AMP Limited Annual Report Analysis and Financial Performance Review

This report provides a comprehensive analysis of the AMP Limited annual report, focusing on its financial position and performance. It begins with an introduction to the company and its business segments, followed by a critical examination of the annual report in accordance with Australian Accounting Standards Board (AASB) guidelines. The report includes a comparison of AMP Limited with other corporations listed on the Australian Stock Exchange (ASX), specifically Challenger Limited, using financial ratios and key performance indicators to assess relative performance. Furthermore, the report offers investment recommendations based on the financial analysis, considering factors such as market position, capital strength, and profitability. The conclusion summarizes the key findings and recommendations of the report.

Accounting theory and
issues

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1. Providing the critical analysis of the annual report of the AMP Limited, considering
AASB..........................................................................................................................................3
Background.................................................................................................................................3
2. Provide a comparison with other corporations listed on the ASX and how well you think
your corporation has performed..................................................................................................6
3. Providing the recommendation for the company to invest with the 10000 dollars. ............10
CONCLUSION ............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Accounting plays an important role to identify the financial position of the business. The
present report will provide the analysis of the annual report of the AMP limited. In this report the
brief synopsis of the Australian Accounting Standards Board and its framework with corporation
law will be discuss. The report will also provide the deep insight of the comparison of AMP
Limited with other organization listed in the Australian stock exchange in which the two
financial data has been drawn for the best comparison. Later it will provide the recommendation
on the basis of annual report that whether company should invest or should not invest.
1. Providing the critical analysis of the annual report of the AMP Limited, considering AASB.
Background
AMP limited is the organization which provides the financial services in Australia. It
deals with the superannuation and investment products, financial advice, banking products and
insurance including the home loans and saving accounts. Its shares are included in the Australian
securities exchange board and it is headquartered in Sydney.
AMP Limited is deal with the four main business
Advice and banking: The organization gives the advice for the financial planning,
superannuation services, and the banking products.
Insurance and superannuation: It also provides the personal risk insurance products
and self managed super fund administration, support and design (Schaltegger and Burritt, 2017).
Customer solution : the AMP limited also deals with the solution of the customers i.e.
the company focuses on the needs and wants of the customers needs, takes sales offers to the
market and handles the market efforts.
AMP Capital: is one of Asia Pacific's largest investment managers. Through a team of
investment professionals across the world, it invests in equities, fixed interest, infrastructure,
property, diversified funds and multi-manager funds.
Australia's accounting standards were initially developed by the master accounting bodies
and were enforceable under the code of ethics (Yong Lim and Tan,2016). In the starting of 1984
the ministerial council for the companies and securities establish the accounting standards review
board to oversee the standards made by the profession and furnish them the force of company
law, where approved by the ASRB.

AASB Policies and processes outlines the AASB's function and how goes about its work.
The Australian accounting standards boards is a government agency of an Australia that
develops and maintains financial reporting standards appropriate to the organization in the public
and private sectors of the Indian economy. It facilitates the participation of the Australian
community in global standard setting and also provides the huge contribution to the development
of the global financial. The functions and powers of AASB, s are set out in the Australians
securities and investment commission act 2001.
Conceptual framework of the AASB
Reporting standards
Following are the Australian accounting standards that AASB has made, including the
interpretations, to be applied by.
 Firms need by the corporation act 2001 to make the financial reports (Ryan and et.al. ,
2014).
 Preparation of the financial statements including the whole government and the general
government sector.
The differentials reporting framework consisting of two tiers of reporting for the purpose
of preparation of the financial statements of AMP limited is being establish by the Australian
accounting standards.
Tier 1: Australian's accounting standards
Tier 2 : Australian's accounting standards – Reduced Disclosure Requirements.
The requirements of tier 1 is IFRS i.e. international financial reporting system which
includes all the interpretation, issued by the IASB ( international accounting standard boards).
According to 1035 organization needs to adopt the tier 1 requirement as a framework of
the organization (Otley, 2016).
Tier 2 requirements consist the acknowledgement, measurement and demonstration
requirements of Tier 1 but considerably weakened disclosure requirements in comparison with
Tier 1.
Adopted standards
Since 2002, the AASB enforced the wide plan of action from the Australian Financial
Reporting Council (FRC) to adopt international accounting standard boards to overwrite the
financial reporting period which was from I January 2005.

