Integrated report 2016

Transcription

1 Integrated report 2016

2 Our network s values Act with integrity Make a difference PwC s global purpose: To build trust in society and solve important problems. Vision 2020 PwC s vision is to be the pre-eminent professional services network, leveraging our values-driven culture to live our purpose. Care Work together Four strategic choices guide us in being: The leader in building and sustaining trust-based institutions; A multinodal organisation, embedded in and operating across the dominant and emerging economies; A provider of client services from strategy through to execution; and A technology-enabled innovator. Reimagine the possible Chairperson s message It is my honour to have been PwC s sponsor through our integrated reporting process, which has resulted in our first South African integrated report. This process has not only allowed us to look inwardly; it has also enabled us to better identify with our clients who produce annual integrated reports. As we embarked on this process, we had rigorous debates at leadership level around identifying our material issues and determining the structure of our report. The material issues identified also form part of our reporting governance structures. As a global network, we are proud that the PwC brand has been recognised as the strongest professional services brand in the world, with a reputation built on the energy, enthusiasm and quality of our people, all of whom are committed to our purpose of building trust in society and solving important problems. Our clients look to us for advice, place their confidence in us and expect us to lead by example. We embrace this position of trust, which is underpinned by our strong ethical culture and is embedded throughout the firm and reflected in the manner in which we conduct ourselves and our business. Growing our people is vital to growing our business and ensuring our sustainability. Our people are the foundation of our firm, and it is inspirational to have witnessed so many talented individuals achieve both their personal and professional ambitions in this nurturing environment. We have staff at PwC South Africa in 22 offices across all nine provinces. We invest significantly in attracting, developing and retaining talented staff. Our training extends to all our lines of service and includes courses provided to upskill people in their field of expertise and in broader professional skills. We also take pride in the qualified chartered accountants (CAs) who have left our firm to take up leading positions in business and who continue to make an important contribution to the South African economy. 2 PwC Integrated Reporting

3 For us, transformation is not about numbers, but about the meaningful development of our people and an economic imperative for the growth of the firm and of the South African economy. Our commitment to transformation is demonstrated through our inclusive culture and demonstrable diversity. Over the past 13 years, PwC has qualified more than chartered accountants from historically disadvantaged communities, a testament to our commitment to transforming our profession to reflect the demographics of our country. This achievement has been recognised for five consecutive years by the Association for the Advancement of Black Accountants of South Africa (ABASA), for qualifying the largest number of historically disadvantaged CAs during the year. We still have a long way to go towards meeting our transformation goals and remain focused on this business imperative. Skills development is core to South Africa s economic growth. The National Development Plan (NDP) identifies the financial inclusion of women as a critical tool in eliminating poverty, addressing unemployment, reducing inequality and contributing towards the achievement of the targets set for Small businesses are a key part of the South African economy, and women own a significant number of these enterprises. However, there is a high failure rate among start-up businesses, largely due to lack of access to finance, business expertise and experience. PwC aims to assist in solving these problems and contribute to making a difference through enterprise development initiatives that include lending our expertise to upskill and support entrepreneurs and start-ups to grow their businesses. One of our flagship programmes, the Faranani Rural Women s Training Programme, showcased on page 4, focuses on creating a culture of entrepreneurship among women in rural communities. The programme has succeeded in many of its objectives and to date has reached more than women. Our other corporate responsibility focus areas include education, probono services, payroll giving and volunteering. Technology continues to transform all facets of our personal and business lives. It is therefore important for us to be innovative in our thinking and to bring state-ofthe-art technology solutions to the firm and our clients. We are excited to be working with Google as part of a local joint business relationship with the aim of driving enhanced productivity and innovation and bringing new and innovative solutions to our clients. Stakeholder engagement is an important part of my responsibilities, as it is essential to keep track of our stakeholders needs, manage their expectations and engage in meaningful dialogue with them on a regular basis. PwC s stakeholders include a wide range of groups, clients, communities, employees, the media, professional bodies, regulators and suppliers. Through our stakeholder approach, we ensure that we participate in meaningful dialogue with these stakeholders on a regular basis. Sound governance and transparency form the foundation of good leadership. At PwC, integrity, good sense and wise solutions through good governance form the cornerstone of our business practices. Transparency and high standards of corporate governance through our strong governance framework both in our clients businesses and in our own are central to our ability to achieve this. As part of the global PwC network, we have so much to be proud of and so much more to achieve. I look forward to embarking on this integrated reporting journey with all of you and I trust you will enjoy this report and, most importantly, appreciate what PwC is accomplishing through the efforts of our clients, our employees and the communities within which we operate. I look forward to receiving your feedback on this report at integrated.report@za.pwc.com. Thank you to my fellow board members and partners for your continued guidance and wise counsel. Shirley Machaba Chair PwC South Africa Governing Board 20 January 2017 PwC 3

4 Faranani Rural Women s Training Programme For the past ten years PwC has been instrumental in contributing to the empowerment and advancement of women in rural communities across the country through our Faranani Rural Women s Training programme. The programme was born out of our aspiration to instil a culture of entrepreneurship among women in rural communities, assisting them to generate their own sustainable sources of income while also becoming meaningful contributors to the economy. Over several days, women participate in five modules and are supported by trained facilitators. On completion of the course participants will have learnt, among other things, how profit is calculated; factors that determine price; the concept of working capital; budget preparation; cash-flow projections; and the know-how to present a business plan to financiers. Through group counselling sessions, participants are given the opportunity to examine their business plans and learn from the experiences of their fellow programme participants. This training is supported by a post-training workshop in which participants gain insight into financial projections, financial management, pricing and costing, marketing, and business management. Since piloting the initiative in Limpopo in 2006, and in partnership with a number of municipalities and government departments, we have managed to roll-out the programme across the country. Five modules 1. Developing business plans 2. Practical pricing and costing 3. Effective financial management 4. Practical marketing 5. Customer care Faranani National Director Shirley Machaba addressing delegates Handing over of training completion certificates to Faranani learners by PwC and City of Johannesburg Our partners Municipalities Buffalo City Tshwane Johannesburg Ekurhuleni Local municipalities countrywide Government departments Department of Cooperative Governance Department of Trade and Industry Department of Traditional Affairs Department of Rural Development and Land Reform The Presidency Department of Social Development Other South African Local Government Association Gauteng Enterprise Propeller Group photo - Faranani learners, PwC team, City of Johannesburg team and BSSA team during the Faranani Award Ceremony event. 4 PwC Integrated Reporting

5 Contents Chairperson s message... 2 About this report... 6 PwC South Africa s Governing Board statement... 6 About PwC... 7 PwC South Africa leadership team... 9 Lines of service Key statistics Chief Executive Officer s message External environment and operating context Business model and value creation Strategy Material issues...25 Performance overview...30 Quality and compliance...30 People and talent management...33 Transformation, diversity and inclusion...36 Understanding our financial performance...40 Innovation Confidentiality of client information and data security...43 Societal impact of our services...45 PwC leased buildings...49 Annexure A: Governance Annexure B: Glossary...53 PwC 5

6 About this report Scope and boundary We are pleased to present PwC South Africa s first integrated report in which we aim to provide a better understanding of our business activities and value creation. This integrated report covers the period 1 July 2015 to 30 June 2016 and includes an overview of who we are; our strategy, risks, and governance; and the performance of our firm in South Africa. PwC has a presence in 34 countries in Africa, with an office footprint covering 66 locations. With a single leadership team for the East, West and South market areas and more than 400 partners and professionals across the region, PwC firms serve some of the continent s largest businesses across all industries. Materiality Our report is structured around seven material issues, which were determined through robust leadership discussions at various workshops. These material issues include: Quality and compliance; People and talent management; Transformation, diversity and inclusion; Understanding our financial performance; Innovation; Confidentiality of client information and data security; and The societal impact of our services. We view these material issues as critical to ensuring that we achieve our global purpose of building trust in society and solving important problems for our key stakeholders. Frameworks In preparing this report, we have been guided by the International Integrated Reporting Committee s (IIRC) framework for integrated reporting (the <IR> framework guidelines). As such, our business model on page 18 takes into account the six capitals included in the <IR> framework guidelines financial capital; human capital; manufactured capital; intellectual capital; social and relationship capital; and natural capital, to illustrate our ability to create value over time, through our business activities. Although we appreciate that this report does not yet meet all the requirements of an integrated report, it is our intention to improve our reporting in future reports. Stakeholders While we recognise that our services impact various stakeholders, our three key stakeholders are our people, clients and society. As we embark on our integrated reporting journey, we would appreciate feedback from our stakeholders, including the manner in which we report on our material issues as well as our strategic and performance overview. Please contact us at integrated.report@za.pwc.com with your feedback. This integrated report can be accessed on our website at PwC South Africa s Governing Board statement PwC South Africa s Governing Board has reviewed the content of this report and its members are satisfied that the report is an accurate reflection of the South African firm s information presented for the period under review. The Board acknowledges that this is the start of the firm s integrated reporting journey. Shirley Machaba Chair PwC South Africa Governing Board Dion Shango Chief Executive Officer PwC South Africa 20 January 2017 Forward-looking statements This integrated report contains forward-looking statements based on management s current expectations or predictions of future conditions, events or results based on various assumptions and management s estimates of trends and economic factors in the markets in which we are active, as well as our business plans. Forward-looking statements in this release should be evaluated in the context of the many uncertainties that affect PwC s business and its markets, particularly those discussed under the risk factors in this integrated report. 6 PwC Integrated Reporting

7 About PwC PwC refers to the PwC network and/ or one or more of its member firms, each of which is a separate legal entity. This is backed by our in-depth cultural and economic understanding of all key markets, and the industry and technical experience of our local and international teams. The PwC network has over staff globally and is represented in 157 countries. Legal structure in South Africa PwC operates under a dual structure: PwC Incorporated, a registered company; and PwC South Africa, a partnership. PwC South Africa has representation in 22 offices across the country, with its head office being situated in Johannesburg. PwC offices in South Africa Limpopo Polokwane Rustenburg Nelspruit Mafikeng Emalahleni Lichtenburg Pretoria Middelburg Johannesburg Secunda North West Gauteng Free State Mpumalanga Northern Cape Kimberley Welkom Bloemfontein KwaZulu-Natal Richards Bay Pietermaritzburg Durban Eastern Cape Cape Town Western Cape Paarl Worcester Robertson Stellenbosch East London Port Elizabeth PwC 7

8 PwC South Africa Governing Board Name Age Qualifications Appointment date Portfolio/Experience Photo Andrea Puggia 53 CA (SA) 2014 Partner in charge for Port Elizabeth office; Eastern Cape Assurance Leader; Assurance Consumer Industrial Products and Services Industry Director Andries Brink 58 CA (SA) 1998 PwC Africa Governance Board member; Private Company Services Leader PwC Southern Africa Asanda Myataza* 34 CA (SA) 2014 Advisory Consulting Director Danie Fölscher 58 CA (SA) 2014 Resigned 31 October 2016 PwC Africa Governance Board member; Partner in Charge for Western Cape; PwC Western Cape Tax Leader Dion Shango* 40 CA (SA) 2012 Chief Executive Officer PwC South Africa; Regional Senior Partner (RSP) - PwC Southern Africa Hardie Malan 57 CA (SA) 2014 PwC Africa Governance Board member; Partner in charge of Paarl office, Assurance Financial Services Industry Director John Bennett 51 CA (SA) 2014 PwC Africa Governance Board member; Advisory Finance & Operations Leader Mark Ally* 58 B.Compt 2012 Advisory Consulting Director Nicolette Jacobs* 38 CA (SA) 2014 Assurance Financial Services Industry Director Shirley Machaba* (Chair) 50 CA (SA) 2005 PwC Global Board member; PwC Africa Governance Board member; Partner in charge of the Pretoria office; Southern Africa Government & Public Sector Leader; PwC Africa Internal Audit and Business Resilience Leader Skalo Dikana* 46 CA (SA) 2014 Assurance Technology, Information, Communication and Entertainment Industry Director Zuhdi Abrahams* 43 CA (SA) 2014 PwC Africa Governance Board member; Assurance Financial Services Industry Director. Partner in Charge of Cape Town (from 1 November 2016) Johannes Grosskopf 45 CA (SA) 1 November 2016 Africa Governance Board member; Financial Services Industry leader - PwC South Market Area and Africa * = ACI (African, Indian and Coloured) Annexure A provides more detail on PwC South Africa s governance committees. 8 PwC Integrated Reporting

