price water house coopers

PricewaterhouseCoopers

Company Profile

Publication Date: 10 Dec 2010

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PricewaterhouseCoopers

TABLE OF CONTENTS

Company Overview..............................................................................................4

Key Facts...............................................................................................................4

Business Description...........................................................................................5

History...................................................................................................................6

Key Employees.....................................................................................................8

Key Employee Biographies................................................................................10

Major Products and Services............................................................................12

Revenue Analysis...............................................................................................14

SWOT Analysis...................................................................................................16

Top Competitors.................................................................................................21

Company View.....................................................................................................22

Locations and Subsidiaries...............................................................................26


PricewaterhouseCoopersTABLE OF CONTENTS

COMPANY OVERVIEW

PricewaterhouseCoopers (PwC) is an audit and accountancy firm that provides assurance, tax, andadvisory services.The company primarily operates in Europe and North America. It is headquarteredin New York, United States and employs about 163,545 people.

The company recorded revenues of $26,171 million during the financial year (FY) ended June 2009,a decrease of 7.1% over FY2008.

KEY FACTS

PricewaterhouseCoopersHead Office300 Madison Avenue24th FloorNew YorkNY 10017USA

1 646 471 4000Phone

1 646 471 4444Fax

http://www.pwcglobal.comWeb Address

26,171.0Revenue / turnover(USD Mn)

JuneFinancial Year End

163,545Employees


PricewaterhouseCoopersCompany Overview

BUSINESS DESCRIPTION

PricewaterhouseCoopers (PwC) is one of the world's largest professional services firms. PwC is anaccountancy firm that provides services in three lines of business: assurance (including financialand regulatory reporting), tax, and advisory. PwC is one of accounting's Big Four, along with DeloitteTouche Tohmatsu, Ernst & Young, and KPMG. The company has operations in 150 countriesspanning Europe, North America and the Caribbean, Asia, Australia and Pacific Islands, the MiddleEast and Africa, and South and Central America.

The company's member firms offer services under six divisions: audit and assurance, crisismanagement, tax, transactions, human resources, and performance improvement.

The audit and assurance division provides services in financial accounting issues related to matterssuch as valuations, pensions and share plans, listings, IFRS conversions, and corporate treasuryand company secretarial functions. This division offers solutions related to Sarbanes Oxley andinternational financial reporting standards (IFRS).

Under the crisis management division, PwC offers services related to business recovery, disputesand investigations.The company's recovery services range from turnaround and restructuring plansto exit strategies.

Through the tax division, PwC assists businesses, individuals and organizations with tax strategy,planning, and compliance, whilst also delivering a range of business advisory services.The companydevelops comprehensive integrated solutions by combining industry insight with the technical skillsof financial and tax specialists, economists, lawyers and other in-house experts. The company has23,000 tax professionals in over 140 countries.

The transaction division offers services related to a range of financial transactions such as mergersand acquisitions, corporate finance, and valuation and strategy.

The human resource services division offers services across three core disciplines: internationalassignments, reward and HR management. The PwC network is one of the world's largest HRadvisory organizations with more than 6,000 professionals in over 100 countries.The HR managementincludes Saratoga, one of the leaders in human capital measurement, benchmarking and strategicapplication of human capital information.

The performance improvement division focuses on financial effectiveness, IT effectiveness andgovernance, risk and compliance business operations of companies.


PricewaterhouseCoopersBusiness Description

HISTORY

PwC was created by the merger of two firms - Price Waterhouse and Coopers & Lybrand in 1998.

Each of the two companies traces their roots back to 150 years. In 1849, Samuel Lowell Price setup a business in London and in 1854; William Cooper established his own practice in London, whichseven years later became Cooper Brothers.

Price, Holyland and Waterhouse entered into a joint partnership in 1865 and in 1874, name of thecompany was changed to Price, Waterhouse & Co.

Robert H Montgomery, William M Lybrand, Adam A Ross and T Edward Ross formed a companywith the name of Lybrand, Ross Brothers and Montgomery in 1898.

Cooper Brothers & Co (UK), McDonald, Currie and Co (Canada) and Lybrand, Ross Bros &Montgomery (US) merged to form Coopers & Lybrand in 1957.

Price Waterhouse World Firm was formed in 1982. In 1990, Coopers & Lybrand merged with DeloitteHaskins & Sells in UK.

