successfully executing transactions, including mergers, acquisitions, divestitures, and restructurings, aimed at maximizing value.
After a year of unprecedented international mergers & acquisitions (M&A) activity, recent months have witnessed a notable deceleration in global transaction activity due to market uncertainty and higher interest rates. Nonetheless, the local market continues to be very active. During the last financial year, we were engaged to assist clients in some of the most significant local transactions, particularly in the local middle market segment as well as in the igaming sector.
Local capital markets have gained momentum in the past few months and we continue to be active as financial advisors in most of the new equity and corporate debt listings on the local market.
Furthermore, we are regularly engaged in valuing family businesses, assisting shareholders in the seamless transition and division of their enterprises to the next generation. Additionally, our expertise extends to evaluating complex financial instruments, intellectual property, and other challenging-to-assess assets, with a particular focus on the financial services sector, the igaming industry, and various other sectors. Beyond the valuation services offered to clients, we offer ongoing support to our Assurance practice and the broader PwC network, particularly in the preparation of fair value assessments, impairment testing, and going concern evaluations. In addition, we continue to experience a growing involvement in projects involving the valuation of commercial properties and real estate developments.
In the past year, we have also supported several clients in the preparation of feasibility studies and in assessing strategic alternatives, aimed at optimizing shareholder value.
The investment made in staff upskilling over the past few years is yielding results. A substantial proportion of our team is now proficient in the use of data tools such as Power BI and Alteryx. These tools empower our team to unearth deeper insights and enhance the value we bring to our clients beyond what traditional tools can provide. Through the integrated use of data analytics and visualization tools, we are now better equipped to present information in a clear and visually engaging manner, enabling our clients to make more informed, data-driven decisions.
Management Consulting
This year, several factors including supply chain disruption, digital transformation, talent shortages, inflation, climate change, and geo-political factors have continued to impact our clients with both opportunities and challenges they need to address. Our multidisciplinary team of management consultants have supported our clients to navigate through these challenges and solve their complex problems.
In FY23, our focus has therefore remained on supporting our clients in both the private and public sectors to address their challenges and opportunities across the wide array of services we offer including strategy and research, workforce solutions, EU funding, programme management and sustainability. In addition, we have also continued to support the public sector in the areas of policy, economics and research. We have continued to strengthen our capabilities in these areas to ensure our Management Consulting team is strongly positioned in the provision of the full spectrum of public sector and business transformation services, and to help our clients build trust and deliver sustained outcomes.
- Strategy, Data & Research
- EU Advisory, Policy and Research
- Workforce
- Programme and Project Management
- Sustainability
Strategy, Data & Research
We have continued to support decision-makers in collating the required data and insight to be able to make decisions based on reliable insight. Our work has supported strategic decision-making, including viability and feasibility assessments and forms part of our due diligence work prior to a merger or acquisition. We have carried out various market quantification studies spanning various industries from Fast-Moving Consumer Goods (FMCG) to real estate, renewable energy, and technology.
We continue to conduct primary research on behalf of our clients, through online digital surveys using various survey and sampling techniques, as well as, in-depth interviews and focus groups. A notable engagement this year was the first national study on bullying and ostracism in the workplace in Malta which shall guide procedures and policy formulation in the area.
During this period, we have also become ESOMAR certified which reflects our commitment to the highest standards of professional practice as enshrined in the ICC/ESOMAR Code on Market, Opinion and Social Research and Data Analytics, and ESOMAR World Research Guidelines.
EU Advisory, Policy and Research
In FY23, in the area of funding support, we have continued to provide bilateral advisory support to one of the largest banking institutions in Europe. Our aid was in relation to the European Investment Fund Financial Instrument for Energy Efficiency and Renewable Energy being administered by selected local financial intermediaries to encourage increased investment by both households and enterprises in energy efficiency and renewable energy measures. We have also continued to support businesses to benefit from EU funding to assist them in undertaking various eligible investment projects. In this regard, we have supported them with both the application process and the preparation of the required business plans related to some of the schemes.
We have also provided technical support to the local Managing Authority for the Implementation of Malta's Recovery and Resilience Plan through a contract with a European body that deals with structural reform to provide technical support. In this period we have also provided support to public sector organisations in carrying out a cost-benefit analysis for their investment projects.
Workforce
In the area of Workforce consulting, we have continued to support our clients to achieve their strategic ambitions through their people. This has included supporting them to develop and implement change management strategies to enable the achievement of the objectives of their transformation initiatives. In this regard, we have supported two large public sector organisations with change management support to ensure their people are committed and supported throughout the change process. Another key area we have supported our clients on throughout the year is through job evaluations to support them in determining their grading, pay structure and to develop career progression plans.
Skills development and performance management remains at the forefront of our client’s challenges and we have therefore continued to support our clients in developing competency frameworks leading to the development of learning strategies. Furthermore, we have supported our clients in developing a framework for succession planning for identified pivotal roles.
Ensuring the operating model of the HR function enables the company to deliver its overall strategy is another area of focus for our clients. In this regard, we have provided support to review the relevant components including the design of roles, optimisation of processes and identification of technology requirements to enable the HR function to deliver optimum value.
Programme and Project Management
Effective delivery of programmes and projects has become essential for the successful implementation of many of the transformations our clients are implementing. During this year we provided project management services to several clients to support their projects and programmes, such as the implementation of IFRS17, digital transformation, funding programmes and wider implementation of transformation strategies. This included support in developing the governance for the projects and also support in developing tools such as dashboards to monitor the achievement of milestones, completion of activities, risks, budget, etc.
We have also supported various clients to prepare their bids for projects, for both public tenders and private requests for proposals. Our support mainly consisted of managing the numerous stakeholders and components involved.
Sustainability
In FY23, we have increased our efforts to champion the cause of responsible business practices and sought to drive home the urgency of the sustainability agenda. We have also continued supporting our clients on their journey towards a more sustainable transition and to achieve positive outcomes for society by, for example, reducing their carbon emissions, improving their disclosures, increasing their diversity and prioritising good governance to create shared prosperity for their staff, investors, and communities.
Our role has been to help businesses plan, measure and deliver on their wider impact. In understanding the importance of ESG, we help clients manage risks, maximise opportunities and communicate their sustainability journey, all while grappling with a fast-changing regulatory environment.
We are also supporting in driving national policy and assisting the government in creating change. In this regard, for example, we are supporting the Renovation Wave initiative, specifically supporting a key public authority with improved technical knowhow, methodologies and tools for designing, procuring and supervising deep energy renovations while increasing awareness about the benefits and best practices of building energy renovation in the Maltese context.
Given the importance of the topic, more detailed information on what has been happening in this space can be found in the Sustainability section.
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PwC Malta Annual Review 2023
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