pwc luxembourg annual review 2010 · annual review 2010 5 recruitment of more than 300 people our...

PwC LuxembourgAnnual Review2010

www.pwc.com/lu/annualreview

Reviewing 2010, looking forward to 2011

PwC Luxembourg (www.pwc.com/lu) has about 2000 professionals from 53 different countries. PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice.“PwC” is the brand under which member firms of PricewaterhouseCoopers International Limited (PwCIL) operate and provide services. Together, these firms form the PwC network. Each firm in the network is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way.

Our Clientspage 8

Our Peoplepage 14Editorial

page 2

Our Firmpage 18

Summary

Glossarypage 24

2 PwC Luxembourg

Editorial

Didier MougetManaging Partner PwC Luxembourg

Annual Review 2010 3

A strong performanceThe majority of PwC Luxembourg revenues come from our local market but our services are heavily impacted by the international markets. In a very difficult global economic context, global GDP showed only a modest recovery in the year to June 30, 2010. Luxembourg has suffered from this unstable environment, the country deficit has amplified, and relations between the Government, economic actors and union’s representatives experienced increased tensions. However, Luxembourg has also been able to transform those challenges into opportunities and while the fall in Luxembourg was similar to the rest of Europe, the recovery trend seems to be stronger in the Grand- Duchy than in other European countries.

In this adverse context, our financial performance has been strong. Our revenues increased by 3.1% with a turnover reaching € 233 million.

These strong results can be explained by our commitment to invest in our people, our clients and our business while developing innovative solutions and attracting some key international investors to develop new activities in Luxembourg.

Our willingness to invest was particularly strong in our advisory business which we reshaped to enhance its contribution to our firm. This reorganisation has led to a new level of ambition for our advisory practice and has resulted in strategic hires to boost our market impact.

Today, we are a strong leader in our profession with almost 2000 people fully committed to serve our clients and our communities.

€ 233 million

turnover of

3.1%increase

in revenues

4 PwC Luxembourg

Awards & recognitions

• Best Audit firm

• Best Risk Management firm

• Best Financial Advisory firm

• HR team of the year

• Best HR consulting firm

• Best CSR marketing initiative of the year

• IT One ICT Awards for Best ICT Strategy Company

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2010


recruitment of more than

300 people

Our promise“build relationships and create value”Investing in our peopleDuring our financial year (July 09 to June 10), we continued to invest in our future. These investments included the recruitment of more than 300 people. We promoted 14 new directors and 118 new managers. We also co-opted 10 new partners to further develop our expertise in the different fields, to better connect with our clients and to help promoting the Luxembourg place. This brings the total number of partners to 95.

We are very proud of our people. Their ethics, their behaviour, their commitment to quality and to the firm are outstanding. They have shown solidarity during these last two difficult years. I would like to thank them all for their considerable contribution to our success.

Adding value to our clients In these times of instability, our priorities have been to focus on quality and to remain close to our clients. Through client satisfaction surveys and detailed market research, we gain a better understanding of the issues they are facing and develop solutions and services which help them creating value for their business. I would like to thank all our clients for the continued trust extended to our firm.

New brandingPwC has refreshed its branding in order to strengthen and modernise how it represents its worldwide network to its clients, its people and the communities in which it operates.

The new branding includes a simplified logo consisting of the initials “pwc” in lower-case type and new colours, but our brand encompasses much more than that. It is our promise to our clients, to our people and the market place to “build relationships and create value” with them. This formal shortening of the brand name will provide consistency and ease of use for PwC firms around the world. “PricewaterhouseCoopers” remains the full name of the global organisation for legal purposes and will be the name used by PwC firms to sign company audits.

new managers

14 new directors

11810 new

partners

6 PwC Luxembourg

Our brand promise:“My relationship with PwC helps me create the value I’m looking for”. This sentence sums up what we want our clients and people to say about their relationship with us – everyday, everywhere. As we put ourselves in our clients’ shoes, we aim at building strong, lasting and productive relationships in order to add value.


