Chairman/CEO statements:
- Don't take them at face value. Check if the financials match what they are saying
- If a mistake was made, the statement should acknowledge it instead of sweeping it under the carpet.
- Look out for companies skimpy on the performance details -> yellow flags
- Read past 5 years of chairman statements to look out for consistency and check that the plans put out are on track
- If plans are shelved, did management provide a valid reason for the change?
- Check for a change in tone of statements
Operations Review:
- Understand the firm and how it makes money
- If you dk how the company makes money, pass on the company
Board of directors and key management:
Corporate governance report:
- Are leaders overly compensated: compare remuneration with revenue
Report of the Directors, Statement of Directors and Independent Auditors’ Report
- check if the independent auditors have given the company a clean bill of health
- check that the auditors are not changed frequently
Financial Statements:
- Income statement: shows how much a company has made/lost
- Balance sheet: company's assets, liabilities, shareholders' equity
- Cash flow statement: shows company's ability to generate cash to fund its operations
Statistics of Shareholders, Notice of Annual General Meeting (AGM) and Proxy Form
- Look out for high insider ownership
Chairman/CEO statements:
Financial highlights:
