www.pwc.com.cy
Cyprus Annual Review 2013
How we responded to the FY13 challenges, focussing on our clients and our people.
September 2013 Key performance indicators
Our clients: Financial Performance:
68% state that PwC brings in the right €77,3m Net Revenues experts 3,3% Increase of net revenues compared to FY12 65% Inspires confidence €24,6m Total contribution to 65% offers tailored solutions government revenues Corporate Social 63% delivers consistent high quality Including PAYE, corporation tax special contribution for defence VAT, social insurance Responsibility: PwC Cyprus remains as in previous years and special contribution the leading brand among professional €72.000 worth of pro-bono services firms in Cyprus Our people: and discounted services donated to community organisations and charitable institutions Figures based on an independent, blind survey of Over 900 people including 750 50 of the leading businesses in Cyprus carried out University graduates and more than 400 donated to non-profit between May and June 2013 qualified accountants €42.000 organisations new Directors, new Senior Managers 3 7 people from our organisation and promotions to the other grades 240 121 volunteered spending 557 hours for
some of our activities 76% People engagement score1
86 New recruits
21 of our People worked on international secondments in other PwC firms around Awards & the world Accreditations: 56 ACA and 13 ACCA Investors in People (IIP) Newly qualified accountants Gold accreditation 3 of our ACA trainees received 4 awards for achieving first worldwide place in Maintaining our prestigious “ACCA st rd Approved Platinum Employer” status individual papers, as well as the 1 and 3 place overall for the ICAEW Professional stage examinations during the year 2012
1 Employee feedback obtained through our Global People Survey Table of contents
CEO’s message 02 Our Services 04 Corporate Social Responsibility: Clients and markets 13 - Energy 14 - Government & Public Sector 17 - Banking & capital markets 20 - International business 22 - Domestic Market 26 People and talent 28 Firm 33 Corporate Social Responsibility 45 Financials 50 PwC offices in Cyprus 53 CEO message
Welcome to our Annual Review for the Our financial performance financial year which ended on 30 June Despite the difficult economic and market 2013 (FY13). The report reflects our conditions we have achieved responsible, strategy, our key achievements over profitable growth. Our revenues grew by the past 12 months as well as the main 3.3% to €77,3 million. This reflects the trust challenges we faced. of local and international businesses for our services and the professionalism, hard work The economic conditions and commitment of our people. Our total Financial Year ‘13 started with the contribution to state revenues, in the form application of Cyprus for EU and IMF of direct and indirect taxation and other financial support which was concluded 9 contributions, was €24,6 million. months later in March ‘13. During those 9 months the Cyprus economy was in Our clients recession. The uncertainty regarding the Our financial performance is the result of final agreement on the financial assistance the strength of our brand and the trust of package had an adverse impact on Cyprus our clients in delivering value. According as a business centre. to the independent market survey carried out in June ’13, PwC remains the clear Evgenios C Evgeniou The financial assistance package leading brand amongst professional CEO The €10 billion financial assistance package services firms in Cyprus. Professional PwC Cyprus for Cyprus will be used to refinance public services buyers in Cyprus rank PwC first debt and recapitalize the Cooperative for a number of attributes including, Banks. The agreement was harsh for the inspiring confidence, helping companies two local banks, with one being wound to be successful, bringing the right experts, down and the other recapitalized through delivering consistently high quality and depositors bail in. Cyprus has agreed to offering tailor made solutions. These results implement reforms, which will ultimately are in line with the feedback we receive strengthen the economy. Importantly, the directly from clients in the context of senior main pillars of the development of Cyprus partner review visits and client surveys. as a business centre, which have been Maintaining and strengthening the trust of the tax, legal and regulatory frameworks our clients remains a major challenge with and the quality of professional services, the intention of continuously improving the have proven resilient, and remained value we deliver to them. fundamentally unchanged.
2 PwC Cyprus Our people that the relevant stakeholders understand ended. Whilst we budget for a decrease in Our major asset is our people who the scope and limitations of our work. revenues we will continue to invest in the enable us to deliver value to local and In this context we engage in discussions development of our people, in building international clients with a broad range with regulators with respect to changes capabilities for the future, in improving of services across several industries with that might enhance audit quality, increase the efficiency of our service delivery and quality, professionalism and dependability. investor confidence and generally improve importantly in proactively delivering value We continue to invest in the training, the way our profession works. In the quality, to clients. development and advancement of our risk management and integrated network people and this has been recognized review assessments that were carried out In the current volatile environment I believe with the Investors in People (IIP) GOLD during the year by our global network and that we are well positioned to provide the accreditation. The engagement index the monitoring visit by our professions value, quality, dependability and cutting score amongst our people held up at 76% regulatory body we achieved very good edge advice that clients are looking for. reflecting their commitment to the firm. In results demonstrating our continuous The achievements of the past year reflected FY13 we had 3 new Directors, 7 new Senior commitment to quality. in this annual review are the result of the Managers and 121 promotions to other hard work and commitment of everyone in grades. Moreover, we recruited 86 people Our global network our firm for which I would like to sincerely of whom 61 were university graduates. Our PwC Cyprus is part of the leading and thank them. trainees achieved very high exam pass rates most complete global professional services and three of our ACA trainees won four network. The PwC network, which Last but not least my gratitude goes to global prizes. During the year, 56 of our employs close to 180,000 people in 158 all our clients. Their trust gives us the trainees obtained the ACA and 13 the ACCA countries, provides us with the knowledge confidence to continue working towards qualification bringing the total number of and expertise to deliver value to our local improving further the value that we deliver qualified accountants in the firm to 403. and international clients and service them to them. across borders. Equally important are the Quality opportunities for our people. During FY13, Quality is the foundation of our work and 21 of our people worked on international it is at the core of our culture. Our firm secondments in other PwC firms around the is committed to delivering high quality world and 6 people came from other PwC work for our clients, acting with integrity firms to work with us in Cyprus. and demonstrating the high standards of professional behavior that we uphold. We The financial year ahead take our public interest responsibilities Financial Year ’14 promises to be more Evgenios C Evgeniou seriously and we believe that it is important challenging than the year that has just CEO
September 2013
Annual Review 2013 3 Our services
Message from the Head of the Assurance & Advisory Service Line
Liakos M Theodorou ‘‘FY13 was a particularly challenging We have maintained a strong focus Head of Assurance & Advisory year during which we have seen on quality and leveraging on our the implications of the Global and technical and industry expertise, I European financial downturn believe we have delivered value to inflicting a real economic crisis clients and provided confidence to in Cyprus which necessitated the other stakeholders. request of support from the European Union and the IMF. The decisions Similar to every crisis challenges and measures that followed had and problems come also with an adverse impact on the Cypriot opportunities and our Risk companies operations, working Assourance, Performance capital, investment and deposit Improvement Consulting and Deals holdings, valuation of their assets etc. competencies were kept very busy with The developments affecting the Cyprus special assignments especially during economic conditions and its banking the first nine months of the financial system created new challenges for year until the Eurogroup decisions in our Assurance competencies and March. We are determined to continue increased the focus on Auditors. These to seek the opportunities which will conditions offer an opportunity to begin to emerge from the challenging highlight the importance of quality times ahead of us, supporting our independence and objectivity in an domestic clients with our knowledge audit so as to restore trust. Attributes and expertise, helping them to adopt that are at the heart of the PwC Audit. to the new realities, reorganise and transform their businesses to survive the worst crisis in Cyprus since 1974 and come out stronger in the future.” 4 PwC Cyprus The integrated Assurance and Advisory This year we secured the audit of the one •• provide specialised IFRS training to practice with 30 Partners and Directors and of the largest owners and managers of a executives and staff in the financial 370 staff services local and international portfolio of high quality office properties in services and shipping industry; clients, public and private companies, Moscow. with updates on the current bringing together a diverse team of experts IFRS developments (for financial that work together to meet the increasingly In addition our knowledge and experience instruments - IFRS 9; Exposure draft complex needs of clients in the current in the offshore supply vessels and rigs on leases and revenue recognition) and market and economic conditions. industry has differentiated ourselves in hot issues (impairment of financial and the market (especially in entities with non-financial assets; going concern Norwegian interest) and helped us to issues; derecognition of financial assets Assurance provide a quality service to our existing and liabilities etc) clients (Songa Offshore SE; Deep See •• advice on accounting for share based Quality audits come from a knowledgeable, Supply; SD Standard Drilling; Frigstad; payments questioning, imaginative and insightful Mosvold; Prospector) and allowed us to approach. We are experts in the application have important new wins (Sigma Drilling) of audit methodology and audit techniques Risk Assurance Consulting in the industry. and we use our expertise to make our clients’ audits efficient and effective. We We offer solutions that help management use our knowledge of our clients, together Accounting Consulting make well-informed decisions. The insight and independent assurance we bring with our position as trusted advisor, to Services match our approach and our solutions to provides an invaluable safeguard in today’s their needs. We use the audit to explore complex operating environment. We work Our group provides: and think more widely about our clients’ with our clients to help them to protect and businesses and the potential issues they strengthen every aspect of their business •• advice to various international and face. This understanding enables us to offer from people to performance, systems local group’s regarding accounting new solutions to our clients’ problems, to to strategy, business plans to business for Group re-organisations in the help them learn from the past and prepare resilience. We can add significant value to consolidated and separate stand alone them for the future. clients who want to: financial statements •• advice on specialised accounting An example worth mentioning here •• Manage their processes efficiently and treatments in the foreign exchange is the Real Estate Industry where our effectively as well as mitigate inherent trading business (ie welcome bonuses local technical expertise, including our business risks and strengthen internal etc) representation by a partner on the PwC controls •• secondment of various levels of staff Global Real Estate Industry Accounting •• Obtain the required licenses to offer (including partner) to clients assisting Group, and industry knowledge has, in close regulated services in Cyprus (e.g. them in preparing relevant accounting coordination with PwC Russia, allowed us Banking, Investment, Insurance, memos and quality financial and the Russian Firm to win various audit Fiduciary services) statements to enable the client to engagements in the real estate industry •• Set up and operate an Alternative meet tight deadlines in relation to (both the investment property holding and Investment Fund or UCITS in Cyprus contemplated IPOs the real estate development).
Annual Review 2013 5 Our services
•• Proactively address the requirements Our team, with a vast experience in all We can also support our clients through of local regulators (Central Bank, industries, specialises in offering tailor targeting and selecting the right people, CySEC, Superintendent of Insurance) made practical solutions to our clients with advising them on market salary ranges and •• Increase the Board’s effectiveness and an aim to support their response to the job responsibilities. align the way it operates with best recession, market and people challenges. practices Under the current economic conditions, Global mobility lies at the heart of many •• Strengthen the Corporate Governance the need to transform the business model international companies and our Expatriate of the organisation of the organisations is critical. We support Services team aims to help companies •• Enhance and strengthen the Internal our clients by providing services in relation harness the value of global mobility Audit department’s capabilities to their strategic re-alignment, re-design of by assisting in the effective planning, •• Have in place a framework which their activities, processes and procedures, implementation and management of the effectively addresses fraud prevention achievement of cost savings and re-design expatriate relocation. We also support and detection of their organisational structure through clients seeking to obtain the Cyprus •• Have insights on the integrity and back clarification of the roles and responsibilities. Citizenship by investment or those ground of new business partners and expatriates who choose Cyprus as their prospective employees Increasingly, in today’s operational permanent residence. •• Gain competitive advantage by environment of responsible leadership leveraging Information Technology organisations need to address important (“IT”) for the benefit of the sustainability issues including climate organisation change. We support such organisations •• Increase confidence in the quality of in the areas of quality, environment, the information produced by the IT occupational health and safety and food systems safety management and most importantly on Corporate Sustainability Strategy and Performance Improvement Reporting. Consulting The major asset of the organisations is their people and especially in this difficult Through the specialist knowledge and economic environment, the continuous experience that we have consolidated over investment in their development is more 15 years of presence and drawing on the important than ever. Our team comprises expertise of our international PwC network, of Specialist Advisers who can support we can help you address issues under the organisations in achieving the Investors in following areas: People (IiP) accreditation.
•• Strategy and Operational Effectiveness In addition, we can design Management •• People and Change Workshops to align minds and management •• Sustainability Business Services practices, workshops to enhance team •• Project Management effectiveness and skill building workshops focusing on developing the right skills to support the business.
6 PwC Cyprus Deals & Corporate Finance •• Diagnostic review and assessment of Cyprus as a listing jurisdiction the troubled businesses Cyprus has established itself as a credible Our Deals & Corporate Finance (DCF) •• Short-term corrective measures to jurisdiction for significant cross-border provides consulting on: restore liquidity transactions. •• Long-term corrective measures to •• Mergers and acquisitions restore viability and profitability The result is an established track record in •• Valuations successful international IPOs. As shown •• Feasibility studies At Deals and Corporate Finance we can in the chart below, Cyprus as a listing •• Restructuring plans tailor our service offerings according jurisdiction accounted for 6 (about 55%) of •• Crisis Management to the needs of our clients and we are Russian and CIS IPOs on the London Stock prepared to work with them under difficult Exchange for the period from 1 January Our team offers complete and effective circumstances and strict deadlines in order 2008 to date. solutions to companies of the private for them to achieve the desired outcome. and public sector. The specialised advice and continuous support we offer to our Capital Markets clients has the ultimate aim of enhancing shareholders’ value. Our Capital Markets Group offers advice in relation to access to the global capital We facilitate the transactions taking place markets and on any relevant transactions in Cyprus by offering valuation services such as an Initial Public Offering or to our clients, supporting them with the Eurobond offering. We focus on the IPO negotiations and assisting them in the and debt raising process from beginning structuring of the deal. We assist our clients to end, providing initial advice as well as in the restructuring of their debt facilities continuing support to the company and its and with the securing of new funds, either underwriters up to the point of listing and in the form of equity or loans. We provide beyond. support to our clients in assessing their Source: London Stock Exchange investment options by preparing feasibility During FY 13, we supported several of our plans and assisting them in developing the clients, both before and after the Eurogroup appropriate business strategies. decision, in raising $1,5 bn on cross-border equity and Eurobond transactions. The During crisis situations, we perform securities were listed on international PwC Cyprus acted as reporting accountant independent viability assessment of stock exchanges including London, Dublin, in 4 out of these 6 transactions. The total troubled businesses and analysis of the Moscow and Singapore. capital raised by our clients through these recovery options available to the business transactions was $1,8 bn. and its lenders and firm recommendation as to what should be done, in order to achieve Finally, we continue to support the Cyprus a win win result for both sides. Stock Exchange by offering our advice and expertise both to the issuers and to the We offer corporate turnaround services by exchange itself. designing and implementing appropriate strategies for each business based on:
Annual Review 2013 7 Our services
Transactions Support We have actively contributed to the local Secondments debate on the privatisation issue, through We believe in secondments as an important Our Transactions Support practice helps the issue of our publication ‘A beginner’s way of investing in our people. Our companies in their acquisitions, divestments guide to privatisations’ as well as articles in secondees are given the opportunity to and strategic alliances. We assist with the local press. sharpen their technical skills as well as operational, financial, tax and legal due strengthen their capital markets network, diligence for both, buyers and sellers. We both of which ultimately add value to our can also provide advice for structuring a clients. Over the last few years, we had deal in the most tax efficient manner. secondments in London, Paris and Moscow.
We have been involved in a number of due Publications and Website diligence assignments with companies in A number of publications on topical issues several sectors including Financial Services, and current developments are regularly Hospitality and Leisure, Construction and released on our website. other sectors. Furthermore, our microsite is being Privatisations continuously updated and is a useful tool Privatisations is an area that has become for interested parties that wish to keep in relevant in Cyprus, mainly due to provisions touch with developments as regards capital of the Memorandum of Understanding Conferences markets/transactions support issues and between the Cypriot Government and the PwC Cyprus sponsored and participated seek the services of our firm. Troika. PwC is actively involved in the area with speakers in the London Stock of privatisations; we have been in touch Exchange Conference held in Moscow in with clients for provision of advice with July 2012. Socrates Paschalis, CMG Director regards to privatisation issues and have in PwC Cyprus, delivered a presentation secured assignments as regards specific on the benefits of Cyprus as a listing privatisations prospects. jurisdiction for cross-border listings. PwC Cyprus was the lead sponsor of the “Debating on Europe’s future” conference which was organised by The Economist in March 2013. Mr Rolf E. Meakin, Global Telecoms Advisory Leader, PwC U.K., and Mr Hansjorg Arnold, PwC Germany Partner, participated in the session, delivering presentations on Telecom and Ports privatisations respectively.
8 PwC Cyprus Message from the Head of the Tax & Legal Service Line
Costas L Mavrocordatos Head of Tax & Legal ‘‘The financial year that ended We believe that the uncertainty of 30 June 2013 was surrounded by the last financial year will largely be uncertainty. It coincided with the over with the end of the restructuring application of the Cyprus Government process of the two banks and the to Troika for financial aid, the lifting of the remaining capital resolution/restructuring of the controls hopefully by the end of country’s two biggest banks and the 2013. We take comfort of the fact introduction of capital controls. All that our Government is committed unprecedented events which had a to implementing all measures agreed significant impact on the economic with Troika and to introducing activity and on our business. Our initiatives that will help the economic efforts from the very beginning growth of Cyprus. We are convinced have concentrated on helping our that Cyprus will continue to play a clients to continue their activities as significant role as an international unaffected by the events as possible. business centre and regional hub We have stayed close to our clients and will be devoting our energy and throughout and tried to be responsive resources to help Cyprus succeed.’’ to their needs. In the process we have managed to protect our client base and have ended the financial year with a modest growth.
Annual Review 2013 9 Our services
During the difficult times of an escalating These resulted to some significant wins the Troika was found to be very helpful and financial crisis, our 29 Partners and amongst others a large Russian construction was greatly appreciated by the Government. Directors and 348 staff have stood by our group and a large Chinese group investing Direct Tax was instrumental in explaining clients and supported them through in solar energy in Europe. the beneficial nature of the Cypriot tax providing sound advice and constructive framework in helping economic growth and solutions. During the banking crisis we have has helped to ensure that the tax regime provided close support to our international remained largely unaffected. Its quick Global Compliance Services clients through regular updates on all response post March 2013 in identifying developments and we have provided a clients’ needs and presenting practical Our Global Compliance Services (“GCS”) timely response to their increased enquiries solutions protecting businesses and assets comprising the whole spectrum of company due to the banking crisis in order to ensure was well received by clients, our PwC administration and corporate statutory that they can continue their business international network and the audience in compliance services, bookkeeping, seamlessly. In addition and in collaboration various seminars and presentations abroad accounting and payroll services as well as with our Legal and Tax departments we and has contributed to the retention of our specialised services such as private client have addressed asset protection issues. client base. services, advice on establishment and administration of local and international Indirect Tax Services business companies, collective investment Direct & Indirect Tax VAT: Advisory services for VAT, VAT schemes, CITS, investment firms and trusts. recovery and VAT minimisation and tax services compliance such as administration of VAT returns, communication with VAT Our clients are looking for a comprehensive Through our Direct & Indirect Tax services service for their business that includes in authorities and agreement of disputed we can provide assistance and guidance to assessments. addition to the services offered by GCS, businesses and individuals in developing tax tax, legal, assurance, advisory and other strategies which both maximise tax benefits During this year we have: services. PwC with its size and capabilities and meet all compliance requirements. is in a prime position to provide all these •• assisted banks and other financial services and GCS operates as a one point institutions in maximising their VAT Direct Tax Services recovery positions of contact within the firm to facilitate an Corporate: Advisory Services for tax integrated service offering. •• assisted financial institutions in planning, international tax structuring, disputing assessments issued by the mergers, buyouts and other business issues, Responding to international developments, VAT authorities tax returns administration, agreement with •• assisted clients in obtaining their we are as a firm assisting clients to increase Tax authorities and obtaining tax rulings. their substance in Cyprus through our refunds from the VAT authorities •• assisted clients in claiming back VAT on specialised service Pathfinder which Personal: Tax planning, completion provides a comprehensive support to bad debts, and submission and agreement of tax returns, •• advised clients on efficient companies and their officials when setting- tax services to expatriates, pensioners and up offices in Cyprus. introduction and application of loyalty other non-Cypriot individuals. and sales promotion schemes from a VAT perspective. During the year we have made FY13 was a particularly challenging year presentations of our services to key markets for Direct Tax given the known economic and in particular Russia, Ukraine, China, developments in Cyprus. Its support to the Poland, Slovakia demonstrating our Ministry of Finance in the negotiations with capabilities and discussing opportunities.
10 PwC Cyprus Local Compliance Services Hospitality & Leisure The new business environment Our Local Compliance Services are Some of our other initiatives include under the MoU addressed to all types of businesses assisting a number of potential foreign that carry out operations in Cyprus. investors in researching the local Prospects and challenges These enterprises cover a wide range industry, performances, economic trends of activities and include private and and legalities in their considerations In the context of providing support to public companies, government and semi- for investment in large multi purpose local businesses, PwC Cyprus organised government organisations, foundations, tourist related projects. Such projects an event with the topic “The new business as well as individual entrepreneurs and are considered by the government as environment under the MoU. Prospects family enterprises. Our services cover the priority actions and in our efforts to and challenges” on Wednesday, 29 May whole spectrum of accounting, payroll assist both clients and the country we 2013 at Aliathon Hotel in Paphos. and related employment issues, tax and are concurrently making suggestions for VAT compliance, business financial advice, incentives that will mutually benefit all. The conference which was mainly statutory compliance services and family addressed to owners and executives of estate administration and planning. Health businesses operating in the city of Paphos focused on the new business environment after the signing of the MoU as well as Government/Local Authorities We have helped two large Medical clinics on overcoming the current business to merge (possibly the first ones in challenges. During FY13 we have successfully project Cyprus) under the Reorganisation Tax and managed the endeavours of the Pafos Corporate scheme. The project involved The event was addressed by the Mayor Local Authorities and Business Chamber the studying of both financial and non of Paphos, Mr Savvas Vergas and by the in their application for the prestigious title financial issues, identification of synergies, President of Paphos Chamber of Commerce of European Capital of Culture for 2017. A tax and corporate structural planning, as and Industry, Mr George Leptos. Pantelis process that took two years and involved the well as financial planning. We are also Evangelou, Direct Tax Services Partner selection and setting up of a multifaceted assisting them in locating an international at PwC analysed the main provisions of team including urban planners, artistic affiliation with a reputable medical foreign the memorandum and their impact on and cultural institutions, local authorities, establishment in line with the endeavours entrepreneurship, while Mr Elias Dinenis, business associations, academic institutions, of the Cyprus authorities to establish Rector of the Neapolis University focused volunteering groups and blending their Cyprus as a reputable Medical centre and on the ways of exiting the economic crisis ideas and visions with that of the promoters promote Medical tourism. using examples from other countries. namely the local authorities. The process necessitated the preparation of the so called Particular emphasis was placed on the Bid Book accompanied by a comprehensive ways of supporting entrepreneurship both questions and answers document with through the presentation of Philippos supporting financial budgets. The decision Soseilos, Advisory Partner and the panel of the 11 member Jury appointed by discussion which followed. Participants the European Union and the Cyprus of the panel discussion included Messrs Government was that Pafos is the successful Elias Dinenis, Pantelis Evangelou, Marios city. Kedaritis, Hellenic Bank, Polys Polydorou, Piraeus Bank and Matheos Charalambides, Eurobank. The discussion was moderated by Angelos Loizou, Partner, In charge of Local Compliance Services.
