Nkonki awards recognise excellence in integrated reporting in SA public sector

Johannesburg –  On 28 September 2016, assurance and advisory firm Nkonki announced the results of its sixth Annual State Owned (SOC) Integrated Reporting Awards, with top honours going to the Airports Company South Africa SOC Limited this year. In second and third place respectively were Telkom SA SOC Limited and Transnet SOC Limited.  

This is the first time in the history of the awards that three SOCs achieved an “A” rating, meaning they scored higher than 80% in terms of applying all the necessary elements of the International Integrated Reporting Council’s (IIRC) Integrated Reporting Framework, released in December 2013, and the new global standard for best practice in terms of integrated reporting.  

Other finalists included Air Traffic and Navigation Services SOC Limited in fourth position, Eskom Holdings SOC Limited in fifth, the Development Bank of Southern Africa in sixth, Denel SOC Limited in seventh, the Industrial Development Corporation of South Africa Limited in eighth, and the Central Energy Fund SOC Limited in ninth place.  

Since 2011, Nkonki has been tracking how South African SOCs are adopting integrated reporting best practice through this yearly review, thereby creating a significant body of research to assist SOCs on their journey towards improved reporting.  

“Increasingly organisations around the world, both in the public and private sectors, are using integrated reporting to assist them to communicate a clear, concise story that explains how they create value. This is helping them to not only think holistically about their strategy and plans, but also to make informed decisions, and to manage key risks to build investor and stakeholder confidence. Most importantly, it is helping them to improve their performance as a result,” says Thuto Masasa, Nkonki Lead Partner for Integrated Reporting  

Thanks to the King Code of Corporate Governance and the JSE’s stringent listing requirements, South Africa was an early adopter of integrated reporting, and the country continues to set the trend globally. However, the more recent introduction of the International Integrated Reporting Framework seems to be presenting a significant challenge to both private and public sector organisations.  

“Whilst it could be argued that JSE-listed companies have made more progress in this respect due to the fact that they are compelled to produce integrated reports as a listing requirement, this year our report shows that SOCs have not embraced the Framework to the same extent. In fact, the gap between those SOCs that are making an effort to embrace integrated reporting and produce a high quality integrated report and those that were not seems to be widening, which is of concern.”  

Masasa adds: “That being said, it is also clear from the 2016 report that there is a group of SOCs which have embraced the key concepts of the Framework and this represents a positive step forwards. More encouraging perhaps is that many of the SOCs reviewed by our independent panel still lead the way in terms of the early adoption of the Framework and are providing a good example to other members of the IIRC’s global Public Sector Pioneer Network.”  

Nkonki’s report, entitled “Integrated Reporting | A continued journey for Public Sector Entities in South Africa” also indicates improvement in the disclosure of the Fundamental Concepts, which include the value creation model, the business model and the six capitals.  

“I would like to thank Nkonki for producing this important report, and congratulate the winners, particularly the top three – Airports Company South Africa, Telkom and Transnet – for their continued efforts towards improved reporting. These companies should be seen as leaders in integrated reporting, and represent a beacon for others to follow. I also encourage the rest to continue to make progress,” says Jon Lisby, CEO of Kreston International, the global network of accounting firms of which Nkonki is a member.  

He concludes, “As the primary objective of most public sector entities is to deliver services to the public, rather than to make profits and generate a return on equity to investors, their performance can only partially be evaluated by examining their financial position, financial performance and cash flows. Reports that don’t fully embrace the principles of integrated reporting and the Framework only tell us a limited amount about how well an entity is equipped to deal with the challenges ahead and to continue delivering services and supporting its communities. In today’s climate it’s is becoming increasingly important for stakeholders to understand the full story in order to establish trustworthiness.” 

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