Preparing the futureAt PwC Luxembourg, all of our actions are based on a long term view of the Luxembourg economy. In this respect, we will continue to build relationships and create value in the different markets which can be of interest to the Grand-Duchy.

In particular, we have identified five themes around which we intend to articulate our long term development:

• attract new economic players in Luxembourg,

• strengthen the Luxembourg economy by making it the growth engine of the Greater Region,

• embrace the Green/sustainability revolution,

• develop an international “intellectual property” hub,

• build an efficient knowledge-based economy.

Over the last twelve months we have launched concrete initiatives around these five topics. From our sharp focus on China, our contribution to the emergence of a truly economically integrated Greater Region to our first Green survey, whose results will be published shortly, we are more than ever committed to these themes. We believe they will provide real growth potential to our firm and the Luxembourg economy for the decades to come.

However, the competition between countries to attract economic players and activities will increase within the coming years.

To consolidate and further develop our financial centre, to diversify the economy and better promote Luxembourg across borders are objectives within our common reach but they will require a high degree of cohesion and determination at all levels of the country. As far as it is concerned, PwC Luxembourg is highly committed to these objectives.

Didier MougetOctober 20, 2010

Our Clients

8 PwC Luxembourg


Helping our clients to create valueAt PwC Luxembourg our clients are of many shapes and sizes and come from a broad spectrum of activities: from the financial sector, including asset management, banking and insurance; from the industrial and commercial sector and of course from the public sector.

They nonetheless share one common aspiration, they want to create value for their business. Thanks to our deep skill and expertise sets, we can help them provide their various stakeholders with comfort, increase their tax and operational efficiency and reach for new markets and opportunities.

Staying close to help create valueIn 2010, we had once again many opportunities to help our clients resolving complex issues in a very demanding regulatory, tax and business environment. From creating an impact fund for an African NGO supporting the development of sustainable agriculture in Kenya, to restructuring the capital of a major logistics company, we combined our different skills to deliver innovative solutions.

10 PwC Luxembourg

Besides serving our existing clients, we have been very active in attracting new ones to Luxembourg. Last year, our partners and directors spent more than 4,000 man/days abroad prospecting clients and markets for our firm, but also to the benefit of the Luxembourg economy.

Our country programmes are the mechanism we use to project ourselves across borders. They are either specialised by industry or mobilise the entire firm. This year we focused on five geographical areas which we believe offer great potential: China, Middle East, Russia, South America and India. Through a combination of market research, road shows and secondments we constantly map our opportunities in these areas and carefully and relentlessly focus on them.

• One China day organised in Luxembourg in April 2010, exploring opportunities for local companies in the financial, industrial and commercial sectors in China,

• Organisation of two interactive sessions between the Ministry of Economy and key Chinese business leaders to increase their awareness about the advantages Luxembourg offers,

• Active participation to the Luxembourg week at the World Expo in Shanghai in October 2010,

• Strategic sponsorship of the Chinese Global Summit gathering senior executives from Chinese and European business communities in Luxembourg on November 21-22, 2010,

• Five different prospection trips to approach Chinese players in the asset management, banking and industrial sectors.

The World Expo in Shanghai was the ideal opportunity for us to extend our programme of activities targeting the Chinese economy. Among many other initiatives we can quote:


Our investments in economic and financial research allow us to observe the Luxembourg economy through many angles and develop several thought leadership initiatives such as our report on Third Sphere funds which stimulated the discussions around the concept of sustainable investment. Another example is our “Ideal Advice” report which led to important debates in the financial services industries at major fund conferences around Europe.

This ongoing investment in our clients and their business issues allowed us to grow our revenues in 2010 and to increase our number of clients across all different segments. Our market shares in all key industries such as asset management, banking or real estate have been maintained at a very high level and sometimes increased.

Luxembourg Market-Largest auditors Total number of funds and sub-funds

X19.48%

Y18.41%

Z16.43%

Others2.91%PwC42.77%

Source: Fitzrovia, 31/12/2009

Note: gross revenues are inclusive of expenses billed to clients.

