04 Nov 2013
The annual report remains the bedrock of corporate financial reporting for mining investors and analysts. But there is a significant gap between the perceived importance of data in company reporting and its adequacy, according to a new PwC survey – Extracting value.
Investment professionals surveyed, flagged up reporting shortfalls and inconsistencies in relation to a number of key metrics, such as cash costs and reserves data. Respondents also said they would particularly like to see all-in production cost measures included, more detailed capital expenditure reporting and greater industry-wide consistency.
Jason Burkitt, PwC UK mining leader commented: "One challenge for management and investment professionals alike stems from the lack of clear guidance around the reporting of key performance measures, such as non-GAAP and non-financial information. This is resulting in diverse disclosure practices, creating a harder task for investors and analysts as they seek to compare companies - even within the mining sector."
Perhaps because of concerns over presentation of data, 84% of investors and analysts surveyed said they would gain comfort from knowing that non-GAAP measures, such as EBITDA, stuck to some basic 'ground rules'.
There are also opportunities to improve trust in the measures that have the power to influence and ‘move markets’. Only 56% of those surveyed felt that the measures that move the market are sufficiently reliable.
Jennifer Sisson, from PwC’s investor engagement team said: “There is a close link between the perceived importance of a piece of information and the account reader’s desire for assurance.
"From an investor perspective, the metrics most likely to be involved in their models – the 'measures that move the market' – are naturally the areas where they feel assurance is most important. The investment community is sending a clear message to management. If a measure is important, make sure it’s reliable."