Conceptual framework of the AASB adopted by the AMP limited.
Lots of accounting standards are amended and have been adopted by the AMP limited 1
January 2017. These new changes have the material effect on the financial health or performance
of the AMP group (Australian Accounting Standards Board , 2017 ).
Therefore, there are some accounting standards which are issued but not proven so
effective, are discussed under.
AASB 15 revenue from contract with customers.
Law for acknowledging income and inform new disclosure necessity. Under AASB 15,
income will be recognized at a sum that indicate the consideration which an AMP limited
expects to be eligible to in transaction for transfer of goods or services to a customer. From an
AMP group perspective, AASB 15 will principally utilize to stake income as life insurance
contract related income will proceed to fall outside the scope of AASB 15 and will be accounted
for under other relevant standards (Newberry, 2015). Based on the impact Assessment
undertaken by the AMP group, there is no material impact to the group upon adoption of AASB
15.
AASB 9 financial instruments
It also does not provide the any material impact to the group upon the adoption. It
measures and classifies the financial instruments of the AMP limited (Joubert, Garvie, and Parle,
2017). It introduces the new expected loss model on recognizing the expected credit loss.
There are some new accounting standards which AMP group has been adopted are discussed
under.
AASB 16 Leases- although, it has been adopted the entity but doesn't provide any effect.
AASB 16 needs lessees to know most leases on financial statement as lease liabilities, with the
corresponding right-of-use assets (Ormazabal, G., 2018).
AASB 17 insurance contract - The fresh standard, of itself, is not modified the
underlying economics or cash in flows and out flows of the life insurance concern. However, it is
awaited that there will be an effect on earnings' immersion profiles from life insurance contracts.
GPRF is the general purpose financial reporting system works on the objectives to meet
financial reports which are the requirements common to the customers who are unable to
command the preparation of reports tailored so to fulfil , specifically for the information needs.

It provided the information to those people who unable make their financial reports.
They provide specific information to the user so that the proper utilization can be done.
Governing bodies to discharge the accountability and mechanism to enable the management is
also provided by the General purpose financial reports.
Corporate law to be followed by the AMP Limited.
The laws of the Australia are borrowed by the UK company law. The legal structure of
this law is consisted of the nation statue, single, corporation law 2001.
Company formation
The AMC limited company are incorporated by the registration with the ASIC i.e.
Australian securities and investment commission (Huber, 2017). This registration is very much
important of every type of the organization. AMC limited is registered itself under the
corporation act, upon this registration the ASIC had issued the certificate of incorporation with
an Australian company number which must be quoted on all correspondence and invoices issued
by the company (Gornik-Tomaszewski and Choi, 2018).
Share capital
AMP limited must have share capital. According to the corporation act of share capital
for the AMP limited have at least a shareholder (Beattie, 2014). There is not a upper limit for the
share holder. Corporations listed on the ASX can't pervert from one share, one vote rule (ASX
LR 6.8). Under section 249 D, manager must assemble for a group meeting if members with
over 5% of voting rights request it in written material, stating the resolution they wish to be put
first.
2. Provide a comparison with other corporations listed on the ASX and how well you think your
corporation has performed
In my opinion, selected organization that is AMP Limited is best than other listed
corporation in Australia (He, Evans and He, 2016). There are many factors that determines the
that AMP has performed very well than other companies. Among the top hundred companies I
have taken the Challenger Limited Company of ASX for the comparison (Tweedie, 2018).
Challenger Limited Company is one of the leading organization in its industries. Same as
AMP limited, it also deals with the financial. It provides the annuity with a dominant market
share, superannuation, banking products etc.

On the behalf of following factors the comparison stakes the best to the AMP Limited than
Challenger ltd.
Aging population.
People over the age of 65 is expected to increase by 78% over the next 20 years, which
advise that the figure of fascinated customer could raise by 78% during that time (Dunbar, and
Laing, 2017). According to the research it is obtained that Australian's have a declining
percentage of its assets distributed for the fixed income that many other countries, if it increased
to the same level then the AMP limited would benefit.
Superannuation
Australia serves a most advantageous retirement system (Christensen, Nikolaev, 2016).
The compulsory share of 9.5% of wages and the amended tax treatment mean that customers are
impelled to make their super balances as big as they can, at least to $1.6 million.
New government rules
The new rule has been implemented by the government in the budget that all the trustees
will have to offer comprehensive income products for the retirement candidates, that will give
the lifetime assurance for the no matter how long they live (Beattie, 2014).
AMP limited could be a key beneficiary from this new rule because as I stated earlier, it’s
already a leader of annuity products.
Foolish takeaway
AMP Limited is presently trading at 19x FY18’s calculated earnings with a grossed-up
profit yield of 3.8%. It’s not as low-budget as it was before the budget, but I think it still offers
good long-term value at the current price (Bond, Govendir and Wells, 2016). However, interest
rates could cause interruption over the next year or two, so there might be a better time to buy
shares, in the $11s or lower.
Therefore, there are certain fore factors which state AMP at the best corporation among
the NSX registered companies.

