2005 Annual ReviewLuxembourgPerspectives*

Luxembourg has always proven its reputation to create flexible and innovativesolutions to develop existing and new markets; our firm benefits from thesubstantial developments of the local marketplace. Over the last twelve months, we performed well with a revenues growth above expectations, reinforcing ourposition as a market leader in 2005. This growth, the strongest in three years,results from an increasing demand for our services in all competencies and in allindustries and is a testimony of our multidisciplinary approach. Indeed, whilefinancial markets and the fund industry continue to grow significantly, the number of new large assignments won in the non-financial sector had a positive effect on our revenues.

Moreover, specifically for audit activities, we have felt the effects of the significantreforms undertaken by regulators, all over the world during the last 5 years.

This increasing demand for our services requires more and more experienced and qualified professionals. I am very proud to announce that todayPricewaterhouseCoopers Luxembourg counts more than 1,000 People. And we arestill actively recruiting. Our People growth gives an additional weight to our firm bothas a major local player but also in the global PricewaterhouseCoopers network.

In a People business like ours, retaining qualified professionals is also essential.Consequently, training, personal career program, mobility, working environment,gender diversity… are some of the priorities we are working on to develop our People as far as their talent and ambitions will take them.

To conclude, I take the opportunity of this letter to underline that atPricewaterhouseCoopers we are committed to being socially responsible to the community in which our People work. As you will see in this report, we areconstantly seeking ways to share our knowledge and energy to give value back tosociety and the environment.

We hope that the first edition of this publication helps you familiarise yourself withrelevant facts and figures of PricewaterhouseCoopers and brings over our wish inenhancing value for both our People and our Clients.

Marie-Jeanne Chevremont-Lorenzini

Connecting strategyand perspectivesA letter from Marie-JeanneChevremont-Lorenzini,Territory Senior Partner

Our priorities for 2006:

• strengthen the quality of our services

• develop our services for non-financial companies and the public sector

• continue to recruit and todevelop our resources

• further boost specialisationof our People in marketniches

• enhance the promotion of Luxembourg abroad

Market leaderpositionreinforced in 2005

Our revenues grew by around 17 percentto EUR 109.3 million in fiscal year 2005.

Unlike 2003-2004, our growth was notonly a result of new regulatorydevelopments but a consequence of the following three factors:

• A thriving financial centre which hasbenefited from better investmentconditions and a booming fundbusiness. Luxembourg is becoming thecentre where the European industryconsolidates its product ranges.

• The ongoing progress made inidentifying and defining new niches for Luxembourg. Real estate, privateequity and securitisation structures are currently flourishing anddemonstrate once again the country’sability to develop new and fastgrowing business opportunities.

• The structural changes impacting the non-financial sector. Variousfinancial structures, which have been attracted to Luxembourg by its sound and stable businessenvironment started developingsubstance. This has already generatedsubstantial investments in theLuxembourg economy.

These current market conditions are not the simple outcome of luck. Theyresult from the efforts made by theLuxembourg Government so as toattract the most dynamic businessplayers by constantly adjusting itsstrategy in the competition coming from other countries.

17 percent turnover growth The Government’s relationship withLuxembourg’s business community is, in our opinion, a key factor in sustainingeconomic growth in the coming years. In this respect, PricewaterhouseCoopersLuxembourg plays a part by supportingthe Government in developing itsbusiness focus such as in the logisticsand the electronically supplied services.

Our position as a strong market leader in Luxembourg can be seen by an important growth in all ourcompetencies. The contribution of ourcompetencies to this result is due to:

• Assurance, comprising of audit andaudit related services, has seen newclient acquisitions and a thrivingfinancial centre that generated newvehicles to audit. This was helped by a reinforcement of our market sharesin the non-financial sector.

• Tax services enjoyed a strong growthas Luxembourg now has the technicalskills needed to deal with complexstructures.

• The growing performance of ourAdvisory services is not only due to a strong economic climate but also to a constant adjustment of ourservice offering to better meet our client needs.

The prospects for the coming year arepromising. We expect a further increasein our turnover by at least 10 percent forfiscal year 2006.

14%

28%

Advisory

Assurance

Tax

58%

Share of total revenues by competencies, FY05

Our firm enjoyed strong growth in 2005and over the past twelve months, we have hired over 190 new graduatesand 50 highly qualified recruits.Employing more than 1,000 People in October 2005 we focus on offering them individual challenging developmentand career opportunities. We believe weare one of the most attractive graduateemployers in Luxembourg and we intend to maintain this leading positionin the future.

