The Anatomy of The Annual Report

It’s that time of the year again. It’s the season for company secretaries to prepare the documentation for the proverbial Annual General Meeting (AGM). Printers and scanners will be working overtime. Note to self..open shop that sells ink cartridges. Needless to say this is an important day on a premier company’s calendar. One worth notable mention.

TFHZPC pays close attention to what comes out of this event. Of note, is the annual report. This is a fully loaded document that is often self-styled by the authors but contains critical information about the previous year’s performance and what the company believes is the outlook for the coming year. 

The Chairman and Chief Executive Officer’s statements are what set the tone in understanding the sort of stewardship the premier company has. They will discuss the highs and lows of doing business in that fiscal year. They will mention what they are extremely proud of and what set them apart from competitors. Some might even paint a rosy picture amidst dismal performance. However, their comments are to be taken very seriously as this is an indicator of whether or not the management is astute enough grow value.

Reading along there will be details of the internal environment of company. Short of a brief internal analysis, some vital stats are provided such as the shareholding or any movements that may have occurred during the year. There will be mention of how the staff levels grew or shrunk. Furthermore, the various board committees may be listed and their mandate discussed. For a company that had positive earnings, a note on the amount dividend can also be mentioned here which certainly wets the appetite of any investor.

One aspect of the AR often ignore is the corporate governance section. We have discussed the importance of this in previous blogs and how it forms the foundation how the company conducts business. There will be bold statements such as fairness, accountability, integrity, transparency and independence. Whichever combination of words used to describe how they intend to conduct business must be taken seriously.

The AR follows up with a statement from the company’s chosen auditors who after months of reviewing the company’s internal and external transactions produce our most coveted financial statements. These exciting statements show the keen eye how and what money the company brought in during the year in review. In addition, it shows how money was spent and whether or not it finally ended up growing value (equity).

So we at TFHZPC will be paying close attention to the output that will come of these AGMs and it is our intention to bring you that most vital of information that is relevant to the discerning stakeholder.