Joint winners of Best Annual Report

Announcing the winner of the annual Ernst & Young Excellence in Corporate Reporting Survey, the judges for the first time awarded joint overall winners to Nedbank Group and Gold Fields. Garth Coppin, national director of accounting at Ernst & Young, says the quality of these two annual reports were such that the adjudicators simply could not agree which was the best.

The annual reports of the top 100 JSE listed companies by market capitalisation are evaluated by an independent team of experts from the University of Cape Town's Department of Accounting and competition for the prestigious top ten places in the survey remains intense.

Top ten in order of position:


  1. Nedbank Group and Gold Fields (joint winner)
  2. Anglo American
  3. Massmart Holdings
  4. Standard Bank Group
  5. Exxaro Resources
  6. Truworths International
  7. African Rainbow Minerals
  8. Sasol
  9. Kumba Iron Ore

In the separate state-owned section, Eskom and Transnet topped the survey. "They can hold their heads high in terms of the quality of their reports," adds Coppin. "State-owned entities operate under different legislation, in particular the Public Finance and Management Act, and they are, therefore, evaluated differently from listed private sector organisations."

Tighter evaluation criteria

In the past the adjudicators focused very much on the financial statements but regulation has become increasingly more robust and today this ensures that compliance with the minimum required by accounting standards is rarely an issue.

Therefore, the survey mark plan has steadily increased the value placed on going the extra mile, rewarding companies that disclose relevant extra information and recognising those companies that make every effort to help investors understand their businesses and their prospects for the future.

"The team not only looks at disclosure but also the way in which the disclosure is made, namely whether that disclosure is both understandable and relevant," Coppin says.

The risk reporting aspect of annual reports has become particularly relevant for investors and companies are expected to identify and quantify the risks that have an influence on their industries and their individual operations.

He adds that it is also important for a good annual report to be balanced, telling both the good and the bad news. "The adjudicators also consider the information that should be present but is not."

Winning efforts

"The winning companies put more effort into their reports than others, with excellent layout giving their reports a good look and feel as well as making information accessible for readers.

"They make good use of tabs, colours and cross-referencing. Further, not only do they provide factual data such as the increase in turnover but also explain how this was achieved, namely how much was due to price, exchange rates, or volumes."

The winning companies also focus on key performance areas, setting benchmarks and comparing actual results with these targets.

"One area in which many companies are less than effective is in their provision of forward looking information. In addition to providing clarity with regard to past results, excellent annual reports set targets for the future against which they can be measured over time.

Investors also want to see that directors' rewards are aligned to targets set by the company and that they are rewarded when their actions add value for shareholders and not for factors such as rising financial tides that are outside of their control.

Next year, integrated reporting

Every year the corporate reporting bar is set higher and next year the spotlight will fall on integrated reporting.

King III raised the expectation that annual reports will meet the needs of a large group of users and supply the information needed by stakeholders as diverse as government, employees, communities, suppliers, trade unions, and customers. Therefore, companies should be changing the way in which they engage with their shareholders.

"The JSE expects companies to produce integrated reports and organisations will have to ask themselves whether they are addressing the needs and wants of all their stakeholders," he concludes.

In line with these changes, next year Ernst & Young's Excellence in Corporate Reporting and Excellence in Sustainability Reporting will be merged to form 'Excellence in Integrated Reporting'.

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