INTRODUCTION
Annual Report Analysis Projectis designed to get you familiar with a real company's financial statements and disclosures. The purpose of the project is for student to be able to identify the MANDATORY AND VOLUNTARY disclosure of financial information rules.
REQUIREMENT
1. Choose two companies in the same business and industry that are listed on Tadawul stock market.
a. Go to www.tadawul.com.sa then click on equities, then click on listed companies web link. The list of companies with their official website is listed on the page.
2. Go to the company's website to get each company's annual report for 2015 (the latest annual report)
3. All of the financial and company information that you need will be in the company's Annual Report. Submit soft copy of the annual reports together with your written report.
4. Answer all of the questions to the best of your ability, using all of the accounting skills .
5. You must submit your final report about your findings.
BACKGROUND INFORMATION
In Saudi Arabia, company need to follow the listing rules set by Capital market authority on financial information disclosure requirement. CMA listing rules article 42 details the disclosure of financial information and article 43 details the content of directors report (www.cma.org.sa).
PART A
Go to CMA website to find information about mandatory and voluntary disclosure of financial information that is requires by CMA of all the company listed on TADAWUL. Be specific on the disclosure requirement. Write a report on mandatory and voluntary disclosure.
PART B
Article 43 stated that annual report should include a review of operations and all of relevant factors affecting the company's business which an investor requires to assess the assets, liabilities and financial position. The report should include:
1. a description of the principal activities of the issuer and its subsidiaries. Be specific on which page of the annual report the information is recorded.
2. a description of the issuer's significant plans and decisions (including any restructuring, business expansion or discontinuance of operations of the issuer), the future prospects of the issuer's business and any risks facing the issuer. Be specific on which page of the annual report the information is recorded.
3. a summary, in the form of a table or a chart, of the assets and liabilities of the issuer and of the issuer's business results for the last five financial years or from incorporation, whichever is shorter;
4. a geographical analysis of the issuer's gross revenues and its subsidiaries;
5. an explanation for any material differences in the operating results of the previous year or any announced forecast made by the issuer;
6. an explanation for any departure (not follow) from the accounting standards issued by SOCPA;
7. Detail explanation about subsidiary: name of every subsidiary, its share capital, the issuer's ownership percentage in it, its main business, its principal country of operation and its country of incorporation;
8. a description of the company's dividend policy Be specific on which page of the annual report the information is recorded.
9. a description of any interest in a class of voting shares held by persons (other than the issuer's directors, senior executives and their relatives) Be specific on which page of the annual report the information is recorded.
10. a description of any interest, contractually based securities, and subscription rights of the issuer's directors, senior executives and their relatives in the shares or debt instruments of the issuer or any of its subsidiaries, together with any change to such interest or rights during the last financial year; Be specific on which page of the annual report the information is recorded.
11. information relating to any borrowings of the issuer (whether repayable on demand or otherwise), and a statement of the aggregate indebtedness of the issuer and its subsidiaries together with any amounts paid by the issuer as a repayment of loans during the year. In case there are no loans outstanding for the issuer, the issuer must provide an appropriate statement; Be specific on which page of the annual report the information is recorded.
12. a description of the classes and numbers of any convertible debt instruments, any contractually based securities, warrants or similar rights issued or granted by the issuer during the financial year, together with the consideration received by the issuer in return;
13. a description of any conversion or subscription rights under any convertible debt instruments, contractually based securities, warrants or similar rights issued or granted by the issuer;
14. a description of any redemption or purchase or cancellation by the issuer of any redeemable debt instruments and the value of such securities outstanding, distinguishing between those listed securities purchased by the issuer and those purchased by its subsidiaries;
15. the number of meetings of the directors held during the last financial year and the attendance record of each meeting listing names of the attendees;
16. a description of any transaction between the company and board of directors
17. information relating to any businesses or contract to which the company is a party and in which a director of the issuer, the CEO, the CFO or any person related to any of them is or was interested, or if there are no such businesses or contracts, the issuer must submit an appropriate statement;
18. a description of any arrangement or agreement under which a director or a senior executive of the issuer has waived any salary or compensation;
19. a description of any arrangement or agreement under which a shareholder of the issuer has waived any rights to dividends;
20. a statement of the value of any outstanding statutory payment on account of any zakat, taxes, fees or any other charges with a brief description and the reasons therefore
21. a statement as to the value of any investments made or any reserves set up for the benefit of the employees of the issuer;
22. declaration that: (a) proper books of account have been maintained; (b) the system of internal control is sound in design and has been effectively implemented; and (c) there are no significant doubts concerning the issuer's ability to continue as a going concern; if any of the statements above cannot be made, the report must contain a statement clarifying the reasons therefor;
23. information required to be disclosed by the Corporate Governance Regulations;
24. if the external auditor's report containing reservations on the relevant annual financial statements is qualified, the directors report must include such qualifications, its reasons and any related information; and
25. if the directors recommends that the external auditors should be changed before the elapse of the term it is appointed for, the report must contain a statement to that effect and the reasons for such recommendation.
QUESTIONS
1. Use annual reports that you choose, find all the information that is required under for questions 1- 25. If there is any item that is not provided in the annual report, explain the reason why.
PART C
Write a general report to explain about any similarities and differences between the two annual reports that you collected.