What is an Year End Report?
An annual report is in the form of a written document which provides detailed information of the financial and operational performance of the company.
It also documents any accomplishments that the company has made over a period of twelve months.
Use and Importance
It is mandatory for all public companies to release an year end report so as to keep the stakeholders abreast of the company’s performance. The principle objective of creating a year end report is to retain prospective customers and cultivate relationships with new partners and donors. The report is usually delivered in published form to all stakeholders.
Standard Essentials and Components of End Year Reports
As a general rule, an annual report is composed of the following sections:
Information About the Company
This is the first section which includes a brief description of:
- History of the company
- What the company does
- Industry in which it operates
- What makes it stand out from others (Competitive Advantage)
Letters to the Shareholders
This section includes formal statements made by the Board Members, Chief Executive Officer and President of the company.
Financial summary generally covers the total revenue or profit generated, expenses incurred, earning per share and net income during the year. The data compares current performance of the company with that of previous two years—this is done to show how well or bad the company is doing. It also includes a summary of future financial goals.
Operational summary is a narrative of significant innovative measures taken up by the company to improve its performance. It is usually comprised of efforts related to
- Marketing, sales and distribution
- Research and development
- Launching of new products and services
- Expansion into other new markets
- Acquisitions, partnerships and mergers
- And other development initiatives
The crux of the annual report lies in financial statements. Financial statements are expressed in form of tables and provide information about the financial wellness of the company. It consists of three elements:
- Balance Sheet
- Income Statement
- Cash Flow Statement
- Statement of Retained Earning
Balance sheet gives information on the shareholder equity, assets and liabilities of the company; income statement provides a snapshot of operational activities in terms of profit, expense and net income; cash flow statement details the cash inflow and outflow from operating, investment and financial activities; and statement of retained earnings includes information on taxes, dividends and funds.
Profile of Key Players
Annual report of any company is incomplete without giving career highlights of key team members so as to assure the stakeholders that their company is in good hands.
Additional information is an essential constituent of a well designed annual report and is presented in the form of:
- Auditor’s report
- Accounting policies
- Compliance standards
- Corporate governance
- Social responsibility report
- Notes on financial statements
Make sure that the annual report is uniformly formatted and comes out as a sleek and sophisticated publication. Include illustrations to support content of the report. These images should be logical and streamlined with the image of the company. You can also go through our guide for drafting annual reports here.
Often times, readers are not interested in the text, they get a general idea of the company by gazing through charts, table and photos. Most importantly, mention accurate information–do not over emphasize any accomplishments because annual report acts as legal document and any fictitious information can drag the company to the court.