Pricewaterhouse and Coopers & Lybrand merged worldwide to create PwC in 1998.

IBM acquired the PwC consulting business in 2002. PwC formed an alliance with Symantec in 2003to offer customers comprehensive security solutions and services.

PwC made a new Performance Risk Management (PRM) advisory service in 2004, which wouldhelp corporations to improve the quality and adequacy of management reporting, especially in thearea of identifying risks that could impact short and long term performance.

In 2005, the company expanded its pharmaceutical and life sciences advisory services group throughthe appointment of three industry veterans Daniel Bartholomew (Managing Director, PwC' WestCoast Pharmaceutical and Life Sciences Advisory Services), Sandy Johnston (Director, PwC' GlobalR&D Performance Improvement) and Neil Patel (Director, PwC' Global R&D PerformanceImprovement).

The company established a Japanese accounting firm, PwC Aarata in 2006. PwC and RSM mergedtheir respective tax practices in India in 2007.

In 2008, PricewaterhouseCoopers was named ‘Accounting Firm of the Year’ by Global InvestorMagazine. PricewaterhouseCoopers LLP acquired assets of New Dimension Solutions, Inc. Theacquisition included a group of client service professionals with significant industry, operational andIT expertise, specifically in EAM implementations.


PricewaterhouseCoopersHistory

PricewaterhouseCoopers was ranked as global leader in Business Advisory Services andManagement Consulting, by Kennedy Consulting Research & Advisory, the leading research andadvisory firm, in March 2009. In April 2009, PricewaterhouseCoopers LLP was named a leader inthe March, 2009 "The Forrester Wave: Information Security And IT Risk Consulting, Q1 2009" reportby Forrester Research. In June 2009, PricewaterhouseCoopers LLP in the US purchased majorityof BearingPoint's North American Commercial Services practice. In November 2009, the firm acquiredcorporate performance management business Paragon Consulting Group.


PricewaterhouseCoopersHistory

KEY EMPLOYEES

BoardJob TitleName

Executive BoardChairman, PricewaterhouseCoopers InternationalNetwork

Dennis M. Nally

Executive BoardChairman and Senior Partner ofPricewaterhouseCoopers UK

Ian Powell

Executive BoardSenior Partner of PricewaterhouseCoopersGermany

Hans Wagener

Executive BoardChairman of the regional Asia Board ofPricewaterhouseCoopers

Silas SS Yang

Non Executive BoardMember of Global BoardPaul Brasher

Non Executive BoardMember of Global BoardNoël Albertus

Non Executive BoardMember of Global BoardSusan Allen

Non Executive BoardMember of Global BoardMark Boyer

Non Executive BoardMember of Global BoardMarco A Castro

Non Executive BoardMember of Global BoardPeter Clemedtson

Non Executive BoardMember of Global BoardMary Ann Cloyd

Non Executive BoardMember of Global BoardGerry Lagerberg

Non Executive BoardMember of Global BoardMurray J Legg

Non Executive BoardMember of Global BoardTim Lui

Non Executive BoardMember of Global BoardJohn Maxwell

Non Executive BoardMember of Global BoardBruce Morgan

Non Executive BoardMember of Global BoardMike Morrow

Non Executive BoardMember of Global BoardDidier L Mouget

Non Executive BoardMember of Global BoardChristoph Schreiber

Non Executive BoardMember of Global BoardRich Sharko

Non Executive BoardMember of Global BoardPeter Tieleman

Senior ManagementNetwork Executive Team memberMatthew Wyborn

Senior ManagementNetwork Executive Team memberBob Moritz

Senior ManagementNetwork Executive Team memberIan Powell

Senior ManagementNetwork Executive Team memberHans Wagener

Senior ManagementNetwork Executive Team memberDonald V Almeida

Senior ManagementNetwork Executive Team memberPaul Boorman

Senior ManagementNetwork Executive Team memberPierre Coll


PricewaterhouseCoopersKey Employees

BoardJob TitleName

Senior ManagementNetwork Executive Team memberRichard Collier-Keywood

Senior ManagementNetwork Executive Team memberMoira Elms

Senior ManagementNetwork Executive Team memberDonald A McGovern

Senior ManagementNetwork Executive Team memberEdgardo Pappacena

Senior ManagementNetwork Executive Team memberJuan Pujadas

Senior ManagementNetwork Executive Team memberJavier Rubinstein

Senior ManagementNetwork Executive Team memberPeter Wyman


PricewaterhouseCoopersKey Employees

KEY EMPLOYEE BIOGRAPHIES

Dennis M. Nally

Board: Executive BoardJob Title: Chairman, PricewaterhouseCoopers International NetworkSince: 2009Age: 57

Mr. Nally has been the Chairman, PricewaterhouseCoopers International Network ofPricewaterhouseCoopers since 2009. He joined PwC in the US in 1974 and became a partner in1985. Prior to being elected US Firm Chairman, Mr. Nally served in a variety of leadership and clientservices roles.