Investing in our People also meansamongst other things ongoingdevelopment of our training package. In 2005, we have reached a record level of 64,100 hours for the firm, whichrepresents an average of more than9 days of training per person.

Our aim is to encourage our staff to achieve their full potential as well asto build a long-term relationship withPricewaterhouseCoopers. One of theways to gauge whether our behaviourreflects our policies is by conducting an annual Global People Survey. Thekey results of 2005 demonstrate that.

In partnership with our People, wedesign individual career plans thatreflect their aspiration. This is in fact

82 percent of our People are proud to work atPricewaterhouseCoopersLuxembourg. The vastmajority of them recommendPricewaterhouseCoopers as a good place to work.

the spirit that animates our Mobilityprogram which, for example, enablesnew opportunities and diverse lifeexperiences. The strong involvement ofPricewaterhouseCoopers Luxembourg in the global and European networkcreates numerous internationalprofessional opportunities. Furthermore,our exchange program is among the most active within our network. In the past twelve months, more than 30 People from PricewaterhouseCoopersLuxembourg were posted internationally,on short-term and long-term assignments.

In 2005, we introduced newcompensation solutions such as therevised “A La Carte” remunerationsystem which now allows, amongstother things, a leasing car for juniors, a supplementary health insurance plan, etc. Furthermore, we launched a well-being program, offering medicalcheck-ups, ocular testing and healthmanagement workshops.

In the coming months, we will alsoreinforce our coaching initiatives andconcentrate on a more balancedresponsibilities’ allocation. We haveasked all our partners to actively andpersonally support these actions.

January20061

October 2005

January2005

January2004

January2003

January2002

January2001

January1999

January1998

January2000

PricewaterhouseCoopers Luxembourg People headcount

400

500

600

700

800

900

1,000

1,100

1,200

1,100

1 Estimate January 1st 2006

People headcount

Developing our People

0% 100%

Men Women

70%30%

66%34%

62%38%

2005

2001

2003

Gender diversity on management (partners, directors, managers) level

5%

I recommendPricewaterhouseCoopersas a good place to work

I believe I have theopportunity for personalgrowth and development

7%

13%

No

13%

12%

8%

No opinion

82%

81%

79%

Yes

I am proud to work atPricewaterhouseCoopers

Source: Global People Survey 2005

“Luxembourg is much more than a small country in the middle of Europe. It plays way beyond its borders.”Samuel A. DiPiazza, CEO PricewaterhouseCoopers International Limited

We count more and more of our leadersholding positions at the internationallevel which enables direct involvement inour network decision making process.

Furthermore, PricewaterhouseCoopersLuxembourg plays a growing role withinthe global network and even becomes areference and a model of innovation inspecific fields like training for example.Inaugurated in 2002, PwC ACADEMY,

What is the role ofPricewaterhouseCoopersLuxembourg in the network?

the dedicated training centre for both internal and external Clients, is unique and inspires other territories to change their way of supporting the learning processes. TASC, thePricewaterhouseCoopers EuropeanTraining Administration Service Centrewas not only one of the projects inspiredby it but since September 2005 its staffand premises are also located atPricewaterhouseCoopers Luxembourg.

Our strong leadership position inLuxembourg with more than 1,000partners and staff is a clear advantage, both for our Clients and our People bygiving us the opportunity to develop our services not only in terms of scope but also in depth.

Moreover, our size allows us to developkey specialist talents in existing andemerging industries, services andmarket developments (UCITS III, IFRS, private equity, real estate,securitisation, …) to the benefit of all our Clients from the largest

Why is our size a competitiveadvantage?

multinational group to the localentrepreneur and the public sector.

We are also a contributor to the development of local markets as more than 25 People ofPricewaterhouseCoopers Luxembourgparticipate substantially in all major local professional associations, publicbodies and technical commitees suchas IRE, CAA, CSSF, ABBL, ALFI, FEDIL,ALGAFI, ALCO, CODEPLAFI… as activeparticipants of working groups or even at board level.

At PricewaterhouseCoopers ourdefinition of quality exceeds the simplemeaning of technical excellence: it embraces the quality of our Clients, our People and the services we provide.