9 PwC South Africa leadership team The leadership team is a vital part of the firm s governance structure and its seven members are selected by the PwC South Africa Chief Executive Officer in consultation with the PwC South Africa Governing Board. The leadership team is accountable for the firm s results and its principal responsibilities include creating, directing and overseeing strategy implementation for the South African firm, developing succession plans for leadership roles as well as ensuring regular and ongoing partner communication on the progress and performance of the South African firm.the leadership team meets eight times per annum to discuss the firm s results and other issues of interest as well as to develop recommendations for the furtherance of key objectives of PwC South Africa. PwC South Market Area leadership team Name Age Qualifications Appointment date Portfolio/Experience Photo Coenraad Richardson 40 CA (SA) 2015 Risk & Quality Leader PwC South Market Area Corlia Volschenk 47 CA (SA) 2015 Human Capital Leader PwC South Market Area Dion Shango 1 * 40 CA (SA) 2012 Chief Executive Officer PwC South Africa Regional Senior Partner (RSP) PwC Southern Africa Fulvio Tonelli 56 CA (SA) 2008 Operations, Risk & Quality Leader PwC Africa Jabu Masondo* 40 CA (SA) 2016 Tax Leader PwC South Market Area Nana Madikane* 39 CA (SA) 2014 Transformation Leader PwC South Market Area Nangula Uaandja 43 CA (NA) 2014 Country Senior Partner (CSP) PwC Namibia (Non-SA partner) Pule Mothibe* 47 CA (SA) 2012 Assurance Leader PwC South Market Area Mark O Flaherty 50 CA (SA) By invitation Advisory & Consulting Leader - PwC Africa and Southern Africa 1 = Chief Executive Officer; * = ACI PwC 9

10 Lines of service The objectives of our service offering are to build trust and enhance value for our clients and stakeholders. To meet the requirements of our clients, as well as regulators, our services are grouped into three distinct service lines: assurance, advisory and tax, across a wide array of industry sectors. These are all described in the business model on page 18. We continue to operate as a multicompetency organisation offering a range of high-quality services to clients. In our business, change is the only constant and we are continually adapting our range of services to ensure our sustainability and that of our clients and stakeholders. Our future portfolio In executing our growth strategy, our portfolio of services is evolving. We will continue to deliver assurance, advisory and tax services as they are defined today. We will also expand the definition of professional services, access a larger addressable market, and grow profitability in new spaces. Target portfolio 2020 and beyond 2016 portfolio Technology-enabled ecosystems New priority services Critical markets Assurance, Tax, and Advisory Evolution of Assurance, Tax, and Advisory 10 PwC Integrated Reporting

11 Key statistics Our network of PwC firms on the African continent covers the Anglophone-, Francophone- and Lusophone- speaking regions, enabling us to identify opportunities and offer tailored assurance, advisory and tax solutions for every business challenge. PwC South Africa earned a Level 1, AAA+ B-BBEE contributor status in our latest annual certification by Empowerdex in October This is the highest rating possible and recognises the firm as a good B-BBEE contributor. We achieved a people engagement score of 73% (2015: 76%) in PwC s Global People Survey. Turnover per line of service, 2016 vs % 11 % 31 % 33 % 56 % 57 % 2015 Assurance Advisory Tax Investing in our people 2016 Assessment of professional competence (APC) pass rate for chartered accountant candidates: PwC total pass rate of PwC ACI pass rate of SAICA: SAICA: 93% 92% 88% 84% Initial test of competence (ITC) pass rate for chartered accountant candidates: PwC total pass rate of PwC ACI pass rate of SAICA: SAICA: 76% 71% 67% 59% Bursary investment of R23.6 million An average of 48 training hours per employee per year R60,7 million spent on learning and development (2015: R58 million) Supporting a diverse and inclusive culture Partnership admissions (white vs ACI): New employees (white vs ACI): New employees (male vs female): % 55% 45% 53% 61% 58% 42% 39% White ACI 58% 54% 46% 42% Male Female Embracing innovation Local joint business relationship with Google Investing in our communities R9.4 million (2015: R5.4 million) spent on corporate social responsibility initiatives across our key focus areas: education, enterprise development, pro-bono services, payroll giving and volunteerism PwC 11

12 Chief Executive Officer s message Overview It is my great pleasure to present our first integrated report to our stakeholders. This report focuses on our South African operations. Our Vision 2020 is to be the pre-eminent professional services network, leveraging our values-driven culture to live our purpose of building trust in society and solving important problems. We are mindful that we are in a position of trust, where clients look to us for advice and expect us to lead by example. Our firm embraces this responsibility and constantly looks to evolve and nurture this privileged position. Our global strategy To achieve the network s Vision 2020 and ambition to be the leading professional services provider in the world, we understand the need for a strategic blueprint, which is depicted on page 21. This blueprint has been filtered down throughout our network globally as well as in South Africa, where our lines of service have aligned their goals with this strategic plan. In developing our global strategy, five megatrends were identified that are changing the world at a rapid pace: Demographic and social change; A shift in global economic power; Rapid urbanisation; Resource scarcity and climate change; and Technological breakthroughs. The megatrends are discussed together with our operating environment on page 15, but broadly speaking, we realise that in this dynamic operating environment, services provided in the past may not necessarily still be relevant and we continually need to evolve to deliver on our purpose. Our strategic choices are the four key pillars on which we will base our initiatives to remain relevant, operate across various economies, deliver client quality, and use technology to transform our business through innovation. Specific focus areas have been identified to direct and grow our business, which will be carried out by our people through the distinctive PwC culture and reinforced by our values (see inside front cover of this report). Material issues Our integrated report is structured according to our seven material issues, which were determined by our leadership through a series of rigorous debates. We believe these material issues are important to ensuring that we achieve our Vision The discussion that follows provides a high-level overview of our material issues and how they shape our strategic outlook. Material issues Quality and compliance People and talent management Transformation, diversity and inclusion Understanding our financial performance Innovation Confidentiality of client information and data security Societal impact of our services Quality and compliance Quality and compliance are not negotiable. It is what we are known for and what our clients expect from us in everything we do. The sustainability of our global organisation is based on our collective strength. We strive to build on this by developing trust, respect, vision and integrity. Our leadership sets the tone by continuously emphasising their dedication to quality. Furthermore, our code of conduct reinforces our commitment to conducting business with integrity, respecting clients confidentiality and privacy, while complying with applicable laws, regulations and professional standards at all times. Our quality control policies and procedures implemented in terms of the International Standard on Quality Control 1 (ISQC 1), and the quality control standards established by the U.S. Public Company Accounting Oversight Board (PCAOB) are subject to periodic inspection by our local audit regulator, the Independent Regulatory Board for Auditors (IRBA), and by the PCAOB. We are actively engaging with the IRBA regarding the mandatory audit firm rotation proposal. While we fully support IRBA s mission of protecting the financial interests of the South African public and international investors in South Africa, we believe that such a far-reaching proposal should follow a robust public consultation process, taking into account the inputs from various stakeholders. PwC is determined to respond to the changing needs and opportunities that strengthen our capital markets, while at the same time not compromising on audit quality. We continue to discuss this matter with our clients as we believe that assurance plays a critical role in the effective functioning of the South African capital markets by building trust between companies and their shareholders and underpinning the delivery of reliable, relevant and timely information to them about the organisation in which they have invested. People and talent management We are a people s business and in a country where skills shortages remain a serious concern, it is imperative that we attract, retain and develop our talent. We pride ourselves on having a distinct PwC culture conducive to ensuring that our employees have stimulating careers, while also having fun. Not only has our operating environment changed; so too has the profile of the new generation of CAs. They are more confident in their views, extremely driven in their ambitions and willing to challenge the norm. It is important for us to understand their needs, in order to differentiate ourselves as an employer and ensure that we attract the best 12 PwC Integrated Reporting

13 For an outstanding achievement in this category and for contributing to Human Resources Management through strategies and practices directly impacting business performance and innovation Ralf Fletcher Chief Executive Officer flymango.com Why not today? media talent available. Some of our differentiators include our client portfolio, which ranges from the country s largest and most complex organisations to some of its most innovative entrepreneurs, across various industries. We are privileged to work with a client base that in turn provides excellent learning and development opportunities for our talented professional staff as they move up through the firm. Our talent mobility programme offers our employees an opportunity to explore different countries working environments and cultures. Popular destinations include the US, Australia, Europe and the United Kingdom. Transformation, diversity and inclusion We embrace the diversity of our country and fully support its transformation goals. Transformation is a key strategic imperative and we are cognisant of our responsibility to drive transformation and invest significantly in creating an environment where every individual who joins the firm has an opportunity to succeed and reach their potential. We are a firm that has aligned our objectives to those of the country a firm that has the country s priorities at the top of our own priority list. We believe that the direction we are taking will allow us to continue to fulfil both our legislative and strategic transformation mandates. We are pleased to announce that the firm achieved Level 1 AAA+ B-BEE contributor status in October This is the highest rating possible. See further details on page 36. Within PwC South Africa, we view diversity as an opportunity to offer a distinctive range of skills and experiences when providing solutions to our clients. We understand that different people bring different perspectives and have always been a workplace of top talent, and highly driven and motivated people. Different and contrasting insights and perspectives are essential to sustain business success in today s complex global economy, making diversity and inclusion a business imperative. It has Awards Best Workplace Diversity and Inclusion Strategy Award at the Future of HR Awards. Skills Development Award (in the greater than R1 billion category) and the Diversity Award at the 15th Oliver Empowerment Awards. Diversity in the Workplace Award and Top Gender Empowered Company Award, the headline award, was won at the Standard Bank Top Women Awards Winner Certificate Of Excellence Business of the Year Award Sponsored by Awarded to PricewaterhouseCoopers been encouraging to receive five awards acknowledging our progress with regard to transformation, diversity and inclusion. These awards recognise the transformation milestones achieved by empowered organisations for their contribution to the growth and sustainability of the economy. As part of our focus on diversity, we not only focus on internal campaigns, but look to where we can make a difference to drive gender change in our industry. Locally, I am proud to say that I am a UNWomen HeforShe Impact Champion, and PwC s Global Chairman is an International Impact Champion. Our commitment to HeforShe includes engaging men as agents of change, further supporting women in leadership roles, and accelerating action and awareness. To ensure these results topco bring action, we ve also introduced a Global Inclusion Index, which evaluates the number of women across the PwC network, with a specific focus on increasing the number of women in leadership roles. With the changing focus of employment equity, all companies are moving towards a workforce that represents the demographics of the country, and as a firm we have reviewed our strategy to align with this. In striving to achieve the new requirements our learnerships and bursaries are split to meet these demographics. At year end, our workforce of staff included 48% African, Coloured, and Indian (ACI) and 52% white staff, of whom 46% are female. To ensure the sustainability of the firm and the accounting profession, PwC remains committed to bursary sponsorship and invested R23.6 million in bursaries in the 2016 financial year. PwC recognises the importance of developing small businesses in South Africa in an effort to create sustainable jobs. Our strategy is to maintain the level of investment through a number of different initiatives, including continuing to provide grants and donations to Business Skills for South Africa (BSSA) and the Faranani Rural Women s Training programme. Another focus area for the firm is developing preferential procurement processes that influence the behaviour of the group to buy products and services from local ACI entrepreneurs. Business Skills for South Africa Established by PwC and the National Industrial Chamber in 1992, the Business Skills for South Africa (BSSA) Foundation is a non-profit, educational trust. BSSA s mission is to provide business skills training to support SMMEs in South Africa, to create sustainable jobs and increase wealth through the transfer of practical business skills. To date, more than SMME participants have completed modules of the BSSA programme for owner-managers, and advisors and professional staff have participated in business advisor training. PwC 13

14 Understanding our financial performance To ensure the sustainability of the firm, we recognise the importance of managing our financial performance. We have a robust reporting system and process in place in which monthly financial performance packs with key metrics per line of service are discussed by the leadership team to determine how the firm is tracking against set targets. There is also a formal budgeting process and budgets are approved by the PwC South Africa Governing Board. For the financial year under review, the firm achieved a turnover of R4.9 billion (2015: R4.8 billion). Assurance contributed 57% (2015: 56%), Advisory 31% (2015: 33%) and Tax 12% (2015: 11%). Over the past few years we have experienced increased pressure on our fees due to the global economic slowdown, and the outlook remains challenging, with South Africa s GDP growth predictions remaining below 1%. Succeeding in tough economic conditions underscores the importance of having a strategy that remains relevant in both the good and bad economic times, and we remain confident in our ability to leverage the opportunities that do exist. Innovation Innovation empowers us to address the technological changes that are rapidly changing the world. We aim to use technology to grow our business and become the preferred partner for technology-enabled systems. Analytical, social, mobile and cloud platforms are the building blocks of a connected experience that will assist us in creating and commercialising new products and services. Business transformation within our firm will enable us to do things more efficiently. We have dedicated resources, focusing on a four-year digitalisation transformation journey which is aligned to our Vision 2020 and is aimed at ensuring that we are the most technologicallyenabled professional services firm. PwC has also begun introducing G Suite products to its own operations in September PwC is transitioning its staff to G Suite Apps, transforming how they collaborate and driving enhanced productivity and innovation. We have entered into an agreement with Google, which supports Vision 2020 by providing new and more efficient tools that will enable us to grow revenue, target client opportunities and disrupt PwC s core business faster, deeper and broader through innovative use of technology. Confidentiality of client information and data security As with the material issue of quality and compliance, client confidentiality and data security are not negotiable and this aspect is a foundation of our purpose. We have a robust risk and governance framework in place throughout the firm to enforce this sacrosanct practice. This framework is supported by various systems, standards and policies as well as an ethics officer and ethics board that oversee the firm s ethics and business conduct programme. Societal impact of our services brand, corporate responsibility and environmental impacts Brand We appreciate that the PwC brand is key to the growth of our network, both in our more well-known and established services and in new markets. PwC s Brand Health Index (BHI) provides us with a method of comparing the strength of the PwC brand against those of competitors across territories and lines of service. PwC was placed first in the results of the BHI survey conducted between July and December Corporate responsibility focus areas Education Enterprise development Payroll giving Pro-bono services Volunteerism Corporate responsibility Our corporate responsibility approach is tailored to our specific strengths and opportunities as a professional services firm to leverage our core skills in creating measurable business and social value-enhancing outcomes. Environmental impacts Over the past few years we have occupied new buildings in KwaZulu- Natal and the Western Cape, with construction underway in Gauteng. All new buildings have been, or will be established with state-of-the-art technology and facilities that are conducive to a safe and healthy work environment. The new buildings follow best practice in terms of energy efficiency and green practice. Looking ahead As our reporting journey matures, I look forward to presenting and engaging with you on our progress towards our Vision While we remain mindful of the expected weak operating environment in South Africa, we are confident in our ability to take PwC South Africa to new heights. Appreciation I am extremely proud of our people, and I encourage you to keep up the good work, whether you are out at clients or supporting our client-facing teams. Please be prepared to face the challenges of the year ahead while also seizing the opportunities that may present themselves. Together, let s continue building PwC South Africa s future. Dion Shango Chief Executive Officer PwC South Africa 20 January PwC Integrated Reporting

