The annual report is the primary source of comprehensive information on a listed company. It needs to skillfully complement other sources of information, such as the investor relations website and ensure consistency between all channels and to not think of them as separate information outlets that are used by different target groups.
The annual report comprises information about a company and, where applicable, entities it controlled during the reporting period. The annual report is a primary document through which companies communicate details of their activities, financial results, and strategies to shareholders and other stakeholders.
The key objectives of an annual report are:
- Educate and inform current and potential shareholders.
- Explain the corporate strategy and report on how it is being implemented.
- Report on performance during the reporting period.
- Provide clarity and direction on corporate governance issues.
- Put the results in a wider context by linking them to external factors and market developments.
- Elaborate on the risks that could influence the performance of the business.
- Fulfil other legal and regulatory responsibilities.
For listed companies in the Kingdom, it is strongly recommended that the annual report be published in both English and Arabic. The report’s content should be simple, clear, consistent, and concise.
What is Included in an Annual Report?
The annual report is an integral part of corporate reporting. Since the annual reports are based on specific legal requirements, the items that are included in the report vary. Most annual reports provide a fundamental overview of the business over the past year.
Chairman’s letter. The annual report usually starts with an introduction and a letter from the chairman, primary owner, or the CEO of the company to the shareholders providing a snapshot of the significant developments in the past year, company initiatives, and a summary of the financials.
Business profile. This section includes the vision and mission statement of the company, details of directors, officers, the products or services that are the main source of revenue for the business, competitor profile, and risk factors of the business.
Management discussion and analysis. The section provides an overview of how the company performed in the prior period, its current financial condition, and management’s future projections. It helps potential investors understand the company’s financial fundamentals and management’s thinking, beliefs, and performance.
Financial statements. The financial statements are the most important part of the annual report that allows current and future investors, shareholders, employees, and other business stakeholders to determine how well the company has performed in the past.
How to Write a Comprehensive Annual Report as a Listed Company?
Annual reports are important elements of a company’s transparency and accountability. However, rather than writing a ponderous document that only a few can understand, listed companies are creating annual reports that speak to a broad group of people. These reports communicate the values and goals of the brand.
Producing creative reports that are highly visual and narrative-driven helps companies to better connect with shareholders, investors, and customers. An annual report must strategically engage the audiences and inspire shareholders to invest.
Here are four extremities to help you create a compelling annual report that people actually want to read:
Determine the key message. The investors and employees want to know what you did and why you did it. By connecting your activities and your accomplishments to the final goals and mission statement, businesses can build trust and foster long-lasting connections.
Finalise structure and content. Apart from the basic elements such as introduction, chairman’s letter, business profile, and financial statement, the annual report should have a storyline that defines the overall structure of the report and shapes the content around a narrative thread. This makes it easier to identify and cut out information that does not actively move the story forward. Use clear, precise, and unambiguous writing. Maintain a professional and unbiased position throughout the document. The content of the annual report should be transparent and honest.
Use compelling design. A well-designed report that is engaging and professional can be used as a marketing tool by listed companies. Ideally, readers should be able to scan through the document and get the information they need. A good annual report design uses a bold and complementary colour scheme and layout techniques that are in sync with the brand.
Plan in advance. Creating an annual report is a long-term process that requires an organised system for recording and tracking data, media clipping, photographs, and a list of business achievements. While several companies create the annual reports in-house, others may hire an advisory firm to compile, proofread and finalise the document.
The annual reports keep the critical business information up to date. A failure by public companies to update the investors and the state might result in late fees or even dissolution of the company.
Listed companies are required to prepare and issue to shareholders a financial report and directors’ report annually, including the auditor’s report on the financial and remuneration reports. Alternatively, a company may issue a concise report to shareholders. A concise financial report provides shareholders with information relevant to evaluating the business without providing full detailed accounting disclosures. These reports should be issued to shareholders within four months of the end of the financial year.
A well-executed report can serve as a valuable piece of content that elevates the company brand over the long term while serving the core needs of the financial community. Although creating a compelling annual report requires lots of time and planning, it’s also an exciting chance to flex your creativity and reflect on the reasons why your company is in business.
Sager IR professionals’ have the expertise to advise on best practice standards and techniques to ensure your company’s annual report is executed most efficiently and effectively.