Table of Contents
Reliance on Annual Reports6
An annual report is a ‘portrait’ of the business. It embeds a sense of achievement, as well as, future prospects into the minds of the company, as well as, its readers (Sanders, 1949). JJB Sports plc is one of the foremost vendors of sports goods in UK. They have been facing a tough and challenging time over the years which are reflected in their annual report. Emphasis is mostly given on the way through which the company can complete a successful turnaround. The annual report begins with the description of the problems they are facing and promising a bright future for the company ahead.
Annual reports are the source of financial and non financial strategies and activities of the company over a year. They provide relevant information to relevant parties about the operations of the company and how well the company has performed over year, as well as, what are the new strategies being employed by the business (CPA Australia Ltd., 2012).
This report will critically analyze and assess the initial section of the annual reports and accounts of JJB Sports plc consisting of the Overview, Business review and Governance section of the annual report 2011. The annual report will be analyzed from an investor’s point of view, and information from the report will be used to gauge the performance and future prospects of investment in the organization. Critical assessment of the initial three sections of the annual report 2011 will be done followed by the extent of relevance of investment information in the annual report. Question 1: Overview
The overview begins with a brief statement by the Chairman, Mike McTighe who admits to the turmoil that the company is facing and then goes on to list the steps that the company has taken to correct the issues. The steps include raising capital for the firm, restructuring the business plan which includes expanding the existing portfolio of the company without taking significant risks. The business plan is in general a turnaround plan which will reinstate the company as the leading retailers of sports goods just like the way they were before the problems ensued. The achievements of the company are listed, most important of them being able to reduce costs which are likely to generate more profits for the firm in the future. The chairman statement continues with acknowledgement to the board members who have been pivotal to the turnaround process followed by the acknowledgement to the employees. The one issue with the acknowledgement is that it is implied that the company has restructured their senior team which can be perceived as a negative and desperate step by many readers, most importantly investors who may doubt the credibility of the company if they come to know that the board is inefficient and needs constant replacement.
The Chief Executive’s review follows the Chairman’s statement. The CEO just like the director starts off with explaining that the company’s current situation may last a long time; however, steps are being taken to rectify all the past issues and the company is now revamping their structure and strategy to operate. The emphasis on a new senior team employed by the company is clear. The future prospects are mainly promises of a better tomorrow compared to today without establishing any solid fact that might suggest. Then, the CEO’s review goes on to explain the losses that the company had to face over the year. The reasons for the loss are mainly the lack of performance by procurement, as well as, availability of cash for stocking purposes. The company did recently expand into the online version of their store, which is a positive step towards achieving their targets and had doubled their earnings from the online front compared to the last...