INTEGRATED REPORT 2016 - WWW.PWC.CO.ZA - PWC SOUTH AFRICA
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www.pwc.co.za Integrated report 2016
Our network’s PwC’s global purpose: To build trust in
values society and solve important problems.
Act with Vision 2020
integrity
PwC’s vision is to be the
pre-eminent professional services network,
Make a leveraging our values-driven culture to live our
difference purpose.
Four strategic choices guide us in being:
Care • The leader in building and sustaining trust-based institutions;
• multinodal organisation, embedded in and operating across the
A
dominant and emerging economies;
Work • A provider of client services from strategy through to execution; and
• A technology-enabled innovator.
together
Reimagine
Chairperson’s message
the possible
It is my honour to have been PwC’s embrace this position of trust, which
sponsor through our integrated is underpinned by our strong ethical
reporting process, which has resulted culture and is embedded throughout
in our first South African integrated the firm and reflected in the manner
report. This process has not only in which we conduct ourselves and
allowed us to look inwardly; it has our business.
also enabled us to better identify
Growing our people is vital to
with our clients who produce annual
growing our business and ensuring
integrated reports. As we embarked
our sustainability. Our people are
on this process, we had rigorous
the foundation of our firm, and it is
debates at leadership level around
inspirational to have witnessed so
identifying our material issues and
many talented individuals achieve
determining the structure of our
both their personal and professional
report. The material issues identified
ambitions in this nurturing
also form part of our reporting
environment. We have 4 839 staff at
governance structures.
PwC South Africa in 22 offices across
As a global network, we are all nine provinces.
proud that the PwC brand has
We invest significantly in attracting,
been recognised as the strongest
developing and retaining talented
professional services brand in the
staff. Our training extends to all
world, with a reputation built on the
our lines of service and includes
energy, enthusiasm and quality of our
courses provided to upskill people
people, all of whom are committed
in their field of expertise and in
to our purpose of building trust
broader professional skills. We also
in society and solving important
take pride in the qualified chartered
problems.
accountants (CAs) who have left our
Our clients look to us for advice, firm to take up leading positions in
place their confidence in us and business and who continue to make
expect us to lead by example. We an important contribution to the
South African economy.
2 PwC Integrated Reporting
For us, transformation is not about programme has succeeded in many of our clients, our employees and
numbers, but about the meaningful of its objectives and to date has the communities within which we
development of our people and reached more than 2 000 women. operate.
an economic imperative for the Our other corporate responsibility
I look forward to receiving your
growth of the firm and of the South focus areas include education, pro-
feedback on this report at
African economy. Our commitment bono services, payroll giving and
integrated.report@za.pwc.com.
to transformation is demonstrated volunteering.
through our inclusive culture and Thank you to my fellow board
Technology continues to transform
demonstrable diversity. members and partners for your
all facets of our personal and
continued guidance and wise
Over the past 13 years, PwC has business lives. It is therefore
counsel.
qualified more than 1 800 chartered important for us to be innovative in
accountants from historically our thinking and to bring state-of-
disadvantaged communities, a the-art technology solutions to the
testament to our commitment to firm and our clients.
transforming our profession to
We are excited to be working with
reflect the demographics of our Shirley Machaba
Google as part of a local joint
country. This achievement has been
business relationship with the aim of Chair – PwC South Africa Governing
recognised for five consecutive
driving enhanced productivity and Board
years by the Association for the
innovation and bringing new and
Advancement of Black Accountants 20 January 2017
innovative solutions to our clients.
of South Africa (ABASA), for
qualifying the largest number of Stakeholder engagement is an
historically disadvantaged CAs important part of my responsibilities,
during the year. We still have a long as it is essential to keep track of
way to go towards meeting our our stakeholders’ needs, manage
transformation goals and remain their expectations and engage in
focused on this business imperative. meaningful dialogue with them on
a regular basis. PwC’s stakeholders
Skills development is core to South
include a wide range of groups,
Africa’s economic growth. The
clients, communities, employees,
National Development Plan (NDP)
the media, professional bodies,
identifies the financial inclusion
regulators and suppliers. Through
of women as a critical tool in
our stakeholder approach, we ensure
eliminating poverty, addressing
that we participate in meaningful
unemployment, reducing inequality
dialogue with these stakeholders on
and contributing towards the
a regular basis.
achievement of the targets set for
2030. Sound governance and transparency
form the foundation of good
Small businesses are a key part of
leadership. At PwC, integrity,
the South African economy, and
good sense and wise solutions
women own a significant number of
through good governance form the
these enterprises. However, there is
cornerstone of our business practices.
