Annual report

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An Annual Report (English: annual report ) the task information has on the business performance of the past fiscal year of a company to mediate and in particular its financial statements - consisting of balance sheet , income statement , notes and management report - to explain and supplement.

General

The term annual report has become common in the lingua franca, but has not been used in commercial law or stock corporation law since December 1985. The stock corporation law reform of July 1884 stipulated that the management board of corporations had to submit an annual report to the supervisory board and then to the general meeting with its remarks on the company's circumstances (Art. 185, 239 (2) ADHGB). Soon after, this report was called the “Annual Report”. However, it remained so meager that the emergency ordinance of the Reich President of June 1931 provided the business report - now also explicitly named by law - with a series of concrete contents. Its main purpose was to keep shareholders informed. The term “annual report” was adopted in the AktG in September 1965 (Section 160 AktG old version). According to Section 160 (2) AktG a. F. the annual report had to present the course of business and the situation of the company for the past financial year ("management report"), to explain the annual financial statements and to provide certain additional information in connection with the annual financial statements ("explanatory report").

In accordance with the old legal situation, the annual report provided information on the course of business and the company's position and supplemented and explained the balance sheet and income statement. According to this task, the annual report could be broken down into a management report and an explanatory report (Section 160 (1) sentence 1 and (2) sentence 1 AktG old version). The explanatory report should explain individual items in the balance sheet and the profit and loss account in more detail or supplement them with additional information (table of assets, equity and liabilities). The task of the management report was to provide a comprehensive picture of the economic situation and development of the company. This was achieved in particular through the profitability report, which was supposed to present the situation and future development of the company. In addition, the voluntary social report, risk report and, if necessary, environmental report could describe the social performance and ecological conditions of society.

These functions of the old annual report under stock corporation law were taken over today by the management report and the notes to the annual financial statements because the legal definition of the annual report had not prevailed. According to Section 264, Paragraph 1, Clause 1 of the German Commercial Code , the balance sheet, profit and loss account and the notes to the annual financial statements form a unit that is compared with the management report. The appendix is regulated in Section 160 AktG and the management report in Section 289 HGB. According to Section 289 (1) of the German Commercial Code, “the course of business including the business results and the situation of the corporation are to be presented in the management report in such a way that a picture that reflects the actual circumstances is conveyed. ... “Regardless of this, the term annual report continues to be used for the published annual financial statements, especially by listed stock corporations in the practice of corporate publicity.

Form and content

Due to the lack of statutory provisions on the content of the annual report, it is a matter of voluntary publicity by companies ( Section 328 (2) HGB). As a rule, the annual report is used to comply with the statutory disclosure requirements ( Sections 325 to 329 HGB) (“compulsory part”) and to provide further voluntary information. Then you have the annual report at least the management report, the annual accounts, the proposed appropriation of earnings (if he gives not already from the financial statements), the auditor's report of the auditor to the financial statements and management report and the report of the Supervisory Board as well as the Declaration of the Corporate Governance Code include. Annual reports also regularly contain further information about the company. Many companies that are not subject to disclosure also publish annual reports. In addition to the company's self-presentation, these generally only contain selected figures for the annual financial statements.

  • Compulsory portion:
    • Management report ( § 286 AktG)
    • Annual financial statements ( Section 149 AktG)
    • Auditor's report (Section 167 AktG - no longer applicable, see also Section 325 HGB)
    • Report of the Supervisory Board ( Section 171 (2) AktG)
    • Proposal for the appropriation of profits ( Section 170 (2) AktG)
    • Declaration of Compliance Corporate Governance ( Section 161 AktG).
  • Voluntary, non-mandatory information:
    • Letter from the Board of Management to the shareholders
    • general economic situation
    • economic situation of the branch
    • further information on the course of business
    • Segment reporting ( Section 264, Paragraph 1, Clause 2 of the German Commercial Code and Section 297, Paragraph 1 of the German Commercial Code), there is only an obligation if companies report in accordance with IFRS (IFRS 8; January 2009)
    • Social , environmental , risk ( § 289 Paragraph 2 No. 2 HGB; technical and economic risks) and research report (§ 289 Paragraph 2 No. 3 HGB)

Pursuant to Section 175 (1) of the German Stock Corporation Act (AktG), once the report from the Supervisory Board has been received, the Management Board must convene the general meeting to receive the approved annual financial statements and the management report, individual financial statements approved by the Supervisory Board in accordance with Section 325 (2a) of the German Commercial Code (HGB) and to resolve on the appropriation of retained earnings. The general meeting must take place in the first eight months of the financial year.

