Consistency with Materiality Matrix
According to the Telenet’s annual report, the materiality matrix that is presented for the communication with investors and the stakeholders they prepared the materiality matrix. They set-up the matrix plan on the basis of four-step plan that are expected to assist them to recognise the issues that are most important for the management of sustainability of the company (Telenet.be. 2017). To achieve the goal they started with the evaluation of performance based on the Global e-Sustainability Initiatives that identified the issues linked with the improvement of the company’s business. As per the given case study, the disclosures linked with the sustainability have been crucially evaluated and they focused on the integrated reporting approach of the company. Through the analysis of the case study, it is recognised that the shareholder’s responsibility are important towards the materiality matrix for evaluating the disclosures required for the sustainability approaches. Further, if the company wants to complete the report from every aspects then it must give proper disclosures regarding the facts that it thinks material (Milne and Gray 2013). Therefore, it is crucial to the company to assess the extent to which the disclosed information can be used by the shareholders relevantly. Further, the shareholders significantly impact the services or products of the company they are dealing with. The details that shall be covered under financial report to enable the shareholders to take crucial decisions are –
- Analysis of important ratios – the ratios like solvency ratio, profitability ratio, performance ratio, market share ratio and liquidity ratio play crucial role in the decision-making purposes of the investors. If the shareholders have clear idea regarding the trend of the company’s performance and the comparability with the standards industry average, they will be in better position to take their decisions regarding whether to invest in that company or to invest in the rival company. Moreover, with the ratios the investors able to forecast the future growth aspects of the company and whether the company is able to pay off their obligations with the available assets or not (Juš?ius and Snieška 2015).
- Strategy of the business – if there does not exists any particular strategy for the business of the company then the stakeholders will have to carry on a market research to evaluate the company’s ability to overcome the financial crisis. However, if any particular approach exists for the company, the approach will depend on the product or services that are offered by the company. The shareholders therefore, can analyse the future prospect and the competitive advantages of the company to evaluate the performance of the company. Through the business models are not simple to evaluate, the shareholders may refer to the media releases, financial newsletter, and the economic analysis of the company to get clear idea regarding the business concepts of the company and the way they are making profits (Hahn and Kühnen 2013).
- Competitive advantages – this is the advantage that any company holds over other companies through the innovative products, better after sales service, faster delivery chain, brand name and better level of customer satisfaction. The companies with better competitive advantage have better growth aspect and sustainability for the future as they will be able to sell more of their products or services as compared to their competitors. It will be helpful for the shareholder for making their decisions related to their decision if the company mentions their competitive advantages in their annual reports or integrated report. Further, it will enable the shareholders to make a comparative analysis with the other potential companies for the investment.
- Policies regarding the engagement of shareholder – to assess the reasonable interests and expectations from the company it is crucial to have a clear idea about the company’s policy regarding the engagement of the shareholders. The engagement policies adopted by various companies differs from each other, some apply very strict policy regarding the engagement of the shareholders while other use simple policies. Engagement of the shareholders is the inherent part of the organizational policies. Each company form their policy that is aligned with the required standards and organizational procedures. However, other manners like scientific communities or collaborative activities can also be used to compare the policies of other organization before forming the final policy. The objectives related to the engagement of the shareholders assist the shareholder as well as the organization itself to assess the expectations and interests of the shareholders. In addition, it also assists the organization to prepare the reports related to the communication to shareholders (Cheng et al., 2014).
The aim of the integrated report is to portray the value of the company and potentiality of the company to generate value for the company over a specific period. The organizations prepare the integrated report based on the international framework of integrated report. The report helps shareholders to create some value for the company through the employees, local communities, clients, legislators, government and the policy makers. It can be identified from the Telenet’s integrated report that in some aspects they failed to follow the international framework while preparing the report (Bebbington, Unerman and O’Dwyer 2014). The disparities that fond are as follows:
- The qualitative and quantitative policies of the company play important role in evaluating the materiality aspect of the economy. However, it is found from the integrated report of Telenet that it failed to mention the the key performances in detailed manner.
- Normally the integrated reports are prepared to assists in the decision-making approaches of the shareholders. However, it will be a good approach to take into consideration the customers, creditors and other creditors at the time of preparation of the integrated report.
- If the company during the year has provided any services that will be beneficial to the environment or society that may create competitive advantages to the company that must be included in the report of the company as it may have a positive impact on the profitability of the company.
- The reports of the company are prepared and presented in intricate way and the users will face problem in analysing the reports. It should have been prepared with technical knowledge and experience of the preparer with regard to the international standards.
- The ability of the company in creation of value is dependent on the available resources of the company that includes both tangible and intangible assets of the company. The assets may be held even by the third parties. Therefore, it is important to disclose all the assets.
- The accounting systems of the company should have been included as a part of the statement of non-financial statements through the approval of the shareholders or the confirmation from the third parties like creditors (Adams 2015).
- The non-financial report of Telenet was not sufficient to form an opinion on the non-financial aspects of the company. It should have been sufficiently mentioned in the financial report as well as the integrated report.
- The organization that publishes its operating strategies publically and measure their contribution are regarded as are in better position to generate values. Further, it gives the shareholders better idea about the future prospect of the company.
- The relationship among the reporting system, business strategies and associated risks were not reported anywhere in the integrated report or financial report of the company (Lock and Seele 2016).
- The challenges and uncertainties that the company are facing must be included in the integrated report of the company so that the users will be able to analyse the company’s exposure to the risks and will enable the company to form the strategies and approaches through which it can achieve their target to maintain the sustainability over the long-run period.
