1.

0 INTRODUCTION The King Report on Governance for South Africa 2009 (King III) defines integrated reporting as a holistic and integrated representation of the companys performance in terms of both its finance and its sustainability. As is outlined in Discussion Paper, the objective of integrated reporting is to enable stakeholders to assess the ability of an organisation to create and sustain value over the short-, medium- and long-term. In late 2011, the newly formed International Integrated Reporting Committee (IIRC) launched a discussion paper to begin the process of developing an internationally accepted integrated reporting framework. Integrated reporting is a new and fast developing concept in corporate reporting, which enables businesses to present environmental, social or ethical information, in a way that is explicitly related to the financial, strategic, and governance information within an annual report. 1.1 INTERNATIONAL INTEGRATED REPORTING COMMITTEE (IIRC) The International Integrated Reporting Council (the IIRC) is a powerful, international cross section of leaders from the corporate, investment, accounting, securities, regulatory, academic and standard-setting sectors as well as civil society (IIRC website, 2012). The IIRC is developing an International Integrated Reporting Framework that will facilitate the development of reporting over the coming decades. The core objective of the Framework is to guide organizations on communicating the broad set of information needed by investors and other stakeholders to assess the organizations long-term prospects in a clear, concise, connected and comparable format. This will enable those organizations, their investors and others to make better short-and long-term decisions. Nowadays, companies have shifted from reporting that is aimed exclusively at their shareholders to reporting that explains the directors claimed belief in stakeholder accountability and stakeholder engagement. The introduction of integrated reporting appears to have created a new set of priorities for the directors, expressed through the reporting. Integrated reporting is fundamentally different to sustainability reporting in its focus on issues that are material to the business. Other than that, the difference between integrated and sustainability reporting concerns their audiences. Investors currently form the primary

audience for integrated reports, whereas sustainability reports are read by many other stakeholders. Reports based largely on financial information do not provide sufficient insight to enable stakeholders to make an informed decisions and judgments regarding organisations performance and whether it is able to sustain economically, socially as well as environmentally. Sustainability reports also suffered from weaknesses, usually by failing to integrate with financial aspect, as well as providing a historical information that sometimes is irrelevant to organisations current situation. There are also concerns about the lack of comparability and consistency in non-financial reports (Solomon and Solomon, 2006). Stakeholders today want forward-looking information that will enable them to assess and make informed decision about the total economic value of an organisation.

Recognising the shortcomings of existing reporting models, and driven by an urgent need to find more effective reporting solutions, discussions around the world have begun to focus on what has become known as integrated reporting.

An integrated report is not simply a combination of the financial statements and the sustainability report. It incorporates material information from these and other sources to enable stakeholders to evaluate the organisations performance and to make an informed assessment about its ability to create and sustain value. An integrated report should provide stakeholders with a concise overview of an organisation, integrating and connecting important information about strategy, risks and opportunities and relating them to social, environmental, economic and financial issues.

1.2 DIFFERENCE BETWEEN CURRENT AND INTEGRATED REPORTING There is a difference between past and current reporting, and it appears that the organisations have had a growing realisation that non-financial issues have financial implications for their firms. There has been a change in how sustainability issues are now linked to materiality and risk.'The International Integrated Reporting Committee (IIRC) suggests that there are eight differences between current and integrated reporting. 1.2.1 Thinking

Because traditional reporting occurs in isolation environment, it encourages thinking in isolation. Integrated Reporting, on the other hand, reflects, and supports, integrated thinking which comprises of monitoring, managing and communicating the full complexity of the value creation process and how this contributes to success over time. Integrated Reporting demonstrates the extent to which integrated thinking is occurring within the organization. 1.2.2 Stewardship An Integrated Report displays an organizations stewardship not only of financial capital, but all forms of capital including manufactured, human, intellectual, natural and social capital, their interdependence and how they contribute to success. This broader perspective requires consideration of resource usage and risks and opportunities along the organizations full value chain.

1.2.3 Focus Annual reporting at present is largely focused on past financial performance and financial risks. Other reports and communications may cover other resources and relationships, however, integrated reporting is presented in a connected way, or linked to the organizations strategic objectives and its ability to create and sustain value in the future. 1.2.4 Timeframe Much of the media and regulatory attention is focused on short-term . Although short-term considerations are important in many ways, placing them in context is also essential. Integrated Reporting specifically factors in short-, medium- and long-term considerations. 1.2.5 Trust Financial reporting focuses primarily on a narrow series of mandated disclosures. Although an increasing number of organizations are improving their transparency, for example, through voluntary sustainability reporting, in absolute terms that number is still low. By emphasizing transparency, for example, covering a broader range of issues and disclosing the positive with the negative, Integrated Reporting helps to build trust. 1.2.6 Adaptive

Todays reporting is often said to be too compliance orientated, reducing the scope for organizations to exercise an appropriate amount of judgement. While a certain level of compliance orientation is necessary to ensure consistency and enable comparison, Integrated Reporting offers a principles-based approach that drives greater focus on factors that are material to particular sectors and organizations. It permits an organization to disclose its unique situation in clear and understandable language. 1.2.7 Concise Long and complex reports are often impenetrable for many readers. A key objective for Integrated Reporting is to de-clutter the primary report so that it covers, concisely, only the most material information. 1.2.8 Technology enabled While the internet introduce the elements of technological innovation, many corporate reports are still presented as if they were entirely paper based. Integrated Reporting takes advantage of new and emerging technologies to link information within the primary report and to facilitate access to further detail online where that is appropriate.

2.0 PRINCIPLES OF INTEGRATED REPORTING The Discussion Paper issued by the IIRC sets out five guiding principles for an Integrated Report. 2.1 Strategic focus An Integrated Report provides insight into the organizations strategic objectives, and how those objectives relate to its ability to create and sustain value over time and the resources and relationships on which the organization depends. 2.2 Connectivity of information An Integrated Report shows the connections between the different components of the organizations business model, external factors that affect the organization, and the various resources and relationships on which the organization and its performance depend.

2.3 Future orientation An Integrated Report includes managements expectations about the future, as well as other information to help report users understand and assess the organizations prospects and the uncertainties it faces. 2.4 Responsiveness and stakeholder inclusiveness An Integrated Report provides insight into the organizations relationships with its key stakeholders and how and to what extent the organization understands, takes into account and responds to their needs. 2.5 Conciseness, reliability and materiality An Integrated Report provides concise, reliable information that is material to assessing the organizations ability to create and sustain value in the short, medium and long term.