As of January 1, 2020, a new guideline is to standardize the reporting format for all companies that have issued securities within the EU. It is an EU-standardized electronic reporting format for company accounts ( European Single Electronic Format, ESEF ), which uses xhtml as the format. The new format applies to balance sheets , statements of comprehensive income , statements of changes in equity, and statements of cash flows . Closing information should be standardized and more easily available. In December 2017, the European Securities and Markets Authority (ESMA) published a final draft of a regulatory technical standard (RTS).

Obligation to report during the year

Quarterly report

The quarterly report is part of the interim financial reporting and provides between two balance sheet dates taking place in three-month intervals Interim reports are of public companies. The obligation to release a quarterly report comes from § 63 para. 8 of the Exchange Rules of Deutsche Boerse AG , which for approved companies in the stock exchange segment Prime Standard requires publication. The Prime Standard is the prerequisite for inclusion in the DAX , MDAX , TecDAX and SDAX stock indices . Since Porsche AG rejected quarterly reports due to costs, it does not appear in the DAX. Quarterly reports must contain at least a balance sheet, income statement, cash flow statement and some other information about business and company. Many companies outside the Prime Standard also publish quarterly reports, which, however, vary greatly in scope and meaningfulness. The documents must be prepared according to the same accounting principles as the annual financial statements. The fourth quarter can be replaced by the annual financial statements. The figures published in the quarterly reports are often called quarterly figures.

History of the quarterly report

The quarterly report can already be proven in the early history of industrialization. Georgius Agricola reported in 1556 that the shareholders in mining were organized into so-called trades. They demanded an account from the mountain administrator four times a year: “Just as there are four seasons, spring, summer, autumn and winter, there are also reports on income and expenditure four times a year. In the first month of each quarter an account is given, first of the money that the mountain manager has spent on the mine in the last quarter, then of the income he has made from it in the same period ”. A failure of the mountain manager was punished consistently: “If a mountain manager has now used the money of the trades usefully for the mine and has managed it faithfully, then everyone gives him the praise of a prudent and good man; if, on the other hand, he has caused damage due to ignorance of the circumstances, he is usually deposed of his office. But if he has caused damage to the trades through his own negligence and inattention, the authorities will force him to pay compensation; when he has finally committed fraud or theft, he will be punished with a fine or with prison or with death "

The current quarterly report was first requested by the SEC in 1970 in the USA ( quarterly report ). It had developed a standardized form (Form 10-Q) for this, which was based on Sections 13 and 15 (d) of the Securities Exchange Act of 1934. In Austria, officially listed stock corporations are obliged to publish interim reports for the first three, six and nine months of a financial year according to Section 78 (1) of the BörsG.

Content and graphic design

graphic

Because business reports are a central means of self-presentation, business reports are often very complex. Both typography and graphics and image design are often respected advertising agencies entrusted. Occasionally, art photographers or artists are commissioned with the design or illustration , and high-quality paper is also used for reasons of prestige.

Competitions

The League of American Communications Professionals LLC (LACP) annually awards prizes in 9 categories for annual reports, such as: B. "Best Front Page" ( Best Report Cover ), Most Creative , "Best Financial Information" ( Best Report Financials ) etc. With around 1,900 business reports, advertising agencies and PR departments compete for 36 prizes (each of the 9 categories in platinum, gold, silver and bronze) as well as placements in the overall list (addition of the category points) and the lists of the branches. The strong performance of the companies from Germany and Austria is striking (see the winners of 2004 and 2005).

The German business magazine " manager magazin " has around 200 annual reports from the most important German stock market indices DAX , MDAX , SDAX , TecDAX and the European leading index STOXX 50 tested. Added to this are all the newcomers to the stock exchange who were listed in the Prime Standard of Deutsche Börse that year. Independent professors examine specifically the categories of content, design and language. Only the five best of each index are additionally examined by a five-member jury of stock market experts for conciseness , credibility and reporting efficiency. The overall winners will receive the sculpture “Der Rufer” by the artist Vadim Sidur at a ceremony.

costs

The media company Theodor Gruda (Meerbusch) used annual reports from well-known companies in Germany to research the distribution of expenses in percent. It is not uncommon for an annual report to cost more than 100,000 euros.