a high failure rate among start-up
Transparency and high standards of
businesses, largely due to lack of
corporate governance through our
access to finance, business expertise
strong governance framework – both
and experience. PwC aims to assist
in our clients’ businesses and in our
in solving these problems and
own – are central to our ability to
contribute to making a difference
achieve this.
through enterprise development
initiatives that include lending our As part of the global PwC network,
expertise to upskill and support we have so much to be proud of
entrepreneurs and start-ups to grow and so much more to achieve. I
their businesses. look forward to embarking on
this integrated reporting journey
One of our flagship programmes, the
with all of you and I trust you
Faranani Rural Women’s Training
will enjoy this report and, most
Programme, showcased on
importantly, appreciate what PwC
page 4, focuses on creating a
is accomplishing through the efforts
culture of entrepreneurship among
women in rural communities. The
PwC 3
Faranani Rural Women’s Training Programme
For the past ten years PwC has been with a number of municipalities and
instrumental in contributing to the government departments, we have
empowerment and advancement of managed to roll-out the programme
women in rural communities across across the country.
the country through our Faranani
Rural Women’s Training programme.
Five modules Our partners
The programme was born out of
our aspiration to instil a culture of Municipalities
1. Developing business plans
entrepreneurship among women in • Buffalo City
rural communities, assisting them 2. Practical pricing and costing
to generate their own sustainable • Tshwane
sources of income while also 3. Effective financial management • Johannesburg
becoming meaningful contributors to
the economy. 4. Practical marketing • Ekurhuleni
Over several days, women • ocal municipalities
L
5. Customer care
participate in five modules and are countrywide
supported by trained facilitators. On
completion of the course participants Government departments
will have learnt, among other things,
how profit is calculated; factors • epartment of Cooperative
D
that determine price; the concept of Governance
working capital; budget preparation; • epartment of Trade and
D
cash-flow projections; and the Industry
know-how to present a business plan
to financiers. • epartment of Traditional
D
Affairs
Through group counselling
sessions, participants are given Faranani National Director • epartment of Rural
D
Shirley Machaba addressing delegates Development and Land
the opportunity to examine their
business plans and learn from Reform
the experiences of their fellow • The Presidency
programme participants.
• epartment of Social
D
This training is supported by a Development
post-training workshop in which
participants gain insight into
financial projections, financial Other
management, pricing and
• outh African Local
S
costing, marketing, and business
Government Association
management.
Handing over of training completion • Gauteng Enterprise Propeller
Since piloting the initiative in certificates to Faranani learners by PwC
Limpopo in 2006, and in partnership and City of Johannesburg
Group photo - Faranani learners, PwC team, City of Johannesburg team and BSSA team during the Faranani Award Ceremony event.
4 PwC Integrated Reporting
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.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Key statistics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Chief Executive Officer’s message. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
External environment and operating context.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Business model and value creation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Strategy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Confidentiality of client information and data security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Societal impact of our services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
PwC leased buildings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Annexure A: Governance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Annexure B: Glossary.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
PwC 5
About this report PwC South Africa’s
Governing Board
Scope and boundary Frameworks statement
We are pleased to present PwC South In preparing this report, we have
Africa’s first integrated report in been guided by the International
which we aim to provide a better Integrated Reporting Committee’s PwC South Africa’s Governing
understanding of our business (IIRC) framework for integrated Board has reviewed the content
activities and value creation. This reporting (the framework of this report and its members
integrated report covers the period guidelines). As such, our business are satisfied that the report
1 July 2015 to 30 June 2016 and model on page 18 takes into is an accurate reflection
includes an overview of who we are; account the six capitals included of the South African firm’s
our strategy, risks, and governance; in the framework guidelines information presented for the
and the performance of our firm in financial capital; human capital; period under review. The Board
South Africa. manufactured capital; intellectual acknowledges that this is the
capital; social and relationship start of the firm’s integrated
PwC has a presence in 34 countries reporting journey.
in Africa, with an office footprint capital; and natural capital, to
covering 66 locations. With a illustrate our ability to create value
single leadership team for the East, over time, through our business
West and South market areas and activities. Although we appreciate
more than 400 partners and 9 000 that this report does not yet meet all
professionals across the region, PwC the requirements of an integrated
report, it is our intention to improve Shirley Machaba
firms serve some of the continent’s
largest businesses across all our reporting in future reports. Chair –
industries. PwC South Africa Governing Board
Stakeholders
While we recognise that our services
Materiality impact various stakeholders, our
Our report is structured around three key stakeholders are our people, Dion Shango
seven material issues, which clients and society. As we embark on
were determined through robust our integrated reporting journey, we Chief Executive Officer
leadership discussions at various would appreciate feedback from our PwC South Africa
workshops. These material issues stakeholders, including the manner in 20 January 2017
include: which we report on our material issues
• Quality and compliance; as well as our strategic and performance
overview.
