The nature and extent of non-financial disclosure in the South African mining industry.

Abstract

Non-financial disclosures are of considerable interest and importance to the reporting world and decision making. However, many companies fail to disclose adequate information on their non-financial matters. The lack of internationally accepted requirements for the presentation of non-financial disclosures is one reason for inadequate reporting of non-financial matters and the reporting differences among companies. The aim of this dissertation was to explore the nature and extent of non-financial disclosure in South African mining companies listed on the JSE Securities Exchange. This sector was chosen because of its high risky nature and its significant role in the South African economy. The data were collected from 22 South African mining companies‘ websites and related to the 2004, 2005 and 2006 annual reports. A disclosure index was developed to investigate the extent and nature of non-financial disclosure in the South African mining companies with regards to environmental, social, corporate governance, forward-looking information and Management Discussion and Analysis (MD&A), and the extent of non-financial disclosure with the JSE Securities Exchange reporting requirements; that is, the King II and the JSE SRI Index. Thereafter, a content analysis of the companies‘ annual reports was carried out using the disclosure index developed for this study. The study found that the non-financial disclosure for all 22 mining companies showed an increasing trend over the years studied. Mining companies were disclosing environmental issues more than any of the other non-financial disclosure items. However, more than half of the companies did not provide information with regard to their non-compliance issues. Generally this means that, although the mining companies face obvious risks, they are better at disclosing positive rather than negative information. The main reason for the increase in the companies‘ adoption of Global Reporting Initiative (GRI) as a non-financial reporting guideline is King II. The study demonstrates that there was not 100% compliance level of adherence with the reporting requirements of the JSE Securities Exchange on corporate governance and integrated sustainability reporting. Keywords: Non-financial disclosures, mining companies, South Africa, JSE Securities Exchange, environmental, social, corporate governance, forward-looking, MD&A.