Annual Reports Service
The Interactive Investor FREE Annual Reports Service provides you with a free copy of your chosen company’s latest published Annual Report which will contain their performance and publicly quoted plans. With over 1,300 listed companies in our database these reports will help you gain a thorough understanding before you invest. For serious investors, no research tool is more valuable than a company’s annual report.
Fast, flexible, convenient and FREE…
- Order all your FREE reports from one source with a few clicks
- Reports shipped to your Address or Inbox within 48 hours
- Alternatively, you can download any number of reports direct from our website
- Choose from thousands of annual and interim reports from hundreds of listed companies and investment trusts
- See the latest annual reports
Why read an Annual Report
The stock value of a company is derived from its ability to create cash profits from invested capital, a listed company is obliged to publish financial statements which are intended to give a snapshot of how successfully this creation of value is progressing. Most people would find reading an annual report quite daunting with its terminology, calculations, and large numbers. However it is key to determining whether you should invest into the business by buying shares, increase your investment by buying more shares or disinvest by selling all or part of your current holding.
An annual report will normally contain the following:
- Financial Statements
- Chairman’s Address
- Corporate Address
- Listing of Board of Directors
- Stockholder information
- Auditor’s report
- Management messages
There are 3 important indicators to a company’s financial strength:
- Cash Flow Statement
- Balance Sheet
- Income Statement
Typically these statements will compare the past three years' statistics, this will allow you to compare the numbers to see how the company is progressing overall.
You can see how the company is progressing with its plans, how the industry is reacting to certain pressures, can see where they are spending their cash, and how it is generating revenue for the company. Most importantly as an investor, you can also see the source of their incoming cash: whether it takes the form of profits, sale of goods, or new investment money coming in.
Cash Flow Statement - details the money flowing in and out of the company.
It contains three main sections:
- Operations
- Investing
- Financing
Operations - This will detail the company's earnings, as well as depreciation of assets and inventory changes (increases in inventory use up cash, and reductions provide cash).
Investing - Expenses such as new supplies, property, equipment, land, and anything that will add value to the business. Investments that have been made over the year will show as a negative number but ideally will increase the value of the business or their ability to make a profit.
Financing - Positive numbers in this section indicate where the company is getting its money from: selling stocks, bonds, or borrowing from the bank.
Negative numbers show the company buying back stock from shareholders, paying out dividends, and repaying borrowed cash, etc.
Income Statement - Sometimes referred to as a Statement of Earnings, this shows the bottom line: profit or loss. It represents the money coming in from sales, and the associated expenses with making those sales.
If you take the net income and divide into it the number of shares the company has in issue, you will get Earnings Per Share (EPS), a common value that investors use to determine the viability of investing in a company.
Typically the Income Statement will be comprised of:
- Sales/Operating Revenue
- Sales Costs
- Gross Profit
- Operating Expenses
- Operating Income
- Net Profits (Earnings)
Sales/Operating Revenue - This will detail how the company is generating money; through sales of goods and provision of services.
Sales Costs – As with all sales there is a cost of doing business, only expenses directly related to the sales revenue will be included.
Gross Profit – Deduct Sales Costs from Sales Revenue, and you have your gross profit/loss.
Operating Expenses – This section will relate to all the other expenses not listed in the Sales Costs section (except financing costs).
Operating Income – Deduct the Operating Expenses from the Gross Profit and you have Operating Income.
The Operating Income is a key number in the report, because it gives a picture of the company’s ability to turn a profit given the costs associated with operating the business.
Net Profits (Earnings) A few expenses not listed in the Operating Expenses section will be in this section such as interest payments to bondholders and taxes. At the end of this section you’ll see the key number: Net Profits/Net Income or Earnings.
Balance Sheet – Here you will see the company’s Assets and Liabilities itemised.
Assets – This contains Current Assets and Fixed Assets, Current assets include cash and anything that can easily be converted to cash. Fixed Assets include less liquid assets: property, and depreciable assets like machinery.
Liabilities – This contains Current and Fixed/Non-Current/Long Term, Current liabilities are those that can and need to be paid within the year; long-term are beyond one year. You will also see money owed to banks, money owed to investors, taxes owing, and other miscellaneous accounts payable items.
Shareholder’s Equity - Expressed as Assets minus Liabilities. It is representative of what the owners (shareholders) own.
What to look for in the Balance Sheet
Obviously you would like the bottom line (Shareholder’s Equity) to be a positive number!
But you must focus on what the assets are made up of. If a large portion of the assets are in the form of retained earnings from previous years, then the company’s “bottom line” for the year really isn’t as good as it appears and for this reason you should cross check this with the Income Statement.
Need help?
- Telephone: 0845 882 3325
- Find answers to questions in the Knowledge Base
- Use our online support form