Our gross revenues by service lines can be broken down as follows

2010 (EUR million)

Statutory Audit 116

Other Assurance Services 24

Download these publications on our website: www.pwc.com/lu/publications

Other Services

Tax 49

Advisory 44

Total 233

12 PwC Luxembourg

Commitment to audit qualityWe are committed to assuring the highest standards of quality at all stages of our service delivery; from our client acceptance process right through to the execution and completion of our audit work. Prior to accepting a client mandate we carry out a rigorous screening procedure to make sure that we only work with reputable companies or family businesses. This process asks questions about how the business is run and looks into topics such as beneficial ownership and compliance with anti-money laundering legislation.

Compliance with International Standards on Auditing (ISA) requires the firm to have a system of quality control over its audit practice. These controls are embedded as part of the firm’s day-to-day activities. The quality control system is in compliance with International Standard on Quality Control 1 (ISQC1), issued by the International Federation of Accountants (IFAC).

The PwC network member firms use consistent audit methodology and processes for all audit engagements. The methodology is enhanced as necessary to respond to the changing environment. All audit engagement partners and staff receive ongoing training in this methodology. To complement the Global policies and procedures, the firm has comprehensive policies and procedures governing our audit practice. These policies and procedures are constantly updated:• to reflect new professional

developments and our operating environment; and

• to address emerging issues, as well as the needs and concerns of the practice.

“Quality assurance is, and will continue to be, embedded into our firm’s structures, reviews, processes, management and organisation”. Pascal RakovskyAudit Leader, Deputy Managing Partner


These policies not only cover professional and regulatory standards, but also reflect the guidance that we provide to our professionals about how best to implement them. They are available in electronic files and databases, are regularly updated or supplemented for all current developments and are accessible to our people remotely at any time.

The work of PwC Luxembourg itself is subject to regular reviews. In our case these come from several sources: our own internal audit, the PwC global network’s quality review, the Luxembourg Institut des Réviseurs d’Entreprises (IRE) review and the Commission de Surveillance du Secteur Financier (CSSF) review as public supervisory authority for the Luxembourg audit profession.

Consultation is a key element to quality control. PwC Luxembourg has formal protocols setting out the circumstances under which consultation is mandatory. The firm is supported by technical experts who track new developments in accounting, auditing, tax, regulatory and other relevant areas and provide updates to the appropriate professional staff. Our consultative culture means that our engagement teams regularly consult with experts and others beyond those that are formally required. Via the PwC global network’s quality review, one third of audit partners’ work is reviewed every year by other audit practices in the PwC international network. In addition to such controls, at PwC Luxembourg we also annually perform internal reviews of the audit work of those partners who have fallen outside the scope of the global network’s quality review.

As stated by our Management Board “Quality assurance is, and will continue to be, embedded into our firm’s structures, reviews, processes, management and organisation and we confirm the effectiveness and functioning of our internal quality control processes”.

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Our People

14 PwC Luxembourg


Invest in PeopleDuring 2010, PwC Luxembourg hired more than 300 new people bringing our head-count to nearly 2,000 people as of today. According to STATEC this positions PwC as the 11th employer in Luxembourg.

Despite the downturn, we remained determined to preserve our pyramid of talents, keeping our focus always on the mid-long-term. Therefore, we have continued to invest in young and promising graduates in order to prepare for the future.

For more experienced profiles, we carried on recruiting at a fairly high level based on proven experience and strong business cases.

Wherever possible, we sourced our need for senior people from the PwC Global network in order to maintain the dynamic of our international exchanges and worldwide connections.

In this second year of economic uncertain-ties, we kept on adhering to our key principles:• selectivity to boost our talents,• solidarity to preserve our people.

As a result, we have continued caring about offering development through promotions, training programmes, international exchanges and rewarding good performers with bonuses, though the financial compensation increase was globally positive but moderated to reflect current context and constraints.

Our People represent our transformation force. Through their agility, curiosity and willingness for continuous learning, we can address the current pace of change and the emergence of new business models and services”.Rima AdasPartner, Human Capital Leader

PwC is the 11th employer in Luxembourg

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16 PwC Luxembourg

Flexibility was the first step and mobility the second! It became obvious that unlocking the potential of our People was lying in an active redeployment of our talents across our lines of services and various expertises. We grew considerably our internal mobility in all directions combining temporary and permanent transfers. The feedback of such an experience brought us very positive messages: we were not only able to address concentration of workload by moving our people adequately but we also expanded their horizon and fostered their knowledge capital.

