Do you want to ensure your business remains competitive, successful, and sustainable?
It’s time to take a deep dive into different types of the annual report. Annual reports are comprehensive documents organisations release at the end of each fiscal year.
Commonly, their main purpose is to provide information about their financial performance and other vital aspects of their operations.
But did you know most Malaysian organisations have five different types of annual reports? Keep reading to understand each type better and determine which best suits your company’s needs!
1. Financial Annual Report
Of all the annual report types, this one has the most attention, as it focuses on the company’s fiscal year financial performance.
It includes details about the income statement, balance sheet, cash flow statement, and other financial metrics. The main purpose of these details is to provide an overview of the company’s financial health.
The income statement shows an organisation’s revenues, expenses, and net income or loss for the fiscal year.
It provides information on the organisation’s profitability and helps stakeholders understand how it generates revenue and manages costs.
Secondly, the balance sheet provides an overview of an organisation’s assets, liabilities, and equity at the end of the fiscal year. Furthermore, It details the organisation’s financial position and helps stakeholders understand its liquidity and ability to meet its financial obligations.
Lastly, the cash flow statement.
This statement shows an organisation’s cash inflows and outflows during the fiscal year. It helps stakeholders understand how the organisation generates and uses its cash and how it manages its liquidity.
A financial annual report is essential for stakeholders, such as investors, creditors, and analysts.
They need the report to assess an organisation’s financial performance and make informed decisions.
2. Corporate Social Responsibility (CSR) Annual Report
The second type is CSR annual report, which overviews a company’s social, environmental, and ethical performance during the fiscal year.
It outlines the company’s initiatives to operate sustainably, reduce its environmental impact, and contribute to the well-being of its communities. It communicates the organisation’s commitments and progress towards sustainability, social responsibility, and ethical practices to all its stakeholders.
The key sections of a CSR annual report may include an introduction and overview.
It consists of a message from the CEO or the board of directors and an overview of the organisation’s approach to CSR. Additionally, it will provide a summary of the key achievements and challenges during the fiscal year to make certain highlights.
It may include data on energy consumption, greenhouse gas emissions, water usage, waste generation, recycling, etc.
The CSR report can also have social performance. This section provides information on the organisation’s social impact and its efforts to support the well-being of its employees, customers, suppliers, and communities.
Moreover, you can also find in the CSR report several sections about governance and ethics.
These sections provide information on the organisation’s governance practices and ethical standards.
Lastly, the report includes a future outlook that includes a forward-looking statement on the organisation’s future CSR initiatives and commitments.
An organisation can enhance its brand reputation by providing transparent, detailed information about its CSR performance. A good reputation, as a result, will help attract and retain customers and employees and improve its long-term financial performance.
3. Integrated Annual Report
An integrated annual report provides a comprehensive view of a company’s financial and non-financial performance.
This report aims to showcase how a company’s financial performance is linked to its environmental, social, and governance (ESG) performance. It gives stakeholders a better understanding of the organisation’s value creation and its impact on the economy, society, and the environment.
It may include information on the organisation’s carbon footprint, water usage, waste generation, employee engagement, diversity, etc.
By integrating ESG information into the report, the organisation can communicate its commitment to sustainability and responsible business practices to its stakeholders.
The key sections of an integrated annual report may include a business overview of the organisation’s business model, strategy, and key performance indicators.
The report also includes financial performance. This section provides an overview of the organisation’s financial performance, including its income statement, balance sheet, and cash flow statement.
Value creation is another component of this report. This section explains how the organisation creates value for its stakeholders, including its shareholders, customers, employees, suppliers, and communities.
It may include information on the organisation’s products and services, innovation, customer satisfaction, employee development, supplier relationships, and community engagement.
Lastly, you can find in this report the organisation’s future outlook, which predicts the organisation’s future performance and prospects.
4. Shareholder Annual Report
Shareholder annual report provides information to shareholders of a company’s financial and operational performance for a fiscal year.
Its main purpose is to keep shareholders informed about the company’s financial health and prospects. Moreover, shareholders also expect from this report the necessary transparency into the company’s operations and strategy.
A shareholder annual report’s key sections may include the chairman’s message.
Second, it may include financial highlights. This section summarises the company’s financial performance, including revenue, net income, earnings per share, and dividends.
Third, it dedicates a section for management discussion and analysis.
This part provides an in-depth analysis of the company’s financial performance. Additionally, it includes an overview of the market and industry trends that may affect the company’s prospects.
Fourth, since this is the annual report for shareholders, financial statements are the main emphasis.
Similar to the financial annual report, It consists of all the company’s financial statements. These include the balance sheet, income statement, and cash flow statement, which an independent accounting firm has audited.
Lastly, it may include shareholder information and the company’s shareholder base.
Information such as the number of shares outstanding, changes in ownership, and the company’s dividend policy is common in this section.
5. Regulatory Annual Report
An annual regulatory report is a mandatory report prepared by publicly-traded companies in Malaysia. They must submit the report to regulatory authorities such as the Securities Commission Malaysia (SC).
The common types of companies that submit this report are mostly in regulated industries, such as finance, healthcare, and energy.
The content of a yearly regulatory report will vary depending on the specific regulations that apply to the company.
However, it generally details the company’s financial performance, governance, and other key aspects of its operations. As such, SC can ensure the company’s compliance with regulatory requirements.
Usually, it includes a summary with an overview of the company’s compliance with applicable regulations during the reporting period.
Moreover, every regulatory annual report must list its risk factors. This section outlines the risks associated with the company’s business operations and the potential impact of regulatory changes.
Lastly, it is common for companies to include any relevant legal proceedings that may impact the company’s financial results.
To Recap
There are five different types of annual reports, each with its purpose and intended audience.
Annual reports play a critical role in providing transparency and accountability to stakeholders. The type of annual report an organisation produces depends on its objectives and target audience.
A financial annual report provides information on a company’s financial performance over a fiscal year.
A corporate social responsibility annual report focuses on a company’s social, environmental, and ethical performance. An integrated annual report combines financial and non-financial information to provide a complete picture of a company’s performance.
Shareholder annual report, on the other hand, informs shareholders about the company’s financial health and prospects.
Finally, an annual regulatory report is a necessary document for publicly-traded companies to submit to SC under the Malaysian Capital Markets and Services Act 2007.
All these types of annual reports are tools for companies to build trust and credibility with investors, customers, and other stakeholders. By understanding the purpose of each type of annual report, stakeholders can better understand a company’s performance and prospects.
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