Annual Review 2013 11 Our services
Legal firm
The legal firm, full member of the PwC international network, offers legal services that cover the whole spectrum of corporate and business law, including advising and representing clients in M&A transactions, re-organisations, European Union law and Competition law, setting up and regulating private companies, setting up joint ventures and other forms of businesses and carrying out legal due diligence.
12 PwC Cyprus Clients and markets
The depth of our industry knowledge
PwC has developed multi- specific performance We list the partners responsible for each of our disciplined teams to work benchmarks based industries. with clients with extensive upon global standard •• Banking & Capital Markets industry knowledge and industry practices, and Stelios C Constantinou •• Construction & Engineering experience. The depth of share methodologies and Stephos D Stephanides our industry knowledge, approaches. In addition, •• Energy, Utilities & Mining like our international our network is available Constantinos Taliotis • perspective, is an attribute to collaborate on the latest • Entertainment, Media, Communications & Technology that our clients value developments unique to Nicos A Theodoulou highly. We invest significant a particular industry, •• Funds resources in building and especially when the Chris Odysseos •• Hospitality & Leisure sharing such knowledge. pricing and structuring of Angelos M Loizou, Petros C Petrakis We organise around potential acquisitions or •• Insurance industries to share the disposals is at stake. Androulla Pittas •• Investment Management latest research and points of George Lambrou view on emerging industry •• Government & Public Sector trends, develop industry- Tassos Procopiou, Philippos C Soseilos •• Real Estate Tasos N Nolas •• Retail, Consumer & Manufacturing Andreas T Constantinides •• Shipping & Ports Yiangos A Kaponides
Annual Review 2013 13 Clients and markets - Energy
Eni(80%) Kogas (20%) Eni(80%) Energy Kogas (20%)
Cyprus should be proud Eni(80%) Kogas (20%) of the interest shown by very reputable IOC's in the second licensing round- Total(100%) Total(100%) Noble(70%) 5 offshore blocks were Delek(15%) awarded during the year to Avner(15%) leading oil and gas groups Source: Cyprus National Hydrocarbons Company Limited with global operations. At the beginning of 2013 as part of the Appraisal drilling in block 12 by Noble second licensing round, the Republic Energy and its partners began last of Cyprus signed production sharing June and the results are expected to be agreements (“PSA’s”) granting exploration announced by coming October. If the licenses for blocks 2, 3 and 9 to the estimated quantities of natural gas in the consortium of ENI- Kogas. The exploration Aphrodite reserve are proven and should licenses for blocks 10 and 11 were awarded the plans of the government of Cyprus for to TOTAL. a commercialisation solution in the form of an LNG terminal materialise, this could In February this year, the Cyprus mark a very important milestone in the government approved the request of Noble ambitions of Cyprus to become an energy Energy, the operator of block 12, to transfer producing country. 30% of the exploration rights to the Israeli companies Delek Drilling and Avner Oil Exploration.
14 PwC Cyprus Clients and markets - Energy
Cyprus a developing energy hub Enhancing knowledge PwC Cyprus also hosted a one day seminar in cooperation with PwC Israel in October Last June a Memorandum of Understanding Conferences and courses 2012 in Nicosia. Invitees included CFO’s (“MoU”) was signed between the Cyprus and other officers of leading energy government and the consortium partners of The ‘‘European Mediterranean Oil & Gas companies in Israel. Some of the main block 12 for the construction of an onshore Exploration & Production Summit’’ was areas presented were opportunities for LNG terminal in Cyprus in the area of organised in September 2012. Our firm investments in Cyprus, cross-border listings Vasilikos. Initial plans have revealed that was the exclusive gold sponsor of the through Cyprus and areas for potential the project could include up to 3 trains of summit. Michael Hurley, the firm’s Global cooperation between Cypriot and Israeli 5 MTA each as well as a marine jetty and Energy, Utilities and Mining Advisory businesses. facilities to process the by-products of the Leader delivered a speech on developing liquefaction process. integrated gas projects in the new economic In April 2013 PwC was one of the sponsors environment. of the 2nd Annual Cypriot-Greek Oil & Given the recent decision in Israel to Gas 2013 Summit. Our Partner In charge eventually export up to 40% of its natural of Energy team, Constantinos Taliotis gas reserves, Cyprus could become one delivered a presentation on developing and of Israel’s natural gas export routes to the supporting energy projects in Cyprus. global markets.
Lebanon’s natural gas reserves have been estimated at 25tcf. The first Lebanese licensing round commenced during the year and despite significant political uncertainty in the country, a large number of IOC’s have expressed interest. An LNG terminal in Cyprus could eventually also service the PwC Cyprus was the lead sponsor of ‘‘The Lebanese gas reserves as well. Cyprus - EU Presidency Summit’’ entitled ‘‘Leadership strategy for stability, progress Beyond the planned LNG terminal, the and prosperity in Europe’’ organised last construction of the private oil products October in Nicosia. The summit was co- terminal of VTTI, also in the Vasilikos organised by the Economist, the European area, is proceeding as planned. This is an Parliament office in Cyprus and the investment in excess of EUR300million European Commission Representation in euros. The investment was expanded in Cyprus. Ian Lefebure, a Director from PwC April 2013 to include marine bunkers. Russia, shared the firm’s experience from global projects for PSA’s and cost recovery which are of particular relevance to the Cypriot emerging energy industry.
Annual Review 2013 15 Source: Vtti Clients and markets - Energy
An oil & gas training was organised in Publications and website Business development October 2012 in our offices covering the oil & gas industry value chain and the main The firm’s energy publication “Delivering The firm secured the cost recovery and accounting issues faced by production excellence” was released last July with the statutory audit assignments of Noble Energy and exploration companies. The two aim of providing potential energy clients during the year. We were also proud to days seminar was attended by about with a clear understanding of the services commence cooperation for a wide range of 35 colleagues from all lines of service, PwC can offer them, across all lines of non-audit services with ENI. The firm is also clients of the firm and other key industry service. supporting other very important players in stakeholders. Colleagues from PwC Russia the Cyprus and global oil and gas industry, shared their extensive experience during The energy microsite continues to be like Ensco, Noble Corporation and others. the course. updated regularly and remains a useful tool for interested parties that wish to keep in A large number of other business touch with developments in the industry development initiatives are currently and who might want to seek the services of underway and we believe they will come the firm. into fruition in the near future.
The firm’s energy team aims, with the support of the network, to become the leading specialist advisor in the energy industry in Cyprus.
Scan to visit our Secondments website
The firm is taking an active interest in securing specialist energy knowledge from the network. As part of that strategy a number of colleagues have been seconded to energy centres of excellence in Aberdeen and Houston. Additional energy secondments are in the pipeline.
PwC Cyprus energy team
From left to right: Michalis Stephanou - Senior Manager, Assurance Services, Lisa Anne Ioannou - Senior Manager, Assurance Services, Nicos P Chimarides - Partner, In charge of Direct Tax Services, Constantinos Taliotis - Partner, Assurance, In charge of Energy Team, Helga Csenki - Manager, Direct Tax Services, Andri Hadjikkou - Senior Manager, Assurance Services
16 PwC Cyprus Clients and markets - Government & Public Sector
Government & Public Sector
There is a world-wide would otherwise have need for Government taken a great number and Public Sector of years. organisations to adjust to the new “normal” The reform vision of Our focus
of “doing more with the Sector focuses on Central Government / Ministries less” and focus on concepts like citizen- In facing up to the great challenge of reform, the outcomes society centricity, value for we focus in supporting Central Government needs and wants. This money, strategic achieve effective implementation. For example, we support efforts around new reality is even prioratisation, transformation, skills and capacity building more profound in public value, and operational efficiencies. Cyprus where, as a results orientation, result of commitments accountability, Local Authorities / Municipalities undertaken under transparency, With increasing constraints on funding the Memorandum of efficiency, agility .... combined with ever-increasing citizen demands and pressures on the delivery Understanding, there of public services, challenges for Local is a need to implement Authorities are becoming increasingly important. In PwC we recognise that in a short space of time Municipalities are a key engine of sustainable growth and therefore we are actively involved structural reforms that in various projects aiming at enhancing their operational effectiveness and securing their sustainability.
Annual Review 2013 17 Clients and markets - Government & Public Sector
Privatisations Our specialisations Our recent projects
Privatisations is a dominant feature In order to support the Public Sector in its The skills and capabilities of our team in the local economic debate and will current challenges we are mobilising a multi can be demonstrated through the various have significant short and long term disciplinary team combining the following projects we are undertaking. Below is a list consequences on the financial landscape competencies: of some of the key projects in FY13: of Cyprus. In PwC we are combining our experience from our global network with •• Restructuring and reorganisation •• Cyprus Academy of Public our local expertise in order to facilitate •• Transformation Administration (CAPA): the optimisation of benefits for the Cyprus •• Operational effectiveness We are leading a consortium named government and the economy at large. •• Process re-engineering “Igetikos Palmos” (The Pulse of •• People management (including Leadership) to deliver a training Private Public Partnerships (PPPs) performance appraisal and reward programme with the aim to enhance systems) Strategy, Leadership and Management We stand ready to provide services to •• Project management Development skills in the Cyprus the Government and local authorities in •• Sustainability Public Service. The project covers potential PPPs projects, as soon as the 2,500 managers who attend classroom relevant regulatory framework is approved. training and implement work based We are in a position to offer high standard projects on strategic planning in their services drawn from our experience in organisations. landmark PPP projects such as the Larnaca and Paphos airports and the Limassol marina and a number of smaller projects.
EU Funds
EU funds are currently one of the most important sources of funding for Cyprus. In PwC we are working closely with the relevant authorities assisting in maximising the absorption of EU funds in the Cyprus economy.