• People and talent management; Forward-looking statements
Please contact us at
• ransformation, diversity and
T integrated.report@za.pwc.com with This integrated report contains
inclusion; your feedback. forward-looking statements
• nderstanding our financial
U based on management’s current
This integrated report can be accessed
performance; expectations or predictions of
on our website at
future conditions, events or results
• Innovation; www.pwc.co.za/integrated-report.
based on various assumptions
• onfidentiality of client
C and management’s estimates of
information and data security; trends and economic factors in the
and markets in which we are active, as
well as our business plans.
• he societal impact of our
T
services. Forward-looking statements in this
release should be evaluated in the
We view these material issues as context of the many uncertainties
critical to ensuring that we achieve that affect PwC’s business and
our global purpose of building trust its markets, particularly those
in society and solving important discussed under the risk factors in
problems for our key stakeholders. this integrated report.
6 PwC Integrated Reporting
About PwC
PwC refers to the PwC network and/ Legal structure in
or one or more of its member firms,
each of which is a separate legal
South Africa
entity. This is backed by our in-depth PwC operates under a dual structure:
cultural and economic understanding PwC Incorporated, a registered
of all key markets, and the industry company; and PwC South Africa,
and technical experience of our a partnership. PwC South Africa has
local and international teams. The representation in 22 offices across
PwC network has over 208 000 staff the country, with its head office
globally and is represented in 157 being situated in Johannesburg.
countries.
PwC offices in South Africa
Limpopo
Polokwane
Rustenburg Nelspruit
Mafikeng Emalahleni
Lichtenburg Pretoria Middelburg a
ng Secunda
Johannesburg ala
North West Gauteng um
Mp
Free State
Welkom
Kimberley
Bloemfontein KwaZulu-Natal
Northern Cape
Richards Bay
Pietermaritzburg
Durban
Eastern Cape
East London
Western Cape
Paarl Worcester
Cape Town Robertson
Port Elizabeth
Stellenbosch
PwC 7
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 PwC Africa Governance Board member; Partner
Resigned in Charge for Western Cape; PwC Western Cape
31 October 2016 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* 50 CA (SA) 2005 PwC Global Board member; PwC Africa Governance
(Chair) 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 45 CA (SA) 1 November 2016 Africa Governance Board member; Financial
Grosskopf 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
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 Shango1* 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
Lines of service
The objectives of our service offering Our future portfolio
are to build trust and enhance value
for our clients and stakeholders. To In executing our growth strategy, our
meet the requirements of our clients, portfolio of services is evolving. We
as well as regulators, our services are will continue to deliver assurance,
grouped into three distinct service advisory and tax services as they
lines: assurance, advisory and tax, are defined today. We will also
across a wide array of industry expand the definition of professional
sectors. These are all described in the services, access a larger addressable
business model on page 18. market, and grow profitability in new
spaces.
We continue to operate as a multi-
competency 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.
Target portfolio 2020
and beyond
o logy-enabled eco
2016 portfolio hn sys
c p r ior i t y ser v te
Te New ic e
s
m
Critical markets
s
Evolution of
Assurance, Tax, Assurance,
and Advisory Tax, and
Advisory
10 PwC Integrated ReportingKey statistics
Turnover per line of service, 2016 vs 2015
• Our network of PwC firms on the African continent
covers the Anglophone-, Francophone- and 12 %
Lusophone- speaking regions, enabling us to identify
opportunities and offer tailored assurance, advisory Assurance
11 %
and tax solutions for every business challenge.
• wC South Africa earned a Level 1, AAA+ B-BBEE
P Advisory
contributor status in our latest annual certification
by Empowerdex in October 2016. This is the highest 31 % 33 % 56 % 57 %
Tax
rating possible and recognises the firm as a good
B-BBEE contributor.