15 External environment and operating context We acknowledge that we operate in an increasingly complex, challenging and dynamic environment, in which it is important for us to adapt in a swift and responsible manner. At the same time, this operating environment and its growing business challenges provides an opportunity for PwC to assist our clients through these evolving times. Economic environment South Africa s economy regained its position as Africa s largest economy in dollar terms in 2016, more than two years after losing its place to Nigeria. The Rand has led an emerging-markets rally after Brexit and the municipal elections, while the Nigerian currency has fallen sharply since a peg to the dollar was removed. With the current electricity constraints being experienced in most countries expected to persist as well as the drought in Southern Africa, the region is likely to experience a challenging recovery with many of the structural impediments to economic growth still persisting. An easing of the power constraints, better fiscal policy measures and continued stability in commodity prices are likely to impact positively on growth. Constitutional and governance structures showed their strength and resilience in the first quarter of 2016, and the gravity of the political issues have allowed the business community, including PwC, to express a more active voice with key members of government. This has led to the working relationship between business, government and labour being closer than it has ever been. Countries across Southern Africa continue to be affected by the depressed commodity prices, with some economists predicting a particularly stark outlook for iron ore, copper, and oil and gas in the coming year. As with other commodity-driven economies around the world, and other countries on the continent, those in Southern Africa have been heavily affected by weakening currencies. Commodity prices are expected to stabilise but remain low through Opportunities remain for the economy and PwC to respond. In the current environment, exports have become comparatively less expensive on global markets, depressed commodity prices may spur greater diversification in non-resource-dependent industries, and current market conditions may drive mining companies to seek greater efficiencies in their businesses in order to maintain operating margins. Notwithstanding the tough operating environment, an upward trend in divestitures and business challenges also provides an opportunity for PwC to assist our clients through difficult times. Regulatory environment Mandatory audit firm rotation proposal In August 2016, the IRBA announced its intention to start implementing mandatory audit firm rotation. This initiative stems from concerns raised around auditor independence, market concentration of the big four audit firms and the need for transformation. The IRBA has indicated that it intends to consult further with the objective to provide guidance. PwC continues to actively engage with the IRBA on this regulatory proposal. Black economic empowerment PwC s 2016 scorecard was calculated under the dti s codes and not within the ambits of the CA Charter. SAICA is, however, in the process of negotiating and concluding a CA Charter that is aligned to new legislation. This means that various aspects of the CA Charter will probably be reopened for debate. Megatrends Research by the PwC network has determined that there are five major megatrends rapidly changing the world. These megatrends are discussed below. Demographic and social change According to research conducted by PwC Germany, it is expected that by 2025, there will be approximately eight billion people globally, but there will be sharp regional variations with Africa s population projected to double by 2050, while Europe s is expected to shrink. These demographic changes will bring both risks and opportunities for businesses risks if companies fail to respond adequately, and opportunities for forward-looking organisations. Furthermore, an estimated 865 million women are set to enter the workforce in the coming decade, which will increase women s purchasing power across this increasingly diverse landscape. Global mobility is expected to present an opportunity to responsive employers, with the number of people working outside their home country increasing by 25% over the past decade, and projections of a further 50% rise by It is also predicted that life expectancy will rise, increasing the risk of overpopulation and putting social and healthcare systems under intensifying pressure. Shifts in global economic power Research conducted by PwC China suggests that the aggregate purchasing power of the E7 emerging economies Brazil, China, India, Indonesia, PwC 15

16 Mexico, Russia and Turkey will overtake that of the G7 by And the global emerging middle class will represent an annual market of some USD6 trillion by These trends and tipping points mean the traditional way of classifying economies is becoming increasingly irrelevant. These huge economic shifts between countries and within groupings are resulting in momentous changes in consumption patterns, which in turn create and amplify challenges for businesses worldwide. Companies are increasingly chasing a moving target, as they strive to meet the needs of their diverse, evolving and increasingly demanding customer segments, while fighting off increasingly intense and new competition. Rapid urbanisation A report by PwC UK highlights that there has been an unprecedented rise in urbanisation globally. In 1800, 2% of the world s population lived in cities. This is now 50%, and every week some 1.5 million people join the urban population through a combination of migration and childbirth. While cities occupy 0.5% of the world s surface, they consume 75% of its resources. Inevitably, this rapid expansion is putting cities infrastructure, environment and social fabric under pressure. Over the next decade, New York, Beijing, Shanghai and London alone will need to invest USD8 trillion in infrastructure. Rapid urbanisation brings major implications for businesses as they refocus their offerings towards an increasingly urban customer base with distinct needs and consumption habits. need to take the lead in mitigating environmental damage and tackling climate and resource challenges, while striving to make their organisations more agile and resilient. If businesses are to rise to these challenges, sustainability will be vital, with corporate responsibility evolving from a luxury to a business imperative. An increasingly important area of focus for businesses worldwide is understanding, measuring and reporting on the environmental and social impacts of the decisions and actions they take. This need is driving the development of innovative ways of measuring and reporting more transparently and holistically on companies overall impacts. Technological breakthroughs In our 19th Annual Global CEO Survey, released in January 2016, business leaders recognised technology as one of the biggest disrupting forces in their organisations. Furthermore, the price of new technologies is falling equally rapidly and at the same time, digitisation via the internet has created extraordinary value, as exemplified by companies like Google. Social media continues to steadily strengthen its position as a dominant force in the day-to-day lives of people across the globe, enabling many of the world s top brands to deepen their relationships with customers. The impacts of digital disruption are now so pervasive that no business in any sector from the smallest family business to the largest multinational is immune to them. For businesses, having a digital strategy will no longer be enough. Instead, they ll need a business strategy fit for the digital age. Climate change and resource scarcity As the world becomes more populous and urbanised, the demand for energy, food and water will rise, while our planet s natural resources to satisfy these needs remain finite. Businesses 16 PwC Integrated Reporting

17 PwC 17

18 Business model and value creation PwC s business model is the centre of the organisation. It sets out the inputs, business activities that impact on these inputs, Inputs Our inputs are the resources or capitals used in our business and include human, intellectual, financial, social and relationship, and manufactured creation over the short, medium and long term. Human capital Being in the service industry, our human capital is a material resource. Not only do we employ professional staff to provide client services, we also ensure that we develop our talent to their full potential. As such, we deploy significant financial capital resources in training and developing of our people throughout our assurance, tax and advisory lines of service as well as our support staff. Intellectual capital Our intellectual capital includes the PwC brand, the intellect of our staff, blueprints and best practice tools, and the various IT systems and software applications we utilise in providing quality service to our clients. The depth of our industry expertise is an attribute that our clients value highly, and we invest significant financial and human capital resources in building and sharing such knowledge. We also invest substantial resources in IT systems and software applications to ensure that the services we provide are innovative and on par with marketleading practices. Financial capital The majority of our financial capital is generated through the deployment of our human and intellectual capital, which results in revenues being received from clients based on time charged for services provided. The monitoring and oversight of client fees remains the responsibility of the PwC leadership. Business activities One of the foundations of our success is our ability to adapt our services to meet the needs of our clients. Teams are aligned to the industry groupings in which that we focus on. Our clients value our rigorous, practical approach, characterised by a detailed understanding of their individual issues and deep industry sectors we provide services to include: agribusiness; asset and wealth management; automotive; banking and capital markets; chemicals; energy, utilities healthcare; higher education; hospitality and leisure; industrial manufacturing; international development; insurance; medical schemes; pharmaceuticals; Key lines of services Core Assurance Risk Assurance Advisory Outputs At the core of the organisation is its business model, which draws on various capitals as inputs and, through its business activities, converts them into outputs (products, services, by-products and waste). Outcomes The various capital inputs are used through our business activities and converted into outcomes. Human capital Intellectual capital Financial capital Developing chartered accountants Developing CAs is of significant importance not only to our profession, but for the broader South African economy as a whole. To ensure the sustainability of the firm and the accounting profession, PwC has a strong commitment to bursary sponsorship. PwC spent R23.6 million on bursaries in the 2016 financial year, 78% of which went towards assisting African, Coloured and Indian (ACI) students. On an annual basis PwC spends 12% of its leviable amount on training ACI staff and bursaries for African and Coloured students, including its contribution to SAICA s Thuthuka Bursary Fund. Promoting thought leadership We are in constant dialogue with our clients and the wider community about the issues affecting them. Due to our experience within our industry and knowledge of our clients and the industries in which they operate, we are subject matter experts in a variety of areas. As a value-added service to our clients and society at large, our dedicated thought leadership team focuses on delivering relevant learning and development solutions through the PwC Business School. We offer various articles of interest and thought leadership publications, where readers can earn verifiable continued professional development (CPD) points using online questionnaires. R1 million was invested in thought leadership publications during the financial period. Information technology R216 million invested in IT and software application systems in Fostering trust in the financial markets The global financial crisis saw the erosion of trust in the financial markets. Trust forms the foundation of our profession as, while clients trust us with their confidential information, shareholders and stakeholders trust that our opinions are accurate and reliable. We recognise the importance of ethics, integrity and building trust in everything we do, values that lie at the heart of our business. Our code of conduct nurtures a culture that supports and encourages all PwC people to live these values.the true value of an audit is in ensuring compliance with exacting rules, regulations and standards and also in assisting our clients in managing the financial hurdles that they encounter on a daily basis, as well as assisting them in improving financial reporting and related internal controls processes. 18 PwC Integrated Reporting

19 outputs created and resulting outcomes depicting the way in which PwC creates value in the short, medium and long term. capital. These capitals are interdependent stocks of value that are increased, decreased or transformed through our business activities, leading to value Social and relationship capital Our purpose as PwC is to contribute to a greater level of trust in society and to solve important problems. This is the yardstick by which we judge all we do. We promote our purpose internally and externally, and it is part of the dialogue we have with our stakeholders, who ultimately judge whether we are living up to our purpose. Key stakeholders include our employees, clients and society, and regular engagement takes place with these stakeholders at various levels within PwC. The stakeholder engagement table on page 29 provides details of our various stakeholder engagements. Manufactured capital Our manufactured capital consists primarily of the 23 properties we lease in South Africa. We invest substantial amounts of financial capital to ensure that we maintain our properties in pristine condition. Our new buildings follow best practice in terms of energy efficiency, and innovative green technology has been implemented to provide a healthier and more productive environment for our staff. In addition, these new buildings include state-of-the-art client meeting rooms with video conference facilities, Wi-Fi access, boardrooms as well as Business School training facilities and Innovation Hubs. Natural capital We appreciate that resources such as energy and water are scarce commodities in South Africa. As such, we strive to reduce our energy, water and paper consumption through various technologies and initiatives. they have the most expertise, enabling them to deliver tailored solutions to problems in these sectors. We serve many of the leading businesses in every sector knowledge and experience. Our clients range from the country s largest and most complex organisations to some of its most innovative entrepreneurs. Industry and mining; engineering and construction; entertainment and media; financial services; forest, paper and packaging; government and public services; retail and consumer; retirement funds; telecommunications; technology; transportation and logistics. Further discussed on page 20. Private Company Services Tax Support Services Section Output references Outputs Page About PwC Line of service including: Assurance, Advisory and Tax Page 10 Societal impact of our services Carbon footprint information Page 48 Social and relationship capital Manufactured capital Natural capital Adding value to clients The depth of our industry expertise underpins our success and the value we provide to our clients. Our industry-aligned teams are experts in their fields, enabling them to deliver tailored solutions to complex issues affecting specific sectors. Our traditional core competency of assurance has expanded over the years with the development of additional services to address clients growing needs. Impacting the broader society Employment impacts on the broader society as salaries are expended. The total value of salaries paid by PwC South Africa was R2 billion in the year under review. Our supply chain has a direct and broad economic impact on various sectors. We also actively incorporate corporate responsibility as part of our core business strategy and invested R9.4 million in 2016, in various initiatives to uplift the communities within which we operate. Embracing transformation, diversity and inclusion In a diverse country such as South Africa, it is important to reflect the demographics within our organisation. Building and maintaining resilient, long-lasting relationships between people with a mix of talents, experiences and backgrounds yields a multitude of benefits for both PwC and our clients. We continue to embed transformation, diversity and inclusion into our culture across all service lines. Utilising energyefficient technology Our new leased buildings in Johannesburg, Cape Town and Durban follow best practice in terms of energy efficiency, which assists in minimising our impact on the environment. Limiting our impact on the environment We seek excellence in every aspect of our business and believe that we can create value for our business and communities by respecting the environment and understanding how our actions impact the world around us. PwC 19