18 PwC Cyprus Clients and markets - Government & Public Sector
•• Cyprus Securities and this project is to enhance the quality of •• European Patent Office (EPO): Exchange Commission: the services offered to the public and PwC Cyprus in cooperation with PwC Preparation of tender documents improve the operational effectiveness Northern Ireland is delivering a 5 –year for the development of a Risk Based of the departments Management Development Programme Supervision Framework (RBS-F) for the population of Aspiring and First •• Cyprus Athletic Organisation: Time Managers in 4 different locations •• Municipalities of Nicosia: Internal Audit Services for the (Munich, The Hague, Vienna and Reorganisation of the garbage organisation and provision of advisory Berlin). collection process in order to identify services for the federations subsidised synergies and achieve maximum by the organisation •• Cyprus EU Presidency: efficiency and savings for the One of our partners supported the Municipalities •• Cyprus Ports Authority: EUPAN network activities during the Internal Audit Services Cyprus EU Presidency. •• Public Administration and Personnel Department: Business Process reengineering for the Lands and Surveys and Town Planning departments. The main objective of
The leading public body of the future
Source: PwC
Annual Review 2013 19 Clients and markets - Banking & capital markets
Banking & capital markets The Cyprus financial our clients draw on the Banking industry services industry is in breadth of experience turmoil as a result of the and expertise of Cyprus’ The operating environment of Cyprus banks has never been more challenging. We unprecedented events of most comprehensive have worked very closely with our banking the past year. The banking financial services clients helping them with all aspects of their industry is in crisis and advisory, audit and business, including restructuring planning, many financial services tax practice, supported data verification and credit reviews, deleveraging initiatives, tax restructuring, firms are facing critical by our international regulatory compliance, as well as due strategic decisions and network. The industry diligence work. PwC offers services to 84% mounting strains as they landscape will continue of banking institutions in Cyprus by market strive to respond to the to change and we will share and our revenues in FY13 grew by recession, regulatory be there to provide the 25% over the last year. changes and fragile insights, advice and More specifically, during 2012 the two investor confidence. This support to help our largest Cypriot banks have requested challenging environment, clients respond to the financial support from the Government however, has also created challenges they will face. in order to complete their recapitalisation plans as per the European Central Bank’s many new opportunities; directives. As part of this process, the Central Bank of Cyprus appointed Pimco in September 2012 to perform a due diligence on the loan portfolios of the major Cypriot banks in order to determine their capital needs. PwC offered assistance to two major Cypriot banks and one Greek bank operating in Cyprus in relation to the
20 PwC Cyprus Clients and markets - Banking & capital markets preparatory work that had to be performed Forex industry tax, bringing together a wealth of technical for the purposes of the Pimco due diligence. and practical experience to help our clients In addition, PwC was appointed by one of Cyprus has established itself as one of the create the value they are looking for. PwC the major Cypriot banks to assist with the leading CFD (contract for differences) Cyprus provides external and internal audit preparation of their restructuring plan. online trading centers in the world, as well as advisory services to more than The restructuring plan was required by dealing primarily in foreign exchange 40% of all CySEC regulated firms trading the Central Bank of Cyprus and European (forex) but also in shares, futures and in forex, and we have achieved a significant Commission in order for them to approve commodities. Despite the economic crisis increase in revenues in FY13 over the prior the provision of financial support to this industry continues to flourish. PwC year. the Bank. Our work on this assignment Cyprus has developed significant expertise was, however, terminated before the in this industry with specialists in audit, The banking sector has been facing many restructuring plan was completed as a result regulation, information technology and challenges during the last couple of years. of the Eurogroup decisions of March 2013. It is expected that the next 12 months will present a lot of challenges to the Cypriot We have also worked very closely with the businesses and financial institutions in Central Bank of Cyprus and the Ministry of specific. PwC will continue providing Finance providing specialist support when PwC Cyprus support to the Cypriot banks and businesses necessary and organising events with some in dealing with such challenges (e.g. debt of the most experienced financial services restructuring, liquidity management, partners from the PwC network, sharing deleveraging). experiences and making recommendations for actions to be followed.
Finally we have distributed many publications, surveys and other thought leadership material to clients, regulators, government officials and other interested parties informing them of industry trends and challenges, regulatory changes and others. Our most recent publication deals with the implications of FATCA, the Foreign PwC Global Account Tax Compliance Act, coming into force in January 2014.
Navigating to tomorrow: serving clients and Banking industry reform creating value a new equilibrium - Part 1 + 2 Global Private Banking and Wealth Management Survey 2013
Annual Review 2013 21 Clients and markets - International business
International business
No doubt, March 2013 events have had an impact on our international Staying close to and keeping our clients and in Cyprus. Indeed a careful analysis of business. markets informed of developments was of the effects of the banking crisis that has primary importance during this period. This hit Cyprus reveals that the legal and tax was achieved both by our client servicing regime has in fact escaped unscathed and Although most of our clients teams and through participation in various is expected to strengthen further following and markets - especially events/conferences both in Cyprus and the agreed measures to be taken by the those not affected by the abroad. New solutions were developed and Government. Cyprus remains an attractive presented to clients seeking to enhance their jurisdiction to be used for international "bail-in" - have recognised structures and provide additional comfort. operations and more developments the events as a Banking enhancing this role are expected in the crisis, overall there has New challenges have also surfaced by new immediate future been relative stagnation Agreements for the Avoidance of Double in gaining new business Taxation that Russia, one of our main markets, has entered into. Although on a Pathfinder during the period March strictly technical analysis Cyprus still comes to June 2013. This is a on top overall, the timing of these new During this year, we continued to natural consequence as both Treaties potentially poses further challenges successfully support international groups clients and markets needed to the Cyprus economy. setting up operations in Cyprus through our Pathfinder Services. Our experienced to assess the situation and What is encouraging is that the great team provided personal, proactive and most importantly consider majority of our clients, having considered comprehensive support to help companies how the events might affect the possibility of re-domiciling their address all challenges both during the early the competitiveness of operations elsewhere and having studied set up stages and thereafter, helping to their options, have finally decided to remain Cyprus as a business hub. minimise time, cost and effort. During 2013 we worked closely with more than 10 large international groups to help them set up their local operations. Our clients originated from various countries including the UK, USA, Russia, Ukraine.’ 22 PwC Cyprus Clients and markets - International business
Russia the local offices of PwC Russia, they were well attended and they provided useful Cyprus: New Realities and We continued our close cooperation with insights about the similarities as well Opportunities PwC Russia providing a seamless service to as some important differences between our common clients. Russia continues to be doing business Moscow and in the Russian Business Breakfast at Baker our biggest international market. As part regions. McKenzie Moscow of our close cooperation we have extended The Senior Partner Reviews of major clients the secondment of Pambos Sergiou our Tax On 4 June 2013 a client event with the title were carried out successfully, with many Senior Manager to PwC Moscow office until ‘Cyprus New Realities and Opportunities’ positive and useful points coming up and September 2013. was organised by Baker McKenzie at their being taken forward by the respective Moscow offices. Following the March events, we organised engagement teams. and held presentations to clients aimed at Upon invitation, Theodoros Parperis, During a difficult period, we succeeded in explaining the developments, assessing how Partner, In charge of Global Compliance substantially maintaining our client base as they would impact their Cypriot operations Services and Stelios Violaris Direct Tax well as generating new business from major and proposing solutions to their immediate Services Partner at PwC Cyprus presented client wins (Absolut Group) and securing a needs. Together with PwC Russia, we on the latest Cyprus economic situation, number of special assignments. devised a number of ideas to enhance asset tax regime status and the newly relaxed protection and mitigate tax exposure under citizenship criteria. The conference various scenarios. Wealth Forum Cyprus 2012 was received very well by all clients Advanced Wealth Planning for in presence and concluded with very We attended and spoke at conferences Foreign Investors positive comments by the Baker Partners organised by Russian and international themselves, Igor Makarov (Legal) and firms (either within or outside the PwC Sergei Zhestkov (Tax) highlighting that network e.g. Baker McKenzie, TMF, etc) Organised by IBC Global Conferences on 13 Cyprus remains overall the best package putting forward the case for Cyprus September 2012, the Wealth Forum Cyprus for Russia inbound investments expressing in comparison with other structuring 2012 focused on foreign investments in their intention to continue offering Cyprus alternatives and showing how favourable and out of Cyprus providing high quality to their clients as the obvious choice. to Cyprus this comparison continuous to be lectures from major players in the trust and despite the recent challenges. estate planning world.
As a result of the above efforts our clients The forum which was co-sponsored by have maintained their Cyprus presence PwC Cyprus attracted more than 30 despite the adverse events. International speakers representing key global markets. Theo Parperis, Partner of Following our decision to explore business Global Compliance Services and Antonis prospects in regions other than Moscow, Christodoulides, Partner of Direct Tax presentations on Cyprus were held in the Services at PwC Cyprus, provided an update cities of Yekaterinburg and Novosibirsk, on tax issues. the third most populous city in Russia (after Moscow and St Petersburg) which is also the economic capital of Asian Russia. The events were organised jointly with
Annual Review 2013 23 Clients and markets - International business
Ukraine China Cyprus Business and Real Estate Forum 2013 In FY13 there has been a significant increase We pursued the Chinese market actively in X-LOS fees which reached €3,775K from through our PwC network in the Region, The Cyprus Business and Real Estate Forum €3,325K in FY12 representing an increase third party contacts as well as through 2013 was organised on 29 March 2013 in of 15%. events we participated/sponsored by KEBE. Kiev by the Embassy of Cyprus in Ukraine, We visited the country once in November the Cyprus Chamber of Commerce & The growth was mainly driven from new 2012. Throughout the year we focused in Industry, the Cyprus Investment Promotion wins and a significant number of other particular on the Real Estate and Renewable Agency, the Cyprus Tourism Organisation clients. The 15 March events slowed down Energy sectors. and MIBS group. the growth which otherwise would have been much higher. We had a major win (Skysolar) as well as a The forum, sponsored by PwC Cyprus, couple of smaller ones. We have just quoted aimed to present Cyprus as an investment During the year we have remained closed for another major client and are awaiting a destination providing comprehensive to clients and contacts visiting the territory reply. knowledge on living and investing in repeatedly and attending various events. Cyprus. During the conference, Nicos The signing of a new treaty with Ukraine Overall our fee growth for the year Chimarides, Partner in charge of Direct presented a challenge in convincing our amounted to 580% rising to €477K fees Tax Services at PwC Cyprus delivered a clients that Cyprus remains a competitive from a mere €77K fees in FY12. presentation on the use of Cyprus in real alternative for inbound and outbound estate structuring. investments. Following this development, a very successful event took place in Kiev by our office there, during which we presented the case of Cyprus post – new treaty together with colleagues from The Netherlands, The UK, Switzerland and Ukraine.
The clear message from the event was that Cyprus still remains a very good option despite the new treaty. As a result of our efforts we have not as yet lost any clients, to the contrary we have won quite a few during the year.
24 PwC Cyprus Clients and markets - International business
US UK Real Estate: The Chinese connection with Cyprus Our US sourced business recorded a very We stayed close to our clients and PwC significant increase during FY13, averaging UK colleagues from day 1 of the banking a 52% fee growth from FY12 within TLS. crisis in Cyprus and provided regular The real estate conference was organised updates. We had several meetings with by the Cyprus Chamber of Commerce and Our investment in that particular market clients and PwC UK partners and leadership Industry and the Cyprus - China Business has continued based on the initial business and attended a number of events. Most Association on 21 March 2013 at the Hilton plan set by our firm. The secondment of notably, our CEO presented successfully Cyprus Hotel in Nicosia. one of our direct tax directors to New York, the Cyprus case at a major event focusing the trips of colleagues to a number of PwC on the aftermath of the Cyprus crisis. Our The conference which was sponsored offices around the USA and our conscious, efforts helped in retaining our clients. Our by PwC, focused on global real estate continuous efforts to raise awareness on the secondee to the PwC UK Tax group, Andreas investment opportunities, on the needs Cyprus offering through participations in Andronicou, successfully completed his of Chinese real estate buyers and risk different fora, are starting to give us back secondment and PwC UK agreed his management in real estate. good returns. replacement by another Cyprus secondee, Yianna Maria Loizou. During the year, The conference was addressed among In FY’14 we will actively continue to there were a number of notable wins, others by the President of the Cyprus stay visible as a sound alternative for US despite the adverse market conditions. Chamber of Commerce and Industry, the outbound investment through featuring These include the Camco private equity Ambassador of the People’s Republic of and organising physical and electronic group and several client referrals generated China and by Panicos Kaouris, Direct Tax presentations, events and postings to through our relationship with AbbeyQC. Services Partner in PwC Cyprus. targeted industries and on specifically developed products both within and outside the PwC US network.
