1)Do a review on directors, with an emphasis on the balance of
non-executive and executive directors. The majority of non-executive
directors should be independent. How long have the individual directors
been on the board? Beware of cross directorships being directors sitting on
the same boards. Review attendance of directors. Always question
resignations of directors, why?

2)Review all directors' remuneration and compare increases with
increased profits if applicable. Options and bonuses tend to be awarded to
directors with minimum disclosure.

3)Read the Chairman and CEO report and compare to the previous years
report. You now have a good overall understanding of the company.

4) Review Income Statement and Balance Sheet, is the company making
profits, based on the profits are bonuses paid to directors justified. On the
Balance Sheet a simple indicator as to the health of the company is by
deducting the current assets from current liabilities, if positive good, if negative
you will have to obtain reasons as to why. The increase audit fees
sometimes gives an indication as to corporate activity, and tax problems etc.
Beware of listed companies changing year-ends. If subsidiaries of listed
Companies have different year-ends to the holding company, question this as to

5)Review all related party transaction and contingent liabilities,
they will appear as notes in the annual financial statements.

6)Review all resolutions proposed by the board, question rotation of
directors especially if directors has been on the board for a long
time, longer than ten years. A popular resolution is the buy back of shares,
question this why?

7)Listed companies use graphics in the annual financial statements,
always compare these graphics to the previous year, and if left out or
included ask

8)All listed companies have to give a breakdown of their shareholders,
ask your self why certain shareholders have sold or bought shares in the
company during the year under review.

By following the above eight steps you are able to get a good understanding,
in relatively short period of time.