Vision/mission statements. Here, companies outline the goals and values of their business. Given that these statements are often generic and vague in nature, the value of such information is rarely important.
Auditor’s report. This is a letter containing your auditor’s comments on the financial accuracy of the statements. Any changes in accounting policy will be highlighted here.
Management’s Discussion and Analysis (MD&A). This section contains key industry trends, a SWOT of the company, key insights into the company’s performance, as well as key risks. Considering this and the fact that prior year MD&As are often read in conjunction, this is a high-importance part of the annual report.
Business information. From a product overviews, revenue analysis, to a listing of directors; this section’s purpose is to provide the reader with background on how the company is run, and the nature of its business.
Financial statements. Consisting of an income (proft and loss) statement, a cash flow, and a balance sheet. These three statements are amongst the most fundamental parts of the annual report.
Notes to financial statements. These notes provide more details on key financial statement items. For example, a discussion on a company’s accounting policies, a detailed breakdown of liabilities, or a disclosure paragraph on related party transactions. Often times, investors analyze financial notes from the last recent years, to gauge an understanding of the company’s accounting changes. Given the amount of scrutiny paid to these notes, its importance is high.
Information on your company’s shares. Includes some highlights over the share’s historic performance, share class structure, any splits, bonus shares distributed, major shareholders/transactions that occured in the year.
Other reports. For example, a director’s report independent from the one provided by management, as well as a corporate governance report outlining the composition/bacground/election of directors and sub-committees.