Annual Review 2013 25 Clients and markets - Domestic Market
Domestic Market
The recent developments Challenges and problems however, are Additionally, during the year our team affecting the banking system also accompanied by opportunities and of specialists assisted a number of clients prospects. In response to the new economic in transforming their business model, and the deepening economic landscape, PwC is focusing in supporting redefining their strategy to align to the new crisis have brought our domestic clients in the challenging reality, managing their cost base achieving about constraints and transitional period ahead through the substantial savings without compromising financial difficulties on the development and provision of specialised quality of services, restructuring their operations of our domestic crisis-related and transformation advisory operations and effectively managing their services. These services aim at supporting human resources. Examples include: clients, which include both and guiding our clients to build resilience, •• Strategic re-alignment for an Cypriot-owned companies accept and adapt to the new realities, international ship management and international leverage opportunities and transform their company companies with a local businesses. •• Re-design of activities and achievement of cost savings for a presence. In an effort to inform our clients and company in the tourist sector share with them our expert knowledge, •• Re-design of the organisational Under the current economic we organised in June 2013 a Business structure, roles and responsibilities of conditions and the difficulties Transformation conference which attracted an Insurance company and of a non- faced by the banking sector, more than 300 participants. During the for-profit organisation companies increasingly face conference, subject matter experts from •• Transformation of the operational problems and challenges related our Advisory team delivered presentations model of a number of local companies to cash flow management, and responded to questions. The topics through the implementation of the financing, cost reduction, supply covered at the conference included, Investors in People (IiP) framework chain management and human Strategy Realignment, Cost reduction, resource management. Employee management, Liquidity and Debt Management, etc.
26 PwC Cyprus Clients and markets - Domestic Market
Cypriot businesses survival conference
The Cypriot businesses survival conference was organised with great success on Wednesday, 26 June 2013 at the Holiday Inn Hotel in Nicosia. The conference aimed at addressing all aspects of the current economic crisis affecting Cypriot companies and the economy in general and to provide useful and practical tools that will support companies in their recovery efforts. The conference which was supported by the Cyprus Chamber of Commerce and Industry and organised in association with IMH, attracted 400 leaders and executives from the local business community.
The conference was addressed by Mr Phidias Pilides, President of the Cyprus Chamber of Commerce and Industry, the CEO of PwC, Evgenios Evgeniou and the Head of Assurance & Advisory Services of PwC, Liakos Theodorou who was also the Chairman of the conference.
Distinguished speakers included Messrs George Vassiliou, former President of the Republic, Stavros Zenios, Professor at the University of Cyprus, Olympios Toumazou, Executive President of RAI Consultants, George Georgiou, Managing Director of Alpha Bank and Ploutarchos Sakellaris, Professor at the Athens University of Economics and Business and Vice President of the European Investment Bank.
Presentations were also delivered by PwC Advisory Partners, Philippos Soseilos and George Lambrou, by Socrates Paschalis, Director and by Michalis Stephanou, Senior Manager in Assurance & Advisory Services.
Annual Review 2013 27 People and talent
Being a step ahead At PwC we acknowledge that our continuing success and ability to meet the demands of our clients in an increasingly challenging business environment depends critically on the strength and quality of our People. Therefore, in FY13, despite the very difficult market and economic conditions, we continued to invest in the professional development of our People by taking a long-term view of our business. This section gives an outline of how our performance, transformation, talent and development activities have sparked personal and professional growth.
Performance
Protecting our People during on our business and our planned actions our leadership position and our People’s were transparently communicated to all job security. Our People showed their challenging times our People by our Territory Senior Partner, commitment by actively supporting and Partners and Directors. accepting these responsible decisions, In the midst of the very difficult and which have helped us be prepared for uncertain economic climate faced during An important element of our business turbulent times. FY13, we worked on a daily basis on culture is to be proactive. To this end, our many fronts to protect our People. We main effort, especially after the events continuously monitored and assessed the Engaging our People of 15 March 2013, was to safeguard our business impact of events so as to pro- People's jobs in the volatile business actively work in the People space, in a In FY13, we continued to listen to our environment. Being proactive, we took a structured and responsible manner, to adapt People’s feedback through our Global number of measures which had an impact to the new emerging reality. To this end, a People Survey (GPS), so as to improve on everybody in the organization but were comprehensive top-down communication our performance in a number of key responsible and secured our sustainability, plan was implemented, so that the impact areas. We demonstrated commitment to
28 PwC Cyprus take all necessary actions to increase our Additionally, in FY13, we continued to People's engagement, and rolled out People administer a confidential, anonymous workshops to communicate our strategic upward feedback programme for all goals and discuss our GPS results with all Partners, in order to help them in their colleagues, in an effort to further improve personal development journey. the quality of our People management practices. As a result of this effort, our Moreover, all our Assistant Managers, people engagement score of 76% was Managers, Senior Managers and Directors similar to last year’s. Impressively enough, received similar confidential and our People’s engagement was not affected anonymous feedback from their colleagues, by the challenging economic environment to help them develop their managerial and or the responsible decisions taken by our leadership style. leadership.
Giving our colleagues the opportunity to engage with leadership has helped everyone feel more informed and involved with the Transformation direction the firm is taking. Our goal is to continuously engage our People to further improve the way they work, continue our Awards and Accreditations is experiencing, was a confirmation of drive for the highest quality in People and the progress we have been making in our in our services so as to ultimately deliver Investing in our People has been a key Human Capital management practices greater value for our clients. driver of our business success. In FY13, and our commitment towards continuous following a rigorous assessment that improvement. Performance Management included lengthy interviews with a large number of our colleagues from all grades This was a fantastic result for PwC, which reflected the quality of our Human Capital Objectivity is the pillar of our performance across the firm, we proudly joined the elite management practices and our People’s management system, and our aim is to top organisations across the world to have personal commitment to continuous continue building a culture, where People achieved the highly prestigious Investors improvement. are rewarded and progress based on their in People GOLD accreditation in Human job performance. Capital management.
In FY13, we had 3 new Directors, 7 new Being the largest firm in Cyprus to have Senior Managers, and 121 promotions to received the Investors in People (IIP) the other grades. This has been a clear GOLD accreditation as well as the only demonstration that in PwC we offer one to have received it in the midst of the tremendous career opportunities and, even difficult economic climate our country in difficult market conditions, we continue to enhance the value of our People and invest in the future.
Annual Review 2013 29 People and talent
An exceptional place to work
One of the most exceptional things PwC Talent offers is the chance to work with many of the world’s leading companies and organisations. This gives our People a great opportunity to develop their business skills through on-the-job learning.
Additionally, the firm is continuously investing in new ways of improving our Attracting the best People •• Recruitment of top Russian and workplace, providing our People with Ukrainian graduates in close flexibility and recognising their contribution Every year, we attract and recruit graduates cooperation with the respective PwC at all levels. These are long-term with potential, as well as qualified and firms. commitments, reflecting awareness that our experienced professionals with technical •• Participation in career fairs at local People make their greatest contribution, expertise, management skills, leadership universities and colleges. when their quality of life is well-balanced attributes and personal integrity. with their professional obligations. In FY13, •• Participation in local high school we have maintained the following benefits career fairs. In FY13, we continued to perform for our People: strongly against this objective and saw Additionally, during the summer of 2012, a high level of demand for graduate and •• Flexible hours for all 27 high-calibre university students secured professional places. We received a total of a place in our competitive “Summer •• Reduced hours for working mothers 1185 applications for employment, out of Internship Programme” and took part in a •• Bonus entitlement which we recruited 86 People. Out of the range of opportunities, including attending •• Compassionate leave university graduates recruited, 61 embarked interesting workshops and shadowing PwC • • Unpaid leave in our September 2012 professional professionals. Upon graduation, 22 of these •• Additional annual leave for long- accounting training schemes. students secured a position in our 2013 and serving staff members 2014 trainee intakes. •• Life insurance scheme To achieve these numbers, our Human •• Medical insurance scheme Capital professionals carried out a series of Mobility •• Provident fund activities, specifically aimed at recruiting •• Free parking high calibre graduates and professionals, While many People think of mobility as •• Subsidised lunch at our canteen such as: moving across geographies, this is only restaurants one aspect of it. There is a wide range •• Friday afternoon off •• Dinner in London for Cypriot of opportunities and business needs, •• Casual Fridays professionals working in the UK. which require our People to be mobile. •• On-campus presentations at top UK During FY13, 21 of our People worked on universities. international secondments in other PwC •• On-campus presentations to University firms around the world, such as Russia, of Cyprus (UCY) students and teaching USA, Middle East, Canada and Greece, UCY accounting classes. while 6 People came from PwC USA, UK and Russia to PwC Cyprus on secondment. After 15 March 2013, due to the prevailing
30 PwC Cyprus input was used as a starting point for the career management conversation and setting of an action plan. The action plan Development decided for each individual will be linked to various developmental options.
