Definition of an Annual Report

An annual report can be defined as,

"As the name indicates, it is an annual publication that public corporations must provide to shareholders to describe their operations and financial conditions".

OR

"An annual report is a comprehensive report on a company’s activities throughout the preceding year".

Design & Template of a Basic Annual Report

Typically, the design and template of a standard annual report comprises of the following components:

Report by Chairperson

Report by CEO

Corporate Information

Corporate Governance Report

Mission Statement

Letters to the Shareholders

Corporate Governance Statement of Compliance

Awards, Grants and Loans

Managements Discussion and Analysis

Auditor’s Report on Financial Statements

Balance Sheet

Income Statement

Statement of Retained Earnings

Cash Flow Statement

Notes to the Financial Statements

Accounting Policies

Financial Highlights

The front part of the report often contains an impressive combination of graphics, photos and an accompanying narrative, all of which chronicle the company’s activities over the past year.

The back part of the report contains detailed financial and operational information.

Significance of an Annual Report

The purpose of annual reports is to give the shareholders and other interested parties information about the company’s financial performance. It is considered mandatory by most jurisdictions that companies disclose their financial performance for shareholders and prospective investors at the end of financial year.

Companies listed on a stock exchange are also required to release annual reports. Most of the information disclosed in annual reports in quantitative since its main focus is on the financial operations. In addition to communicating the financial performance of the company, annual reports also communicate the readers about the technological innovations and strategic revision taken up by the company. The words by the chairperson inform the shareholders that their investment is in safe hands.

How to Write an Annual Report?

Here are a few easy steps which will help you in learning best practices for writing an annual report for your business:

Gather Information

First of all, you need to gather financial data of the company for the past twelve months.

You also need to gain information on the key activities of the company which helped in increasing revenues.

Discuss the financial performance of the company with the members of finance department and board in particular.

Focus on Accomplishments

Once you have all the necessary information in hand, go through it and pick out points which focus on the accomplishments of the company.

You must know that your readers are not interested in knowing about the company’s philosophy and values; what they are looking for is how you carried out a particular activity and how it helped you in achieving your mission and objectives.

Talk about any innovations and strategy modifications which have helped the company gain profit. You can also share your future plans regarding the improvement of financial situation of the company.

Financial Statements and Notes

Present accurate financial data through your balance sheet, income sheet and cash flow statement.

For every financial entry you make, there must be an explanatory note. Refrain from wild and untruthful statements.

Visual Appeal

The annual report should contain graphics, colorful texts, art work and photos which must be linked to the company’s accomplishments.

Add captions; this will leave a positive impression on the shareholders and potential donors.

Pictures validate the work your organization does. Remember, not to overdo the graphics and headings.

Set Up a Theme

Build a theme for your annual report since it provides you a framework for graphics and language.

For developing a theme, invite the opinion of key staff and board members. Possible themes could be ‘Thanks to Our Pioneers’ or ‘1000 Homes in Five Years’.

Highlight Your Activities

You need to put your significant programs, activities and projects up front.

The shareholders and corporate donors are interested in knowing the key benefits the company has provided to the community and the support you have received.

Focus on basics like who, what, where, how and why.

Keep it Concise

Ensure that the annual report must be concise and to the point. Unnecessary and detailed information will put off the interested parties.

Set a Budget

Design a budget for the formulation of annual report.

The budget must include the cost of printing, hiring graphic designers, content writers, photographers and the staff time.

Examples of Annual Reports

Google annual report

Nike annual report

Dell annual report

Starbucks annual report

Apple annual report

Microsoft annual report

Nestle annual report

Wal-Mart annual report