Director report is prepared and form part of your company accounts. You must present the director’s report together with your company accounts to your shareholders. At the same time, submit a copy with Companies House. In addition, send another copy together with your corporation tax return to HM Revenue and Customs.
Additionally, you would need to include an Auditor report if your company is subject to an audit as required by law.
Generally, your company may file an abridged account or micro entity account with Companies House if your company meet the eligibility criteria either or both according to Companies Act. For this purpose, you do not require to include a director report with the abridged account and a micro company account and they put less information for the public.
Broadly, your director report would present the following.
Principal activity
First of all, you must specify your company’s principal activity including any significant changes during the accounting period. Your principal activity in your director report must closely match your SIC code in your confirmation statement.
Business review
Secondly, you are to include a true and fair review of your business performance during the year. Hence, provide description of its principal risks and uncertainties plus analysis of performance indicators. Where possible reference it to amounts included in the accounts.
Future developments
You must disclose information about your company future plus any events happened after the balance sheet date. This is to give a true and fair view of your business future affairs to the readers of the accounts.
Employee policy
Equally important, you must disclose a staff policy pertaining staff involvement in matters of concern to them. This includes employment of disabled employees.
Political and Charitable donations
Your company is to disclose donations made if any. You must provide the details of amounts and the name of each person or organization receiving such amounts. However, expenditure on charitable purposes outside UK may not be disclosed.
However, a wholly owned subsidiary company may choose not give this information. But the parent company must give any such donations made by the subsidiary company.
Dividends
Your company must include information about dividends proposed and paid during the accounting year.
Payments to suppliers (creditors)
You must disclose the following if your company is a public limited company. Or that your company have been classified as large private limited company that is a subsidiary of a public limited company.
- A statement of policy on the payment to suppliers.
- If your company subscribes to a code on payment practices, such as the CBI code. This must be stated, and it must also be stated how details of the code may be obtained.
- A statement of the average number of days’ credit outstanding at the balance sheet date.
Directorships
On the other hand, you must disclose the names of all persons who were directors during the financial year. For this purpose, If a person was not a director for the whole of the year. Then, you must give the date of appointment and/or the date of resignation or removal.
Correspondingly, you must submit relevant Companies House forms for director appointment and termination.
Land and Building
You must disclose any difference in the market value of interests in land or buildings over book value at the balance sheet date. Especially if the difference between the cost of and market value for the land and building is considerable. Hence, the directors believe that the members should be aware of this fact.
Share Capital
You must present the changes in share capital during the accounting year. For this reason, you must disclose new shares issued and the acquisition of your company’s own shares, if any.
You may update your company’s shareholding at the same time submitting your confirmation statement with Companies House.
Accounting principles
You must disclose the accounting principles adopted in your accounts preparation.
Going concern
If applicable, directors should report:
- Any material uncertainties, of which your directors are aware. For instance, in making their assessment of the going concern status. Your director has cast significant doubt on your company’s ability to continue as a going concern.
- Disclose the fact where the foreseeable future considered by your directors in their assessment of the going concern status of your company. The period is less than one year from the date of approval of the financial statements.
- Disclose the fact where the financial statements are not prepared on a going concern basis. Also, the basis on which you prepare the financial statements. For instance, you prepare your accounts on break up basis. Additionally, you include the reasons why you do not consider your company as a going concern.
Disclosure statement to auditors
Lastly, if your company is to produce an audited financial statements. Then, your director report must include a statement to the effect that. In the case of each of the persons who are directors at the time the report is approved.
For example, so far as the director is aware, there is no relevant audit information of which your company’s auditor is unaware.
In addition, the director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information. Concurrently, to establish that your company’s auditor is aware of that information.