Our strategic priorities are focused around talent management, engaging and developing our People, making sure that all of our People fulfil their potential. Learning and Education economic conditions in Cyprus, a number Diversity During FY13 we continued to invest in the of our People decided to utilise the strength personal and professional development of our Global Network and pursue an Being a diverse and inclusive employer of our people both in terms of technical international transfer or secondment to helps us build better relationships with our knowledge and expertise, as well as other PwC firms. The motives for such clients and gives us a competitive edge. business and people management skills. thoughts ranged from personal/family In PwC Cyprus talent has no age, race or Our People’s technical learning took place economic circumstances to aspirations for gender and we are committed to creating through on-the-job training, formal training accelerated careers. Such intentions have an environment where a multiplicity of programs, both locally and internationally, been fully facilitated and supported as a ideas and experiences are encouraged and as well as through the use of blended matter of responsible leadership. appreciated. In our experience, the most learning solutions, which included diverse teams are the highest performing e-learning. Moreover, 19 of our People were transferred teams, hence we work hard to attract, train to a different Service Line department or and develop a diverse gender, ethnic and Our business skills program called “About office within the firm, in order to meet our social group of People. In FY13, our People U” was enriched to enable all our People client needs and provide a diverse work were from 19 different nationalities, 60% achieve their full potential and develop experience. were female and 40% were male. further their client handling, coaching and leadership skills. The program incorporated Talent Management even more blended learning solutions and was based on the PwC global curriculum. In FY13, PwC continued to implement a Over 200 of our People attended at least one series of Talent Management activities of the “About U” programs during FY13. for Managers, Senior Managers and Directors, using certain criteria that In addition, 4 Senior Managers participated have been developed based on the PwC in international PwC Key Talent Programs. network’s guidelines and other PwC firms’ These included “My Way” and “Apollo”, best practices, which have been tailored which aim to develop Senior Managers into according to local needs. our future leaders, through high-impact developmental interventions, personal Additionally, a series of career management coaching and connecting with colleagues conversations were carried out with our from a number of other PwC firms. Senior Managers, to touch base on their career prospects. In preparation for these meetings, People were asked to self-assess based on the criteria of potential and this
Annual Review 2013 31 People and talent
Partner and Director The Academy The Academy also continued to fulfil Development its objective to deliver Continuous During FY13, The Academy continued to Professional Development (CPD) courses In FY13 a 2-day Partner Workshop, provide tuition and support to our trainee to professionals and their businesses. These namely “Driving Growth - Partners’ accountants under both the Institute of courses were approved by the ICAEW and Personal Responsibility”, was organised Chartered Accountants in England and ACCA for CPD credits, and catered for the in collaboration with the London Business Wales (ICAEW) and the Association of needs of professionals. During FY13, 11 School (LBS), where all our Partners Chartered Certified Accountants (ACCA) such open seminars were delivered, with a had the opportunity to reflect on client schemes. Our trainees’ professional total of 543 participants. In addition, The relationship approaches and skills, as examination results were once again Academy designed 15 in–house seminars, well as consider actions and processes outstanding. The FY13 pass rates were well which were delivered to local businesses to understand and fulfil our client above the international averages, achieving and organisations with 474 participants. expectations and needs. The London 100% in some papers. These seminars covered 211 teaching hours. Business School professors facilitated an interactive workshop which covered, In addition, 3 of our ACA trainees received Finally, anticipating the challenges of amongst others, topics such as persuasion 4 awards for achieving first worldwide the current economic crisis in Cyprus, and influence, account planning practices place in individual papers, as well as the The Academy designed and started the and developing C-suite relationships. 1st and 3rd place overall for the ICAEW implementation of a strategic plan in The outcome of the workshop was for Professional stage examinations during the order to address these challenges. The each Partner to develop an action plan year 2012. The prizes were presented in main aspect of the plan is to expand on the for driving growth within their business London during a special award ceremony provision of ICAEW and ACCA courses. and strengthen further their relationships organised by the ICAEW. with clients and other associates. Based on the feedback received, Partners found Moreover, during FY13, tutors of The the workshop very valuable and relevant Academy delivered ACCA courses for clients and look forward for similar opportunities in the Middle East and Greece, receiving where they can develop their skills and excellent feedback. share experiences and best practices.
From left to right: Philippos C Soseilos, Head of Human Capital, Christina Telemachou, Marina Vakana, Nicoletta Neophytou and Evgenios C Evgeniou, CEO.
32 PwC Cyprus Firm
Legal and organisational structure
Ownership of PwC Cyprus
PricewaterhouseCoopers Limited (PwC Cyprus) is a private company with limited liability by shares under registration number 143594, having its registered office in Cyprus office at Julia House, 3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus.
PwC Cyprus is wholly owned Subsidiary undertakings by professional practitioners working with the firm who are The principal subsidiary undertakings of all members of the board of PwC Cyprus as at 30 June 2012 are: directors of the company and are commonly referred to as Subsidiary undertaking Principal activity ‘partners’. PricewaterhouseCoopers (Marketing and Professional services Communications) Limited PricewaterhouseCoopers Associates Limited Professional services PricewaterhouseCoopers Professional Training Limited Professional training programmes These entities are all member firms of the PwC network by being members of the PricewaterhouseCoopers International Limited (PwCIL). A description of the PwC Network can be found in Section 3: Description of the PwC Network of this Transparency Report. Annual Review 2013 33 Firm
Other PwC network member Dervis Str, Julia House Annex, 1st Floor Lines of Service firms in Cyprus. CY-1066 Nicosia, Nicosia, Cyprus and it was registered in Cyprus as a Lawyers’ Limited As of 1 July 2011, PwC Cyprus operates Company under registration number 23348. through two Lines of Service. These are S. A. Evangelou & Co LLC is a member firm S.A. Evangelou & Co LLC and its wholly Assurance & Advisory and Tax & Legal of PricewaterhouseCoopers International owned subsidiary undertaking, namely Services. Support services are provided by Limited (PwCIL) and part of the PwC’s PricewaterhouseCoopers Corporate Internal Firm Services. For details of our Tax and Legal Services Network providing Secretarial Services Limited, are wholly services please visit ‘‘Our servises’’ section. Legal Services in Cyprus. It is a private owned by Spyros Evangelou who is also the company with limited liability by shares Head of Practice. having its registered office at 3 Themistocles
The PwC network
Legal structure of the network Key features of the network
PwC is the brand under which the The PwC Network has a set of standards and member firms of PricewaterhouseCoopers policies with which all PwC member firms International Limited (PwCIL) -an English agree to comply. Focusing on key areas registered private company limited such as strategy, brand, and risk and quality, by guarantee - operate and provide the Network Leadership Team and Board professional services. Together, these firms of PwCIL develop and implement policies form the PwC network. ‘PwC’ is often used and initiatives to achieve a common and to refer either to individual firms within coordinated approach among individual the PwC network or to several or all of firms where appropriate. Member firms them collectively. The PwC network is not of PwCIL can draw on the resources and a global partnership, a single firm, or a methodologies of the PwC network. multinational corporation. PwC member Membership in the PwC network depends firms are not legal partners with each other on a member firm’s implementation of and do not share financial interest. common standards.
34 PwC Cyprus Firm
Governance
The governance structure of PwC Cyprus is made up of three main bodies: the Board of Directors, the Management Board and the Oversight Board. Board of Directors
The Board of Directors is responsible for The members of the Management undertaking certain statutory duties of the Board who served throughout the firm. year ended 30 June 2013 are seated from left: Liakos M Theodorou, Evgenios C Evgeniou – CEO, Costas Management Board L Mavrocordatos and standing from left: Theo C Parperis, Christos The CEO who is elected by the firm’s M Themistocleous, Philippos C partners, appoints partners to form Soseilos, Angelos M Loizou the firm’s Management Board. The Management Board is responsible for assisting the CEO in the formulation and implementation of strategic priorities and business plans, compliance with all PwC Network obligations and the design, maintenance and operation of an effective quality control system.
Oversight Board
The Oversight Board, which is independent of the Management Board, is elected by the firm’s partners every three years. The Oversight Board is made up of five The members of the first Oversight Board, who members all of whom are partners and served throughout the year ended 30 June elects its own Chairman. The Oversight 2013, are starting from the left: Board is responsible for overseeing the Constantinos H Constantinou, George C activities of the Management Board to Lambrou, Chris K Santis – Chairman, hold management accountable to partners, Andreas T Constantinides, Chrysilios K to monitor its decisions and actions and Pelekanos where necessary advise the CEO and the Management Board.
Annual Review 2013 35 Firm
Internal Quality Control System
Introduction Elements of our internal quality Statement on the effectiveness control system of the firm’s internal quality PwC network member firms’ quality control control system system for Assurance practice is based Our internal control system is based on the on the International Standard on Quality six elements of quality control set out in The effectiveness of our firm’s system of Control 1 (ISQC1) ‘Quality control for firms ISQC1, which are: that perform audits and reviews of historical internal quality control is evaluated by •• Leadership responsibilities for quality internal reviews, by independent reviewers financial information and other assurance within the firm and related services engagements (ISQC1), from the PwC network and it is also subject •• Relevant ethical requirements issued by the International Auditing and to review by the profession’s regulator the (including Independence) Assurance Standard Board (IASSB) of the Institute of Certified Public Accountants •• Acceptance and continuance of client International Federation of Accountants of Cyprus (ICPAC). On the basis of these (IFAC). relationships and specific engagements reviews, the Management Board is •• Human resources: satisfied that PwC Cyprus’ internal quality ISQC1 applies to firms that perform audits −−Recruitment and hiring control system for Assurance is operating of financial statements and provide other −−Learning and education and career effectively. Any matters identified through assurance services where they relate to development the various reviews processes are actioned activities that are reported in the public −−Performance evaluation and and changes implemented as appropriate. domain and are therefore in the public compensation interest. −−Assignment of teams and resourcing engagements The objective of ISQC1 is for the firm to •• Engagement performance: establish and maintain a system of quality −−Consistency in quality of engagement control to provide it with reasonable performance assurance that: −−Consultation •• the firm and its personnel comply with −−Engagement Quality Control Review professional standards and applicable −−Resolving differences of opinion legal and regulatory requirements −−Engagement Documentation •• the reports issued by the firm/ •• Monitoring engagement leaders are appropriate in the circumstances.
36 PwC Cyprus Firm
Ethics & Independence
Ethical requirements Independence All partners and staff receive mandatory computer-based and instructor led training All partners and members of staff are Our firm follows the independence policy on the firm’s independence policies and required to comply with the Code of Ethics of the PwC network which incorporates related topics on an annual basis. for Professional Accountants, issued the independence requirements of the by the International Ethics Standards International Ethics Standard Board for Upon joining the firm and at least annually Board for Accountants (“IESBA”), (an Accountants (IESBA) Code of Ethics for thereafter, all partners and staff are independent standard-setting body within Professional Accountants in relation to required to confirm their compliance with the International Federation of Accountants personal financial interests, scope of all aspects of the firm’s independence (IFAC)), that has been endorsed by the services and business relationships. The policy, including their own personal profession’s local regulator. Additionally, independence policy of the PwC network independence. our firm is required to comply with the also outlines the independence rules of the relevant PwC network standard on Data US Securities and Exchange Commission Violation of independence policy will Protection and Privacy and Anti-bribery (US SEC) and those of the Public Company trigger the firm’s disciplinary process and and the obligations arising from the Accounting Oversight Board of the US may lead to disciplinary action including relevant local legislation and contractual (PCAOB) which in general are more dismissal. terms govern the use and disclosure of restrictive and should be complied with information and anti-bribery. where they apply. In some instances, our Our independence procedures and practices firm has also developed supplementary are subject to internal, Network and Conflicts of interest policy based on local business and external regulatory review on an ongoing regulatory environment. basis. Relevant relationships, potential conflicts of interest and other sensitive situations are identified before accepting a new client or engagement. The Independence team performs checks via internal and PwC network databases and websites and provides a report to the engagement team with the results. Where conflicts of interest are identified the appointment is either declined or safeguards are applied to make sure that potential conflicts of interest are appropriately managed.
Annual Review 2013 37 Firm
Continuous professional development
Our firm is committed to providing its In addition to the formal training Partners and People with the relevant programmes, the Firm encourages each opportunities to continuously develop professional to take ownership for their own Partner as professionals, reaching the maximum continuous professional development, by of their potential at every role they are looking into opportunities for secondment assigned within the Firm. to the PwC network and also by making sure remuneration that all the activities they follow are aligned Over and above our Performance to their role and grade. The partners’ remuneration is based on Management and Upward & Peer three interrelated components: Feedback processes, our People’s PwC’s Academy also ensures that our professional development is guided trainee accountants, under both the •• Responsibility income – reflecting the through a combination of on-the-job Institute of Chartered Accountants partners’ sustained contribution and training (expected to account for 70% of in England and Wales (ICAEW) and responsibilities development), coaching (20%) and formal the Association of Chartered Certified •• Performance income – reflecting how a training programmes (10%). Accountants (ACCA) schemes, are provided partner has performed with the highest quality education •• Equity unit income – reflecting the Formal training programmes ensure and support. As a result our trainees’ overall profitability of the firm that our people meet their Continuous professional examination results were Professional Development (CPD) once again outstanding. The FY13 pass requirements. For this reason, we continued rates were well above the international to follow the “Approved Employer - averages, achieving 100% in some papers. Professional Development stream” awarded In addition, 3 of our ACA trainees received by the Association of Chartered Certified 4 awards for achieving first worldwide place Details of the financial information of our Accountants (ACCA) and the Institute of in individual papers, as well as the 1st and firm can be found in Financials section. Certified Public Accountants of Cyprus 3rd place overall for the ICAEW Professional (ICPAC). stage examinations during the year 2012.