Ian Powell

Board: Executive BoardJob Title: Chairman and Senior Partner of PricewaterhouseCoopers UKSince: 2008

Mr. Powell has been the Chairman and Senior Partner of PricewaterhouseCoopers UK ofPricewaterhouseCoopers since 2008. Prior to that he served as head of PwC UK’s Advisory business.He joined PwC in 1977 and became a partner in the UK firm in 1991.

Hans Wagener

Board: Executive BoardJob Title: Senior Partner of PricewaterhouseCoopers GermanySince: 2003

Mr. Wagener has been the Senior Partner of PricewaterhouseCoopers Germany ofPricewaterhouseCoopers since 2003. Prior to that, he served on the German firm’s ManagementTeam, with responsibility for Financial Services. He joined PwC in 1977 and became a partner inthe German firm in 1987.

Silas SS Yang

Board: Executive BoardJob Title: Chairman of the regional Asia Board of PricewaterhouseCoopersSince: 2002


PricewaterhouseCoopersKey Employee Biographies

Mr.Yang has been the Chairman of the regional Asia Board of PricewaterhouseCoopers ofPricewaterhouseCoopers since 2002. He joined PwC in 1983 and became a partner in the HongKong firm in 1989.


PricewaterhouseCoopersKey Employee Biographies

MAJOR PRODUCTS AND SERVICES

PricewaterhouseCoopers (PwC) is an audit and accountancy firm that provides assurance, tax, and advisory services. The company's key products and services include the following:

Audit and assurance:

Actuarial services Assistance on capital market transactions Corporate reporting improvement Financial accounting Financial statement audit Sustainability reporting IFRS reporting Independent controls and systems process assurance Internal audit Regulatory compliance and reporting Sarbanes-Oxley compliance

Crisis management:

Business recovery services Dispute analysis and investigations

Human resources:

International assignments Reward Human resources management Change and programme effectiveness

Performance improvement:

Governance, risk and compliance Financial effectiveness IT effectiveness

Tax:

International tax structuring European Union direct tax Compliance International assignments Mergers and acquisitions


PricewaterhouseCoopersMajor Products and Services

Transfer pricing

Transactions:

Accounting valuations Advice on fundraising Bid services Valuation consulting Commercial and market due diligence Financial and business economics Financial due diligence Independent expert opinions Mergers and acquisitions advisory (buy and sell) Modelling and business planning Post deal services Private equity advisory Project finance Public company advisory Privatisation advice Regulation, competition and merger economics Structuring services Tax valuation


PricewaterhouseCoopersMajor Products and Services

REVENUE ANALYSIS

The company recorded revenues of $26,171 million during the financial year (FY) ended June 2009,a decrease of 7.1% over FY2008. For the financial year 2009, Western Europe, the company'slargest geographic market, accounted for 42.6% of the total revenues.

PwC generates revenues through three business divisions: assurance (50.2% of the total revenuesduring the financial year 2009), tax (26.4%) and advisory (23.3%).

Revenues by Division

During FY2009, the assurance division recorded revenues of $13,143 million, a decrease of 4.8%over FY2008.

The tax division recorded revenues of $6,918 million in FY2009, a decrease of 7.5% over FY2008.

The advisory division recorded revenues of $6,110 million in FY2009, a decrease of 11.4% overFY2008.

Revenues by Geography

Western Europe, PwC' largest geographical market, accounted for 42.6% of the total revenues inFY2009. Revenues from Western Europe reached $11,155 million in 2009, a decrease of 11.6%over FY2008.

North America and the Caribbean accounted for 34.5% of the total revenues in FY2009. Revenuesfrom North America and the Caribbean reached $9,032 million in FY2009, a decrease of 3.2% overFY2008.

Asia accounted for 10% of the total revenues in FY2009. Revenues from Asia reached $2,627 millionin FY2009, an increase of 1% over FY2008.