Mobility mindset was also internationally deployed as our organisation breathes “worldwide” and it is vital for PwC Luxembourg to maintain connections with the various corners of a global business community. Over this last year, again nearly 90 people participated to an international exchange programme with us and more than 60 were sent within our network in many different countries.

Mobile MindsetHaving the right People at the right place is a strategic challenge for the whole organisation. Flexibility is now embedded in our corporate culture but also in most of our working patterns.

Various possibilities can be voluntarily mobilised to adapt our people’s working time to their effective individual activity level.

Our Flexi-time mechanism enriched with a range of financially sponsored time options such as career break, additional holidays or social engagement, allowed us to manage our salary costs while preserving the employment relationships.

PwC people diversityDiversity through nationalities and gendering!At PwC Luxembourg, we have the privilege of sharing our working time with 57 different nationalities but also of enriching our professional collaboration with a unique gendering mix.

We enjoy a balanced representation of women (51%) and men (49%) in our organisation and, with 27% women forming part of our partnership, we trust to have opened an inspiring path to all the younger talented women in our firm and outside.

Flexibility was the first step and mobility the second!

We enjoy a balanced representationof women and men in our organisation 49%

men

51%women


Diversity through open communication!Here it is all about points of views that were collected through our annual “Global People Survey”, which registered an impressive response rate of 82%.

This record participation brought us precious highlights for our future orientations. We acknowledge that times in which rewards are moderate while the amount of effort is still sizeable may alter the engagement of our people.For that reason, we are committed to promoting a supportive working environment:• by proposing state-of-the-art training

solutions,• by encouraging entrepreneurial and

innovative people, • by caring about feedback and individual

recognition.

We are very encouraged by the recognition of our strengths as represented in the illustration below:

Our Strengths

among our people

57nationa- lities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

84 14 2

85 12 3

78 13 4

62 13 5

79 16 5

PwC Leadership is committed to providing high quality products and services to external clients

PwC is a thought leader in my marketplace

PwC is doing a good job of responding to changes in the marketplace

We respond quickly to client needs and issues

at PwC we are continually improving the quality of our products and services

% Favourable

% Neutral

% Unfavourable

Our Firm

18 PwC Luxembourg


The PwC global networkPwC Luxembourg is a member of the PwC global network of separate and independent member firms operating locally in countries around the world. The member firms are linked together exclusively through membership in PricewaterhouseCoopers International Limited (PwCIL), a UK membership-based company. By joining PwC International, and becoming part of the PwC global network, a member firm obtains the right to use the PwC name and gains access to the common resources, methodologies, knowledge and expertise shared among the member firms. Each member firm also agrees to abide by PwC International’s common standards and policies. Each PwC member firm engages in quality control and compliance monitoring activities, covering the provision of services, ethics and business conduct, and independence issues.

By working together, the PwC member firms form a robust and dynamic worldwide network. Hence, together we are able to serve a broad range of clients: from large, publicly-listed multinationals to small, private, domestic companies.

The PwC global network covers 154 countries with a total strength of more than 161,000 people.

The structure of the PwC network gives its member firms additional strengths: a deep understanding of local markets; the sense of individual responsibility and initiative that comes from having a stake in the practice and the ability to serve global clients with the same highest quality in standards wherever they operate.

PwCIL does not provide services to clients and no member firm acts as its agent. Its primary activities are to: identify broad market opportunities and develop associated strategies, strengthen internal services, skills, and knowledge networks, promote the PwC brand; and develop and work for the consistent application of common risk and quality standards by member firms, including compliance with independence processes. PwC International has no right or ability to control any member firm’s exercise of professional judgment. PwC International does not have any liability for the acts or omissions of any member firm.