• e achieved a people engagement score of 73%
W
(2015: 76%) in PwC’s Global People Survey. 2015
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% 88% 92% 84%
Initial test of competence (ITC) pass rate for chartered accountant candidates:
PwC total pass rate of PwC ACI pass rate of
SAICA: SAICA: • n average of 48 training
A
Bursary hours per employee per year
76% 67% 71% 59% investment
of R23.6
million
• 60,7 million spent on
R
learning and development
(2015: R58 million)
Supporting a diverse and inclusive culture
Partnership admissions New employees (white vs ACI): New employees (male vs female):
(white vs ACI):
2016 2016 2016
2015 2015 2015
White White Male
47% 55% 45% 53% 61% 58% 42% 39% 58% 54% 46% 42%
ACI ACI Female
Embracing innovation Investing in our communities
R9.4 million (2015: R5.4 million) spent on corporate social
Local joint business
responsibility initiatives across our key focus areas: education, enterprise
relationship with Google
development, pro-bono services, payroll giving and volunteerism
PwC 11Chief Executive Officer’s message
Overview Specific focus areas have been identified Our quality control policies and
to direct and grow our business, which procedures implemented in terms of
It is my great pleasure to present will be carried out by our people the International Standard on Quality
our first integrated report to our through the distinctive PwC culture Control 1 (ISQC 1), and the quality
stakeholders. This report focuses on and reinforced by our values (see inside control standards established by the
our South African operations. Our front cover of this report). U.S. Public Company Accounting
Vision 2020 is to be the pre-eminent Oversight Board (PCAOB) are subject
professional services network, to periodic inspection by our local audit
leveraging our values-driven culture regulator, the Independent Regulatory
to live our purpose of building trust Material issues
Board for Auditors (IRBA), and by the
in society and solving important Our integrated report is structured PCAOB.
problems. We are mindful that we are according to our seven material
in a position of trust, where clients issues, which were determined by our We are actively engaging with the
look to us for advice and expect us to leadership through a series of rigorous IRBA regarding the mandatory audit
lead by example. Our firm embraces debates. We believe these material firm rotation proposal. While we fully
this responsibility and constantly looks issues are important to ensuring that we support IRBA’s mission of protecting the
to evolve and nurture this privileged achieve our Vision 2020. financial interests of the South African
position. public and international investors in
The discussion that follows provides South Africa, we believe that such a
a high-level overview of our material far-reaching proposal should follow
issues and how they shape our strategic a robust public consultation process,
Our global strategy outlook. taking into account the inputs from
To achieve the network’s Vision various stakeholders.
2020 and ambition to be the leading Material issues
PwC is determined to respond to the
professional services provider in the changing needs and opportunities that
• Quality and compliance
world, we understand the need for a strengthen our capital markets, while
strategic blueprint, which is depicted on • People and talent management
at the same time not compromising on
page 21. This blueprint has been filtered • ransformation, diversity and
T audit quality. We continue to discuss
down throughout our network globally inclusion this matter with our clients as we
as well as in South Africa, where our believe that assurance plays a critical
lines of service have aligned their goals • nderstanding our financial
U
role in the effective functioning of
with this strategic plan. performance
the South African capital markets by
In developing our global strategy, five • Innovation building trust between companies and
megatrends were identified that are • onfidentiality of client
C their shareholders and underpinning
changing the world at a rapid pace: information and data security the delivery of reliable, relevant and
timely information to them about
• Demographic and social change; • Societal impact of our services the organisation in which they have
• A shift in global economic power; invested.
• Rapid urbanisation;
Quality and compliance
• esource scarcity and climate
R People and talent management
change; and Quality and compliance are not
We are a people’s business and in a
negotiable. It is what we are known for
• Technological breakthroughs. country where skills shortages remain a
and what our clients expect from us in
serious concern, it is imperative that we
The megatrends are discussed together everything we do. The sustainability of
attract, retain and develop our talent.
with our operating environment on our global organisation is based on our
We pride ourselves on having a distinct
page 15, but broadly speaking, we collective strength. We strive to build on
PwC culture conducive to ensuring that
realise that in this dynamic operating this by developing trust, respect, vision
our employees have stimulating careers,
environment, services provided in the and integrity.
while also having fun.
past may not necessarily still be relevant
Our leadership sets the tone by
and we continually need to evolve to Not only has our operating environment
continuously emphasising their
deliver on our purpose. changed; so too has the profile of the
dedication to quality. Furthermore,
new generation of CAs. They are more
Our strategic choices are the four our code of conduct reinforces our
confident in their views, extremely
key pillars on which we will base our commitment to conducting business
driven in their ambitions and willing to
initiatives to remain relevant, operate with integrity, respecting clients’
challenge the norm. It is important for
across various economies, deliver client confidentiality and privacy, while
us to understand their needs, in order to
quality, and use technology to transform complying with applicable laws,
differentiate ourselves as an employer
our business through innovation. regulations and professional standards
and ensure that we attract the best
at all times.