Australasia and Pacific Islands accounted for 4.5% of the total revenues in FY2009. Revenues fromAustralasia and Pacific Islands reached $1,176 million in FY2009, a decrease of 13.9% over FY2008.

Central and Eastern Europe accounted for 3% of the total revenues in FY2009. Revenues fromCentral and Eastern Europe reached $778 million in FY2009, a decrease of 9.6% over FY2008.

The Middle East and Africa accounted for 2.7% of the total revenues in FY2009. Revenues from theMiddle East and Africa reached $704 million in 2009, a decrease of 1.5% over FY2008.


PricewaterhouseCoopersRevenue Analysis

South and Central America accounted for 2.7% of the total revenues in FY2009. Revenues fromSouth and Central America reached $699 million in 2009, an increase of 1.2% over FY2008.


PricewaterhouseCoopersRevenue Analysis

SWOT ANALYSIS

PricewaterhouseCoopers (PwC) is an audit and accountancy firm that provides assurance, tax, andadvisory services. PwC remains the world's largest accounting firm with 2008 revenues of $26,171million, ahead of Deloitte, Ernst & Young and KPMG. PwC leverages its leadership among the BigFour to be a preferred transaction (M&A) advisor among other things. However, intense competitionthreatens to erode the company's margins.

WeaknessesStrengths

Adverse publicity due to lawsuitsLeadership among the Big Four accountingand auditing firms Relatively high employee turnoverGlobal presence and broad service offeringshelps the company attract bigger clientsStrong clientele enabling the company winrepeat mandatesDiversified revenue stream lesseningbusiness risk

ThreatsOpportunities

Easing regulatory restrictions could fostercompetition

Increasing demand for compliance solutionsGlobal economic recovery could increasedemand for consulting services Valuation of auction rate securities – shifting

the demand away from Big FourAdoption of IFRS standards could sustaindemand for PwC's services Attacks by fraudsters

Strengths

Leadership among the Big Four accounting and auditing firms

PwC, Deloitte, Ernst & Young and KPMG are known as the Big Four accounting and auditing firms.PwC remains the world's largest accounting firm with FY2009 revenues of $26,171 million, aheadof Deloitte, Ernst & Young and KPMG. In March 2009, Kennedy Consulting Research & Advisory,a leading research and advisory firm, ranked PricewaterhouseCoopers (PwC) number one in BusinessAdvisory Services and Management Consulting in its Global Consulting Marketplace 2008-2011report. PwC leverages its leadership among the Big Four to sustain its growth momentum.

Global presence and broad service offerings helps the company attract bigger clients


PricewaterhouseCoopersSWOT Analysis

PwC operations span across 757 offices in 151 countries with a headcount over 163,545 (as onJune 30, 2009). Leveraging its widespread network, the company has managed to establish its brandimage, which helps it compete effectively against regional players. According to the BrandFinance500 report (2009), the PwC brand was ranked 57, compared to 71 in the previous year. PwC wasranked high compared to the other three in the Big Four. PwC offers a full spectrum of servicesrelated to assurance services, crisis management, tax, human resource, performance improvementand transactions. The company offers tax strategy, planning, and compliance, whilst also deliveringa wide range of business advisory services. A well-diversified portfolio insulates the company fromfluctuations in business operations. In addition, it enables the company to attract bigger clients.

Strong clientele enabling the company win repeat mandates

In the financial year 2009, PwC provided services for 422 of the companies in the Fortune Global500 and 408 of the companies in the FT Global 500. PwC served significantly more than half of thelargest companies in each of its regional markets during the year. In FY2009, the member firms ofPwC audited 30% of the Fortune Global 500; 31% of the FT Global 500; and 29% of the Fortune500 US companies.The company's clients include J.P Morgan Chase, Lloyds TSB Group, AB Volvo,Alcan, DuPont, Electrolux, ExxonMobil, Ford Motor, GlaxoSmithKline, Volkswagen, AT&T, HoneywellInternational, IBM, Lucent, Nippon, Nokia, Raytheon, Samsung, Sony, Viacom and Walt DisneyCompany. Strong clientele enable PwC to win repeat mandates.