More specifically, our training curriculum includes internal and external training courses, seminars and e-learns, which are industry-specific, grade-specific and cover both technical and soft-skills.
38 PwC Cyprus Firm
Leveraging the power of social media
Social media is flourishing. Leading •• Communicating our service offerings, organisations embraced the fact that having corporate events and thought a presence on social media is not an option. leadership through our LinkedIn Networking through social platforms is no Company page. Creating discussions longer an emerging trend, but it has arrived on our LinkedIn Group page and it is here to stay, thus changing the way •• Tweeting our latest corporate people communicate and make decisions. activities, publications, service To ensure success, entry in social media offerings and the latest financial must be a strategic decision. We, at PwC news from leading financial media Cyprus, by acknowledging that fact we have organisations through Twitter embedded the use of social media in our •• Communicating our Corporate Social overall marketing strategy. Our social media Responsibility initiatives through our strategic goal is to exploit and leverage the Facebook page power of social media by connecting and deepening relationships with followers and •• Publishing corporate videos and therefore increasing our brand equity and event presentations through our creating actionable knowledge (Thought Youtube channel Leadership). We achieve these goals by taking the below actions: The numbers PwC_Cy_Press: 1106 followers Facebook page: 531 fans LinkedIn Company Page: 652 followers LinkedIn Group page: 526 members
Connect with us: Twitter: twitter.com/PwC_Cy_Press LinkedIn Company page: linkedin.com/company/pwc-cyprus LinkedIn Group: linkedin.com/groups/PwC-Cyprus Facebook page: facebook.com/PwC.Cyprus Youtube channel: youtube.com/pwccyprus Annual Review 2013 39 Firm
Global technology solutions
The firm listening to the ever increasing IP technology for interoffice and client, needs of its customers and employees, the video conferencing communication. We new way of thinking and working enforced have also made available to our people a upon us by the evolution of the technology, web collaboration tool, the WebEx which has implemented various initiatives to align through their computer can initiate effective technology with business objectives and team meetings, trainings and presentations. transform its IT environment to meet these needs.
Some of these initiatives taken to accomplish this transformation are in the areas of security, web collaboration and social media.
Security as one of the most important aspect of our business and it is always improved and monitored for compliance with PwC Information Security controls that are compliant and conform with the ISO/IEC 27002:2005.
Virtual meeting and web collaboration is a necessity these days. Using these tools and facilities not only we have improved productivity across our teams but we have also improved our communication with our clients, creating a more personal one-to-one relationships. Obviously these technologies are supporting our environmental initiatives and efforts to “go green”. By reducing the need to travel we mitigate energy use. Our firm had built in every city office video conferencing facilities based on
40 PwC Cyprus Firm
PwC Cyprus events and activities
PwC Cyprus events
Professional Services 16th Annual Global CEO Driving jobs and growth in Survey Cyprus Key findings in Cyprus
In the context of the annual global survey, The “Professional Services: Driving jobs crisis and compares Cyprus with its peer PwC Cyprus carried out for the second and growth in Cyprus” report which was group for business services - Ireland, Malta, consecutive year, a local study based on commissioned by our firm, provides a Luxembourg and Singapore. The report the views of 32 Cypriot CEOs. The results basis for a constructive dialogue leading concludes with ten, strategic and actionable of the survey were presented during an to the recovery and growth of the Cypriot recommendations for policy makers, event organised on Wednesday, 30 January economy. the sector and the sector representatives (voice of the industry) that could lead to 2013 that was attended by a number of high caliber individuals from the business The report was carried out by Ms Fiona the creation of 9,700 new jobs in 5 years, community. Mullen, Director of Sapienta Economics bringing in extra tax and social insurance Ltd, and Ms Marina Theodotou, Founder revenue to the government of €13 million The launch event included the presentation and Managing Director of Curveball Ltd, per year. of the results by Philippos Soseilos, and was reviewed by Dr. Stavros Zenios, Advisory Partner at PwC Cyprus and a panel Professor at the Department of Public and discussion with Messrs Makis Keravnos, Business Administration at the University Chief Executive Officer of Hellenic of Cyprus. Bank Group, Manthos Mavrommatis, Former President of the Cyprus Chamber The report was launched on Tuesday, 11 of Commerce and Industry, George December 2012 during an event that was Papanastasiou, Managing Director of attended by industry professionals, private VTT Vasiliko Ltd and Professor Haridimos sector representatives and policy makers. Tsoukas, Dean of the Faculty of Economics and Management at the University of The report findings demonstrate that the Cyprus. professional services sector has become the main driver of jobs and growth in Cyprus, especially during the economic
Annual Review 2013 41 Firm
Sponsored events
Annual Russian and CIS CSR: Awareness and The 11th Management & HC conference Transparency conference
This conference was organised on 2 July The “CSR: Awareness and Transparency” The 11th Management & Human Capital 2012 by the London Stock Exchange Group conference was organised on Friday, 19 Conference, organised by IMH and PwC and was mainly targeted at Russian/ CIS October 2012 in Limassol by the Planning Cyprus on 21 November in Nicosia, focused companies which are considering a listing Bureau of the Republic of Cyprus, the on managing people and companies on the London Stock Exchange. Cyprus University of Technology, the Cyprus in times of crisis. The main speaker of Chamber of Commerce and Industry and the conference was Damian Hughes, an The conference was addressed by the Lord the Cyprus CSR Network. Mayor of the City of London. Participants international speaker, best-selling author and HR consultant who takes the insights, included a number of companies as well The European Union, for more than a methods and lessons by business, sports and as advisors involved in listings such decade has been trying to make CSR an history’s greatest achievers and shares them as investments bankers, lawyers and indispensable tool in achieving its growth through his speaking, training and books to accountants. The conference, which was agenda, by encouraging enterprises to help others enjoy similar success. held at the National Hotel in Moscow, contribute to the attainment of the overall examined latest trends as regards goal of more growth and more jobs. The The panel discussion which was coordinated international capital markets in general purpose of this conference was to enhance by Philippos Soseilos, Advisory Partner at and Russian/ CIS IPOs in particular, stakeholders’ awareness on CSR and PwC Cyprus focused on the financial crisis and facilitated an in-depth discussion encourage transparency and reporting. on a number of issues such as investor and the need to reduce payroll. During the discussion, CEOs and Human Capital expectations and foreign investment access During the conference, which was managers of Cypriot companies shared their to Russia, IPO preparation, tax and legal sponsored by PwC Cyprus, George concerns and experiences of the past two issues, corporate governance, and many Ioannou, Director in Advisory Services years with the audience. more. delivered a presentation on “Best Practices in CSR Strategy and Reporting”. During PwC Cyprus sponsored “The Cyprus way his presentation, he outlined the PwC to the London stock exchange: regulatory methodology on CSR strategy development, and tax aspects” session where Socrates a holistic approach that provides a Paschalis, Director of Assurance & Advisory structured step by step process from an Services at PwC Cyprus, provided an organisation’s stakeholder analysis, to overview of the features and benefits of gap analysis, to strategy development, Cyprus as a jurisdiction for cross-border to reporting and back to stakeholder listings on the London Stock Exchange. engagement.
42 PwC Cyprus Firm
Sponsored events
Cyprus Hotels Association SAP Enterprise Risk & Solvency Quality conference 35th Annual conference Management Meeting The 2012 Quality conference was PwC Cyprus was the official sponsor of The SAP Enterprise Risk & Solvency organised by the Cyprus Association for the 35th Annual Conference of the Cyprus Management Meeting was held on Quality on Wednesday, 7 November 2012 Hotels Association (CHA) which was Thursday, 20 September 2012 at Hilton at the Bank of Cyprus Training Centre. organised on Wednesday, 13 February 2013. Hotel in Nicosia. The meeting focused on how SAP for insurance solutions can help The conference which was co-sponsored The conference attracted high profile companies gain compliance and increase by PwC, discussed recent management speakers such as the Director of the profitability. systems, best practices as well as the World Tourism Organisation, Mr Martin benefits organisations can obtain in order Brackenbury, representatives of the Russian Nikos Chostelides, Assistant Manager in to survive and achieve growth in times of and Ukrainian tourism industries as well Financial Services Consulting, PwC Greece economic crisis. as top officials from the Cyprus Investment delivered a presentation with the title Promotion Agency and Hermes Airports. “Entering the final countdown towards Dr Adrian Ioannou, Health & Safety Solvency II”. During his presentation Officer of PwC Cyprus coordinated one The conference was addressed by the Nikos Chostelides analysed the regulatory of the sessions of the conference which then Minister of Commerce, Industry and uncertainty which remains a key challenge focused on the social aspect of quality. Tourism, Mr Neoklis Sylikiotis, the CEO of for the insurance industry, the implications During the same session George Ioannou, PwC Cyprus, Evgenios Evgeniou and the on strategy, products and capital needs Director in Advisory Services delivered President of CHA, Mr Haris Loizides. of insurance companies as well as the a presentation on 25 years of ISO challenges associated with the new 9000 and its importance to the Cypriot Through their presentations, speakers operating model. environment. analysed the ways for “building our future with sustainable strategic alliances capitalising on our proven strengths” which was the overall theme of the conference.
Speakers also participated in a panel discussion which was coordinated by Angelos Loizou, Partner in charge of Hospitality and Leisure Services at PwC Cyprus. An Exhibition of Products and Services was also held during the day of the conference.
Annual Review 2013 43 Firm
Activities
London Dinner Global Russia Business Meeting On 25 October 2012, our Human Capital Department organised a dinner for The Global Russia Business Meeting is young Cypriot professionals who are the leading annual gathering of Russian currently working in accounting and other business leaders outside Russia. Our firm professional services firms in London. was a Knowledge Partner of the 4th Global During the event PwC Cyprus CEO, Russia Business Meeting which gathered Evgenios Evgeniou, delivered an interesting more than 300 senior leaders from business presentation on the subject “Macro trends and government in Limassol, from 14 to 15 and the ‘new normal’”. April 2013.
The dinner, which was attended by 50 Nicos Anastasiades, President of the professionals, was held at the premises of Republic of Cyprus, addressed participants the Institute of Chartered Accountants in during the opening dinner. Our CEO, England and Wales (ICAEW). Based on Evgenios Evgeniou and our Partner, Theo the feedback received, the professionals Parperis, President of the Institute of enjoyed the event and highly appreciated Certified Public Accountants of Cyprus the fact that our organisation is the only participated in a boardroom dialogue Cypriot firm which communicates and session which focused on Cyprus as an networks with them regularly. Overall, the international business and investment hub. event was a great success.
44 PwC Cyprus Corporate Social Responsibility
Being a catalyst for change
Corporate Social responsibility is an integral element of our business and a priority for the global PwC network of firms. At PwC we believe in being 'part of it': part of the global conversation and movement towards responsible business practices that create positive change in the world. However, we want to go further.