- It is identified that there is loopholes in the conceptual framework and regulatory framework of the company in their non-financial report. It caused discrepancy in the report. Further, it will lead to creation of uncomfortable situation for the users when they will compare the benchmarks related to risk, profit and expenses of the company with other companies in the industry.
- Lastly, the company should have included the manner in which they allocate the resources to achieve the target as it will focus light regarding the companies approach with the profitability and the growth opportunities.
In addition, the segregation of the capital into tangible and intangible could give clear idea about the capital of the company. Moreover, few more crucial things like the activities related to value addition, strategies of the company should have been included that will create value, for instance, design, production, service level agreements, innovation, production, competitive advantages and differentiation factors from the competitors cold have been mentioned in the report. Further, one more crucial thing that is, the risk taking approach of the company and the ability to remove those risks must have been included in the report. Therefore, while preparing the financial report and the integrated report the company should have included the above recognized things to present the report in better and transparent way.
The financial report of Telenet covered the report related to the sustainability strategies and the implementation of those strategies for present years. They covered the Green together programme that included the approaches to minimize the environmental impacts from their operations. It has also mentioned in their report that the primary purpose of the Linking Environment And Profit (LEAP) programme is to develop the growth strategies in the company. Further, it is identified the sustainability report of the company that is included in the financial report of the company are not sufficient to give a broad and clear idea as the length of the report is too small to include all the crucial aspects (Benn, Dunphy and Griffiths 2014). The purpose of the sustainability report apart from making the report clear and concise is as follows:
- Social benefits – it has been identified by most of the organizations that doing welland doing good are two mutually exclusive terms. Through the report, the company can communicate to its stakeholders and local customers in better way
- Communication regarding the sustainability indicates that the firm is able to maintain their growth in the long-run and they are able to implement various approaches regarding their sustainability. It can also be used to communicate their differentiability with the competitors to the customers, creditors, stakeholders and investors (Epstein and Buhovac 2014).
- Risk management – the company can communicate through their sustainability report regarding their risk taking approach as well as the approaches through which they will mitigate the identified risks. This inclusion will create faith among the users regarding the long-term viability of the company.
- Financial performance – the intangible benefits have great impact on the sustainability and viability of the company. It can assists in creation of loyalty and brand reputation of the company. Therefore, the intangible benefits must be included (Crane and Matten 2016).
- Access of capital – from the study, it is recognized that reporting in well manner enables the company to raise capital at less cost. Through sustainability report the company become able to assess the competition, growth opportunities and associated risks, which in turn enable them to approach the financial institutions to sanction loan at less cost.
- Effectiveness in reduction of waste – if the company finds the required information through the sustainable reports at where to reduce the costs and wastes, it will be able to find new way to minimise the wastes through innovative approach and better utilization of available resources and will also gain some in-depth knowledge regarding the growth prospects (Baumgartner 2014).
Completeness of Information for Stakeholders
As per the integrated report and the annual report of the company, it has been identified that the users of the corporate report that is the annual report and the integrated report have positive approach towards the report of Telenet. The integrated report assists the company to maintain the balance and create confidence among the external as well as the internal shareholders. The procedure for the reports demands for innovative and new techniques to align it with the international framework that will take into consideration both the financial and non-financial data (Taylor 2015). It is further identified that the corporate reporting assists in implementation of the strategies that will assist the users in decision-making. The corporate report will also enable Telenet to minimise the risks associated with the operation of the business and improve their business that will be supported by the conceptual framework and the issues relevant to the environment and government. The response from the market and answering the press queries regarding the under performance of the company is caused due to the underperformance of the company regarding the non-financial activities. For instance, the company can provide safe water to the employees and can take steps for minimising the environmental effects on the area which they belong that may cause from their operation. The preamble of the integrated report as well as the sustainability report and inclusion of environment report will enable the company to plan for the new strategies and contribute to the improvement of the health of the society (Flammer 2013).
Further, it is identified that the corporate reporting have great impact on the integrated reporting and with the assistance of these reports the company can analyse that which areas need more concern and through development of which strategies the company will be able to contribute to the environment and make it a better place for the people. It has been recognised that the reports prepared by Telenet regarding their environmental approach and sustainability demands to focus on the environmental issues. However, the Green together programme and Linking Environment And Profit (LEAP) programmes that are initiated by Telenet are expected to have a positive impact on the society aswell as the business of the company. It is further expected to create competitive advantage for the company (Grimmer and Bingham 2013).
The improvement approach for environment as well as the sustainability is expected to have positive impact as it will assist the company to gain some competitive advantages over the competitors. Further, it will create positive feelings among the shareholders, creditors, customers and the local people that the company is concerned about the environment in which they are operating. Therefore, it can be argued that corporate reporting will be useful for the users of the reports like the shareholders, creditors, customers and investors to create a positive impact on the company, which in turn will enable the company to improve their business (Franks et al., 2014).
Conclusion
It has been concluded from the above all discussion that the responsibility of the shareholder’s is significant towards the materiality matrix for evaluating the disclosures required for the sustainability approaches. Moreover, the shareholder’s activities are crucial as it has an impact on the capability of the organization to develop the system for attaining their goals. The main purpose of the integrated report is to create a stability among the flexibility and opportunities that can be identified with the difference in the operating environment of different organizations. However, the sustainability reports that are included under the corporate report of Telenet are not sufficient to enable the shareholders to take concrete decisions. Further, to have a sustainable viability over long-term period, the company must take appropriate steps towards the improvement in the environmental activities that will give a better place to the local community in the company operates.
References
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