reporting =
value enhancement

An important shift is taking place in the way SANRAL is telling its story

SANRAL tells its story in many ways, through this and other similar publications, media releases TV/ radio interviews – and a formal report every year, in which it has to spell out in a comprehensive way all the work it has done in the last financial year (1 April- 31 March).

The way in which the annual report is written is now changing, as will its purpose.

It will still be telling what the roads agency has been doing throughout the year and how its finances are looking. The detailed overview is aimed at its sole shareholder, the Department of Transport (as represented by the Minister), the parliamentary oversight committee and anybody who is interested in what SANRAL does.

The annual report is a public document. It typically contains a report by the board chairperson and the chief executive officer, describes what projects the agency is busy with on the national road network, the state of the agency’s funding and efforts around road safety. But crucially, the annual report also carries information about the agency’s social responsibility efforts.

These include financial support for university departments whose work is related to SANRAL’s activities, the bursaries and scholarships it offers schoolchildren and students, the way in which it is growing SMMEs, transferring skills and looking after the environment.

Naturally, a full overview of how the agency is run and how it has spent its money are important parts of its annual report – as is the finding of South Africa’s Auditor-General.

The basic approach will remain the same, but there will be important additions from now on. This year’s annual report is moving in the direction of ‘integrated reporting’. Essentially, this means that in addition to the usual elements of an annual report, there will now also be information about how the agency’s strategy, governance, performance and outlook leads to the creation of value – an integrated report.

It’s an important shift, as reporting will not only be hard facts pertaining to SANRAL, but how those facts and its performance, makes life better. What does SANRAL do to create unique value?

This unique value is not generated within or by the organisation alone. The

external environment has an influence, as does its relationship with others and the resources it uses and affects. Value creation is the change in value of what the Integrated Reporting Committee of South Africa (IRC) calls ‘capital’. The IRC specifically identifies financial-, manufactured-, intellectual-, human-, social and relationship- and natural-capital.

The IRC says: “The integrated report should show how the organisation uses and affects its important capitals, as well as the trade-offs between the capitals, in its value-creation process.” Another way of looking at it is to see the annual report moving beyond just saying what has been done (which must still be part of the annual report), but how doing that is improving things.

Integrated reporting flows from the King Code of Governance (King III). This was followed by King IV, which applies to SANRAL – it is both a state-owned entity and a company registered in terms of the Companies Act.

King IV is not in any way prescriptive on the format, or the outline, of an integrated report. What matters is the evidence of integrated thinking and approach of all role players in the agency.

The aims of integrated reporting spelt out by the IRC:

  • Improve the quality of information available to providers of financial capital, to enable more efficient and productive allocation of capital
  • Promote a more cohesive and efficient approach to corporate reporting that draws on different reporting strands and communicates the full range of factors that materially affect the ability of the organisation to create value over time
  • Enhance accountability and stewardship for the broad base of the capitals and promote understanding of their interdependence
  • Support integrated thinking, decision-making and actions that focus on the creation of value over the short-, medium- and long-term

It sounds very formal but is a framework within which a modern company (or state entity) must do what is expected in modern times: make the world in its widest sense a better place.