20 Business activities Core Assurance Our Assurance group provides audit and assurance services to clients on their financial performance and operations, as well as helping them improve their external financial reporting and adapt to new regulatory and accounting requirements. Our audit approach can be tailored to meet the needs of any size organisation. Our audit clients include many of the topperforming companies on the Johannesburg Stock Exchange (JSE), as well as many small and mid-sized businesses. In addition to audit services, we also provide accounting and regulatory advice and other assurance-related services. In every case, a PwC audit is underpinned by our industry knowledge, wide international experience, global network of skilled professionals and commitment to delivering quality services. Risk Assurance Our Risk Assurance services provide clients with confidence, clarity and insight in a dynamic and evolving market environment. We assist our clients in building risk-resilient businesses, and work with them to solve important problems. Five core competencies underpin our service offering: IT Risk Assurance, Internal Audit and Risk, Performance Assurance, Financial Services Risk and Regulation, and Actuarial, Risk and Quants Services. Advisory Our Advisory Services design strategies and create sustainable solutions to help our clients innovate, grow, reduce costs and leverage talent. Some of the key focus areas include helping organisations to change, increase performance, align support functions to business needs and manage governance. Private Company Services Our past and continued involvement with business leaders gives us a broad understanding of the unique demands and challenges facing private companies today. We strive to develop professionals known as Trusted Business Advisors who work closely with our industry experts to provide tailor-made solutions that are specifically geared to adding value in the private company environment. In addition, they act as a gateway to all the knowledge and expertise of our entire organisation, combined with a comprehensive understanding of local markets and industries. Our clients, therefore, have access to an integrated service delivery approach encompassing any combination of the firm s services. Tax Taxation is one of the biggest cost items in any business, yet it is one of the most manageable. Using state-of-the-art methodologies and technology, coupled with specialist skills, our team of tax advisors assists clients to manage their tax risk and, where possible, minimise their tax burden by providing innovative and practical tax and business solutions. Our advice covers all aspects of Southern African direct and indirect taxes, exchange control regulations and employee-related issues. Through our extensive network of international offices, we are also able to provide advice on structuring international business operations and investments. Support services We have several support services that work behind the scenes to ensure that our PwC offices all operate in a cohesive manner and engage with a consistent message. These support services cover areas such as administration, finance, human resources, technology, marketing and legal. 20 PwC Integrated Reporting

21 Strategy Vision 2020 For over 165 years, PwC has built trust in the critical systems that have enabled governments, businesses and societies to function. We have consistently displayed an ability to see, understand and adapt to the evolving world, while establishing ourselves as people with high standards of excellence and integrity, and a brand that others turn to when they need help and guidance, insight and reassurance. But the world we find ourselves in today is very different to what we faced in the past, as social, political and economic trends influence and shape everything around us. Global megatrends are changing the world at a staggering pace, creating an environment characterised by: Institutions that are decreasingly fit for purpose; Growth in nations with alternative political economies; A market that is rapidly becoming more complex, transparent and interdependent; and Continuous and accelerating digital disruption. These four key themes will fundamentally change the structure of our market. It is therefore imperative for us to be agile, relevant and distinctive in the market to capitalise on these changes and look for opportunities to grow our business. Vision 2020 is guided by our purpose and driven by our exceptional people. Our distinctive culture attracts, supports and guides our talented practitioners through our values and behaviours, as shown in the accompanying table. Our network s values Act with integrity Make a difference Care Work together Reimagine the possible Speak up for what is right, especially when it feels difficult Expect and deliver the highest-quality outcomes Make decisions and act as if our personal reputation were at stake Stay informed and ask questions about the future of the world we live in Create impact with our colleagues, our clients and society through our actions Respond with agility to the ever-changing environment in which we operate Make the effort to understand every individual and what matters to them Recognise the value that each person contributes Support others to grow and work in the ways that bring out their best Collaborate and share relationships, ideas and knowledge beyond boundaries Seek and integrate a diverse range of perspectives, people and ideas Give and ask for feedback to improve ourselves and others Dare to challenge the status quo and try new things Innovate, test and learn from failure Have an open mind to the possibilities in every idea PwC 21

22 Vision 2020 To deliver our network vision, we need to invest in our core lines of service, critical markets and new priority services, as well as funding new businesses, disrupting our existing businesses and transforming our technology platform. Five megatrends are changing the world. Our clients and society are facing unprecedented our purpose has never been greater... Demographic and social change Shift in global economic power Rapid urbanisation Resource scarcity and climate change We will be the pre-eminent professional services network, leveraging our values-driven culture Governace Leader in building and sustaining trustbased institutions Be relevant and help enhance trust for our stakeholders (clients, regulators and institutions) Multi-nodal organisation Be embedded in, and operate across, the dominant and emerging political economies around the world We will start by directing growth Evolution Capture additional value in our existing lines of service Expand in critical markets Extend the core into new priority services We will build a globally consistent capabilities system that will position us to realise our strategy, 22 PwC Integrated Reporting

23 opportunities and challenges, both in scale and complexity. The opportunity for us to deliver on Technological breakthroughs Governance Stakeholders Distinctive people and culture to build trust in society and solve important problems. Client service from strategy through execution Bring to our clients quality end-to-end solutions leveraging the depth and breadth of our expertise Technology-Enabled innovator Use technology to transform, disrupt and grow our business, bulding relevance through innovation and alliances Stakeholders and investment toward four key areas. Revolution Preferred in technology-enabled ecosystems reminding ourselves that it is the execution that matters. PwC 23

24 Lines of service While our lines of service are all aligned with Vision 2020, they also have their own ambitions to ensure that the network s vision is achieved. These are described below. Assurance Core Assurance Our intent is to keep our ambitious momentum going within the Assurance practice and continue to grow our business. This intention is underpinned by the following: Ensuring audit wins through collaboration within the PwC network and by supporting key clients; Focusing on clients needs to drive growth; Ensuring consistency and quality in all we do; Leading in digital transformation and technology; and Encouraging talent mobility and development. Risk Assurance We continue to invest in deepening client relationships, prioritise innovation and develop our talent pool to ensure that we continuously provide insight and value to our clients by solving their most challenging problems. Strategic priorities include: Authentic client relationships: Growing influential relationships with key decision-makers and the next generation of leaders; High talent diversity: Developing critical mass, with deep industry expertise in large and high-growth sectors; Compelling propositions: Adopting a holistic approach, to set the agenda and respond swiftly to client and industry problems; Sharp focus on market penetration: Driving account intensity and pursuing opportunities with agility; and Enthusiastic and inspired team: Living and breathing consistent behaviours that shape our culture. Advisory Our intent is to build a stronger Advisory practice that delivers branddefining value to our clients, which includes focusing on the following: Ensuring that the PwC Deals and Consulting brand is highly regarded in the market by our clients, our people, our competitors and the broader PwC network and that the division is recognised as the experts in their chosen fields of operation, the first choice for our clients, and the practice that attracts the best talent; Increasing our market share of the total market for Advisory services and growing the Advisory practice as a contributor to PwC South Africa with a focus on profitability; Being able to deliver on our commitments to strategy through to execution and our priority services, including specialist capabilities in predictive analytical solutions, digital technology and enablers, and cybertechnology across all industries, competencies and lines of services; Supporting the transformation of our technology platform (to Google) to support the business and leverage global tools to enable us to be more efficient in our operations and service delivery; and Implementing an Africa delivery model and considering where we can build centres of excellence across the continent. Tax Our intention is to grow a dominant network in South Africa and to maintain and grow our market share. This is to be achieved through new priority service offerings, namely legal, tax reporting strategy and data analytics as well as by: Creating a great place to work for; Developing the tax professional of the future by upskilling our people; Constantly looking at how we can disrupt our own business to keep abreast of our dynamic operating environment; and Implementing new business and wealth creation models. 24 PwC Integrated Reporting

25 Material issues We view a material issue as any matter of importance that has the potential to affect our ability to create value over time. The seven material issues identified in this section continue to inform PwC South Africa s strategy. The table below lists our material issues, taking into account our risks and strategic choices. These are discussed throughout this integrated report, including in the message from the chief executive officer. Material issue Quality and compliance People and talent management Transformation, diversity and inclusion Understanding our financial performance Innovation Confidentiality of client information and data security Societal impact of our services Why this is a material issue High quality and uncompromising compliance form the foundation of our success and is a strategic priority for the firm. We constantly focus on quality and work systematically to develop, optimise and maintain our quality and risk management processes. The development of our employees is critical to the sustainability of the firm and is underpinned by our unwavering commitment to quality and integrity. The expert guidance, strategy and advice we offer our clients are all down to our people. To enable this, we require ongoing attention to attracting, developing and retaining the right people and providing a work environment that challenges and supports our people and is enjoyable to work in. Transformation is a business imperative. Our strategic focus centres on accelerating our transformation journey to remain relevant in the South African market. Financial sustainability is critical to the long-term future of the firm. As such it is vital that there is ongoing responsibility for establishing systems of internal control and for reviewing and evaluating their effectiveness. Megatrends have a major impact on business and society, and we recognise the disruption technological innovation is bringing for many of our clients, as well as our own business. As such we channel this disruption positively and maximise the improvement that digitalisation can bring. Information and technology assets are highly valuable and must be safeguarded. To ensure the continued protection of the PwC network and to maintain a secure environment for economic growth, we have an information security approach that is aligned with leading industry standards. PwC s societal impact incorporates its brand, corporate responsibility and environmental impact. In executing our corporate strategy we strive to create positive change in the world through our social initiatives, services offered and limiting our impact on the environment. Link to strategy Leader in building and sustaining trust-based institutions Be relevant and help enhance trust for our stakeholders (clients, regulators and institutions) Client service from strategy through execution Bring to our clients quality end-to-end solutions leveraging the depth and breadth of our expertise Leader in building and sustaining trust-based institutions Be relevant and help enhance trust for our stakeholders (clients, regulators and institutions) Leader in building and sustaining trust-based institutions Be relevant and help enhance trust for our stakeholders (clients, regulators and institutions) Technology-enabled innovator Use technology to transform, disrupt and grow our business, bulding relevance through innovation and alliances Leader in building and sustaining trust-based institutions Be relevant and help enhance trust for our stakeholders (clients, regulators and institutions) Leader in building and sustaining trust-based institutions Be relevant and help enhance trust for our stakeholders (clients, regulators and institutions) PwC 25

26 Risks and mitigating actions We have a clear business strategy, and to implement this strategy it is vital that we also manage the risks associated with it. As a result, we have a defined process for assessing, monitoring and controlling risk. The leadership team takes overall responsibility for managing risk; however, our lines of service leaders and our internal firm support services report annually to the leadership team on how effectively they have managed the risk during the year. Our risk and quality functions oversee our professional services risk management systems and report directly to the leadership team. Periodic reviews of performance and quality are also carried out independently by the PwC network. PwC s purpose serves as a guide for the strategic choices we make as a firm, including managing our risks. Ethics, quality and compliance Stakeholder groups Risks Mitigating actions Clients PwC employees and partners PwC Global Network Ethics Significant lapse in judgement or unethical behaviour by partners/staff of PwC South Africa that leads to our inability to competently serve clients. Regulators (IRBA, JSE, FSB, SARB, PCAOB, NCR, Council for Medical Schemes) Investors/Financial markets Professional industry bodies (SAICA, ISACA, IIA, SAIPA) Government SARS Quality Significant quality failure in the South African firm or the PwC network due to either engaging with an inappropriate client or inadequate delivery of services leading to a potential service failure, litigation and/or regulatory action. Independence and regulatory requirements Failure to comply with relevant independence, legal, ethical, regulatory or professional requirements. Regulatory change Failure to effectively manage the impact of changes in the multiple regulatory regimes, both South African and non- South African, under which the South African firm operates. Our code of conduct offers a broad range of guidance about standards of integrity and business conduct. It specifically addresses issues such as behaviour by employees, the firm s obligations as a responsible corporate citizen, upholding the PwC name, and respect for clients and colleagues. Our internal quality management systems are designed to maintain and enhance quality. These include: Recruitment standards and staff development procedures. Client engagement and acceptance processes. Client engagement standards supported by methodologies and tools. Quality reviews of PwC network firms, including the South African firm. Monitoring and reviewing key performance indicators by the leadership team. Established compliance and independence management systems, including: Clear policies, procedures and guidance. Mandatory annual training for all partners and staff. Client and engagement acceptance procedures. Annual independence and compliance submissions for all partners and staff, enforced by penalties for non-compliance. Regular monitoring and reporting to the leadership team. Regulatory affairs team that leads the firm s efforts to track all changes in applicable regulatory regimes, of whatever origin, under which the South African firm operates. Regular updating of the firm s processes and procedures to ensure compliance by all our people with all applicable regulations. Regular direct interaction, where possible, with regulators to understand detailed provisions of changes and the implications for our businesses. Regular/Continuous monitoring of the cumulative impact of changes in the regulatory environment on the firm s ability to provide services to audit clients. 26 PwC Integrated Reporting

