Barclays Africa Group Limited (‘Barclays Africa’ or ‘the Group’) strives to incorporate the principles of integrated thinking and reporting. This report aims to help the reader understand how we define and measure our value creation while executing our primary purpose – which is to help people achieve their ambitions by responsibly and sustainably, fulfilling their financial services needs.
The Separation and normalisation
On 1 June 2017, Barclays PLC executed the sell-down of its controlling interest in Barclays Africa, as part of our transition to being a standalone financial services group. The ‘Separation’ refers to the programme of activities over approximately three years which will disengage the businesses from one another.
Financial reporting changes
As part of its divestment, Barclays PLC contributed R12.6bn to Barclays Africa mainly in recognition of the investments required to separate the businesses. This is being invested primarily in rebranding, technology and other Separation-related projects, and it is expected that it will neutralise the capital and cash flow impact of Separation investments on the Group over time.
The Separation will have an impact on the Group’s financial results for the next few years, most notably by increasing the capital base in the near term and generating endowment revenue thereon, with increased costs over time as the Separation investments are concluded. International Financial Reporting Standards (IFRS) require that the contribution is recognised directly in equity, while the subsequent investment expenditure (including the depreciation or amortisation of capitalised assets) will be recognised in profit or loss. The aforementioned will result in a disconnect between underlying business performance and the IFRS financial results during the Separation period. Normalised financial results will therefore also be disclosed while the underlying business performance is materially different from the IFRS financial results.
Scope and boundary
This annual integrated report, covers the period 1 January 2017 to 31 December 2017. Any notable events after 31 December 2017 up until the Board approving the report on 12 March 2018 are included.
This report encompasses the activities of Barclays Africa Group, and our banking and insurance subsidiaries. The BBBEE information applies only to our South African operations.
Financial and non-financial reporting
Our integrated report includes information regarding stakeholder relationships, material matters, risks and opportunities and our forward-looking strategy.
This is our primary report, aimed at our shareholders, but contains information relevant to our other stakeholders.
This report contains statements that relate to future operations and performance of the Group. These statements are not guarantees of future operating, financial or other results and involve uncertainty, as they rely on future circumstances – some of which are beyond our control. Therefore, ultimate results and outcomes may differ.
Stock of capital – the Six Capitals and our Balanced Scorecard
Our operations benefit from a number of key resources and stakeholder relationships. Through our business activities, we increase, decrease or transform the Six Capitals, as defined in the IIRC’s <IR> Framework. Some impacts are easy to identify, quantify and manage, while others are complex and require us to actively consider and manage trade-offs. We believe our Balanced Scorecard – Customer & Client, Colleague, Citizenship, Conduct and Company – provides a suitable framework for measuring our business activities’ impacts on the Six Capitals.
- Engaged employees within a diverse workforce
- Competent and skilled professionals
- Safe, effective information and technology infrastructure
- Institutional knowledge and specialised skills and expertise
- Strong brand
- Carbon emissions (air quality) management
- Water and waste management
We include information in the integrated report based on the principle of materiality. Material matters are those which have influenced, or could influence, our ability to create value over the short, medium and long term as we pursue our ambition to have a positive impact on society and deliver shareholder value.
Our ability to create value is impacted by a multitude of factors ranging from the operating environment and our responses to the risks and opportunities to our business model and our chosen strategy. Through this report we provide the context for what we have deemed our material matters and how we are managing and governing our responses. Our Balanced Scorecard provides a suitable framework for reporting back on our performance and is presented along with our risk, governance and remuneration structures which support value creation. Our material matters have remained fundamentally the same as in 2016 with the Separation being a material matter extending across all elements of our Balanced Scorecard.
Our Values – Respect, Integrity, Service, Excellence and Stewardship – define the way we think, work and act.
Our external reports contain a range of information which is governed by a diverse set of regulations, frameworks and codes. Processes and systems are not equally mature across the reports. For integrated reports specifically:
- disclosures are evolving alongside integrated reporting practices;
- management applies significant judgement in deciding what information to report;
- interpretive, abstract, qualitative or forward-looking information is subjective, which limits the extent of assurance; and
- among other technical challenges, the difficulty in developing suitable criteria and the related records, systems and controls currently inhibit a complete assurance of the content of integrated reports.
Our internal controls, management assurance, and compliance and internal audit reviews support the accuracy of our integrated report. We obtained external assurance on select indicators, and the external auditors have reviewed this report to ensure no information or statements contradict the audited annual financial statements.
We appointed PricewaterhouseCoopers Inc. (PwC) and Ernst & Young Inc. (EY) to undertake a limited assurance engagement on selected key performance indicators set out in our Balanced Scorecard (marked with a LA). View the external assurance report, issued by PwC and EY, that contains their unmodified conclusion, and refers to the basis of measurement for these indicators.
EY and KPMG Inc. have audited the Group’s annual financial statements and have issued an unmodified opinion on these financial statements which are presented in accordance with IFRS.
Empowerdex has verified the BBBEE performance for our South African operations (marked with a V). They have confirmed a Level 2 BBBEE rating.
Assisted by our Disclosure Committee, our Board accepts ultimate responsibility for the integrity and completeness of this integrated report. It is our directors’ opinion that this report presents a fair and balanced view of our integrated performance. We believe this report shows we are creating sustainable value and prosperity for our stakeholders.
The Board approved this report on 12 March 2018.