12 PwC Integrated Reportingtalent available. Awards bring action, we’ve also introduced a
Best Workplace Diversity and Global Inclusion Index, which evaluates
Some of our differentiators include
Inclusion Strategy Award at the the number of women across the
our client portfolio, which ranges
Future of HR Awards. PwC network, with a specific focus on
from the country’s largest and most
increasing the number of women in
complex organisations to some of its
leadership roles.
most innovative entrepreneurs, across
various industries. We are privileged With the changing focus of employment
to work with a client base that in equity, all companies are moving
turn provides excellent learning and towards a workforce that represents the
development opportunities for our demographics of the country, and as a
talented professional staff as they move firm we have reviewed our strategy to
up through the firm. align with this. In striving to achieve
the new requirements our learnerships
Our talent mobility programme offers
and bursaries are split to meet these
our employees an opportunity to
demographics.
explore different countries’ working
environments and cultures. Popular Skills Development Award (in the At year end, our workforce of 4 961
destinations include the US, Australia, greater than R1 billion category) staff included 48% African, Coloured,
Europe and the United Kingdom. and the Diversity Award at the and Indian (ACI) and 52% white staff,
15th Oliver Empowerment Awards. of whom 46% are female. To ensure
Diversity in the Workplace Award the sustainability of the firm and the
Transformation, diversity and and Top Gender Empowered accounting profession, PwC remains
inclusion Company Award, the headline committed to bursary sponsorship and
We embrace the diversity of our country award, was won at the Standard invested R23.6 million in bursaries in
and fully support its transformation Bank Top Women Awards. the 2016 financial year.
goals. Transformation is a key strategic PwC recognises the importance of
imperative and we are cognisant of our developing small businesses in South
responsibility to drive transformation Africa in an effort to create sustainable
and invest significantly in creating an 2015 jobs. Our strategy is to maintain the
environment where every individual Winner Certificate Of Excellence
Business of the Year Award
level of investment through a number
who joins the firm has an opportunity to S p o n s o re d b y
of different initiatives, including
succeed and reach their potential. Aw a rd e d t o
continuing to provide grants and
We are a firm that has aligned our
P r ic e wat er ho u se C o op ers
donations to Business Skills for South
Africa (BSSA) and the Faranani Rural
For a n outs ta nding a ch iev ement in th is ca tegor y a nd for contrib uting to Huma n
R es ources Ma na gement th rough s tra tegies a nd pra ctices directly impa cting
b us ines s performa nce a nd innov a tion
objectives to those of the country – a
firm that has the country’s priorities
R a lf F letch er
Ch ief Executiv e Officer
flymango.com Why not today?
topco
Women’s Training programme.
media
at the top of our own priority list. Another focus area for the firm is
We believe that the direction we are developing preferential procurement
taking will allow us to continue to been encouraging to receive five awards processes that influence the behaviour
fulfil both our legislative and strategic acknowledging our progress with of the group to buy products and
transformation mandates. regard to transformation, diversity and services from local ACI entrepreneurs.
inclusion.
We are pleased to announce that the
firm achieved Level 1 AAA+ B-BEE These awards recognise the Business Skills for South Africa
contributor status in October 2016. transformation milestones achieved
by empowered organisations for Established by PwC and the National
This is the highest rating possible. See Industrial Chamber in 1992, the
further details on page 36. their contribution to the growth and
Business Skills for South Africa
sustainability of the economy. (BSSA) Foundation is a non-profit,
Within PwC South Africa, we view
diversity as an opportunity to offer As part of our focus on diversity, we not educational trust.
a distinctive range of skills and only focus on internal campaigns, but BSSA’s mission is to provide business
experiences when providing solutions look to where we can make a difference skills training to support SMMEs in
to our clients. We understand that to drive gender change in our industry. South Africa, to create sustainable
different people bring different jobs and increase wealth through the
Locally, I am proud to say that I am a
perspectives and have always been a transfer of practical business skills.
UNWomen HeforShe Impact
workplace of top talent, and highly Champion, and PwC’s Global Chairman To date, more than 40 000 SMME
driven and motivated people. is an International Impact Champion. participants have completed
Our commitment to HeforShe includes modules of the BSSA programme
Different and contrasting insights and for owner-managers, and 2 000
perspectives are essential to sustain engaging men as agents of change,
advisors and professional staff have
business success in today’s complex further supporting women in leadership participated in business advisor
global economy, making diversity and roles, and accelerating action and training.
inclusion a business imperative. It has awareness. To ensure these results
PwC 13Understanding our financial enabled professional services firm. Corporate responsibility
performance
PwC has also begun introducing G Our corporate responsibility approach
To ensure the sustainability of the Suite products to its own operations in is tailored to our specific strengths and
firm, we recognise the importance of September 2016. PwC is transitioning its opportunities as a professional services
managing our financial performance. staff to G Suite Apps, transforming how firm to leverage our core skills in
We have a robust reporting system they collaborate and driving enhanced creating measurable business and social
and process in place in which monthly productivity and innovation. We value-enhancing outcomes.