27 People and talent management Stakeholder groups Risks Mitigating actions PwC employees and partners Recruits Universities Clients People and talent recruitment and retention Failure to engage fully with our people, impacting our ability to attract, develop and retain the best talent and provide quality services. Acquisitions Failure to integrate newly acquired businesses, non-realisation of expected synergies and inadequate on-boarding of new partners and staff. Physical security Failure to safeguard the physical security of all our people, wherever they are deployed on the firm s business, including within our own premises in South Africa. Mobility Inability of staff to move between African countries to deliver a consistent service. Regular reviews of the market for students and experienced talent to understand the firm s relative competitive position. Embedding the PwC leadership framework to support the career progression of our people. Supporting staff engagement. Use of various communication and discussion channels to engage with our people. Monitoring and review of key performance indicators by the leadership team, including staff surveys, salary and benefit benchmarking, external Brand Health Index and regular client feedback. Firm-wide travel policy and processes for all our people, incorporating 24/7 tracking and, where appropriate, consultation with a dedicated security team. Comprehensive security infrastructure covering all our premises. Continuous monitoring of threat levels and issues in overseas travel destinations, and potential threats to our local premises. Talent mobility programme in place. Transformation, diversity and inclusion Stakeholder groups Risks Mitigating actions PwC employees and partners Transformation Transformation strategy in place. Clients Government Regulators Failure to achieve transformation targets and remain competitive in the South African market. Transformation performance against targets measured by transformation and leadership committees. Understanding our financial performance Stakeholder groups Risks Mitigating actions PwC employees and partners PwC Global Network Financial risks Risk of reliance on key clients Risk of inadequate financial controls within PwC. Cash-flow management. Ability to obtain project funding. Governance structures in place to monitor financial controls and performance within PwC. Regular leadership meetings take place to discuss financial performance of the firm. PwC 27

28 Innovation Stakeholder groups Risks Mitigating actions Clients Business partners Corporate society Suppliers Digital maximisation and disruption Failure to use advanced technology to underpin new business models and cost structures for existing and new services. New business Failure to manage risks created by innovations in service delivery. Significant investment in new and innovative technology solutions for existing services. Commitment to new platforms to allow delivery of quality services at a more competitive pricing point. Firm-wide process for reviewing new business so that relevant risks are identified promptly and addressed. Confidentiality of client information and data security Stakeholder groups Risks Mitigating actions Clients Government Data compromised Failure to safeguard confidential information. Professional industry bodies Regulators Information protection team, chaired by a member of the leadership team, which provides overall strategic direction, framework and policies for information security. Governance and policies for client data and other information. Physical, technical and human resource controls. Incident response capability. Regular monitoring and independent review systems. Societal impact of our services Stakeholder groups Risks Mitigating actions Corporate society NGOs General public Public perception and reputation Failure to respond in a transparent manner to issues Media raised by the public interest Environment debates. Business partners Impact on the environment Inability to minimise the impact of PwC s service delivery on the environment through excessive travel, energy-inefficient buildings, excessive use of paper. Embedding a culture of doing the right thing in our people, our clients and our communities, as a matter of strategic intent. Conducting open and active engagement in serious debate with relevant stakeholder groups on trust-related and public interest issues to inspire change. Sharing of knowledge and insights on trust to sustain, widen and enrich the discussion. Environmental management policy in place. Energy-efficient building technologies in place. Monitoring of carbon footprint. 28 PwC Integrated Reporting

29 Stakeholder relations To create the most value for our businesses and communities, PwC consults with internal and external stakeholders to help influence business priorities. Key stakeholders include our employees, clients and society. Regular engagement takes place with these stakeholders at various levels within the firm. Stakeholder engagement, both internal and external, is essential to understanding and meeting our stakeholders needs. Internally, we collaborate across lines of service, industries and geography to provide quality solutions for our clients. Our people are equipped with the best tools to enable them to solve our clients problems. Externally, we actively engage with our clients to: Bring the best of the PwC network to bear in addressing their challenges; Develop foresight that informs our client work and drives understanding of their future needs; and Consistently deliver superior quality to add client value. We also engage with local communities to identify and assist with socio-economic development initiatives to expand our impact on broader society. The table that follows provides examples of engagement activities carried out locally in order to gain in-depth insights into the needs and wants of our various stakeholders. Engagement activities Stakeholder groups Types of engagement Outcomes Clients Relationship management, Understand client industry and business challenges. satisfaction surveys, participation in Identify opportunities to improve our service and industry and client forums. products. Building trust-based relationships. Employees, partners, potential recruits, alumni Global institutions and nongovernmental organisations, local government departments and entities within national and provincial government, regulators, professional bodies and general marketplace Media Local communities and not-forprofit organisations Suppliers Annual PwC Global People Survey, focus groups, regular career meetings, recruitment fairs, university lectures and contests, publications and webcasts, alumni events and newsletter, local corporate responsibility champions. Participation in expert forums and continuing dialogue, reports, publications and surveys, collaboration on projects, participation in standard-setting bodies, ongoing discussions with regulators. News releases, surveys and results announcements, conferences and round tables, and continuing conversations with journalists. Board positions, participation in forums and platforms, collaboration on non-profit projects, review meetings with local community partners, provision of professional expertise, mentoring and volunteering. Formal supplier assessments, regular dialogue with suppliers. Inform stakeholders about our talent strategy and working opportunities. Well-being assessment of our people. Create a diverse and inclusive workplace. Recruitment, retention, referral. Understand and enhance our people s attitudes and knowledge of corporate responsibility. Contribute to marketplace thought leadership. Help shape policies, regulations and standards. Identify emerging developments in policy. Engage in relevant debates. Opportunity to communicate our performance and success stories. Share our thought leadership, and insight into public and business concerns. Understand market sentiment. Inform communities about investment decisions. Shape joint community programmes. Develop opportunities to broaden our people s experiences. Work in partnerships to develop solutions to specific challenges. Understand supplier concerns. Mutual support to enhance quality of service and corporate responsibility standards in our supply chain. Preferential procurement policies further discussed on page 39. PwC 29

30 Performance overview Quality and compliance PwC is committed to providing high-quality professional services and to conducting our business ethically. Our good name and reputation are the cumulative product of the conduct, and dedication and the quality of our people and the work they do. Overview Quality and compliance are fundamental to all our operations and represent what clients expect from us. They are a strategic priority for the firm and we work systematically to develop, optimise and maintain our quality and compliance processes. This mindset is championed by our leadership and extends to every level and every individual in the firm, in our quest to deliver the value our clients and stakeholders are looking for. PwC s quality control system complies with ISQC 1 standards and requirements, which address six critical elements: Leadership responsibilities for quality within the firm (the tone at the top ); Ethical requirements (including independence, integrity and objectivity); Acceptance and continuance of client relationships and specific engagements; Human resources (including personnel management, and learning and education); Engagement performance; and Monitoring. Quality and compliance Quality control standards PwC is subject to a review of its quality control policies and procedures in terms of ISQC 1 by our local audit regulator, the IRBA, and the quality control standards established by the PCAOB. Both reviews are carried out in a three-year cycle and, there have been no materially adverse findings against the firm. The last IRBA and PCAOB inspections took place in 2015 and 2014 respectively. Quality control procedures Our quality control procedures include the following elements: Tone at the top: PwC s leadership is committed to quality as its foremost priority, which it demonstrates through the effective and consistent prioritisation and communication of quality throughout the firm. The firm expects its partners and staff to commit themselves to delivering the highest quality work that adds insight and value to our clients. We remain committed to taking action to ensure that our firm continues to stand for quality, independence and objectivity. Professional ethics and compliance: PwC is an organisation with people of integrity and distinction. Our values reflect what is important to us, as well as our individual and collective motivations. We are bound to one another and our firm by our shared values and behaviours of acting with integrity, making a difference, caring, working together and re-imagining the possible. In order to grow and develop the firm in the right direction, we need to be aware of our values and how they influence decisions and actions. PwC s ethics officer oversees the firm s ethics and business conduct programme and provides regular feedback to the social and ethics committee. One of the key components of our programme is a whistle-blower hotline, which protects the confidentiality and identity of informants. Our compliance programme provides tools and resources to support both the firm and employees compliance efforts. This programme encompasses a number of functions, including independence, continuing professional development (CPD) compliance, privacy and ethics, as well as supporting compliance functions across all lines of service. Independence, integrity, and objectivity: Independence includes both independence of mind, which allows employees to be objective and apply professional scepticism, and in appearance. PwC has extensive systems to monitor the independence of the firm and individual professionals within the firm. Our independence policies are readily available to staff and are reinforced through periodic, mandatory training. In compliance with the requirements of the JSE Limited and the Companies Act 2008, lead audit and quality review partners on listed company audits are rotated every five years. There are also separate rotation requirements applicable to other partners who play a significant role on listed company audits. 30 PwC Integrated Reporting

31 No client individually constitutes a material element of the firm s revenue, and the firm and its partners, therefore, have the necessary freedom to act with independence, objectivity and integrity. Consultation: There are specific matters on which PwC s partners are required to consult with professional and technical experts. Engagement teams are also encouraged to consult on other matters as warranted by facts and circumstances. In the Assurance practice, our focus is on whether the company s accounting is appropriate and its financial reporting transparent, rather than finding a way to simply agree with management s views. In the event that an engagement partner disagrees with the advice provided by our technical experts, a resolution process provides guidance for moving the discussion through our chain of command until the matter is satisfactorily agreed upon and collectively resolved. Personnel management: PwC maintains stringent hiring standards for both entry-level graduates and experienced hires, which include not only an assessment of academic records but also interviews, background checks, psychometric assessments and reference checks. Once hired, staff members participate in a variety of formal training courses with a curriculum tailored to meet the needs of their roles and responsibilities as they progress in their careers. The annual assessment process captures information about how well each of our staff has performed relative to our values, the goals each person has set for the year, and their peers. This process also emphasises the importance of sustained quality above other performance criteria. Partner and staff performance is evaluated annually through a review process that includes peers, subordinates and supervisors. Partners and staff are evaluated, recognised and rewarded for performing as competent employees, consistent with the firm s focus on quality. Our key audit partner evaluation and compensation processes are structured in accordance with the professional rules prohibiting direct compensation for selling non-audit services to audit clients. Risk and quality control Risk management: PwC s risk management structure consists of experienced partners who ensure that risk is well managed within the organisation. They play an integral part in our client acceptance and retention process, assessing risk on both a qualitative and quantitative basis. In addition, audit engagement teams are required to consult with risk management partners on a variety of issues and judgments, such as certain materiality and going-concern considerations. Client acceptance and retention: PwC has a proprietary information system to support client acceptance and retention decisions. The system involves the engagement team, industry experts and risk management partners to determine whether the risks related to existing or potential clients are manageable and whether PwC should be associated with the particular company and its management. Control activities Audit engagement performance: PwC has a global methodology that is reinforced PwC 31

32 with comprehensive policies and procedures that are regularly updated to reflect the latest professional developments and to address emerging issues. These policies and procedures cover professional and regulatory standards, as well as guidance on how best to implement and apply the standards. Engagement quality controls: While many aspects of PwC s system of quality control apply to all engagements, there are certain procedures performed specifically with respect to particular audits. For example, our listed company clients and certain other clients have a quality review partner assigned, whose responsibilities include reviewing the audit strategy, considering PwC s independence, and discussing the significant risks identified by the engagement team and our responses to those risks. Professional standards: To keep up to date with relevant professional standards and developments, information is available to PwC partners and staff regardless of their location, through our system of databases and ongoing communications. Alerts on regulatory, accounting and auditing developments: Regular communications inform our partners and staff of new standards, legislation, and practices, and provide related guidance to assist them in providing high-quality service to clients. These topics are periodically reinforced through training and online webcasts. Litigation and indemnity: Given the wide array of services we render, and consistent with the experience of other major professional services firms, PwC South Africa is, from time to time, a defendant in claims for damages. The firm has professional indemnity insurance for such instances. Monitoring Quality reviews: PwC has an internal quality-monitoring programme. This programme includes inspection of a partner s work to evaluate whether our quality controls are functioning properly on an engagement. It also provides management with reasonable assurance that our examinations and other services are being performed in accordance with applicable professional standards and PwC s policies and procedures. Reviews are conducted annually, with engagement partners being subject to periodic review, generally at least once every three years. Admission to the partnership is also conditional upon the individual being subject to and achieving a successful outcome from a review. Our inspection process also involves periodic testing of the effectiveness of our quality controls in functional areas such as hiring, training, advancement, ethics and independence. Quality monitoring is also an integral part of our continuous improvement programme. PwC constantly evaluates inputs from formal and informal programmes in an ongoing effort to improve our policies and procedures, and the consistency and quality of our work. In addition, we continuously evaluate the effectiveness of the design and operation of our quality control system. 32 PwC Integrated Reporting

