This means our clients have had to navigate through this inflationary context that continued over the year, amid rising cost pressures and a drop in pricing power. And all this during a time of critical transformation for businesses - regulatory demands, artificial intelligence (AI), the Cloud, product diversification, climate risk, sustainability and diversity - to name a few of the key trends.
Yet, despite these adverse impacts, we are pleased to report a +16.8% increase in our net revenue (based on turnover), taking us to year ended 30 June, 2023.
As a professional services firm in Luxembourg, we believe this was an exceptional year despite the disruption. We were—and continue to be—able to adjust our services to respond to our clients’ needs. We also continue to invest for tomorrow's needs, for example, on our Environmental, Social, and Governance (ESG) services offer.
According to our 24th Annual Global CEO Survey - Luxembourg Findings - “Embracing Tomorrow with Optimism”, Luxembourg CEOs seem optimistic regarding their operations in the Grand Duchy in the medium term (five years). However, the search for talent, rising costs and the need to diversify products/services are seen as key challenges.
This is why it is even more important for us to listen closely to our clients to get their real-time insights. We are convinced this is how we will best drive actions and bring the right value to them. Asking them about their experience with us is an important part of our culture. This is reflected in our latest results, showing that what our clients appreciate most is our ability to create trustful and long-term relationships, which enable our teams to have the right impact while delivering high-quality service.
Indeed, providing our clients quality services and solutions in both financial and non-financial areas, with trust, is what is behind the growth in all our lines of services in FY23, with an exceptional increase in Assurance.
Higher growth is with Alternatives, where we observe huge interest from both private markets players and traditional funds players. We have also been able to contribute to the transformation journey of other industries, such as Banking or Industries and Services, and adapt to the often-complex regulatory agenda driven (amongst other factors) by climate change and the digital era.
Our clients have started their transformation journeys. We want to help them with their navigation to tomorrow by being the most impactful, dynamic and trusted partnership for our clients and all our stakeholders, in Luxembourg and beyond its borders.
Our Lines of Services
Advisory
Our Advisory practice experienced great success this year, achieving a growth rate of 12.2%, bringing the total turnover to €130.7m, representing 20.6% of the Firm's total revenue for the year and therefore playing a pivotal role in driving the overall expansion of PwC Luxembourg.
This performance reflects the attractiveness of our services, their alignment with clients' requirements during uncertain times, and our ongoing efforts to attract and nurture top talent.
The regulatory agenda, the important market growth in Alternatives, as well as the importance to adapt and transform business via technologies have been the key drivers of growth this year.
Our services offering regrouped around clients’ current key challenges and focus mainly on Operational Excellence, Risk and Regulation, Sustainability, Alternatives, Workforce of the Future, Digital transformation and strategy.
In the coming year, we plan to continue broadening our Advisory business proposing innovative services in Sustainability and Managed Services, fostering our Alliances as transformation enablers, accompanying in the reinvention of business thanks to the Cloud and the AI and supporting the finance functions in their daily challenges with the ambition to solve clients’ most critical business issues.
Assurance
FY23 has been an outstanding year for PwC Luxembourg Assurance practice with a growth of 22.6% overall, bringing the total turnover to €333.9m, representing 52.6% of the Firm's total revenue for the year.
In line with previous years, the growth drivers in terms of industries remain mainly the Alternatives industry, although all industries have generally experienced a strong positive contribution to their topline, evidencing the resilience of our regulated industries (mainly Banking and Insurance, still heavily challenged by the impact of mandatory firm’s rotation rules but with dynamic underlying markets).
This growth is strong both in the Audit practice (+26%) as well as the Other Assurance Services (+14.5%), the latter including our Broader Assurance Services (BAS) which encompasses a wide range of complementary assurance-related services such as risks (incl. cyber, IT, data) , actuarial, valuation & controls etc. particularly relevant to deliver proactive assurance to our clients, and prepare their business and organisational readiness to face complex challenges.
The positioning and continued support to the development of our Assurance Services has proven especially relevant and valuable with several large assignments in the field of ESG and sustainability reporting, notably with the Sustainable Finance Disclosure Regulation (SFDR) kicking in as from 2023. The expectations from stakeholders require all market players to ensure they report timely, accurately and with proper assurance level. These investments in our capabilities, from a resource as well as tools and technology perspective in these fields will represent a key asset and differentiator to our clients when it comes to the upcoming Corporate Sustainability Reporting Directive (CSRD), which will hit in successive waves as from 2024. The Digital Operational Resilience Act (DORA) will represent another focus point going forward from a broader assurance standpoint.
The backbone of our Assurance practice's development remains our continued investment in our People (+283 FTE increase between 30 June, 2022 and 2023), a considerable challenge in a highly competitive marketplace for skilled resources able to understand and adapt to the challenges of our clients in an holistic manner. This investment in our workforce remains closely linked to our deepening investments in Assurance Technology with new, transformative tools. This benefits not only our People's experience in the delivery of our services but also our clients’ through high-quality, tailored and business-centric audits, yielding sustainable outcomes and solutions.
Tax
In FY23, turnover from our Tax Services grew by 10.2%. To note that in April 2022, our Global Mobility Tax and Immigration Services business was sold to a private equity firm upon PwC's Global strategy. Adjusting our Tax results for the disposal of this activity, Tax growth would be at 12.6% (vs 10.2% as reported).
While the Tax Services practice continues to be recognised as a leading provider for consulting services in Luxembourg (all industries), the growth has been particularly supported by the demand for our Managed Services (which includes but not only tax compliance, accounting and corporate secretarial services).
The ever-more complex tax rules (such as the upcoming Pillar 2 rules) and reporting landscape, the human resources shortage, and the need for tech-enabled solutions are some of the examples that resulted in this increasing demand from our clients to get support.
Investment in Managed Services and more specifically for the Alternatives investment industry for example, combined with new technologies, enabled us to support our clients with a one-stop shop solution covering a wide range of services for all levels of the structure and at each step of the life cycle: flexibility, efficiency and time saving!
Recruiting new talent, transforming our operating model and upgrading our clients’ experience with technology and digital solutions are high on our agenda for the year to come, as we believe that these will continue to be enablers to meet our clients’ expectations and deliver best service experience in FY24 and following.
PwC Luxembourg Annual Review 2023
PwC Luxembourg Annual Review 2023
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