Analysis Of AMP Limited Essay

Questions:

1.Download a copy of the 2016 annual report of your selected Company.
2.Discuss the main structure of annual report and provide a summary of key activities of the selected company.
3.What are the key numbers in the financial statements over the year. Discuss whether company has disclosed information about its environmental and social performance.
4.Evaluate the usefulness of annual reports to different stakeholders of the company. What is the stock market reaction on the day when annual reports are released?

Answers:

1.The Selected Company for the given analysis is AMP limited. It is one of the leading financial service company , having its area of operation in Australia. The major services that the company offers include insurance, superannuation and various banking products.

2.The annual report of the company consists of around 20 sections. It consists of a report on the financial performance of the company consisting of the consolidated income statements, cash flows and the changes in equity. It also consists of an independent report of the auditors and various statements issued by the chairperson and the board members of the company. The key activities of the company in the bygone year included, facing the various challenges that the insurance business posed. It also included resurfacing from the same, reducing the total amount of losses and moving forward (ASX, 2017).

3.The key number in the financial statements includes the total income for this year, which in case of AMP is in negative thus reflecting a loss. It also includes details about the net assets of the company, i.e. $7541million. The total equity is also $7541 million. The reserves are in negative ($1972m). The basic earnings per share are ($0.11). The total dividend per equity share is $0.28. It reflects that the company is in a very poor position because the shareholder earnings are in negative. The company has managed to pay the dividend, but the reserves are negative ($1972m). The company has incurred in the past year a total net loss of $344m. The net cash flow of the company has reduced by 53% and is presently $1778m. Cash flow from operating activities is $175million. The net cash and cash equivalents at the end of the year is $8810m (Adam, Marcet, and Nicolini, 2016). The company is trying to rebase the business to cut over the operating drivers in the insurance business. The company was able to deliver a good successful performance through its AMP banks and capital management that is reflected in the positive dividend that the company was able to pay the shareholders. The company has discussed about its social performance in its corporate sustainability reports highlighting the efforts it has put in to help in the growth of the communities that it works with (Steenkamp, 2017)


4.The annual reports that are released by the company are very helpful to the different stakeholders as it helps them in taking important investing decisions .The annual reports provide an insight into the present situation of the company and help in making future predictions on how the company will eventually function. The day the annual reports are released, the reaction of the stock market is driven by the information that is contained in these reports (Milani, 2017). If the information affects the viability of the stakeholders it leads to lot of speculation in the stock market, which affects the overall, prices of the shares of the specific company (Ajina, Laouiti, and Msolli, 2016).The stock market is driven by the decisions of the investors who speculate in order to earn the maximum amount of revenue from any kind of investment that they do. There are some media reports on the release of these annual reports and nay major changes in the financial structure of the company is highlighted by these media report (Strine Jr, 2017).The impact of annual reports is mostly positive in a way that it presents the true position of the company and reflects the future prospects. The only drawback is that it often leads to large-scale speculation that ends up affecting the movement of the stock prices in the stock market. All the listed company requires publishing their annual report that must contain all the relevant details related to the financial position of the company (Ertugrul, Lei, Qiu and Wan, 2017.

Refrences:

Adam, K., Marcet, A. and Nicolini, J.P., 2016. Stock market volatility and learning. The Journal of Finance, 71(1), pp.33-82

Ajina, A., Laouiti, M. and Msolli, B., 2016. Guiding through the Fog: Does annual report readability reveal earnings management?. Research in International Business and Finance, 38, pp.509-516

ASX (2017). 2016 Annual Report AMP. Available at:

Ertugrul, M., Lei, J., Qiu, J. and Wan, C., 2017. Annual report readability, tone ambiguity, and the cost of borrowing. Journal of Financial and Quantitative Analysis, 52(2), pp.811-836

Milani, F., 2017. Learning about the interdependence between the macroeconomy and the stock market. International Review of Economics & Finance, 49, pp.223-242

Steenkamp, J.B., 2017. Global Brands and Shareholder Value. In Global Brand Strategy (pp. 275-289). Palgrave Macmillan UK

Strine Jr, L.E., 2017. Corporate Power is Corporate Purpose II: An Encouragement for Future Consideration from Professors Johnson and Millon. Wash. & Lee L. Rev., 74, p.1165.

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