Diversified revenue stream lessening business risk

PwC's revenue stream is diversified in terms of business lines and geographies. In FY2009, thecompany generated more than 50% of the total revenues from assurance, its core business line.Revenues from tax services accounted for 26.4% and the revenues from advisory services accountedfor the remaining 23.3%. In FY2009, the company generated 42.6% of the total revenues fromWestern Europe. North America and Caribbean accounted for 34.5% of revenues in FY2009 whilethe remaining was spread across other regions. The company's diversified revenue stream reducesits business risk.

Weaknesses

Adverse publicity due to lawsuits

The company has been facing adverse publicity due to some of the lawsuits filed against it. In 2009,the company was criticized along with the promoters of Satyam, an Indian IT firm listed on the NYSE,in a $1.5 billion fraud. PwC's US arm ‘was the reviewer for the US filings for Satyam.’ Consequently,lawsuits have been filed in the US with PwC as a defendant.Two PricewaterhouseCoopers partners,Srinivas Talluri and S. Gopalakrishnan, have not been exonerated as on February 5, 2010. PwCimage in India was earlier tarnished when its clients the DSQ Software and Global Trust Bank wereindicted in accounting and other scams. Lawsuit related adverse publicity is not limited to India alone.In 2009, the Accountancy and Actuarial Discipline Board, which regulates the profession in the UK,



announced an inquiry in July 2009 into PwC's auditing of Cattles, a sub-prime lender. Adversepublicity may tarnish PwC's brand image which could lead to flight of clients.

Relatively high employee turnover

Among the Big Four, PwC seems to experience higher employee turnover rate which is in high teens.Since the Satyam scam became public, more than 200 professionals left PwC India for other firms,mainly due to adverse reputational impact.This is considered one of the highest and quickest attritionsin Indian professional services. These 200 employees include the 19 partners who left along withDinesh Kanabar, the widely-regarded head of PwC’s tax practice, who joined rival firm KPMG asdeputy CEO in December 2009. These employees, across all level of professional services, haveapparently moved onto other Big Four firms in India - KPMG, Ernst & Young and Deloitte. Highemployee turnover rate not only disrupts business schedules but also increases compensationexpenses. It also contributes to increase in client turnover.

Opportunities

Increasing demand for compliance solutions

The demand for compliance services in Europe and the US has increased, fuelled by large marketexpansions by banks and credit unions and increasing compliance requirement by financial institutionsunder various regulations. The changes mandated by the European Union and Section 404 of theUS Sarbanes-Oxley Act have required companies to spend additional amounts on internal controlsand in applying new accounting and reporting standards. The market for PwC's corporate andfinancial service products is estimated at $1.9 billion, which is growing at a rate 3%--5% annually.With a strong offering in this market the company should see a significant growth in the short tomedium term.

Global economic recovery could increase demand for consulting services

According to the International Monetary Fund (IMF), the global economy registered a contraction of0.8% in 2009, compared to a growth of 3%. In 2010, IMF expects the global economy to register agrowth of 3.9%. Economies across PwC's key markets are likely to see a spur in economic growth.For instance, GDP growth in the US, the UK, Euro area, Japan, and Emerging and developingeconomies are likely to be 2.7%, 1.3%, 1%, 1.7%, and 6% respectively.The global economic recoverycould increase the demand for the company’s services especially consulting services.

Adoption of IFRS standards could sustain demand for PwC's services

According to a November 2008 survey, an increasing number of company finance professionalswould consider adopting International Financial Reporting Standards (IFRS) sooner than the pathrecently outlined by the Securities and Exchange Commission in its proposed IFRS roadmap. About42% of more than 200 finance professionals who responded to the survey indicated they would



consider implementation of IFRS sooner than 2014, if that were permitted under the mandatedadoption date proposed by the SEC.This represents a significant increase from a similar IFRS studyperformed earlier in 2008 that showed 30% of respondents would consider adopting IFRS, if givena choice. Among the leading factors driving companies’ interest in considering adopting IFRS soonerwas simplified financial accounting and reporting and, separately, improved financial reporting andtransparency. Both of these factors were cited by 37% of the companies surveyed that would considerearlier adoption. Companies in the survey that would consider adopting IFRS at an earlier date arepredominantly in the technology, media and telecommunications (TMT), manufacturing and financialservices industries. 57% of respondents from companies operating in the TMT industry would consideradopting before 2014. For financial services, 42% of respondents would consider early adoption.PwC's strong presence in these industries allows it to benefit from the demand for IFRS adoption.