As so, the maintenance of quality begins with highly selective recruitmentprocedures. We recruit the most talentedindividuals and ensure by training andcoaching them that their skills andknowledge represent best practice.Diversity of our People also contributesto quality. Not less than 23 nationalitiesare represented within our firm in

How do we maintain quality? Luxembourg. This is a crucialcompetitive advantage as most of ourClients (90 percent) have foreign origins. When delivering our services, we alsoensure quality by developing standardmethodologies and work programs and by applying “zero default tolerance”when it comes to compliance withstandards and the law. This is of primaryimportance regarding the developmentsin the profession (US Sarbanes-OxleyAct and European 8th Directive), as itprofoundly impacts the future of ourbusiness. Quality and excellence areprinciples that underlie everything we do.

Mervyn Martins

Odile Renner

Gian Marco Magrini

Global Assurance Risk Management Team Member

Eurofirm UCITS III Champion

Eurofirm European Institutions Group Member

Marie-Jeanne Chevremont-Lorenzini Eurofirm Board Member &

People and Partner Development Leader

Didier Mouget

Olivier Mortelmans

Marc Saluzzi

René Beltjens

Thierry Blondeau

Anne Murrath

Michel Guilluy

Global Board Member

Eurofirm Advisory Leader

Eurofirm Investment Management & Real Estate Leader

Eurofirm US Outbound Leader

Eurofirm Investment Management & Regulatory Leader

Eurofirm Logistic Tax Leader

Eurofirm IFRS Tax Leader

Providing Clients withdeep expertiseand quality

Luxembourg leaders at international level

For us, Corporate Social Responsibility (CSR) is not a process nor a series of related or discrete initiatives. It is more an ethos or way of approaching business.How good a corporate citizen PricewaterhouseCoopers actually is will be evidencedin the way we conduct our business, the impacts we have on our stakeholders, how we manage them and how we are perceived to manage them.

Caring about People

We are proud of the diversity of our People which is part of what makes us adynamic organisation and intend to continue developing initiatives to create asupportive work environment. To be recognised as a good place to work, allows us that People perform at the highest level while aiming to maintain a healthy work-life balance.

But our CSR policy also has an external dimension, oriented to make a significantand sustainable contribution to society. We have this obligation as we are one ofLuxembourg’s largest professional service providers. We do this by developing andspreading quality and knowledge to the economy in which we live and work.

Furthermore, we actively support various charities. Not only by our financialcontribution but also by our active involvement by encouraging personalcommitment whether it is for Télévie, Swim for Malaria or Clowns relationnels.

Caring about culture and art

Together with the greater region, Luxembourg will become the cultural centre of the European Union in 2007. Multiple public and private initiatives are underway to prepare for this important happening. In addition to this, Luxembourg hasundertaken a large number of investments to position itself on the European culturalmap. At PricewaterhouseCoopers Luxembourg, we sponsor cultural events such asart exhibitions, music or movie festivals and support foundations with a culturalorientation: Over Bridges and Valleys, Cinénygma, Centre Culturel de RencontreAbbaye de Neumünster, Orchestre Philharmonique de Luxembourg, …

In other words, our Corporate Social Responsibility is inextricably linked toour values, our business strategy and our performance and we will continue topursue our commitment rigorously.

The way forward onCorporate SocialResponsibility

“Luxembourg: a prime location for doing business, 2005”, in collaboration with the Luxembourg Chamber ofCommerce, has been translated into Chinese, Japanese and many other languages to support economic missions.Download on www.pwc.com/lu

Caring about the economy

One of the ways our commitment to developing Luxembourg’s economy manifests itself is through our contribution to Government andprivate sector initiatives aimed atpromoting the image of Luxembourgabroad and through our thoughtleadership initiatives which are geared towards the diversification and attractiveness of the Luxembourg economy.

16 full-time equivalent staff a year are dedicated to road shows abroad to promoteboth PricewaterhouseCoopersand Luxembourg as anattractive place to do business

Photos of Luxembourg: Carlo Hommel & Rol Schleich © Copyright Photothèque de la Ville de Luxembourg.

PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 771 cities in 148 countries work collaboratively using Connected Thinking to develop fresh perspectives and practical advice. PricewaterhouseCoopers Luxembourg (www.pwc.com/lu) has over 1,000 skilled professionals coming from more than 20 different countries.

PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.

© 2005 PricewaterhouseCoopers. All rights reserved. PricewaterhouseCoopers refers to the network of member firms of PricewaterhouseCoopers InternationalLimited, each of which is a separate and independent legal entity. *connectedthinking is a trademark of PricewaterhouseCoopers LLP.