PwC Luxembourg has always been willing to play a role in the network, a role going beyond our economic weight. In this context, several of our partners carry out regional and global responsibilities:

These roles help PwC Luxembourg to have a word on the overall governance of the network, to communicate about its specificities, but also make Luxembourg a better known place for doing business.

PwC global network: 154 countrieswith a total strength of more than

161,000 people

At the Global level of our network

Didier Mouget Member of the PwC Global Board

Marc Saluzzi Global Asset Management Leader

Kees Haage Global Real Estate Leader

At the Central Cluster level

John Parkhouse Central Cluster Asset Management Leader

Anne Murrath VAT Financial Services Central Cluster Leader

20 PwC Luxembourg

The majority of PwC Luxembourg’s shareholders are registered auditors (“réviseurs agréés”) and/or members of the Ordre des Experts-Comptables (OEC).

The firm is also registered with the Public Company Accounting Oversight Board (PCAOB - the US supervisory agency for auditors) and with the Japanese Financial Services Agency (JFSA - the Japanese capital markets supervisory authority).

PwC Luxembourg has two fully owned subsidiaries which are PwC ACADEMY S.à r.l. and PwC TASC S.à r.l.

PwC Luxembourg’s Management TeamsThe Management BoardPwC Luxembourg has a Management Board namely CLT (Country Leadership Team) that has overall responsibility for the strategic, business, operational and financial management of the firm. This Board is currently made up of eight partners, representing each of the firm’s strategic areas.

PwC LuxembourgAt PwC Luxembourg we are very much aware of the position of trust that we are granted by our clients and the market. We have implemented structures and standards to ensure the ongoing independence and integrity of all our people in all of our activities and at all levels of the firm. These also include standards on how we interact with other firms in the PwC global network.

PricewaterhouseCoopers S.à r.l. (“PwC Luxembourg”) is a limited liability company by shares incorporated under Luxembourg law and is registered with the Luxembourg Trade and Companies Register under number B 65477. It is owned by individuals practicing audit, tax and consulting in Luxembourg and by Luxfide S.à r.l., a limited liability company by shares incorporated under Luxembourg law and also registered as auditor (“cabinet de révision agréé”). Luxfide is exclusively owned by shareholders who are all individuals practicing audit, tax or consulting in Luxembourg. PwC Luxembourg is itself registered as auditor (and is a “cabinet de révision agréé”) as per the Law of 18 December 2009 on the audit profession.


Current members of the Management Board are:

The Supervisory BoardBesides our Management Board, our main governance body is our Supervisory Board. This Board is currently made up of five partners elected by their peers.

Supervisory Board members are:

The CommitteesThe Luxembourg firm is managed through the following committees reporting to the Management Board:

Functional Committees• Human Capital• Markets• Operations• Risk and Quality

Management Committees• Audit• Tax• Advisory

Industry Group Committees• Asset Management• Banking• Hedge Funds• Insurance• International Structures• Operational Companies• Private Equity• Public Sector• Real Estate

Management Board

Didier Mouget Managing Partner

Pascal Rakovsky Audit Leader, Deputy Managing Partner

Rimas Adas Human Capital Leader

Luc Henzig Market Leader Commercial and Public Sectors

Jean-François Kroonen

Advisory Leader

Valérie Piastrelli Operations Leader (COO)

Wim Piot Tax Leader

Marc Saluzzi Strategy and Market Leader Financial Sector

Supervisory Board

Thierry Blondeau Chairman

Pierre Krier Member

Steven Libby Member

Anne-Sophie Preud’homme Member

Serge Saussoy Member

22 PwC Luxembourg

CommunityEven in difficult times, we have decided to maintain our support to cultural institutions, such as MUDAM and Centre Culturel de Rencontre Abbaye de Neumünster (CCRN) as well as to welfare activities like Relais pour la Vie or Postlaaf. We also encourage our staff to volunteer in social projects with work time allocated to supporting humanitarian initiatives. Over the past year, PwC Luxembourg donated more than EUR 255,000 to non-profit and community organisations and contributed about 750 volunteer hours to community projects.

