Term: ANNUAL FINANCIAL STATEMENTS

Sometimes known as an Annual Report or just the “financial statements”, this is a document required by the Companies Act (71 of 2008) to be produced once a year for presentation to the Annual General Meeting. These statements must consist of a balance sheet, income statement, directors’ report and auditors’ report in terms of section 29 of the Act. These must be prepared in accordance with Generally Accepted Accounting Practices (GAAP), and must fairly present the state of the company and its profit or loss for the year. You should note that the Chairman’s report which is included with the financial statements is not a requirement of the Act. Most listed companies publish their full financial statements on their website in a PDF format which can be downloaded. You should download the latest financial statements of the companies that interest you and read them carefully – even if you are not an accountant. You will be amazed at how much you can learn from them. Companies are also required to produce “interim financial statements” after six months of their financial year. These contain similar information to the annual financial statements, but in a much abbreviated form. You can also see the “discloseable” portion of the company’s financial statements on the Stock Exchange News Service (SENS) – which is available on your software for each listed company (go to the “Current Company Comments” icon which is at the top of any chart, third from the left).

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