financial performance packs with have entered into an agreement with
Environmental impacts
key metrics – per line of service – are Google, which supports Vision 2020 by
discussed by the leadership team to providing new and more efficient tools Over the past few years – we have
determine how the firm is tracking that will enable us to grow revenue, occupied new buildings in KwaZulu-
against set targets. There is also a target client opportunities and disrupt Natal and the Western Cape, with
formal budgeting process and budgets PwC’s core business faster, deeper and construction underway in Gauteng.
are approved by the PwC South Africa broader through innovative use of All new buildings have been, or will
Governing Board. technology. be established with state-of-the-art
technology and facilities that are
For the financial year under review, the
conducive to a safe and healthy work
firm achieved a turnover of
Confidentiality of client environment. The new buildings
R4.9 billion (2015: R4.8 billion).
information and data security follow best practice in terms of energy
Assurance contributed 57%
efficiency and green practice.
(2015: 56%), Advisory 31% As with the material issue of quality and
(2015: 33%) and Tax 12% (2015: 11%). compliance, client confidentiality and
data security are not negotiable and this
Over the past few years we have Looking ahead
aspect is a foundation of our purpose.
experienced increased pressure on
We have a robust risk and governance As our reporting journey matures, I look
our fees – due to the global economic
framework in place throughout the forward to presenting and engaging
slowdown, and the outlook remains
firm to enforce this sacrosanct practice. with you on our progress towards
challenging, with South Africa’s GDP
This framework is supported by various our Vision 2020. While we remain
growth predictions remaining
systems, standards and policies as well mindful of the expected weak operating
below 1%.
as an ethics officer and ethics board environment in South Africa, we are
Succeeding in tough economic – that oversee the firm’s ethics and confident in our ability to take PwC
conditions underscores the importance business conduct programme. South Africa to new heights.
of having a strategy that remains
relevant – in both the good and bad
economic times, and we remain Societal impact of our services –
confident in our ability to leverage the brand, corporate responsibility
Appreciation
opportunities that do exist. and environmental impacts I am extremely proud of our people,
and I encourage you to keep up the
Brand
good work, whether you are out at
Innovation We appreciate that the PwC brand is key clients or supporting our client-facing
Innovation empowers us to address to the growth of our network, both in teams. Please be prepared to face the
the technological changes that are our more well-known and established challenges of the year ahead while
rapidly changing the world. We aim to services and in new markets. PwC’s also seizing the opportunities that may
use technology to grow our business Brand Health Index (BHI) provides present themselves.
and become the preferred partner for us with a method of comparing the
Together, let’s continue building PwC
technology-enabled systems. Analytical, strength of the PwC brand against those
South Africa’s future.
social, mobile and cloud platforms of competitors across territories and
are the building blocks of a connected lines of service. PwC was placed first in
experience that will assist us in creating the results of the BHI survey conducted
and commercialising new products and between July and December 2015.
services.
Corporate responsibility
Business transformation within focus areas Dion Shango
our firm will enable us to do things • Education Chief Executive Officer
more efficiently. We have dedicated PwC South Africa
resources, focusing on a four-year • Enterprise development
20 January 2017
digitalisation transformation • Payroll giving
journey – which is aligned to our
• Pro-bono services
Vision 2020 – and is aimed at ensuring
that we are the most technologically- • Volunteerism
14 PwC Integrated ReportingExternal environment and
operating context
particularly stark outlook for iron ore, however, in the process of negotiating
We acknowledge that we copper, and oil and gas in the coming and concluding a CA Charter that is
operate in an increasingly year. aligned to new legislation. This means
complex, challenging and that various aspects of the CA Charter
dynamic environment, in which As with other commodity-driven
will probably be reopened for debate.
it is important for us to adapt in economies around the world, and
a swift and responsible manner. other countries on the continent, those
At the same time, this operating in Southern Africa have been heavily
environment and its growing affected by weakening currencies. Megatrends
business challenges provides an Commodity prices are expected to Research by the PwC network has
opportunity for PwC to assist our stabilise but remain low through 2017. determined that there are five
clients through these Opportunities remain for the economy major megatrends rapidly changing
evolving times. and PwC to respond. In the current the world. These megatrends are
environment, exports have become discussed below.
comparatively less expensive on global Demographic and social change
markets, depressed commodity prices
Economic may spur greater diversification in According to research conducted by
PwC Germany, it is expected that by
environment non-resource-dependent industries,
2025, there will be approximately
and current market conditions may
South Africa’s economy regained its drive mining companies to seek eight billion people globally, but there
position as Africa’s largest economy greater efficiencies in their businesses will be sharp regional variations with
in dollar terms in 2016, more than in order to maintain operating Africa’s population projected to double
two years after losing its place margins. by 2050, while Europe’s is expected to
to Nigeria. The Rand has led an shrink.
