Nkonki SOC Integrated Reporting Awards 2015

Nkonki report finds that South African State Owned Companies continue to improve integrated reporting efforts

Johannesburg, 29 July 2015 – Assurance and advisory firm Nkonki has released the findings of its fourth annual review of integrated reporting in South African State Owned Companies  (SOCs). Entitled “Integrated Reporting: A New Era for Public Sector Entities in South Africa”, the report assesses how local parastatals measure up in terms of applying the guiding principles of and global best practice relating to integrated reporting. 


As part of the report, 20 of the country’s SOCs were assessed in terms of their integrated reporting performance. This year the top performers were Transnet SOC Limited, Air Traffic and Navigation Services Company SOC Limited and Eskom SOC Limited. 

“Despite many of the country’s SOCs coming under fire for a variety of reasons, our report indicates that they are in fact doing admirably in terms of their reporting standards, and that their integrated reporting continues to improve. The average score was 54.2% this year; this compares well against previous years’ scores of 40.2%, 46.4%, and 50.6% respectively,” says Nkonki partner, Thuto Masasa.

The 2015 report provides insights into the extent to which SOCs have applied the International Integrated Reporting Council’s (IIRC) International Integrated Reporting Framework, released in December 2013, to their 2014 reports. Chaired by Professor Mervyn King, the IIRC had as its mission to create a globally-accepted Integrated Reporting Framework, which brings financial, environmental, social and governance information together in a clear, concise, consistent and comparable format. The aim is to help with the development of more comprehensive and comprehensible information about organisations, prospective as well as retrospective, to meet the needs of a more sustainable global economy.

“This is a radical departure from the past, in which SOCs were measured against the King III Code and Report. It must be highlighted that those SOCs included in the report did not have the full benefit of time as they had just three months to become familiar with the Framework as they all had March 2014 year-ends. It is not easy to adapt quickly to such a comprehensive change as that brought about by the Framework, with companies having had to prepare well ahead of its release to understand the requirements in order to start implementing them,” Masasa explains.

Overall the results reflect that out of the 11 expected requirements of the Framework, the SOCs achieved an average score of more than 50% for eight of the 11 expected requirements, and fell below 50% for three of the 11 expected requirements. This suggests that there is respect for and some application of the Framework. 

“Thinking innovatively, communicating clearly, and being accountable. These are all crucial attributes that public sector entities must develop if they are going to thrive in the 21st century. There are few that would disagree that changes to corporate reporting are necessary for improving performance in these areas, and the innovation of companies leading the way in evolving their reporting practices are beacons as others start the journey towards integrated reporting. This is especially true in South Africa. Companies, public and private, look to leaders such as Transnet and Eskom as examples of how to develop reporting practices, and best reap the benefits by doing so. As this report articulates, integrated reporting is relatively new, so no one company can be said to have totally and comprehensively implemented it. But there are some that have certainly come a long way and companies in South Africa are very much at the forefront,” says Paul Druckman, CEO of the IIRC, whose Foreword features in the Nkonki report.

“An important aspect of good corporate governance is to follow best practice and our report aims to support the continued effort and improvement of integrated reporting by SOCs. It also seeks to gain insights in order to provide guidance to others,” adds Masasa.

“While we acknowledge those SOCs that do apply the true spirit of the Framework in their corporate reports, we strongly recommend that those that have not yet acted, should start immediately or will simply be left behind, which would be an enormous set-back in the progress shown to date, and no doubt will have serious consequences in terms of disclosure to shareholders and other stakeholders,” she concludes.

Leigh Roberts

Grant Patterson

Khomotso Phihlela

Nonkululeko Veleti

Mervyn King

Sindi Zilwa

Thabani Mthiyane

Thuto Masasa

Other:

Event overview

Panel participant interviews

Download:

Nkonki SOC Integrated Reporting Awards 2015.pdf