Annual Review 2013 45 Corporate Social Responsibility
We in PwC Cyprus aspire to be a great Volunteering Corporate community corporate citizen by playing a leading role leadership in the community. Our Corporate Social Employee volunteering is widely Responsibility (CSR) activity is all about acknowledged as an integral component of Corporate community leadership is about abiding with our Code of Conduct and our a company’s CSR activity. sharing knowledge, experiences and skills main values in our relationships with all our with our stakeholders. During FY13 our stakeholders, clients and staff. Our program A total of 240 people from our organisation main focus under this pillar was on the has 5 pillars: volunteered spending 557 hours for some following activities: of our activities such as the “You can talk •• The issue and distribution of •• Volunteering, the talk, but can you walk the walk”, Blood publications and other material in Donation, Cervical Cancer Lectures, Let’s an effort to share our knowledge and Environment, Do it Cyprus, Bring your child to work and experiences with society. TELETHON. •• The participation of our people •• Professional Services, in community and/or business Giving Giving organisations. •• The introduction of surveys in an effort •• Corporate Community Giving is an opportunity to demonstrate to bring to the surface topical issues our social commitment to the broader and new perspectives, which we can Leadership community. It is part of our culture and share with our society. it worth mentioning that PwC this year •• The granting of awards to top donated around €42.000 to non-profit university and college students organisations, to support charitable causes. focusing on supporting talented Soon our pillars will change so as to focus PwC Cyprus supports the Cyprus Anti - people, the future business leaders. on the areas where we believe that we can Cancer Society, Europa Donna, the Cyprus make relevant and significant contributions. Radiomarathon, the Centre for Preventive At PwC Cyprus we want to do the right Paediatrics and the “Association for the thing for our clients, our people and our Welfare of people with Mental Handicap”. community. This is a core element of our Other charitable organisations we have vision and a part of our everyday work. It supported this year were the “Make a wish”, is encouraging to see that our people are “Unicef” and many others. enthusiastically getting involved not only in local projects but also in initiatives driven globally by the Global Communities of the PwC Network, understanding how they can positively make a difference. It worth Universities awards mentioning that 81% (Source: Global People Survey 2013) of our people in Cyprus are satisfied with the actions we take to be socially responsible
46 PwC Cyprus Corporate Social Responsibility
Some of our projects
We have carried out a research for the tourism industry, in cooperation with the Business Research department at the University of Nicosia, aiming to record and understand the perceptions of Cypriots working in the industry of tourism. You talk the talk, but can Moreover, PwC Cyprus has signed along you walk the walk? Blood Donation with 18 another Cypriot organisations the European Road Safety Charter and committed to improve road user behavior of our members and their dependents on road safety issues like speed, alcohol use and driving, seat belts and vehicles safety.
In addition to the above projects it is worth mentioning that we support steadily the past years the “Association for the welfare of people with mental handicap” not only with donations but helping them in various Cervical Cancer Lectures colleagues who attended the lectures, the projects like the building of their website. information provided was very interesting and useful. We continued for a 5th consecutive year the The Human Capital department in sponsoring of our Olympic Sailing athlete collaboration with the “Women in PwC Committee” organised 2 lectures on the In the context of its corporate social Andreas Cariolou who represented Cyprus responsibility towards its people, PwC aims at the 2012 Olympic Games in London. subject of “Awareness on Cervical Cancer” on 17 and 19 September 2012 in our Nicosia to continue providing training programmes and Limassol training centres respectively. and informative seminars of general On the occasion of International Women’s interest. day, on 8 March, our Women in PwC committee organised a sponsored walk During these lectures, 2 obstetricians event that gathered more than 120 and gynaecologists, namely Dr Dinos participants in an effort to collect money Mavromoustakis and Dr Marios Liasides, for ‘Paidiki Stegi’ in Nicosia and Limassol. talked about the HPV virus, statistics, Through this initiative we managed to consequences and prevention of cervical collect more that €7.500 for this cause. cancer. From the feedback received from the 80 The PwC Classic & Sports Car Club has actively supported this initiative by offering free transportation to participants from Nicosia to Limassol in classic cars, generously provided and driven by members and friends of the club.
Annual Review 2013 47 Corporate Social Responsibility
Bring your child to work High School presentations
The Women in PwC Committee organised As part of our Corporate Social an event especially for the children of the Responsibility (CSR) activities, Human staff on Friday, 23 November 2012. The Capital professionals of PwC Cyprus event which took place simultaneously at delivered presentations regarding the our offices in Nicosia and Limassol was “Accounting Profession” to 1st year titled “Bring your child to work”. lyceum students, as part of the ministry of education’s career week. The main purpose of this initiative is for the children to become familiar with the More than 150 students from local lyceums, working environment of their parents. such as Apostolos Varnavas in Nicosia, Both the children and the parents enjoyed Lanitio B and Agia Phyla in Limassol, a number of Christmas related activities attended our informative presentations, such as receiving gifts from Santa Clause, where they had the opportunity to gain paintings, making Christmas ornaments, information and advice regarding the career animal balloons and many more! opportunities the accounting profession can offer following the completion of their studies.
Activities Let’s Do it Cyprus is based on volunteer work and aims at cleaning up all the waste Let’s Do it Cyprus recorded in the island in a single day.
Our firm which strongly supports initiatives Let’s Do it Cyprus is part of the Let’s Do focusing on environmental preservation it World campaign that aims to clean the and conservation, organised two teams of world from rubbish outside the cities. volunteers who joined the cause. A total of The project which is implemented in 94 22 colleagues participated in cleaning up countries all over the world, took place campaigns in Nicosia and Limassol. for the first time in Cyprus on Saturday 29 September 2012.
48 PwC Cyprus Corporate Social Responsibility
48-Hour Cyprus Rally vehicles for this year’s rally (i.e. Mercedes Benz 220 - 1960, Mercedes Benz 230 - 1969, As part of our corporate social responsibility Volkswagen Beetle - 1970, MGB Roaster activities, PwC sponsored the 48-Hour Cabrio - 1977 and Rolls Royce Silver Wraith Cyprus Rally charity event, which took II - 1979), driven by members and friends of place between 5-7 October 2012 and was the firm who joined the team. open to all classic vehicles over 20 years of age.
This event was organised for the 10th consecutive year by the Cyprus Federation of Classic Vehicles and the Bank of Cyprus, in an effort to raise funds for the Cyprus Anticancer Society.
More specifically, PwC sponsored 5 classic
Environment environmental friendly cleaning products. The environmental plan of our organisation We in PwC Cyprus are working to develop is communicated to our people through our more environmentally-efficient business CSR policy. practices for our own operations. Due to the nature of our organisation we have a Providing professional services- relatively low impact on the environment. Pro-bono However, our aim is to achieve minimum environmental impact. During FY13, 37 staff members were involved in the provision of pro-bono Our environmental friendly policy includes and discounted services to a number of a series of activities like the minimise use of community organisations and charitable electricity, water and paper, the black and institutions worth about €72.000. In total, white printing, the introduction of paper more than 476 hours were charged by our recycling and the implementation of our staff under this pillar. Recycling Collection Scheme in all of our buildings. In addition we have reduced CO2 emissions by replacing some travelling for meetings with electronic video conferences. Our building management system uses Annual Review 2013 49 €74,8m Financials FY12 €77,3m FY13
Revenue The firm has achieved net revenues of €77,3m, an increase of 3,3% compared to FY12.
50 PwC Cyprus Financials
Assurance & Advisory Tax & Legal Services
The Tax & Legal Services practice net The Assurance & Advisory practice revenue increased by 5,1% to €47,7 net revenue increased by 0,7% to from €45,4 in FY12. €29,6 from €29,4 in FY12.
3,4% 4,1% 7,3% 5,1% 6,1% AssuranceFinancial Assurance 8,8% Global Compliance Services DealsRisk & Assurance Corporate Consulting Global Compliance Finance ServicesDirect Tax Deals & Corporate Finance Risk Assurnace Consulting Direct TaxIndirect Tax PerformancePerformance Improvement IndirectSmall Tax & Medium Enterprises 25,2% ImprovementConsulting Local Compliance 84,8% 55,3% Legal Consulting Services Legal
Assurance Tax The Assurance practice revenue Global Compliance Our Tax practice achieved same increased by 1,5% to €26,9m net revenues compared to FY12 of from €26,5m in FY12. Services €16,2m GCS achieved net revenues of €28m being an increase of 8,1% compared to FY12 of €25,9m. Operating costs Legal and Total cost have been decreased Corporate Support Deals & Consulting by 3,5% with the staff costs Our legal and corporate support services recording a 3,7% decrease Deals & Consulting revenues were achieved net revenues €3,5m being an over the prior year. Other €2,7m, being a decrease of 6,8% increase of 9,4% compared to FY12 of operating costs have been compared to FY12 of €2,9m. The €3,2m. decreased by 3% Deals & Consulting practice comprises Deals & Corporate Finance and Performance Improvement Consulting. Annual Review 2013 51 Financials
Staff Provident Total tax Fund Costs contribution The firm maintains a staff provident fund State revenues from the firm emanate with 885 members (FY12: 911). The fund, from payments of direct and indirect taxes which is a defined contribution scheme had as well as Social Insurance and Special €5.035.000 in contributions during FY13 contributions. (FY12: €5.643.000) and at 30 June 2013 its net assets stood at €37m (30 June 2012: The firm’s Partners and staff paid €10,3m €38m). (FY12: €11,9m). Further to this the firm paid €11m in VAT (FY12: €7,7m) and some €3,3m in Social Insurance and Special Contributions (FY12: €3,2m).
Capital Working capital policy Expenditure As part of the continuous effort of Debtors and work in progress Financing maintaining the best working facilities and keeping abreast with the latest state of The average number of credit days The firm’s financing emanates from technology an amount of €0,6m outstanding for the year was 67 (FY12: 67). Partners’ capital, retained profits coupled (FY12: €0,5m) was expended mostly on We also try to reduce the number of days with long term and short term external furniture, equipment and infrastructure. between the time work is carried out and financing. the time of billing it. The average number of days of work in progress for the year was The firm did not utilise any of the bank 7 days (FY12: 12 days). facilities at year end (FY12: €7,6m) as compared to the bank facilities available of Creditors €26,6m (FY12: €19,6m).
Creditors are paid promptly with the average number of days between receiving and settling and invoice standing for FY13 at 31 days (FY12: 31 days).
52 PwC Cyprus PwC Cyprus offices
Nicosia Address: Julia House, 3 Themistocles Dervis Street, CY-1066 Nicosia, Cyprus P O Box 21612, CY-1591 Nicosia, Cyprus Tel. +357 - 22555000 , Fax +357 - 22555001
Limassol Address: City House, 6 Karaiskakis Street, CY-3032 Limassol, Cyprus P O Box 53034, CY-3300 Limassol, Cyprus Tel. +357 - 25555000, Fax +357 - 25555001
Larnaca Address: Artemidos Tower, 7th & 8th Floors, 3 Artemidos Avenue, CY-6020 Larnaca Cyprus P O Box 40450, CY-6304 Larnaca, Cyprus Tel. +357 - 24555000, Fax +357 - 24555001
Paphos Address: City House, 58 Grivas Dighenis Avenue , CY-8047 Paphos, Cyprus P O Box 60479, CY-8103 Paphos, Cyprus Tel.+357 - 26555000, Fax +357 - 26555001
Designed by: PricewaterhouseCoopers (Marketing & Communications Department) Printed by: Chr. Nicolaou & Sons Ltd
© 2013 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Cyprus member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. Annual Review 2013 53