Financial analysis case study - Essay Example

At the same time there is a belief that chairman statement serves no purpose from the point of view of shareholders. It is a sort of ritual to inaugurate the reporting and review process in the annual report. There is no legal requirement for a chairman statement to be a part of an annual report. It is more of a customary part of the annual report. ‘The chairman report is largely qualitative in character. The other documents report what happens, this one offers an explanation of the company’s results.

The accounts and other statutory reports present historic information on how the company fared in the previous accounting period, while the chairman will comment on future prospectus and plans.’ (Christopher Murphy, page 177)1 Directors Report is a central section of prime importance of an Annual report. It is prepared annually and in case of parent company directors’ report will be for the entire group called ‘group directors’ report. ‘Directors’ report deals with significant development in the company’s business operations during the reporting period.

This is effectively a review of business and an opportunity for the board to comment on the financial results of the company in terms of its sales and profits, and to explain material matters such as exceptional items.’(Thomas A Lee, page 170)2 In accordance with the provisions of sections 415 to 419 of Chapter 5 of Part 15 of the Companies Act 2006, a directors’ report must contain the following information: i) trends and factors affecting company’s future development, performance and position of business, information about environmental matters, company’s employees and social and community issues, and information about important contractual and other business arrangements.

‘In addition to the above legal requirements, a directors’ report should also include information required by the stock exchange. As an option some companies include additional