emerging-markets rally after Brexit Notwithstanding the tough operating
environment, an upward trend in These demographic changes will
and the municipal elections, while the
divestitures and business challenges bring both risks and opportunities
Nigerian currency has fallen sharply
also provides an opportunity for PwC for businesses – risks if companies
since a peg to the dollar was removed.
to assist our clients through difficult fail to respond adequately, and
With the current electricity constraints times. opportunities for forward-looking
being experienced in most countries organisations. Furthermore, an
expected to persist as well as the estimated 865 million women are
drought in Southern Africa, the region set to enter the workforce in the
is likely to experience a challenging Regulatory coming decade, which will increase
recovery with many of the structural environment women’s purchasing power across this
impediments to economic growth increasingly diverse landscape.
still persisting. An easing of the Mandatory audit firm rotation
proposal Global mobility is expected to
power constraints, better fiscal policy
present an opportunity to responsive
measures and continued stability in In August 2016, the IRBA announced employers, with the number of people
commodity prices are likely to impact its intention to start implementing working outside their home country
positively on growth. mandatory audit firm rotation. This increasing by 25% over the past
Constitutional and governance initiative stems from concerns raised decade, and projections of a further
structures showed their strength around auditor independence, market 50% rise by 2020.
and resilience in the first quarter of concentration of the big four audit
firms and the need for transformation. It is also predicted that life expectancy
2016, and the gravity of the political
The IRBA has indicated that it intends will rise, increasing the risk of
issues have allowed the business
to consult further with the objective to overpopulation and putting social and
community, including PwC, to
provide guidance. PwC continues to healthcare systems under intensifying
express a more active voice with key
actively engage with the IRBA on this pressure.
members of government. This has led
to the working relationship between regulatory proposal.
business, government and labour
being closer than it has ever been. Shifts in global economic power
Black economic empowerment Research conducted by PwC China
Countries across Southern Africa
continue to be affected by the PwC’s 2016 scorecard was calculated suggests that the aggregate purchasing
depressed commodity prices, with under the dti’s codes and not within power of the E7 emerging economies
some economists predicting a the ambits of the CA Charter. SAICA is, – Brazil, China, India, Indonesia,
PwC 15Mexico, Russia and Turkey – will need to take the lead in mitigating
overtake that of the G7 by 2030. And environmental damage and tackling
the global emerging middle class will climate and resource challenges, while
represent an annual market of some striving to make their organisations
USD6 trillion by 2021. more agile and resilient.
These trends and tipping points mean If businesses are to rise to these
the traditional way of classifying challenges, sustainability will be
economies is becoming increasingly vital, with corporate responsibility
irrelevant. These huge economic evolving from a luxury to a business
shifts between countries – and imperative. An increasingly important
within groupings – are resulting in area of focus for businesses worldwide
momentous changes in consumption is understanding, measuring and
patterns, which in turn create and reporting on the environmental and
amplify challenges for businesses social impacts of the decisions and
worldwide. Companies are actions they take. This need is driving
increasingly chasing a moving target, the development of innovative ways
as they strive to meet the needs of their of measuring and reporting more
diverse, evolving and increasingly transparently and holistically on
demanding customer segments, while companies’ overall impacts.
fighting off increasingly intense and
new competition.
Technological breakthroughs
In our 19th Annual Global CEO
Rapid urbanisation Survey, released in January 2016,
A report by PwC UK highlights that business leaders recognised
there has been an unprecedented technology as one of the biggest
rise in urbanisation globally. In 1800, disrupting forces in their
2% of the world’s population lived organisations. Furthermore, the
in cities. This is now 50%, and every price of new technologies is falling
week – some 1.5 million people join equally rapidly and at the same time,
the urban population – through digitisation via the internet has created
a combination of migration and extraordinary value, as exemplified by
childbirth. companies like Google.
While cities occupy 0.5% of the Social media continues to steadily
world’s surface, they consume 75% strengthen its position as a dominant
of its resources. Inevitably, this force in the day-to-day lives of people
rapid expansion is putting cities’ across the globe, enabling many of
infrastructure, environment and social the world’s top brands to deepen their
fabric under pressure. Over the next relationships with customers.
decade, New York, Beijing, Shanghai The impacts of digital disruption are
and London alone will need to invest now so pervasive that no business in
USD8 trillion in infrastructure. any sector – from the smallest family
Rapid urbanisation brings major business to the largest multinational
implications for businesses as they – is immune to them. For businesses,
refocus their offerings towards an having a digital strategy will no longer
increasingly urban customer base be enough. Instead, they’ll need a
with distinct needs and consumption business strategy fit for the digital age.
habits.
