A guide to understanding annual reports: Listed companies

The annual report comprises information about the company, and some commentators believe that it is the primary source of information about a company’s activities and strategies. The peak body of Australia’s senior finance executives (the G100) publication Reporting to Shareholders – A Good Practice Guide (May 2008) states the primary purpose of the annual report is accountability, particularly to shareholders. Information found in the annual report includes material framed by statutory and regulatory requirements articulated in the Corporations Act 2001 and Australian Securities Exchange (ASX) listing rules, including: • the directors’ report (of which the remuneration report is part)
• the corporate governance report
• the financial report
• the auditor’s report on the financial and remuneration reports
Additional non-compulsory reporting which supports good corporate governance is normally reflected in reports from the chairman and the chief executive of the company. The emergence of corporate social responsibility and sustainability reports are further examples of the non compulsory reporting which companies are choosing to provide shareholders with to enhance market knowledge and understanding of their strategies and performance operating the business.