Director's/Chairman's Report

Definition

The Director's Report is written by the Directors of a company and forms part of the company's financial statements. This report must support and elaborate on the information contained in the Income Statement, Balance Sheet and Source and Application of Funds Statement.

Directors Report: What it tells you

In descriptive and narrative form under headings it must state:

• The nature of the business and its subsidiaries and any major changes
• The particulars and amounts of all shares issued
• Any changes in the nature of the fixed assets of the company, and changes in the policy relating to the use of the fixed assets
• Dividends declared or paid in respect of each class of shares
• Should any of its business be managed by a third party, or a company in which a director has an interest, the Nature of the director's interest must be disclosed.

The Names of:

• The Holding Company if any
• The Subsidiary Companies if any
• The Directors
• The Company's Secretary and his business and postal address as well as name or address
• changes of the above
• Any matter not yet dealt with, which provides material for the appreciation of the company's state of affairs

E.g. Statements on:

• Estimated Profit or Loss
• General Review of the business and operations

All the above applies to the Accounting Period only

The information is of no use if this report or the set of Financial Statements are not signed

The Director's Report is used by the shareholders, the bank/creditors and the Inland Revenue. The information disclosed in this report is essential when assessing the financial details as well as the company's strengths and weaknesses. It will highlight any substantial changes in the organisational structure.