The contents of the annual report can be broadly categorized as mandatory and voluntary disclosures.
Mandatory disclosures refer to the information that companies are required to disclose by law. These disclosures include:
- Financial statements: The annual report includes the company’s financial statements, including the balance sheet, income statement, cash flow statement, and statement of changes in equity.
- Auditor’s report: The auditor’s report is included in the annual report and provides an opinion on whether the financial statements are presented fairly in all material respects.
- Corporate governance report: Listed companies are required to disclose their corporate governance practices and provide a report on the same.
- Management discussion and analysis (MD&A): The MD&A is a section of the annual report where management provides an analysis of the company’s financial performance, operations, and future prospects.
- Directors’ report: The directors’ report is a mandatory disclosure that provides information on the company’s operations, financial performance, and future outlook.
Voluntary disclosures, on the other hand, refer to information that companies choose to disclose in addition to the mandatory disclosures. Some examples of voluntary disclosures include:
- Sustainability report: Companies may choose to disclose their sustainability practices and initiatives in a separate sustainability report.
- Corporate social responsibility (CSR) report: Similar to a sustainability report, the CSR report provides information on the company’s social and environmental initiatives.
- Financial highlights: Some companies may choose to include a section highlighting their financial performance over the year.
- Analyst coverage: Companies may disclose the number of analysts covering their stock and provide a summary of the analysts’ ratings and recommendations.
- Other relevant information: Companies may also choose to include any other relevant information that they believe is important for their stakeholders to know, such as upcoming projects, partnerships, or acquisitions.