• Narrative items
– Chairmen’s statement
– Directors’ report
– Operating and financial review
– Review of operations
– Statement of corporate governance
– Auditors report
– Statement of directors’ responsibilities for the financial statements
– Shareholder information
• Non-narrative
– Highlights
– Historical summary
– Shareholder analysis
Balance sheet
• A balance sheet is a statement of the resources owned and controlled by a business at a single point
in time.
• It gives a snapshot of assets, liabilities and capital at a point in time.
• It provides information about the company’s funds and how they are used in the business.
Accounting policies
• Companies must describe the accounting polices they use in preparing financial statements.
• Companies have a choice of accounting polices in many areas such as foreign currencies, goodwill,
pensions, sales and stocks.
• As different accounting polices will result in different figures it is necessary to state the policy that
was used so that readers of the accounts can make an informed judgement about performance.
• It is also important to state the effect of any changes in accounting policies – restating prior year
numbers where this is materially significant
Chairpersons statement
• An overview of the trading year.
• A personalise overview of the company’s performance over the past year.
• Usually covers strategy, financial performance and future prospects.
Directors’ Report
• Its principal objective is to supplement the financial information with other information consider
necessary for a full appreciation of the companies activities. It includes:
• A description of the principal activities of the company.
• A fair review of the current and future prospects of the business.
• Information on the sale, purchase or valuation of assets.
• Recommended dividends.
• Employee statistics.
• Names of directors and their interests.
• Details of political or charitable donations.
Operating review
• New product development
• Details of shareholders returns
• Risks and uncertainties
• Future investment
• Sensitivity of financial results to specific accounting policies
Financial review
• Current cash position.
• Sources of finding.
• Treasury policy.
• Capital structure.
• Confirmation of the business as a going concern.
• Factors outside the balance sheet impacting on the value of the business.
• Taxation.
Other features
• Highlights
– An “at a glance” summary of selected figures and ratios.
• Historical summary
– Five years of selected data from the balance sheet and profit and loss account
– Tables and graphs to illustrate trend and comparison of turnover, profit ,dividend and earnings per
share.
• Shareholder analysis
– Detailed analysis of the shareholders, for example by size of shareholding
Auditors report
• Auditors are independent accountants who are registered to carry out this work.
• They also have to certify that the accounts are drawn up in accordance with the requirements of the
Companies Act.
• Auditors must make a brief report to confirm that the accounts give a true and fair view of the firm’s
financial position.