Distribution of costs (as of 2012):

  • 28% pressure
  • 23% photos including rights
  • 22% prepress (prepress)
  • 12% agency service
  • 07% logistics
  • 05% paper
  • 03% advice

Addressees

Annual reports serve to inform the shareholders and other interested parties. The latter include shareholders and employees of the company, customers , suppliers , competitors , lenders , analysts , rating agencies and the media . The business and technical knowledge of these interest groups is very heterogeneous and must be prepared in a way that is appropriate for the target group through linguistic and visual representations in the annual report. The annual report to be published before the general meeting also serves to prepare the shareholders for this general meeting.

Others

In text linguistics , the annual report is a type of text . It has to present relevant or new facts in a factual and as objective form as possible. Sometimes complex, abstract facts have to be conveyed to a heterogeneous group of interested parties in an understandable form. In addition to their legal obligations, the publishing companies also pursue public relations purposes, so that annual reports often contain content about the company and its products .

In addition to stock corporations, limited partnerships based on shares , cooperatives ( Section 33 (1) GenG), credit institutions ( Section 26 KWG), public insurance companies ( Section 38 (1) VAG) and companies that operate the Fulfill the size criteria of the Publicity Act (with the exception of commercial partnerships and sole traders ; Section 5 (1) sentence 2 PublG).

International

In Switzerland , accounting is done in the annual report (Art. 958 sentence 2 OR). This contains the annual accounts (individual accounts), which are composed of the balance sheet, the income statement and the notes. The annual report must be drawn up within six months of the end of the financial year and submitted to the responsible body or persons for approval. According to Art. 810 OR, the managing directors are also obliged to prepare the annual report, which consists of the annual financial statements, annual report and, if applicable, consolidated financial statements. The shareholder must receive the annual report no later than 20 days before the General Meeting (Art. 696 OR) and accept (approve) it in accordance with Art. 689 OR.

According to Section 222 UGB, the legal representatives of a corporation in Austria have to prepare the annual financial statements expanded by the appendix, a management report and, if necessary (Section 243b UGB), a corporate governance report for the previous fiscal year and the members of the supervisory board to submit. The annual financial statements, the management report and the corporate governance report must be signed by all legal representatives.

In France , the annual report (“rapport annuel”) is explained in Articles 8 to 17 of the Code de Commerce (CdC) and has a high priority in corporate communication. According to Article 8 CdC, the annual financial statements include the balance sheet, income statement and notes.

See also

literature

Web links

Individual evidence

  1. ↑ Peter Ulmer, Large Commentary HGB Accounting Law , Part 1, 2002, § 289, Rn. 3.
  2. ↑ Peter Ulmer, Large Commentary HGB Accounting Law , Part 1, 2002, § 289, Rn. 6th
  3. ↑ Tatjana Oberdörster, Financial Reporting and Forecasting Errors by Financial Analysts , 2009, p. 52.
  4. ↑ EUROPEAN SINGLE ELECTRONIC FORMAT. In: ESMA website. Retrieved June 2, 2020 .
  5. ↑ KPMG: ESEF - Uniform electronic format for financial reporting. Retrieved June 2, 2020 .
  6. ^ Jan Wilhelm, Corporation Law , 2009, p. 306.
  7. ↑ DRS 6, 2001, Item 18.
  8. ↑ Quotations from: Georgius Agricola : De re metallica libri XII 1556, fourth book; New edition VDI 1928 (p. 76), Springer, Berlin 2004, ISBN 3-540-20870-4 .
  9. ↑ 2004 Vision Awards Competition Winners
  10. ↑ 2005 Vision Awards Competition Winners
  11. ↑ Manager magazine annual reports
  12. ↑ Manager magazin: "Method: This is how the reports are evaluated"
  13. ↑ Hans-Jörg Schlierer, culture-specific style features of German and French annual reports , 2004, p. 97 f.