Threats

Easing regulatory restrictions could foster competition

PricewaterhouseCoopers operates in a highly competitive industry. The company faces competitionfrom large players such as Deloitte, McKinsey & Company, Ernst & Young, KPMG and BostonConsulting Group. It also competes with management consulting firms in the strategy implementationand system integration services. Other competitors of the company include Bain & Company, BDOInternational B.V., BearingPoint, Mercer International, Accenture and Capgemini. If the changes inregulations across geographies become laws then competition could increase leading to an adverseimpact on the company’s market share.

Valuation of auction rate securities – shifting the demand away from Big Four

The largest accounting firms – PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & YoungLLP and KPMG (collectively called Big 4) – audit the bulk of the world's biggest blue chip companies.Smaller firms include Rothstein Kass, RSM McGladrey and BDO Seidman.The collapse of US creditmarkets and subsequent stock market decline slashed the value of many investments held by publiclytraded companies. Some companies have accounted for their losses, while others have yet to marktheir positions at the lower market value. An average 84% of companies audited by one of the Big4 have written down the value of their auction rate securities in June 2008 and July 2008. Theaverage write-down was 11.5%. In stark contrast, just 36% of companies whose accounting is auditedby a non-Big 4 firm took write-downs.The average discount was just 8% for companies that did takewrite-downs. A difference of 3.5 percentage points is significant enough to affect bottom-lines ofmany companies.Those companies whose managements disapprove of Big 4’s accounting practicesespecially with regard to the valuation of auction rate securities have started shifting to a non-Big 4firm.

Attacks by fraudsters



Recently PwC became a target of attack for fraudsters. On its website, the company carries newsrelated to a check fraud. Fraudsters mailed bogus checks bearing the logo ofPricewaterhouseCoopers. Accompanying the checks was a letter advising the recipients that theyhad been selected to be ‘secret shoppers.’ The letters guided the potential scam victims to cash thechecks at specific banks, and then wire the funds to another address for use by a second ‘secretshopper.’ Rose Littlejohn, head of PwC's US Security team said that their employees have beenalerted regarding this check fraud. However, there is nothing to prevent the scammers from makinganother attempt. This incident highlights the lapses in security checks and lapses at PwC.



TOP COMPETITORS

The following companies are the major competitors of PricewaterhouseCoopers

BDO International B.V.Deloitte Touche TohmatsuErnst & Young InternationalGrant Thornton InternationalKPMG InternationalBoston Consulting Group, TheManagement Network Group, Inc., TheDeloitte Consulting


PricewaterhouseCoopersTop Competitors

COMPANY VIEW

A statement by Dennis M. Nally, Global Chairman of PwC is given below. The statement has beentaken from the company's 2009 annual review.

The past year has been tough for the world economy. Although we are now seeing the first signs ofa rebound, the recovery has yet to fully take off and there are still potential troubles ahead, such asthe threat of faltering growth and inflation. Until the recovery seems secure, the challenge of dealingwith the effects of a lingering recession will continue to dominate every aspect of business andcommerce.

Governments around the world played their part in restoring confidence by taking dramatic steps tostimulate growth. These stimulus programmes have started to show some positive results, aided bythe closer coordination that has emerged among countries around the world in their responses tothe downturn.

At the same time, national regulators have begun to implement schemes to prevent a recurrence ofthe financial meltdown. It is necessary, however, to take a careful and considered approach to suchchanges to the regulatory environment in order to strike the critical balance between control andfree markets. The goal must be to develop regulation that minimises future problems withouthampering entrepreneurial spirit. Businesses, by their nature, must take risks in order to succeed.Finding the right level of risk, and understanding what that risk really entails, is the key challengefor both entrepreneurs and investors.

There couldn’t be a more exciting time to lead a professional services network such as PwC, giventhe uncertainty ahead for the global economy and the challenges and opportunities it will presentfor us and our clients. I’m honoured by the confidence that the PwC network has shown in electingme as Global Chairman. In this role, I work closely with the other members of our Network LeadershipTeam (NLT): Bob Moritz, senior partner of the United States firm; Ian Powell, senior partner of theUnited Kingdom firm; Hans Wagener, senior partner of the Germany firm; and Silas Yang, seniorpartner of the China firm.

