1. Integrated Reporting – Simplified & South African Trends ALEX HETHERINGTON - Benefits Beyond Compliance Accelerate Cape Town March 09 2012 KPMG, Cape Town

2. Is it a minefield? ALEX HETHERINGTON - Benefits Beyond Compliance

3. Agenda 1.Context 2.Objectives & Outcomes of Integrated Reporting 3.Differences from traditional reporting 4.South African trends 5.Key issues Relevance & materiality Stakeholder engagement & assurance Style & clarity

4. 2.King Code of Governance Principles for South Africa 2009 (King III) – best practice ALEX HETHERINGTON - Benefits Beyond Compliance Context 1.Companies Act (2008) – “to act in the best interests of the company”. 3.Integrated Report – form of communication with all stakeholders

5. ALEX HETHERINGTON - Benefits Beyond Compliance Objectives of Integrated Reporting To demonstrate … 1.Organisational overview; business model & governance structure –How do we create & sustain value and make decisions 2.Remuneration policies 3.Understanding the operating context - What are the circumstancse under which we operate? 4.Objectives; competencies; KPIs - Where do we want to go; How are we going to get there. 5.Organisational performance 6.Future performance objectives

6. ALEX HETHERINGTON - Benefits Beyond Compliance Tell the organisation’s story to the market. –Obtain capital at a reasonable rate –Enhance corporate reputation –Maintain licence to operate Outcomes of Integrated Reporting

7. ALEX HETHERINGTON - Benefits Beyond Compliance Key differences FeatureTraditionalIntegrated TrustNarrow disclosureGreater transparency StewardshipFinancialAll forms of capital ThinkingIsolatedIntegrated FocusPast; FinancialPast & future; Connected TimeframeShort-termShort, medium & long- term AdaptiveRule-boundResponsive to circumstances ConciseLong & complexConcise & material TechnologyPaper-basedTechnology enabled

8. Negatives 1. Hesitation on King III 2. Non-financial reporting still weak - quantitative data - reluctance to set targets 3.Materiality not well defined 4.Assurance still elusive ALEX HETHERINGTON - Benefits Beyond Compliance South African Trends Positives 1.Increasing uptake 2.Early days – no definitive best practice 3.GRI 3.1. being used as sustainability framework 4.Improvement in remuneration disclosure 5.Improvement in stakeholder engagement

9. ALEX HETHERINGTON - Benefits Beyond Compliance Critical issues Relevance & materiality 1.Engage with stakeholders 2.Relevant to stakeholders 3.Influence the decision-making of stakeholders Fact: Only 11% of IRs disclosed their methodology for determining materiality in non-financial information

10. ALEX HETHERINGTON - Benefits Beyond Compliance Critical issues Stakeholder engagement 1.Identify stakeholders “those groups who affect, or could be affected, by an organisation’s activities, products or services and performance” 2.Prioritise stakeholders 3.Engagement strategy Assurance 1.Dominated by IFA (ISAE 3000) & AccountAbility (AA 1000AS) Fact: Only 27% of companies furnishing independent assurance.

11. ALEX HETHERINGTON - Benefits Beyond Compliance Critical issues Concise & clear style 1.Limited use of jargon 2.High use of visual illustration 3.Not long

12. Thank you Alex Hetherington Tel: 021-671-9883 alex@ahmedia.co.za www.ahmedia.co.za/alexhetherington www.alexhetheringtonsustainabilityblog.com