June 9th, 2010 by Tom Minney
South Africa’s JSE stock exchange (www.jse.co.za) is requiring listed companies to integrate their sustainability reports with their annual reports, with effect from this month. According to a report in Business Day newspaper (www.businessday.co.za) Mervyn King, chairman of the King committee and a leading expert on governance, said: “SA is among the first countries in the world to require integrated reporting of listed companies. This puts us ahead of the game.”
The newspaper says there are still no set standards for companies’ integrated reporting, and Mr King will chair a new Integrated Reporting Committee to issue guidelines on good practice in integrated reporting.
The King Report on Corporate Governance in South Africa 2009 (King III) includes an integrated report disclosure checklist, effective March 2010, according its publication by Ernst & Young. Companies should apply this, or explain why they feel it approroriate not to apply or to apply it differently (“apply or explain”). An integrated report should contain “adequate information on the operations if the company, the sustainability issues pertinent to its business, the financial result and the results of its operations and cash flows”.
Jayne Mammatt, an associate director in governance and sustainability at Ernst & Young, was cited in the newspaper saying an integrated report should evaluate all areas of performance, including economic, social and environmental issues. It was not sufficient for companies to provide wordy platitudes and vague estimates, Ms Mammatt said. It cites a 2009 study by Ernst & Young showed that only a handful of 3,000 sustainability reports around the world were integrated.
Mr King is quoted as saying: “The corporate identity of companies has changed and so reporting has to change. Stakeholders need to make informed assessments about the longer-term sustainability of a company and that it is operating as a responsible corporate citizen.” The requirement is likely to make more work for companies.
The founding organisations of the committee include the Association for Savings and Investment SA, Business Unity SA, the Institute of Directors SA, the JSE and the South African Institute of Chartered Accountants (Saica). Graham Terry, Saica’s senior executive of strategy and thought leadership will chair a working group whose first task will be to develop a framework for integrated reporting.
Leon Campher, CEO of the Association for Savings and Investment, was quoted saying the project was considered a priority initiative, given the volumes of annual reports generated by the association’s members. “We have 153 member companies managing in excess of R2,5-trillion of assets. Integrated reporting will facilitate more holistic and meaningful reporting of financial results, enabling shareholders and clients to gain a better understanding of a company’s triple bottom line.”
Freda Evans, chief financial officer of the JSE, was quoted as saying: “Reporting on the financials alone is no longer sufficient, as all aspects of the business – environmental, social and governance aspects – affect the company’s bottom line.”
Saica CEO Matsobane Matlwa was cited: “Corporate reporting is entering a new era. Shareholders and other stakeholders need broader information to enable them to make more informed decisions about a company. This does not necessarily mean more detail, but greater insight into the strategy, risks and value creation of the company.”
March 16th, 2010 by Tom Minney
African markets have seen a lot of volatility in the last 18 months. Worldwide investors first rushed out, then realized that many African businesses were not badly affected by the global financial crisis, and that African banks were not exposed to the same risks as international bans, and in some cases came back. The lesson learned by international investors is to prioritize liquidity as a way of managing risk. Leading African exchanges are seeking ways to offer liquidity, including widening the range of products on offer. Exchanges that cannot offer liquidity will tend to stay “off the map”.
Last night (15 March), African Capital Markets News editor chaired a panel discussion on African capital markets at the 5th Annual African Investment Conference in London, organized by stockbrokers Securities Africa and Citigroup Emerging Markets. Here are a few extracts from the discussions.
March 7th, 2010 by Tom Minney
The website www.africaniscool.com has been upgraded with a newsletter. According to CEO Rob Stangroom: “Our newsletter contains mostly original content and is targeted at investors, regulators and listed companies in Africa. Our goal is to increase awareness of issues related to online shareholder communications. Best of all, our Dilbert column provides the lighter side of investors, the internet and IR.
“Sign up to the newsletter on www.africaniscool.com – on the landing page. I look forward to your feedback. Cheers and thanks for your support.”
The site also includes a good blog by Rob, including interesting feedback on investor views on Africa after the visit by Christopher Hartland-Peel of London stockbroker Exotix (www.exotix.co.uk).
December 24th, 2009 by Tom Minney
This networked world means using the web to spread the news for friends and colleagues. Hubert Danso, MD of African investor asked us to pass on this message:
“Dear Friends, Hope you’re well. This is a brief invitation for you to become a fan on our Africa investor facebook page. http://www.facebook.com/pages/Africa-Investor/149204237884?v=wall#
Look forward to connecting. Best. Hubert.”
October 14th, 2009 by Tom Minney
Free information on African listed companies? There are three excellent sites which offer fine material and services on promoting investor relations, and feature an enticing line-up of online published annual reports of listed companies from all over Africa as well as many other useful tips and advice. The sites are www.africaniscool.com, www.africanshareholder.com and www.africanfinancials.com. Congrats to Rob Stangroom on a great initiative.
Here are some good words of advice to African stock exchanges, from the www.africaniscool.com blog. I hope Investor Relations and shareholder activism will feature strongly on the agenda at the upcoming African Stock Exchanges Association Conference (www.aseaabuja2009.com) on 2-4 December 2009 in Abuja, Nigeria.
10 Investor Relations Tips for African Stock Exchanges (from www.africaniscool.com) on 2 Oct 2009.
TIP 1:
Make it mandatory that annual reports be published online as soon as they are made available or posted to shareholders. Less than 30% of African annual reports are currently online!
TIP 2:
Require an IR contact to be clearly indicated on the company website or stock exchange website and require a maximum turn around time. Investors should have access to companies that they own. They usually don’t!
TIP 3:
Automate the publication of corporate actions online with free access to attachments. The JSE has been offering the SENS platform to African stock exchanges for years – why not use it? Investors need information to make educated investment decisions.
TIP 4:
Incorporate the core investor relations best practices into the listing rules. And name the companies that are not compliant. Why? It makes sense, and it creates value.
TIP 5:
De-list companies that should not be listed, i.e. those with very low free floats and low number of shareholders. They are not serving any purpose except adding to the apathy of other listed companies.
TIP 6:
Do not seek rents from investment data of listed companies. Africa can’t afford it. Monetising these data should happen later, after the value has been created.
TIP 7:
Host a mandatory annual investor presentation event and ensure that all companies participate. Make sure to follow up and disseminate the presentations online. Why? To increase awareness in directors that they have a duty to ensure information is available.
TIP 8:
Standardise minimum requirements for the investor relations sections of websites, and name those not complying. Why? To create awareness.
TIP 9:
Pay for an IR specialist to present to listed companies at least every 6 months to increase awareness.
TIP 10:
Have an active public investor education programme, co-funded by government. Typically governments have created the masses of shareholders by privatising former state-owned companies through the stock exchange. Therefore it should be a joint responsibility into ensuring these investors become meaningful participants