DRDGOLD modernises financial reporting processes with Certent CDM
Certent CDM has saved the mining company time and effort, and ensured compliance with XBRL mandates in the US and SA.
XBRL mandates in the US and SA prompt a rethink of reporting processes
Founded in 1895, DRDGOLD is one of South Africa’s oldest gold mining companies and the longest continuously listed company on the Johannesburg Stock Exchange (JSE). It has an American Depositary Receipts (ADR) programme listed on the New York Stock Exchange (NYSE), requiring it to file an annual report on Form 20-F to the US Securities and Exchange Commission (SEC), in line with the rules governing foreign private issuers (FPIs).
As a mid-size company with a small finance team of finance professionals, and with a corporate IT budget largely limited to IT maintenance, DRDGOLD had been taking a manual approach to preparing financial reports for filing to the SEC and to SA’s Companies and Intellectual Property Commission (CIPC).
The most onerous document to prepare was the Annual Report on Form 20-F, which combines a narrative front section with consolidated financial statements thereafter. The team had been preparing the financial data in MS Excel and the narrative section in MS Word, then had been manually retyping the financial data from MS Excel into the Word document.
“It’s not the most fun thing to do,” says Francois Bouwer, Group Financial Accountant for DRDGOLD. “It’s a laborious, painful process, and when the pressure is on, you just want it to go quicker. But the more information you have to rekey, the more room there is for typing errors.”
What’s more, DRDGOLD would send the completed report to an external service provider to convert it to an EDGAR-compliant format and file it to the SEC’s EDGAR Web site. That process took one to two days for conversion, checking and validation, adding extra stress as the filing deadline approached.
So in 2018, when the SEC introduced a mandate for issuers to file statements in XBRL, Bouwer and the team saw it as an opportunity to completely rethink the financial report creation process. “We wanted a platform that would automate the preparation of our financial reports, including the newly mandated XBRL tagging, and reduce the amount of information we had to capture manually,” he says. “Something that would automatically populate reports with the correct data and deliver an output format ready for filing.”
The need became even more pronounced when the CIPC swiftly followed the SEC’s example and mandated iXBRL reporting for companies in SA. “Now we were looking at XBRL reporting in two jurisdictions at the same time, which meant more of a big-bang switch to XBRL than we’d expected,” says Bouwer. “It drove us to look for a solution that would tick both boxes.”
Automated report creation and XBRL tagging with Certent CDM
DRDGOLD knew that it wanted to automate as much of the financial report creation work as possible, rather than simply outsource the XBRL tagging element. “That was a very quick decision,” says Bouwer. “We wanted to modernise and automate our processes, not just do XBRL because we had to do XBRL.”
The team evaluated a number of solutions. Several did not meet the brief because they only automated the XBRL tagging aspect, not the narrative report preparation or output into a format ready for filing.
Of the remaining options, Certent CDM was selected because it enables the automated creation of multiple types of reports on a familiar interface, with all the capabilities of MS Excel, Word and PowerPoint. It also applies XBRL tags using the different taxonomies used by the SEC and the CIPC, and produces output in a format ready for filing.
That was partly down to the knowledge and expertise of Certent and its South African partner Synergy, recently rebranded to iOCO, which gave Bouwer and the team confidence that they would be able to configure the CDM platform to meet DRDGOLD’s reporting requirements.
“They had the capacity to assist us to build the financial statements on the platform and to help with the tagging for the local and US markets because our capacity was limited,” says Bouwer. “It felt like there was a good network to support us in both jurisdictions.”
With CDM selected, Certent and iOCO worked closely with DRDGOLD to build the Form 20-F and annual financial statements in the platform, automate the pull of data, apply the required XBRL tags, and prepare the reports for filing in the required format, such as EDGAR for the SEC.
As the implementation progressed, DRDGOLD saw opportunities to automate more reports. Populating the 20-F was the main focus, but DRDGOLD also added other ad hoc filings on Form 6-K.
A dry run confirmed that DRDGOLD was ready to file the 20-F and other reports using CDM, and the first 20-F was successfully prepared and filed through the platform on 31 October 2018, with the XBRL document being filed at the end of November 2018.
Faster, more accurate and lower-cost creation of external and internal reports
It’s still early days for DRDGOLD with CDM, but the team have already experienced a number of benefits using the platform.
Firstly, the time and cost of using an external provider to convert the report from MS Word to EDGAR have been eliminated. “Generating the 20-F report is now just a question of pressing a button and it is virtually instantaneous,” says Bouwer. “That reduction in time is a big element of the upside.”
Secondly, as the team create reports in the CDM platform, they are starting to realise the benefit of automated data population. “For the 20-F, all of that laborious rewriting of numbers in Word has been avoided,” says Bouwer. Looking ahead, he expects to free up time to focus on the narrative, with the numbers dynamically flowing into the final report.
XBRL tagging for two jurisdictions is another major benefit, allowing the team to keep report creation in-house rather than outsource the work to a third party.
And finally, there’s the flexibility of CDM to automate many different types of reports. While DRDGOLD started with annual reporting, it’s now exploring other areas where CDM can save time and improve accuracy; for example, IAS34 interim financial statements and quarterly board reports.
“We’re looking across the finance function to see where else we can roll CDM out,” says Bouwer. “We’re looking forward to saving time and effort across our workflows.”