33 People and talent management PwC Professional guides the following areas: Recruitment: We recruit future PwC professionals, and their assessment during interviews is aligned to the PwC Professional attributes described above. Training/Coaching culture: PwC s Business School offers world-class learning and development programmes to our people. These can be accessed in our MyDevelopment system, which houses our curriculum of courses. Attendance can be booked and recorded. Building a pipeline of future talent is achieved through talent management programmes, including Prism, Altitude and Genesis Park. Overview PwC Professional: As PwC professionals, we expect and empower our people to lead themselves, lead others and strengthen the firm. Technical capabilities include the ability to build strong relationships. Having business as well as global acumen is key. We had a total of staff at the financial year end (2015: 4 602), which is further broken down on page 38. The development of our staff is critical to the sustainability of our business, and even though individuals are driven by different aspirations, we share the same commitment to quality. Our work is carried out to best practice standards in an exciting environment where success thrives. The expert guidance, strategy and advice we offer our clients is provided by our staff, making recruiting the right people critical to the firm s success. We strive to provide challenging work, while developing our staff s foundational, technical, and leadership skills, and helping them progress their careers within the firm. The firm makes a contribution to the external market by training CAs in excess of the firm s own longer-term requirements. The annual internal retention target ranges between 30-35%, depending on the business need. Training contracts typically end in December and offers were extended and accepted by 34% of associates ending their training contract during the period under review. Voluntary cumulative staff turnover for the year was 14%. This was made up of permanent staff and trainee accountants who qualified and left the firm. PwC financially supports a number of bursary applications from employees annually for professional qualifications that include CFA, CIMA, Prince 2 and CFE. In addition, 50 graduates join our two-year Foundation for the Future learnership programme every year. The graduates joining this programme have a variety of qualifications, including degrees in engineering, industrial psychology, information technology and finance. About three-quarters are ACI. In addition, young tax professionals are offered learnerships in our Tax practice. These include the CA(SA) tax elective learnership and the tax professional learnership. The PwC Professional is a leadership development framework for all our people across all territories and all lines of service. It pulls together into one single and simple framework all the skills and capabilities our people need to meet and exceed our client s expectations. The five attributes of the PwC Professional are Whole leadership, Relationships, Global acumen, Business acumen and Technical capabilities. The PwC Professional Relationships Global acumen Whole leadership Business acumen Technical capabilities PwC 33

34 Key performance indicators Headcount Total Female Male ACI White Employee profile 60 % 50 % 54 % 54 % 54 % 55% 54 % 55 % 50 % 46 % 47 % 46 % 48 % 45 % 40 % 30 % 26 % 27 % 27 % 27 % 28 % 30 % 20 % 10 % 0 % % female % ACI % ACI female Movement Partner admissions Partner exits New employees Total ACI Total ACI Total ACI Female Other Global People Survey Skills development spend R millions People engagement score (out of 100%) % % 58.1 PwC candidates vs total SAICA ITC results, 2016 ACI White Total Result PwC SAICA PwC SAICA PwC SAICA Fail Pass Total Pass rate 71% 59% 83% 80% 76% 67% 34 PwC Integrated Reporting

35 PwC candidates vs total SAICA APC results, 2016 ACI White Total Result PwC SAICA PwC SAICA PwC SAICA Fail Pass Total Pass rate 92% 84% 93% 94% 93% 88% Talent and performance management Our human capital function guides the identification, development and progression of talent, but accountability for talent remains within the lines of service, with talent review groups and an overall talent council in place for governance. Performance is measured across the business through the performance management system, in which our people create development plans, receive feedback on job assignments, and discuss and agree a final annual performance evaluation. The system helps ensure the consistent delivery of quality work which our clients expect. Failure to participate in the performance process results in an exclusion from the annual remuneration review. Retention Retention of our talent is key to achieving our organisational purpose, driving quality client delivery, and providing overall client satisfaction and staff engagement. Elements that contribute to the retention of staff are articulated in our overall employee value proposition, which encapsulates the areas of personal growth, work, recognition, rewards, the firm, and our people. Challenging and interesting work, mobility, personal growth and development are important to our people. The emphasis on retaining our people is to ensure a good work environment in which the individual is supported by their coach to enhance their strengths and address development areas. An interactive online course, Spotting development opportunities, is offered to all staff to create a development-focused mindset. The course had been completed by 83% of staff across all grades by 30 June Reward The firm s reward philosophy is based on clear principles associated with reward management. As such, roles are graded based on complexity using the Patterson grading system to ensure that the role is positioned at the correct level within the firm. These grades are also aligned to salary bands determined through external market benchmarking, which ensures that our salaries are competitive. Scarce and expert skills are also benchmarked to ensure that we can retain our talent and provide the best for our clients. The firm supports a performance culture upon which reward is based. Our people are awarded increases every year based on performance. Bonuses are also payable once a year to managerial-level staff according to the firm s performance. Engagement Every year the South African firm participates in the PwC Global People Survey (GPS) to obtain feedback from our people on their experience of working at PwC. The survey also measures our people engagement landscape and our staff s awareness of and buy-in to the organisational purpose. The survey findings provide insights to leadership on areas of strength as well as those requiring attention. Participation is through an anonymous online survey and each country draws its own reports for analysis and feedback to leadership. A participatory process is followed for the sharing of results and drawing up action plans. PwC South Africa achieved a People Engagement Index score of 73% (2015: 76%), which indicates that employees answered favourably on the following questions: I am satisfied with PwC as a great place to work; I am proud to work at PwC; I would recommend PwC as a great place to work; and I plan to be working at PwC 12 months from now. PwC 35

36 Transformation, diversity and inclusion As the PwC transformation leader, I am proud of the initiatives and programmes we have in place aimed at making PwC an employer of choice. We are making a noticeable difference within our profession and the communities within which we operate. Nana Madikane, Transformation, Diversity and Inclusion Leader PwC South Africa Overview We recognise and embrace the importance and values of B-BBEE. It is not only about compliance, but being committed to making a difference in the broader community in which we operate. We are focused on intensifying our efforts to ensure sustainable performance and on accelerating our transformation journey. This will allow us to continue to fulfil our legislative mandate and enable us to deliver more effectively in order to contribute to the growth, development and transformation of the South African economy. Given that transformation is a strategic imperative, we monitor and discuss performance against objectives monthly at PwC s South Market Area Leadership Team meetings as well as quarterly at the Transformation Committee, which is a subcommittee of our Governing Board. Historically, we were measured against the CA sector code until it was repealed on 17 February We are now measured according to the dti s generic codes of the B-BBEE Act, 2003, which have more stringent B-BBEE requirements. The more stringent requirements have prompted us to gain a clearer understanding of the amended codes, and the early planning and continuous gap analysis have proved to be beneficial. In our recent annual audit by rating agency Empowerdex, PwC South Africa received a AAA+ rating, recognising the firm as a good B-BBEE contributor and enabling our clients to claim 135% of their spend with us for their BEE scorecard purposes. This rating encompasses all aspects of B-BBEE, namely ownership, management control, employment equity, skills development, preferential procurement, enterprise development and socio-economic development. Our performance against these aspects is discussed in further detail on page 39. Following the revision of our transformation strategy, we remain confident that we will maintain an improved score in years to come. One of the main objectives in our transformation strategy is increasing the number of ACI trainees in our annual graduate intake. Despite sluggish growth in university graduate numbers, we have maintained an average intake of 55% ACI graduates for the past five years. PwC is currently engaging learners in over 200 schools across the country to provide career guidance and tutoring programmes in mathematics. We also encourage our employees to invest their time and give back to the schools they attended by providing learners with career education and information relevant to subject and career choices. At PwC, we know that the achievers of today are the leaders of tomorrow, and we are committed to continue investing in youth development and developing leaders with the right skills to oversee sustainable businesses. Recognising this, and in line with our purpose, we have invested in a number of initiatives geared to nurturing future leaders, such as our Foundation for the Future programme. This initiative takes talented young graduates and exposes them to various operational disciplines within the firm, and provides them with opportunities to be mentored by directors and senior managers. The true success of such a programme comes when opportunities are provided to individuals from underprivileged backgrounds. Initiatives to boost the number of black chartered accountants began at PwC more than a decade ago. The greatest challenge and cause of the slow pace of transformation has been the scarcity of skills. In order to create an enabling environment in which economic growth continues, while allowing effective transformation to take place, the skills profile of the South African population needs to change and move towards reflecting the demographics of the country. 36 PwC Integrated Reporting

37 Key performance indicators Transformation scorecard Points available Achieved Points available Achieved Ownership Management control Employment equity Skills development Preferential procurement Enterprise development Supplier development n/a n/a Socio-economic development Total Ownership Increasing our levels of ACI ownership is a key focus area for us. We endeavour to empower and promote ACI senior managers to partnership level, with a particular focus on ACI female managers. We have steadily grown our ACI partnership from 8% ACI in 2008 to 29.70% in This growth highlights the successes of our pipeline management strategy over a number of years. Management control At year end, our management committee is 56% ACI, with 22% female; and our governing board is 55% ACI, with 27% ACI women. We aim to maintain the current level of ACI representation and improve on our ACI female representation on the management committee. Profile of top management % 17 % 14 % % 18 % 18 % % 16 % 16 % % 26 % 22 % % 29 % 24 % 2015 % Female % ACI % ACI female 55 % 30 % 25 % 2016 PwC 37

38 Employment equity PwC South Africa employs permanent people, including partners, in South Africa, 50.22% of whom are ACI. Another 30.13% are ACI women, and 0.17% (8) are people with disabilities. The table below shows our employment equity as at 30 June Staff profile at 1 July 2016 Female Male A C I W A C I W Total ProfQual, ExperSpec & MidMgt Manager Senior Associate Senior Associate Senior management Associate Director SkllTech & AcadQual, JrMgt, Suprvs Unskilled & Defined Decsn Making Partner/Director Senior Manager Associate Associate Other Senior Associate Trainee Associate Trainee Associate Trainee Associate Trainee Associate Other Top Management Partner/Director Grand Total A = African; C = Coloured; I = Indian; W = White Skills development PwC spent R60.7 million on learning and development (2015: R58.1 million). Another R23.6 million was invested in bursaries, 78% of which went towards assisting more than 480 ACI students. PwC spends 12% of its leviable amount on training ACI staff and on bursaries for ACI students, including its contribution to the Thuthuka Bursary Fund. This is a fund developed by SAICA to provide bursaries to those who would not otherwise be able to study towards a CA qualification. With the focus changing from a general overall ACI count to looking into the specific race groups and genders, we will ensure that our future learnership and bursary spend is divided according to race and gender as per the Economically Active Population (EAP) targets. These targets use the national demographics in the setting of racial targets under the Employment Equity Act of 1998 as well as the generic codes. Enterprise and supplier development Our enterprise development spend is over R25 million per annum, in excess of the generic code s requirements. We are fully supportive of the generic code s objective of advancing economic transformation and promoting the economic participation of ACI people, in particular, the promotion of ACI-owned and ACI women-owned businesses with 51% and 30% ACI ownership, respectively. Our initiatives include continuous engagement with emerging ACI accounting firms on audit engagements, in order for skills transfer and economic empowerment to take place. The firm is also involved with a number of organisations that aim to advance ACI development in South Africa. These include initiatives such as Business Skills for South Africa (BSSA) and the Faranani Rural Women s Training Programme, an initiative focused on the development of rural women, described in detail on page 4. PwC recognises the importance of developing small businesses in South Africa. Our strategy is to maintain the level of investment in a number of different initiatives, including the aforementioned BSSA and Faranani Programme. In addition, PwC s Accelerator Fund aims to assist emerging companies with solid market traction to accelerate rapidly and become national and global leaders through PwC s worldwide network and extensive competences. The fund is specifically aimed at 51% ACI-owned and 30% 38 PwC Integrated Reporting