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 ReportingPwC 17
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 Intellectual capital Financial capital
Being in the service industry, our Our intellectual capital includes the PwC brand, the intellect The majority of our financial
human capital is a material resource. of our staff, blueprints and best practice tools, and the various capital is generated through the
Not only do we employ professional IT systems and software applications we utilise in providing deployment of our human and
staff to provide client services, we also quality service to our clients. intellectual capital, which results
ensure that we develop our talent to in revenues being received from
their full potential. As such, we deploy The depth of our industry expertise – is an attribute that clients based on time charged for
significant financial capital resources in our clients value highly, and we invest significant financial services provided. The monitoring
training and developing of our people and human capital resources in building and sharing such and oversight of client fees
throughout our assurance, tax knowledge. We also invest substantial resources in IT systems remains the responsibility
and advisory lines of service as and software applications to ensure that the services of the PwC leadership.
well as our support staff. we provide are innovative and on par with market-
leading practices.
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 Promoting thought leadership Fostering trust in the
accountants We are in constant dialogue with our clients and the financial markets
Developing CAs is of wider community about the issues affecting them. Due The global financial crisis saw the
significant importance not only to our experience within our industry and knowledge of erosion of trust in the financial
to our profession, but for the broader our clients and the industries in which they operate, we are markets. Trust forms the foundation of
South African economy as a whole. To subject matter experts in a variety of areas. As a value-added our profession as, while clients trust us
ensure the sustainability of the firm service to our clients and society at large, our dedicated with their confidential information,
and the accounting profession, PwC thought leadership team focuses on delivering relevant shareholders and stakeholders trust that
has a strong commitment to bursary learning and development solutions through the PwC Business our opinions are accurate and reliable.
sponsorship. PwC spent R23.6 million School. We offer various articles of interest and thought We recognise the importance of ethics,
on bursaries in the 2016 financial year, leadership publications, where readers can earn verifiable integrity and building trust in everything
78% of which went towards assisting continued professional development (CPD) points using online we do, values that lie at the heart of our
African, Coloured and Indian (ACI) questionnaires. R1 million was invested in thought leadership business. Our code of conduct nurtures a
students. On an annual basis PwC publications during the financial period. culture that supports and encourages all
spends 12% of its leviable amount PwC people to live these values.The true
on training ACI staff and bursaries Information technology value of an audit is in ensuring compliance
for African and Coloured students, R216 million invested in IT and software application systems with exacting rules, regulations and
including its contribution to SAICA’s in 2016. standards and also in assisting our clients
Thuthuka Bursary Fund. 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 Reportingoutputs 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 Manufactured capital Natural capital
Our purpose as PwC is to contribute to a greater level Our manufactured capital consists primarily of the 23 We appreciate that
of trust in society and to solve important problems. properties we lease in South Africa. We invest substantial resources such as energy
This is the yardstick by which we judge all we do. We amounts of financial capital to ensure that we maintain and water are scarce
promote our purpose internally and externally, and it our properties in pristine condition. Our new buildings commodities in South
is part of the dialogue we have with our stakeholders, follow best practice in terms of energy efficiency, and Africa. As such, we strive to
who ultimately judge whether we are living up to our innovative green technology has been implemented to reduce our energy, water
purpose. Key stakeholders include our employees, provide a healthier and more productive environment and paper consumption
clients and society, and regular engagement takes place for our staff. In addition, these new buildings include through various
with these stakeholders at various levels state-of-the-art client meeting rooms with video technologies and
within PwC. The stakeholder engagement conference facilities, Wi-Fi access, boardrooms initiatives.
table on page 29 provides details of our as well as Business School training facilities and
various stakeholder engagements. Innovation Hubs.
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 Utilising energy- Limiting our
The depth of our industry expertise underpins our success and the value we efficient impact on the
provide to our clients. Our industry-aligned teams are experts in their fields, technology environment
enabling them to deliver tailored solutions to complex issues affecting specific Our new leased We seek excellence
sectors. Our traditional core competency of assurance has expanded over the years with buildings in Johannesburg, in every aspect of our business
the development of additional services to address clients’ growing needs. Cape Town and Durban and believe that we can create
follow best practice in terms value for our business and
Impacting the broader society of energy efficiency, which communities by respecting
Employment impacts on the broader society as salaries are expended. The total value of assists in minimising our the environment and
salaries paid by PwC South Africa was R2 billion in the year under review. Our supply impact on the environment. understanding how our actions
chain has a direct and broad economic impact on various sectors. We also actively impact the world around us.
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.
PwC 19You can also read