The responsibility of the NLT is to encourage and foster closer cooperation across our network, andto become more nimble, responsive and effective in everything we do. To protect and enhance ourmarket-leading brand, we will work to embed throughout the PwC network a culture of quality andexcellent service that makes clients eager to work with us. In pursuing these aims, we all owe a debtof gratitude to my predecessor, Samuel A. DiPiazza, Jr., for his years of visionary leadership andfor carrying on the long tradition of entrepreneurial excellence at PwC.

As for so many of our clients, FY 2009 was a challenging business period for PwC, and it is hearteningto report that many of our firms and business sectors performed well in difficult circumstances.Globally PwC’s revenues in local currency terms were slightly up from the previous year, even asthe formerly steady growth in demand for our services slowed. Adjusted for foreign exchange


PricewaterhouseCoopersCompany View

fluctuations, however, our gross revenues fell, due primarily to the strength of the US dollar. Overall,the PwC network had total gross revenues for FY09 of US$26.2 billion. Our performance was ledby the strength of our core Assurance business, where revenues rose by two percent to US$13.1billion. Our Tax revenues also held up well, remaining steady at US$6.9 billion. Given the cyclicalnature of its business, Advisory revenues were down by 3% to US$6.1 billion a strong performancein the circumstances. Advisory revenues were impacted by the sharp decline in transactions anddeal-related work, as well as cutbacks in discretionary spending by our clients.

Despite the economic downturn, PwC member firms in places as diverse as Spain, the Middle East,Russia and Japan all performed strongly and posted impressive revenue growth. This resilientperformance provides us with a robust platform from which to serve clients in the recovery and thecontinued ability to invest in our network for the future. For organisations, including our own, toemerge successfully from the downturn, business leaders across the world will need confidence intheir vision and the courage to take action.The ability to anticipate market changes, and particularlyto manage risk effectively and responsively, will characterise the best performers as the upturngathers pace. Now is not the time for faint-hearted management, but for conviction and the agilityto meet change head-on. For PwC, this means maintaining an unwavering focus on our provenlong-term strategy to excel in the marketplace, by delivering the distinctive PwC Experience to ourclients and our people even amid the difficulties posed by the current economic environment. Oneexample of PwC’s strategic focus on the future was the acquisition of substantial parts ofBearingPoint’s business in the US and Japan to make our Advisory business more competitive. PwCUS acquired the majority of BearingPoint’s North American Commercial Services practice, assumingselected contracts and increasing the US firm’s Advisory client service staff by 800 professionals,providing additional consulting expertise across multiple industries. PwC US also acquired two GlobalDelivery Centres in Shanghai, China and Bangalore, India that will enable us to provide our clientswith expanded global sourcing capabilities and cost advantages. Meanwhile, PwC Japan acquiredall of BearingPoint’s Japan consulting and technology business, adding some 1,500 professionalsand positioning PwC Japan as the country’s clear leader in Advisory services. In combination, thesestrategic acquisitions will accelerate the growth of our Advisory business, increase our market sharein two of the world’s largest markets, and expand the ability of the PwC network to meet the needsof complex global organisations.

As part of our strategy to prepare for recovery, PwC member firms across the world worked hardthrough the downturn to sustain both our business and our employees. While ever-conscious of theneed to keep a tight rein on costs, we were determined to remain committed to our people and onlymake large-scale reductions in our workforce an action of last resort. So, despite the downturn, PwCmember firms continued to recruit and retain the best talent in FY 2009.

During the year, PwC member firms hired around 30,000 new people, increasing our total workforceto over 163,000. While local circumstances resulted in layoffs in a few countries, our member firms,by and large, retained their high-performing people, using innovative strategies such as sabbaticalsand reduced hours where necessary. By continuing to invest in our people, we are positioning PwCto handle a global pickup in demand for our services as the eventual recovery gains momentum.



Talented professionals are our number one asset at PwC and attracting top talent from around theglobe is a key priority for us.To help us keep attracting top talent we strive to be known as a networkthat cultivates and develops individuals by fostering a culture of coaching and development thatprovides all our people with the opportunity to achieve their potential. In recent years, advancingglobalisation has intensified the importance of having a diverse and inclusive workforce, while alsoaccelerating the pace at which businesses must adapt to change. We recognise that we will onlyenjoy success in the long term if we consistently share the tremendous skills and experiences ofour people by providing them with opportunities outside their home countries. Without doubt, thoseorganisations that truly recognise the critical role played by diversity and mobility in sustaining aproductive, loyal workforce gain a clear competitive advantage over those that do not. Again, inFY09, PwC’s innovative human resource initiatives were recognised by numerous externalorganisations. Among other honours, PwC was ranked as the leading organisation for Global Diversityby DiversityInc, ranked among the 100 Best Companies to Work for by Fortune magazine, and wasamong the top 10 companies on Working Mother’s best workplace list. Rather than rest on theseachievements, we continually seek to improve and to increase diversity at all levels within PwCmember firms.

