AWARDS | Excellence in Integrated Reporting


Larissa Clark | Director | Assurance Professional Practice Group | EY Africamail me |

Over the years it became clear that financial statements on their own did not tell the whole story of a company’s performance. Companies therefore started reporting on their environmental impacts, employee-related issues and corporate social responsibility issues in a separate report often referred to as a sustainability report, which accompanies the financial information distributed to shareholders.

Since 2010, all companies listed on the Johannesburg Stock Exchange (JSE) have been required to produce an integrated report in line with King III. This requirement has been carried forward to King IV, effective for financial years commencing on or after 1 April 2017. In addition, the JSE requires application and disclosure of King IV in any report lodged with them after 1 October 2017.

EY has been commissioning the Excellence in Integrated Reporting survey for the last seven years in order to encourage excellence in the quality of integrated reporting to investors and other stakeholders by South Africa’s top companies.

Restoring trust in capital markets through excellent integrated reporting to stakeholders

Excellence in Integrated Reporting Awards 2018

  • Nedbank Group Ltd wins 2018 Excellence in Integrated Reporting Awards
  • Digital transformation and disruption has started to raise new questions for integrated reporting
  • 47 companies ranked as ‘Excellent’ and ‘Good’, a decline compared to 59 in 2017

DOWNLOAD | EY’s Excellence in Integrated Reporting 2018 |

Following a volatile year of business uncertainty, the need for building trust and confidence in South Africa’s capital markets is a key priority for business and the future prosperity of the country.

We believe that EY’s Excellence in Integrated Reporting 2018 plays an important role in restoring trust by identifying best practice and standards of excellence for integrated reporting among listed companies.

The awards, which were adjudicated by the University of Cape Town’s (UCT’s) College of Accounting, include the top100 JSE listed companies based on market capitalisation as at 31 December 2017, accounting for 93% of the market capitalisation at that date. The awards identify best practice in integrated reporting, which may be useful to organisations that are commencing on their reporting journey, but they also differentiate between companies that exhibit a high level of integrated reporting and those that do not.

The rankings of the Excellence in Integrated Reporting Awards are based on the International <IR> Framework, which states that the primary purpose of integrated reports is to explain to providers of financial capital, how an organisation creates value over time.

The impact of digital transformation and disruption on business has started to raise new questions for integrated reporting. For example, with the proliferation of data, questions arise about the increasing importance of the governance of data. Also, how do the use of ‘bots’ to streamline the accounting and reporting function increase quality and controls? Technologies such as artificial intelligence and blockchain are transforming every aspect of corporate reporting. So, how are organisations aligning the impact of this to their strategic key performance indicators, and reporting on this to their stakeholders?.

The top ten companies ranked excellent by the EY Excellence in Integrated Reporting Awards are:

  1. Nedbank Group Ltd (with Honours)
  2. Redefine Properties Ltd (with Honours)
  3. Kumba Iron Ore Ltd (with Honours)
  4. Sasol Ltd
  5. Vodacom Group Ltd
  6. Oceana Group Ltd
  7. Impala Platinum Holdings Ltd
  8. Standard Bank Group Ltd
  9. Truworths International Ltd
  10. Barclays Africa Group Ltd

‘Honours’ is awarded to those high quality integrated reports, which the adjudicators believe have come closest to complying with the requirements of the <IR> Framework.

Nedbank scored excellently in almost every aspect of the marking process by demonstrating a high level of adherence to the guiding principles and content elements of the International <IR> Framework. We particularly liked the comprehensive explanation of how the Group creates value for its various stakeholders as well as the detailed explanations of the value that the Group has created for each stakeholder grouping during the current year.” – Professor Mark Graham  

Unfortunately, this year Clark notes that trend is downwards of the number of companies making an effort to produce excellent integrated reports. Only 47 companies of the 100 companies surveyed ranked as ‘Excellent’ and ‘Good’, a decline compared to 59 in 2017.

Major trends in the 2018 integrated reports

Overall trends
  • A strong strategic focus, that emphasised value creation and a high level of connectivity between the elements presented
  • 47 companies ranked as ‘Excellent’ and ‘Good’, a decline compared to 59 in 2017
  • 3 integrated reports awarded an ‘Honours’ compared to 5 in 2017
Positive trends
  • Increased disclosures of the value that the organisation is creating for itself and others
  • General improvement in the explanation of the strategy to create value
Negative trends
  • Governance disclosures are largely boilerplate and compliance driven

Industry representation: mining companies set a high bar

It is worth noting the strong industry representation in this year’s survey.

More than 20% of the companies included in the 2018 survey operate in theconsumer products and retail sector. Approximately 15% of the companies included in the survey arefinancial services, mining, industrial products andreal estate development companies respectively.” – Professor Mark Graham

A further analysis of the entities per industry included in the 2018 survey shows that almost 80% of the mining companiesincluded in the survey are included in ‘Excellent’ and ‘Good’ categories.

This is followed by the consumer and retail products companies with 45% and thefinancial services and industrial products sectors that have almost 40% of the companies included in the survey included in the ‘Excellent’ and ‘Good’ categories.

Rating per industry

Categories: Excellent (E) | Good (G) | Average (A) | Progress to be made (P) |

We congratulate Nedbank Group Ltd for achieving first place in our 2018 awards as well as the other companies achieving a place in our Top 10.

We hope that other companies will be both inspired and encouraged by those who have set the bar high to improve the quality of their integrated reports, especially in the current economic climate.

How is the mark plan developed?

The mark plan for the awards is developed by three adjudicators from the College of Accounting at the University of Cape Town, in conjunction with EY’s Professional Practice Group.

The UCT team comprises Professors Alexandra Watson, Goolam Modack and Mark Graham. All of the adjudicators have been involved for many years in EY’s Excellence in Corporate Reporting survey, and in EY’s Excellence in Integrated Reporting survey since 2011.

What is included in the mark plan?

The mark plan is based on the guiding principles and content elements that appeared in the International Integrated Reporting Council’s <IR> Framework, which was issued in December 2013.

A mark out of ten is awarded for each of the seven guiding principles:

  1. strategic focus and future orientation
  2. connectivity of information
  3. stakeholder relationships
  4. materiality
  5. conciseness
  6. reliability and completeness
  7. lastly consistency and comparability

Similarly, a mark out of ten is awarded for each of the eight content elements:

  1. organisational overview and external environment,
  2. governance
  3. business model
  4. risks and opportunities
  5. strategy and resource allocation
  6. performance
  7. outlook
  8. basis of presentation and preparation

Marks are also awarded for the extent to which the integrated report incorporates the Framework’s fundamental concepts, dealing with how value is created with reference to the six ‘capitals’, where relevant.