39 ACI female-owned qualifying small enterprises (QSEs) and exempted micro enterprises (EMEs). UNWomen HeforShe Impact Champion I have pledged to increase the procurement spend on femaleowned businesses to 20% in the next three years; to ensure all employees complete the Global Gender IQ training, which we launched in collaboration with UNWomen, as mandatory training; and finally, to profile our female leaders internally and externally and to ensure male leaders participate as mentors to our female employees. In addition to our commitment to HeforShe, we are also founding members of the 30% Club Southern Africa and proud to have been the headline sponsors of the Gender Mainstreaming Awards since their inception in So while we are a global firm, our local roots are firmly in South Africa and I am proud that we are playing a role in driving both transformation and gender diversity in our industry and country. Dion Shango Chief Executive Officer PwC South Africa Preferential procurement The dti s generic codes now require companies to direct all procurement of goods and services from suppliers that are deemed to be an empowering supplier. Failure to procure from an empowering supplier will negatively impact our scorecard, even if the supplier has a level-one certificate. We acknowledge that procurement is one of the driving elements behind transformation and have developed our procurement policy to take current business dynamics into account. Of our total discretionary expenditure, 85% is channelled towards organisations that are socially responsible and embrace the objectives of BEE. Our objective is to continually develop emerging companies and to accelerate their growth by increasing procurement from B-BBEE suppliers with a specific focus on QSEs, EMEs and entities that are predominantly 51% ACI or 30% ACI female owned. A focus area is developing preferential procurement processes that influence behaviour across the firm to buy products and services from such suppliers. Transformation, diversity and inclusion Building and maintaining resilient, long-lasting relationships between people with a mix of talents, experiences and backgrounds yields a multitude of benefits for both PwC and our clients. To continue to be the number one professional services firm, we need the best available talent to serve our clients, which means attracting, developing and retaining a diverse set of skilled professionals. Embedding transformation, diversity and inclusion into our culture is a key focus across all lines of service. By actively acknowledging diversity and building this into our everyday culture, we can find new ways to maximise and capitalise on the different skills, styles and sensibilities of all our partners and staff. Listening to our employees It is critical that we not only engage with our employees but that we listen to what they are saying. In this year s PwC Global People Survey, our employees have been vocal about transformation, diversity and inclusion. Some of the key opinions to come out of the survey are that: Senior management structures need to change to reflect the diverse workforce; A glass ceiling exists for women in the firm, which needs to be dealt with; There is no PwC standpoint on lesbian, gay, bisexual and transgender (LGBT) people in the organisation; Communication about different cultures needs to be improved; and There are no growth opportunities for white employees. The initiatives the firm currently has in place to address this feedback includes the following networks: Gender network: This aims to investigate why women leave the workplace and to help make PwC a more conducive environment to female staff members. Multicultural network: The purpose is to educate staff about our different cultures to ensure that individuals of every culture, race and religion are acknowledged. This enables us to stay relevant in the market, and our business model in this regard hasn t changed over the years. The partnership continues to focus on 50:50 admissions of ACI and white partners and aside from the legislative requirements, we view transformation, diversity and inclusion purposefully. Our admissions over the past three years are testament to the fact that there s a place for all races within the firm. Under-35 network: Most of the staff in our firm are under the age of 35 and this network aims to better understand young people in order to attract, engage, retain and develop them into future leaders. Be yourself network: This encourages acceptance of LGBT members of staff. Globally, PwC has an LGBT board that advises the diversity and inclusion team on matters affecting LGBT employees, and the PwC South African firm forms a part of this LGBT network. PwC 39

40 Understanding our financial performance As with any organisation, it is important to understand our financial results to ensure the long-term financial viability of the firm. Overview We have a robust reporting system and process in place. The PwC Africa leadership team takes overall responsibility for establishing systems of internal control and for reviewing and evaluating their effectiveness. These systems produce the firm s financial information on a monthly basis, and the accuracy of information is ensured through monthly reviews by finance teams and management. Our internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives or, in the case of financial controls, the risk of material misstatement in our financial statements. Accordingly, they provide only reasonable and not absolute assurance against such failure or material misstatement. Key performance indicators - Turnover 2016 R billions 2015 R billions Assurance Advisory Tax Total PwC Integrated Reporting

41 Innovation PwC aims to be the go-to person for digital transformation and innovation. The G Suite applications, launched in September 2016, enable our people to communicate, collaborate and innovate together wherever and whenever they want. Overview As discussed on page 22, megatrends are having a major impact on business and society. They create opportunities and risks in terms of how organisations manage their businesses and interact with their customers. In Africa, we are seeing the collision of a number of these megatrends, creating the potential for brand new industries, as well as a new set of risks. At PwC, we recognise the disruption technological innovation may bring to many of our clients, as well as our own services. As such, we are working to channel this disruption positively, to maximise the improvement that digitalisation can bring. There is a growing understanding that the way in which we work and continue to deliver quality services to our clients will transform radically within the medium term, and we need to be deliberate about how we let those changes impact our business. Our global agreement with Google and the associated activities is testament to this. Among other factors, rapid urbanisation in Africa is creating a number of difficulties in cities. Growing congestion means our people are spending unproductive time away from their families and creating a work-life imbalance, challenging Our Cape Town colleagues moved into their new building at Silo 5 in the Victoria and Alfred Waterfront. Our new Cape Town office boasts a first for PwC in Africa a dedicated Innovation Zone! our long-held beliefs about how we manage our people. The introduction of new, digitalenablement technologies will mean that we can allow staff to stay connected with each other and our clients, responding rapidly and maximising their productivity, without having to always be in the office. The PwC Global Innovation Challenge is an annual competition that seeks out the most innovative solutions from across PwC s global network. Now in its fifth year, the challenge has attracted more than 70 innovative submissions. We have defined innovation internally to be our process of converting the great ideas our staff have into commercial realities. During the financial year, we conducted an innovation challenge focused on providing our staff with the opportunity to pitch ideas for new businesses to some of our firm s leadership. This resulted in the submission of 30 new business ideas. One of the ideas from the challenge is currently being driven to market and has the potential to revolutionise talent acquisition globally. Our measurement of investment into innovation and digital transformation activities for the financial year is estimated to be close to people hours, excluding direct cash costs. Our plans for the 2017 financial year include a number of new internal technologies and efforts that we believe will continue to drive digital transformation in PwC South Africa and further empower our people. Strategic digital transformation PwC s strategic digital transformation incorporates both internal and external focus areas. Internally, each person within the firm has a role to play in helping to coordinate everything digital by understanding the big picture, connecting the dots and communicating, while also remaining aware of technology risks and other possible disruptors. By supporting and monitoring innovation, new ideas can lead to innovative new services and new revenue streams. We encourage our staff to be intrapreneurs and change agents within the firm. PwC 41

42 Digital maximisation and new business innovation Going Google To stay competitive in a world that s facing unprecedented change, challenges and opportunities, we need to reinvent how we work in a technologyenabled world. Going Google will give us the opportunity to: Collaborate and connect across Africa Mobilise an agile workforce Challenge traditional business rules Excite our people about the innovative potential of Google, and Recharge productivity. During the roll-out programme, some of our internal systems and processes are being reworked to include the new capabilities in our day-to-day work lives and to significantly improve our efficiency and effectiveness. This process will continue on an ongoing basis, enabling us to improve the services we provide to our clients as we strive to achieve our Vision PwC Going Google Bandwidth Barn In 2013, we took up residence at the Bandwidth Barn, a technology and design business incubator based in Cape Town. For the past three years we have been lending our expertise to leading entrepreneurs in Cape Town s tech ecosystem. Members of our Private Company Services team meet with business owners to offer insight on topics ranging from secretarial matters, to payroll and employee tax compliance, tax registrations and tax compliance, and government incentives. Our involvement in understanding the entrepreneurial ecosystem not only enables PwC and our collaborative partners to actively lobby for changes within our current legislation, but also helps us to better understand the immediate challenges facing entrepreneurs, and how we can assist them. The transformative power of Google Google Apps for Work is an all-in-one suite of tools that enables you to communicate, store and create in the Cloud. The suite includes file storage and sharing with Google Drive, real-time collaboration with Google Docs, video meetings with Google Hangouts and professional with Google Mail, all bundled together. q Mobilize your workforce to compete in new ways q Redefine core business processes and operating models to create new sources of business advantage 42 PwC Integrated Reporting

43 Confidentiality of client information and data security Our code of conduct makes our position clear: We do business with integrity; We respect the confidentiality and privacy of our clients, our people and others with whom we do business; and We comply with applicable laws, regulations and professional standards in order to maintain the appropriate degree of confidentiality and privacy. Overview Client confidentiality and data security are critical to building trust with our clients and form part of a non-negotiable practice that is embedded throughout our organisation. Our information and technology assets are valuable and are closely safeguarded. Information security governance PwC South Africa has established an information security management system (ISMS) to bring our information security under explicit management control. Our ISMS consists of an information protection team, internal information security functions and budgeted processes to ensure compliance with the network s global information security policy. The ISMS is subjected to periodic external review by the British Standards Institute (BSI) against the Code of Practice for ISM (ISO 27001:2013). To ensure the continued protection of the PwC network and to maintain a secure environment for economic growth, our information security approach is aligned with industry standards. System reviews PwC is subject to reviews every three years by the global PwC Information Security Compliance Team, which focuses on compliance with the network s Information Security Policy. Between the reviews, a control self-assessment process is conducted that considers any findings raised in the review, and together with a corrective action plan, assists in tracking findings raised and progress made with regard to resolving them. Our information security team conducts internal audits at planned intervals to provide information on whether the ISMS conforms to PwC s requirements for its ISMS and the requirements of ISO 27001:2013, as well as whether the ISMS is effectively implemented and maintained. In addition, PwC has various policies that place obligations on employees not to disclose confidential information, and these policies are also included in the PwC main risk management process. All PwC staff are required to sign a confidentiality agreement when joining the firm, which contractually binds them to secrecy and confidentiality. The various policies are reinforced by regular training interventions for which attendance and completion are monitored. During the APC examination in November 2015, there was an incident where certain of PwC s internal confidentiality rules were breached by some examination candidates during the prerelease period of the qualifying examination. This is the five-day period before the APC during which candidates are provided with case study materials to enable them to prepare for the assessment. Whistle-blowers alerted PwC to the misconduct of certain PwC trainee accountants who were involved in this incident and swift action was taken, resulting in the dismissal of ten trainee accountants found guilty of breaching the firm s client confidentiality policies while preparing for the board examinations. PwC met with the clients in question and they are aware that the breach was motivated by the intention to prepare for the examination rather than for any commercial reasons or malice. Maintaining client confidentiality is a value that PwC holds dear and we take a firm stance as regards taking action against any breaches. Information security incidents Information security incidents are reported to a central system to ensure a consistent and effective approach to the management thereof. Knowledge gained from analysing and resolving information security incidents is used to reduce the likelihood or impact of future incidents. The main reason for security incidents relates to stolen equipment. The chart below depicts where equipment was stolen. PwC 43

44 Location where equipment was stolen Home Car Forced entry Car Remote block Office Robbery 1 0 Courier Other ISO certification During the year under review, certain offices were subjected to an external assessment by the BSI. The objective was to ensure that elements of the scope of certification and the requirements of the management standard are effectively addressed by the organisation s management system, as well as to identify any areas for improvement of the management system. There were no major non-conformities identified during this assessment; however, ten minor non-conformities were identified and a corrective action plan was implemented to resolve these issues. Data protection risk management standard PwC s global data protection risk management standard (RMS) sets out how PwC member firms are expected to identify and mitigate the risk of data and privacy breaches in their activities. This standard requires each member firm to: Assign an experienced, senior staff member to be accountable for implementing the data protection standard under appropriate leadership oversight; Put in place policies and guidance, building on the network risk management policy, to address data protection and privacy risk; and Provide training on policies and procedures on a regular basis. Network risk management policy and guidance Each PwC member firm is required by the RMS to develop, implement and monitor specific policies and procedures tailored to the data protection and privacy risks in the local environment. The network risk management policy is a baseline policy to be applied by all member firms, which are expected to supplement this policy with additional local policy and guidance in response to local data protection and privacy risks. Firms may not issue local policies or guidance that sets a lower standard than that set out in the baseline network risk management policy. In addition to member firm monitoring, the network also 42 monitors how member firms address data protection and privacy risks through yearly self-assessments, which are evaluated by a partner or staff member from another firm. The senior partner of the member firm then confirms the self-assessment and commits to addressing any remedial actions identified as a result of the self-assessment. The network has a link on its global website which anyone within a PwC firm or otherwise can use to report matters of concern. Appropriate individuals, including an independent network ethics and business conduct leader, follow up matters reported through the link. Any member firm that is unable to confirm compliance in all material respects with the data privacy RMS is required to rectify the position promptly, with progress being monitored by an independent evaluator. Local regulatory requirements In addition to its network standards, PwC South Africa subscribes to the requirements of the Protection of Personal Information Act of 2013, and other requirements that seek to protect the information of clients and employees. These include, but are not limited to, the Promotion of Access to Information Act of 2000 and the SAICA and IRBA Professional Codes of Conduct. 44 PwC Integrated Reporting

45 Societal impact of our services At PwC, we strive to achieve a positive societal impact through our business operations, products and services created for the benefit of our society, the environment and the general economy. Overview This material issue incorporates three essential elements that all have a societal impact: our brand, corporate responsibility initiatives and managing our environmental impact. Brand As a professional services organisation, it is essential that we understand how our brand is perceived by, not only our clients and the market, but also our current employees and prospective employees. Based on our biennial global BHI survey, the PwC brand remains strong in the market, and it is crucial that we protect this position. The BHI survey is commissioned by PwC and conducted by a third-party research agency. The BHI enables us to compare the strength of our brand against that of our competitors and across our lines of service. It is based on perception within the market of the Big Four firms and, more specifically, PwC. It provides us with a benchmark of whether we are top of mind for decision-makers, spanning both clients and non-clients across various market segments. During the most recent survey, 36 countries across PwC s global network participated in the survey, including PwC South Africa. The survey was conducted between July and December The results for South Africa placed PwC ahead of all our Big-Four competitors, a confirmation of our brand strength. Findings from the various countries BHI surveys are shared and presented internally, with the results used to develop market strategies, business activities, learning and development programmes, and account planning workshops. The BHI is designed to provide a composite picture based on the interrelationship of a number of elements: Consideration: The extent to which a brand would be considered as a provider when preparing a shortlist. Attribute importance: The extent to which specific attributes influence the consideration of providers. Attribute performance: The performance of an individual brand relative to the competition on each attribute. In this context, performance means the extent to which the market associates each brand with each attribute. Respondents are asked to rate our performance against that of the other Big Four firms. Corporate responsibility For PwC, corporate responsibility is considered an integral part of doing business. We aim to be a part of the global movement towards responsible business practices that create positive change in the world. This focus on corporate responsibility is also in response to the changing expectations of society and other stakeholders. We have many capabilities that are relevant to corporate responsibility the same ones we use in our businesses every day and we put these to use working with others to make a difference. Our local corporate responsibility strategy reflects the core investment areas in which we believe we have the potential to add value for our people, our clients and society. We have developed a local corporate responsibility strategy that builds on a strong foundation of mobilising our people and managing our collective impact. During the period under review, we invested R9.4 million (2015: R5.4 million) in our corporate responsibility programmes. Our primary areas of investment include: Education; Entrepreneurial development; Pro-bono services; Payroll donations; and Volunteering. Our flagship programmes Education Our approach to contributing to development in the education sector is centred on supporting the development of schools in disadvantaged and rural communities, as well as the environment in which they operate. This systemic approach ensures that we address developmental gaps across the four priority areas (districts, leading and managing, teaching and learning, and communities and learners). The underlying assumption is that educational outcomes will improve when teachers are effective and the teaching and learning environments are supported by effectual school districts, school organisation and community involvement. In July 2013, then Deputy President Kgalema Motlanthe launched the Education Collaboration Framework and its implementing agency, the National Educational Collaboration Trust (NECT), with the objective of tackling how civil society, business, unions and government can work together to implement the Education Chapter of the National Development Plan (NDP). PwC was appointed the Lead Implementing Agent in a consortium with Performance Solutions Africa (PSA), Class Act and Penreach to manage two of the eight districts under the NECT, namely the Bojanala PwC 45

46 (North West Province) and Bohlabela (Mpumalanga) districts. Our role within the NECT is to implement programmes targeting numeracy and literacy in primary schools and mathematics, physical science, English and accounting in secondary schools, through a turnaround initiative targeting schools that require special attention. Some of the programmes we are involved with are included below and throughout the report. PwC Learner Leadership Development Programme The PwC Learner Leadership Development Programme was piloted in January 2016 in partnership with Epic Youth Matters, an NGO that specialises in developing interventions to address youth engagement. With the help of the school management teams, 60 learners with demonstrable leadership qualities were selected to participate in the programme. The overarching objective of the programme is to enable the learners to utilise their strengths to add value in their respective schools and to become catalysts for change in their communities. The five-day programme was held at a campsite in Magaliesberg and was facilitated by the PwC People and Change business unit, in partnership with expert advisors from Epic Youth Matters. Some of the topics covered during the course include: Decision-making; Stress and self-management; Engaging and empowering others; The role of service in leadership; Goal setting; and Cultural competence. To reinforce the programme s objectives, ongoing engagements with the learners and the school management teams have been organised to assist them in implementing the lessons learnt in their schools and communities. Enterprise development Our approach to enterprise development is centred on leveraging what we do well, our core skill set, and acknowledging where we may need help from external partners to offer a value proposition that addresses the needs of small, medium and micro-sized enterprises (SMMEs). A focused approach to enabling the growth of small businesses has the potential to contribute greatly to both economic transformation and new business development for our firm, which is key to creating shared value for our beneficiaries, our people and our business. Partnering with stakeholders who have expert knowledge of the SMME landscape is integral to enhancing the quality of our interventions. We have formed strategic partnerships with various stakeholders, including business incubators and tertiary institutions, to achieve our programme s strategic objectives. University of Johannesburg The University of Johannesburg s Centre for Social Entrepreneurship and Social Economy (CSESE) supports research, education and the promotion of social entrepreneurship and the social economy through various programme offerings, partnerships and initiatives. For the past two years, we have offered our expertise to the business owners that benefit from the CSESE Business Incubation Programme, by availing PwC financial and advisory services on a no-fee basis in an effort to enhance the capacity and skills development of these entrepreneurs. Our engagement with the entrepreneurs includes, amongst others, one-on-one or group mentoring and coaching, business support and panel reviews. 46 PwC Integrated Reporting

47 Pro-bono services Providing our services pro bono is an important part of how we help our communities. By lending our skills and expertise we are able to support NGOs to better serve our communities by helping them report their results effectively and accurately. We perform audits and provide advisory services annually for a range of non-profit organisations through formal fee-waived engagements. We also lend our support to these organisations through the time that our partners and people commit to board positions at non-profit organisations. Payroll giving Our payroll giving initiative provides our employees with a platform to initiate and support charitable projects by enabling them to donate directly from their salaries. The initiative allows employees to support diverse projects in our communities, with beneficiaries ranging from infants to the aged and from orphan assistance to wildlife conservation. The projects are entirely funded by staff donations and in certain instances supported with matched contributions from the firm. Managing our environmental impact As an office-based professional services organisation, our environmental impact is comparatively small; however, minimising the direct negative impacts of our business is still important to us. Our environmental performance policy emphasises going beyond compliance to ensuring the protection and preservation of the environment. Throughout the firm, we are developing and implementing programmes that promote sustainability through environmentfriendly practices. PwC South Africa is mandated to report to the PwC global network annually on its environmental commitments, following which the network produces a consolidated report containing the total environmental impacts of the top 21 firms in the network. Through our environmental governance framework, our environmental policy is reviewed annually, while our environmental performance is managed and monitored on a regular basis. The importance of environmental issues is also regularly communicated to our staff. Environmental commitments Continuously improve our environmental performance and integrate recognised environmental management best practice into our business operations. Reduce our consumption and improve the efficient use of resources. Manage waste generated from our business operations, incorporating reduction, reuse and recycling. Manage our business operations to prevent pollution. Give due consideration to environmental issues and energy performance in the acquisition, design, refurbishment, location and use of our buildings. Ensure environmental criteria, including climate change, are taken into account in the procurement of goods and services. Comply as a minimum with all relevant environmental legislation as well as other environmental requirements to which the firm subscribes. Raise awareness and educate our staff about environmental challenges and how they as individuals can play a role both in their personal capacity and at work. PwC 47

48 Key performance indicators 2016 CO 2 emissions 1 (tons) Water consumption 2 (kl) Electricity consumption 2 (kwh) Paper consumption 2 (A4 reams) Includes scope 2 and 3 emissions see carbon footprint table for scope boundary. 2 Water, electricity and paper consumption is based on four of PwC s buildings: Cape Town, Durban, Menlyn and Sunninghill. Carbon footprint Although we have a relatively low impact on the environment, managing our environmental impacts remains a focus throughout our operations in South Africa. We continuously strive to reduce our carbon footprint through various initiatives. Some of our iconic buildings, which are using best practice in terms of energy efficiency and green practice, include our offices in Cape Town and Durban, with construction underway in Gauteng at our Waterfall City office. Consumption (kwh) CO 2 emission (tons) Scope 2 2 Electricity Scope 3 3 Travel and accommodation Flights Accommodation Car hire Mileage claimed by staff Total CO 2 emissions Due to the nature of business conducted by PwC, Scope 1 is considered to be immaterial and is not be reported. 2 Scope 2 includes electricity consumption from four of PwC s buildings: Cape Town, Durban, Menlyn and Sunninghill. 3 Scope 3 includes travel and accommodation for all PwC staff. 48 PwC Integrated Reporting

49 PwC leased buildings Durban PwC Durban officially opened the doors to its new building in January This 4 000m2 development visibly and tangibly positions the firm as the market leader with our clients and people. The building is located in the Ridgeside Precinct 3 Estate, making it arguably one of the best corporate addresses in Durban. The location provides some of the most scenic views from Umhlanga to Durban City to the Bluff. Innovative green technology and best practice The building follows best practice in terms of energy efficiency, sustainability and green practice. The building is designed to achieve a 4 Star Green Star SA rating from the Green Building Council of South Africa for its sustainable initiatives. Innovative green technology has been implemented to reduce the new building s carbon footprint to provide a healthier and more productive environment, while also decreasing the consumption of energy and other resources. One of the highlights of the building is a thermal storage cooling plant, which reduces electricity usage in peak demand periods. The system works by freezing ice in tanks at lowdemand times when electricity is plentiful and less expensive, and using the ice for cooling at peak times instead of running the chiller. This will result in significant cost savings as well as assisting the economy by reducing pressure on the supply grid. Other green features include the installation of metering systems that monitor and manage electricity and water consumption; an acoustic design that maintains suitable internal noise levels; and an architectural design that provides good daylight levels for building users. Open spaces have also been introduced for high performance and glass panels for views, while minimising passive solar gain and optimising daylight. Lighting is motion operated across the building to reduce electricity consumption. Best technical specifications The new building has ten stateof-the-art client meeting rooms, including one video-conference facility and one boardroom, which can seat up to 30 people. There are a further six internal meeting rooms. Each meeting room is equipped with either 55 or 65 commercial grade LED displays allowing HDMI and VGA connectivity for laptops to encourage collaboration between teams. Wi-Fi access throughout the building provides connectivity for both clients and staff. The building s digital network comprises 400km of the latestcategory copper cabling with 10GB connectivity capabilities. Connectivity between floors and into the building is fibre-optic. The IT network facilitates room booking and automation systems. Security The office passed an Information Security Management System Audit, which has paved the way for ISO certification. We have Business Continuity Certification, ISO 22301, which means that in the event of an emergency we can still operate. There are approximately 72 access control points in the building to ensure the security of our staff and clients at all times. As the site has no perimeter fence, we utilise CCTV extensively, with every entrance and exit being monitored 24 hours a day. Cape Town Our Cape Town practice moved into a newly constructed building at the iconic Victoria & Alfred Waterfront in July The 9 000m² offices provide an excellent platform from which to further enhance our presence in key markets while also contributing towards resource savings and efficiency. The building follows best practice in terms of sustainability and green building principles, climate control and security. Highlights include a district seawater cooling plant, electric car charging points, and bicycle storage facilities. Features Systems that ensure carbon dioxide levels are monitored adequately so that optimum amounts of oxygen are delivered to the building; The installation of metering systems that monitor and manage water consumption; An acoustic design that maintains suitable internal noise levels; and PwC 49

50 A design that provides maximum levels of daylight for building users and makes use of highperformance glass panels that minimise passive solar gain. Johannesburg Construction of PwC s Gauteng regional headquarters at Waterfall City offices is underway and occupation is expected in March The R1.5 billion development comprises sqm of offices, designed to house PwC employees in an efficient and optimally designed workplace. The project is scheduled for completion early in The building is designed to conform to the internationally recognised LEED (Leadership in Energy and Environmental Design) silver standard. LEED is a set of rating systems for the design, construction, operation, and maintenance of green buildings, homes and neighbourhoods. Features Sustainable site Encourages use of existing public transport modes to reduce single motor vehicle traffic, including buses, mini-bus taxis, the Gautrain and associated bus services, and a PwC firm shuttle service; Promotes biodiversity by providing a high ratio of open space to the development footprint; Reduces heat island and local climate modifications by means of cool roofing, which also lowers the heat gain to the building: light colours (high solar reflective index), green roofs, shaded walkways, open grid paving, light coloured hard surfaces and underground parking. Construction At least 20% of building materials by cost extracted/harvested and manufactured within 800km radius of the site, supporting the use of local resources and reducing the environmental impacts resulting from transportation. Construction waste recycling to reduce overall diversion to landfill sites. Target: at least a 75% diversion rate. Contractor and appointed waste management contractors fully accountable for verifiable records and diversion rates. At least 20% of building materials by cost contain post- and/or preconsumer recycled content. Reducing need for the extraction and processing of virgin materials. Major focus on concrete and steel and other big ticket items. Water efficiency Indoor: Reduce the building s internal water consumption by at least 35% over an international baseline by the use of waterefficient indoor fixtures across the building. These include electronic taps, low-flow showers and dualflush toilets. Outdoor: Focus on water-efficient landscaping with planting of indigenous, water-hardy plant species. Energy efficiency Achieve levels of energy performance beyond the minimum standard to reduce environmental and economic impacts associated with excessive energy use. Modelled building energy consumption reduced by 28% compared to modelled base building energy standard applied is more stringent than SANS regulations (ASHRAE 90.1). Recycling Dedicated area for collection and storage of office recyclables at a minimum: paper, corrugated cardboard, glass, plastic and metals. Indoor environmental quality Fresh air supply will meet and likely exceed both SANS and ASHRAE 62.1 requirements. Low VOC content in all paints, coatings, glues/ adhesives and sealants. Focus on low to zero urea formaldehyde content in all finishes, flooring (including carpeting), and shopfitting. No smoking in building and outdoor smoking areas exceeds South African regulations: i.e. all outdoor smoking areas outside a 12m radius from any building openings. Thermal design provides a comfortable thermal environment that promotes occupant productivity and wellbeing. Design to ASHRAE 55 specifications. Daylight and views provide building occupants a connection to the outdoors through the introduction of daylight and views into the regularly occupied areas of the building. Daylight for at least 75% of occupants in regularly occupied spaces. Views for at least 90% of occupants in regularly occupied spaces. Lighting and thermal controls Switches and occupancy sensors in meeting rooms and multioccupant spaces. Task lighting at individual workstations. Thermal controls in multioccupant spaces for any or all of the following: air speed, air temperature, radiant temperature and humidity. Thermal controls for at least 50% of all occupants. 50 PwC Integrated Reporting