Your Company’s Annual Report

As a shareholder ie part owner of a company, you need to know its performance over the past financial year and the management’s view on the same. You also need to know what are the company’s future plans and strategies and what does the management intends to do to attain targets.And your company’s annual report is your means to do so.

Following are the Key Constituents of Your Company’s Annual Report

Director’s report: The director’s report comprises the events that take place in the reporting period. This includes a summary of financials, analysis of operational performance, details of new ventures and business, performance of subsidiaries, details of change in share capital, and details of dividends. In short, you the shareholder can get a gist of the fiscal year from this section.

Management discussion and analysis (MD&A): More often than not, the MD&A starts off with the management giving its view on the economy. It is then followed by a perspective on the sector in which the company is present. Any major changes like inflation, government policies, competition, tax structures, amongst others are highlighted and discussed in this report. It also includes the business strategy the management intends to follow. Details regarding different segments are provided in this section. The company also gives a brief SWOT (strength, weakness, opportunity, and threat) analysis and business outlook for the coming fiscal.

This can aid you the shareholder to understand what major changes are likely to affect your company going forward. However, you the owner/investor should not blindly believe what the management has to say.

Report on corporate governance: The report on corporate governance covers all aspects that are essential to the shareholder of a company and are not part of the daily operations of the company. It includes details regarding the directors and management of a company. These include details such as their background and their remuneration. This report also provides data regarding board meetings – how many directors attended the how many meetings. It also provides general shareholder information such as correspondence details, details of annual general meetings, dividend payment details, stock performance, details of registrar and transfer agents and the shareholding pattern.

Financial statements and schedules: This is the  crux of your company’s annual report. Financial statements, provide details regarding the operational performance of your company during the reporting period. In addition, it also depicts the financial strength of your company. The key constituents of the financial statement include the profit and loss account, the balance sheet, the cash flow statement and the schedules.