Annual report
Learn what an annual report is, what it contains and how it applies to small businesses in South Africa.
Published Wednesday 5 August 2026
Table of contents
Key takeaways
- An annual report summarises a company's operations and financial performance over a 12-month period, giving shareholders and potential investors a clear picture of business health.
- The report typically includes financial statements (balance sheet, income statement, cash flow statement), a letter from the CEO or chair, an auditor's report and notes to the financial statements.
- In South Africa, private companies may need an audit or independent review depending on their public interest score, while public and state-owned companies must be audited.
- Small businesses produce much simpler annual reports than listed companies, but the core purpose remains: showing financial position and performance.
What is an annual report?
An annual report is a detailed report that shows a company's operations and financial performance over the preceding 12 months. It's of interest to shareholders and potential investors who want to understand how the business is performing.
Publicly traded companies must produce annual reports for market regulators and shareholders. Companies that aren't publicly traded may still produce them for regulators and tax authorities, depending on local requirements.
What goes in an annual report?
An annual report brings together several key documents and disclosures. While the exact contents vary by company size and jurisdiction, most annual reports share a common structure.
You'll typically find the following in an annual report:
- performance and activity highlights for the year
- a letter to shareholders from the CEO or chair
- management discussion and analysis (MD&A)
- corporate governance information
- an auditor's report
- the financial statements: balance sheet, income statement (also called profit and loss), and cash flow statement
- notes to the financial statements
The financial statements are the heart of any annual report. Together, they reveal:
- the company's current financial position
- whether it made a profit or loss for the year
- its ability to pay debts as they fall due
- retained earnings available to grow the business
- the ratio of operating expenses to revenue
A small business's annual report is much simpler than a listed company's. You won't need glossy design, an MD&A section, or detailed governance disclosures. The focus is on accurate financial statements that meet your legal obligations.
Who uses an annual report, and why?
Annual reports serve different audiences, each with their own reasons for reviewing the information. Understanding who reads your annual report helps you present information clearly.
Common users of annual reports include:
- shareholders and potential investors: to evaluate financial performance, growth prospects and return on investment
- lenders and creditors: to assess creditworthiness and the ability to repay debt
- employees: to understand company stability, performance-based compensation and job security
- customers and suppliers: to gauge reliability and long-term viability as a business partner
- regulators: to confirm compliance with reporting requirements and accounting standards
The core purposes of an annual report are evaluating financial performance, providing transparency and accountability, informing business decisions and meeting statutory reporting requirements.
Annual reports for small businesses in South Africa
South African companies are governed by the Companies Act (Act 71 of 2008), which sets out financial reporting and disclosure requirements.
Whether a private company's annual financial statements must be audited or independently reviewed depends on its public interest score. Public companies and state-owned companies must have their financial statements audited. All companies must file an annual return with the Companies and Intellectual Property Commission (CIPC) to stay registered.
JSE-listed companies apply the King IV corporate governance code and typically produce an integrated annual report. This combines financial performance with environmental, social and governance information in a single document.
For most small businesses, the requirements are far simpler. Your annual report may only need to include basic financial statements and, where applicable, an independent review. Check with your accountant to confirm what applies to your business.
Simplify your financial reporting with Xero
Preparing your annual report is easier when your financial data is accurate and up to date. Xero accounting software helps you track income and expenses, reconcile bank transactions and generate financial reports throughout the year.
When it's time to prepare your annual financial statements, you'll have the information you need at your fingertips. Ready to see how it works? You can get one month free and explore Xero's reporting features for your business.
FAQs on annual reports
Here are answers to common questions about annual reports.
What is the difference between an annual report and annual financial statements?
Annual financial statements are the core accounting documents (balance sheet, income statement, cash flow statement). An annual report is a broader document that includes these statements plus commentary, governance disclosures and other information for stakeholders.
Are annual reports audited?
Public and state-owned companies must have their annual reports audited. Private companies may require an audit or independent review depending on their public interest score and the requirements of the Companies Act.
Do small businesses in South Africa need to produce an annual report?
Small businesses must prepare annual financial statements, but they don't typically need a full annual report with governance disclosures and commentary. The level of assurance required (audit, independent review or none) depends on your public interest score.
What is the difference between an annual report and an integrated report?
An integrated report combines financial performance with environmental, social and governance (ESG) information. JSE-listed companies in South Africa follow the King IV code and produce integrated reports. Standard annual reports focus primarily on financial performance.
How often is an annual report produced?
An annual report is produced once per financial year, covering the preceding 12-month period. The timing depends on your company's financial year-end.
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Disclaimer
This glossary is for small business owners. The definitions are written with their requirements in mind. More detailed definitions can be found in accounting textbooks or from an accounting professional. Xero does not provide accounting, tax, business or legal advice.