In addition, PwC actively contributes towards eradicating malaria by collecting funds for the Against Malaria Foundation through various staff initiatives. As a result, 9,600 bed nets were distributed in Malawi.

EnvironmentProtecting our environment is a responsibility that we take very seriously and we do our best to use resources with care. Specific actions, like waste management, mobility or eco-driving involve more and more people and make our “Green Strategy” visible in everyday life.

For the fifth time in a row now, PwC was awarded the SuperDrecksKëscht Label from the Ministry for Sustainable Development and Infrastructure.

We pay a lot of attention to our greenhouse gas emissions and try to minimise their impact in many things we do. For instance, the junior and senior cars selected this year allow us to decrease the average carbon footprint of our fleet to 127g/km (- 20 % during the last 2 years).

At PwC Luxembourg, we believe that we have a strong responsibility towards the community in which we live and work, and that giving back is essential. Each year, we extend a significant contribution towards several projects in the fields of Community, Environment, People and Marketplace and this is part of our long-term commitment to create a positive and sustainable impact.

Corporate and Social Responsability

PwC Luxembourg

contributed about 750volunteerhours to community projects.

Distribution of

9,600bed nets in

Malawi


Moreover, all major events organised by PwC Luxembourg are now subject to a CO2 compensation, which gives us the opportunity to support projects that help reduce carbon emissions around the world.1

PwC Luxembourg has also subscribed to an Ecomix contract with the Luxembourg Energy Office. Our offices are now fully powered by electricity from renewable energy sources.

PeopleWe believe that our people are essential to the value we deliver to our clients and that they deserve the best. Therefore, we insist on providing a working environment that puts people first. Our code of conduct specifies that “we treat each other with dignity, fairness and respect”. We also encourage diversity at all levels, we promote wellness & health programmes and we offer attractive ways of organising one’s time, on and off-the-job. Education is also an aspect in which we continuously invest, as a key factor for development and success.

MarketplaceAt PwC Luxembourg we consider that our leading position gives us the duty to contribute to the economic development of our entire community. We actively promote the Luxembourgish marketplace with more than 4,000 man/days spent abroad and we continuously support initiatives such as the translation into Chinese and Russian of our “Luxembourg: Where Else?” publication, which was created in collaboration with the Luxembourg Chamber of Commerce (CCL). PwC Luxembourg is also a dynamic member of and/or contributor to various public and private committees and working groups (IRE, Haut Comité de la Place Financière, CSSF, CAA, ACA, ABBL, ALFI, Profil, Fedil).

“we treat each other with dignity, fairness and respect”.

We have decreased the average carbon footprintof our fleet to 127g/km -20%

during the last 2 years

1 In partnership with myclimate.

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24 PwC Luxembourg

Glossary

ABBL association des banques et banquiers Luxembourgwww.abbl.lu

ACA association des Compagnies d’assuranceswww.aca.lu

ALFI association of the Luxembourg fund Industrywww.alfi.lu

CAA Commissariat aux assurances www.commassu.lu

CSSF Commission de surveillance du secteur financierwww.cssf.lu

Fedil fédération des Industriels luxembourgeoiswww.fedil.lu

Greater Region

describes the area of saarland, Lorraine, grand-duchy of Luxembourg, rhineland-Palatinate, Wallonia, the french Community of belgium and the german-speaking Community of belgium.

ICT Information and Communication Technologies

IRE Institut des réviseurs d’Entrepriseswww.ire.lu

ISQC1 International standard on Quality Control 1www.ifac.org

JFSA Japanese financial services agencywww.fsa.go.jp

OEC ordre des Experts-Comptableswww.oec.lu

PCAOB Public Company accounting oversight boardwww.pcaobus.org

Profil fédération des professionnels du secteur financierwww.profil-luxembourg.lu

STATEC service central de la statistique et des études économiqueswww.statec.public.lu

Photos: Etienne delorme pour MkE (page 2).Conception: lola

To view the web version of this report, visit:www.pwc.com/lu/annualreview

© 2010 PricewaterhouseCoopers s.à r.l. all rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

pwc luxembourg annual review 2010 · annual review 2010 5 recruitment of more than 300 people our...

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