To my partners, our staff, clients and friends

Welcome to our Australian Annual Review for the 2009 financial year. Little did I know
when I became CEO on 1 July last year what was in store. What a year it has been!

Our credible performance in FY09 could not have been achieved without the stellar
efforts and support of our people, who worked admirably to do our best for clients
and the firm. I am deeply grateful for their efforts and the support they have shown.

The global financial crisis

Though there were signs of a liquidity problem in parts of the global financial system
in the latter part of 2007, few, if any, foresaw the extent of the system’s collapse and
the ensuing economic decline. While actions of government and others appear to have
stabilised the crisis, the world has changed in significant ways. Witness the extent of
government intervention in business ownership; increased regulation and oversight;
the decline of complex, highly geared business models; the restructuring of entire
industries and automotive sectors; and the end, for now at least, of the easy credit
of the previous decade.

But what an opportunity this presented for me and my team, and Australian
businesses generally, to finesse how best we can work with our clients to build
truly competitive global businesses.

Australia and our firm – thanks in part to a mining boom, a robust financial system and the buffer of a federal budget surplus – entered the worst global recession in 80 years from a position of strength. During the early months of FY09, PwC’s performance was outstanding. In the latter part of the year, like many, we began to feel strongly the impacts of a rapidly softening economy. The effects were partly offset by strong performance in the counter-cyclical parts of our business, such as our growing and successful corporate restructuring and economics teams. We finished the year with modest revenue growth of just over 1 per cent, which was still an achievement and another record revenue year for our firm.

Challenge and opportunity

Throughout the year I met with CEOs and senior executives from many organisations.
I was struck by how many were in agreement that these difficult times were as much about opportunity as they were about challenge. These discussions also reaffirmed my sense that
if we are flexible and listen closely, there are excellent opportunities for us to collaborate with clients to achieve mutual success using the full power and – at times under-utilised – breadth
of this firm's resources.

The rapid shifts in the world around us have definitely helped create a burning platform for both organisational change and a more genuine focus on opportunities that deliver the greatest value. Those with the hunger and determination to seize the agenda at times like these ensure their organisations are agile and able to emerge from tough times stronger than when they went in. This has been, and remains, our aim for our clients and ourselves.

Our focus

This year we took care to have a close look at what business was feeling about the professional services industry. While there were many positives, to be frank, the picture painted was not always as flattering as our industry, and we, would have liked. Those insights are helping us to evolve our business to focus more on collaborative relationships, to be more progressive and questioning, as well as agile and empathetic.

Our aim is to drive sustainable growth through clear decisions about who we serve, what we offer and what we are like to work with. While it has required some internal restructuring to simplify and target our focus, these changes position us well to enhance networking across our teams and within the marketplace for the benefit of our clients. We have also aligned our client relationship, market, brand and cultural initiatives. Our new development curriculum will enlighten and reinforce them all. In professional services, the client experience is everything and our audacious goal over the next few years is to perfect it.

We made a number of acquisitions to better serve our clients in the areas of strategic and operations consulting, economics, estate planning, franchise management and debt and capital advisory. Throughout this year, through these acquisitions, recruitment and promotion, we welcomed 37 new partners to the firm. We also continued to invest in developing new solutions and refining and improving our traditional offerings. You will see more projects, designed to build new and better business models and enhance our brand, unfold over the next year.

A year of achievement

As CEO, one of my top priorities for our firm is finding, inspiring, developing and retaining
great talent, recognising that it is ultimately individual and team behaviours that shape our firm’s culture and support the success of our clients. Underpinning this is a philosophy of continuous improvement. Our talent management strategy guides the future development, retention and succession plans of our key talent. A Talent Council, comprising senior representatives across the firm, oversees our strategy and identifies talent initiatives and leadership development opportunities such as an overseas tour, a client secondment, a business school course or a period working with one of our leaders. We are proud that we kept our promise to invest $94 million in initiatives to help our people develop, grow and excel. And we plan to spend more next year.

We fortified our commitment to corporate responsibility this year, becoming Australia’s first carbon neutral professional services firm; the first professional services firm to enter the Corporate Responsibility Index; and the only firm to release independently assured data
on our greenhouse gas emissions.

What about 2010?

The Australian Government and the Reserve Bank of Australia acted swiftly and well to minimise the impacts of the global financial crisis on the Australian economy.
Some observers are seeing early positive signs, though a sustained recovery
seems some way off. Key to Australia's future prosperity will be a focus by the government and private sectors on, among other things, Australia's education and health systems, its resources and services sectors, foreign investment strategies and the national infrastructure. Our own strategies, plans and capabilities are focused on supporting these efforts.

Australia's regulatory systems have generally performed well and we believe the government should tread carefully before adopting overseas legislative reforms here. While sensible, effective regulation is to be encouraged, it is equally important to avoid regulatory responses which over-reach and threaten the entrepreneurial, innovative spirit that is at the heart of economic growth and prosperity.

We expect FY10 to continue to be difficult. Yet, as positive thinkers, we are now firmly focused on the recovery and the possibilities it brings. We are confident that PwC can assist Australia to turn economic and environmental challenges into opportunities for sustainable growth and social change.

Best wishes for 2010!



Mark Johnson
CEO and Senior Partner
Mark Johnson
Chief Executive Officer