The views of a wide range of stakeholders who have an interest in what we do governments,regulators, investors, and others who think and care about capital markets and wealth creation areimportant to us, and throughout the year we have engaged in dialogue with them, both locally andglobally. Similarly, PwC remains fully engaged in corporate responsibility programmes around theglobe. In partnership with the United Nations High Commissioner for Refugees, we have madeprogress toward our goal of providing schooling, and in many cases a life-sustaining haven, throughour Educating the Children of Darfur project in the refugee camps of Chad.

The programme exemplifies our view of corporate responsibility, which encompasses our actionsto sustain the environment, our donations of professional services and financial contributions to ourcommunities, our commitment to foster our people, and our unwavering dedication to integrity,respect and fairness in our behaviour in the marketplace. FY09 also presented us with difficult issuesaside from the tough business conditions.The widely-publicised issues at former audit client SatyamComputer Services in India have presented a significant challenge.

With the assistance of expertise from across the PwC network, the PwC member firms in India aredoing all they can to rebuild their reputation and reward the confidence clients there have shown inus. Among the steps taken by the Indian member firms are the appointment of an outside board ofadvisors and appropriate management changes. For the accounting profession in general, therecession has not only impacted growth, but has also triggered criticism of accounting standards.Some commentators have claimed that financial reporting by banks and other institutions made thecredit crunch much worse than it need have been. These critics blame the credit freeze on the useof Fair Value accounting, which requires financial institutions to carry, at market value, financialassets such as mortgage-backed securities.

In PwC’s view, such criticism is misplaced, as it confuses the cause of the financial meltdown withthe methodology used to report it. Fair Value reporting did not cause the problem; rather, it madetransparent to investors the extent of the weakness in a system overburdened by risk. Fair Value



remains the best means available to inform investors and provide accurate, transparent informationin highly volatile markets. We agree that the current Fair Value standards are not perfect, and wesupport initiatives by the standard setters to clarify some aspects of Fair Value reporting. But FairValue reporting is far from being the problem; it is part of the solution to avoiding another credit crisisin the future.

The debate over Fair Value also underlines the need for global accounting standards for theprofession. PwC has supported the adoption of International Financial Reporting Standards sincetheir conception. Over 100 nations now use these global standards.The US has adopted a sensible,measured timetable for considering IFRS, leading to potential full-scale adoption. Large US companiesincreasingly are using the global standards in their dealings with global customers, suppliers, andsubsidiaries overseas. We believe adoption of IFRS by the US is in the interests both of the US itselfand the global economy. In contrast, a failure by the US to adopt the global standard could leave itisolated and reduce the competitiveness of its markets.

FY 2010 is likely to be another challenging year, both for PwC and our clients. We expect demandfor our services to remain steady, growth to be somewhat below levels of the recent past and thecurrent hyper-competitive environment to continue. And while most economists predict that a recoveryeither has begun, or will begin soon, they also say it will be slow to gain speed.

Our focus throughout the downturn has been on helping our clients manage their way through thesedifficult times and emerge stronger. Our clients continue to value our insights and services as anadvisor who can help them understand the risks and capitalise on the opportunities of the nexteconomic cycle. Our ability to engage in this way with clients and indeed with all our stakeholders willset the stage for long-term relationships and shared success.

Looking across the entire professional services marketplace, we believe PwC has the best andstrongest network to help our clients succeed. We see opportunities emerging in the recovery, inindustry sectors such as healthcare, financial services and infrastructure, and we are primed to helpour clients capitalise on them. We’re positioned to anticipate our clients’ needs and respond with aquality of service that sets us apart. To deliver this service, we’ve built a great workforce whosecapabilities and commitment to clients continue to astound me every day.

There are better times ahead. What is clear to me is that organisations that choose to invest in theirfutures and manage through these difficult times with optimism, will be the ones best placed to thrive.I look forward to leading the PwC network through the future challenges and to helping both us andour clients to succeed.



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