AMP Limited. Challenger limited.
It has prima market position and strong
dispersion networks in their geographies. It has
increasing capital strength in last few years
(Berry, Broadbent and Otley,2016).
Not very good at commodity petition
prediction leading to high rate of missed
opportunities' comparison to its competitors
(Nitzl, 2018). One of the reason why the days
inventory is high compare to its rival is that
Challenger Limited is not very good at demand
forecasting thus end up conformity of higher
inventory.
Its starring fruitfulness assist the organization
to modify the turnover rate and thence amend
the profitability.
Not extremely flourishing at integration of
firms with various work culture. As mentioned
before even though Challenger Limited is
successful at integrating tiny organization it
has its share of failure to unite firms that have
various work culture (Gendron, 2018).
Comparison on the basis of ratios
Profitability ratios of the AMP Limited.

Profitability ratio for the Challenger Limited.

On the basis of the profitability ratio it can be easily obtained that AMP Limited financial
health has increased in during the year as comparison to the Challenger Limited (Kapp, 2018).
Observing the book value of the shares which has been increases during the year from 28.52 to
the 39.70 in the AMP limited and in Challenger Limited it is only 2.43 to 5.71. It shows that
AMP Limited is better than the Challenger Limited. It is because the equity of the company in
AMP Limited is much higher than the challenger limited. It is observed in the given ratios that
current assets of the AMP Limited also managed efficiently according to the ideal current ratio.
The efficiency ratio are also more in AMP Limited than to the Challenger ltd. The reason behind
low efficiency ratio of challenger limited is that organization is unable to generate the income
from the effective utilization of the assets.
3. Providing the recommendation for the company to invest with the 10000 dollars.
Net present value
YEAR CASH FLOW
DISCOUNTING
FACTOR @10% PRESENT VALUE
0 10000 1
1 4000 0.9090909091 3636.3636363636
2 2500 0.826446281 2066.1157024793
3 3000 0.7513148009 2253.9444027047
4 4800 0.6830134554 3278.4645857523
5 5200 0.6209213231 3228.7908799076
TOTAL PV 14463.6792072077
LESS: II 10000

NPV 4463.6792072077
Internal rate of return
YEAR CASH FLOW
0 -10000
1 4000
2 2500
3 3000
4 4800
5 5200
IRR 25.03%
Recommendation
To identify whether to invest or not to invest if I have to given 10000 dollars, as
according to my financial report of company that is AMP limited have good financial health
which indicates that with this 10000 dollars I would like to invest in my company as with the
help of NPV and IRR it can be observed that this investment will provide the profit with the
internal rate of 25.03 %. Here, It is clearly observed by seeing NPV has a positive value which
shows the profit which means organization have good cash flow and hence, go for investments.
CONCLUSION
From the above report it can be concluded that accounting is a system, which governs
various special activities to make the financial report more presentable. There are various
accounting theories that have been formulated and keep processing to heighten the current
accounting system or for introducing something new in the system. The report is consisted of
various provisions of the Australians accounting standards boards which is mandatory to be
followed before the incorporation of the company.

REFERENCES
Books and Journals
Beattie, V., 2014. Accounting narratives and the narrative turn in accounting research: Issues,
theory, methodology, methods and a research framework. The British Accounting Review.
46(2). pp.111-134.
Berry, A. J., Broadbent, J. and Otley, D. T. eds., 2016. Management control: theories, issues and
practices. Macmillan International Higher Education.
Bond, D., Govendir, B. and Wells, P., 2016. An evaluation of asset impairments by Australian
firms and whether they were impacted by AASB 136. Accounting & Finance. 56(1).
pp.259-288.
Christensen, H. B., Nikolaev, V. V. and WITTENBERG‐MOERMAN, R.E.G.I.N.A., 2016.
Accounting information in financial contracting: The incomplete contract theory
perspective. Journal of accounting research. 54(2). pp.397-435.
Dunbar, K. and Laing, G. K., 2017. Deconstructing the Accounting Standard AASB 13 Fair
Value: Exit vs Entry Price for Assets. Journal of New Business Ideas & Trends. 15(2).
Gendron, Y., 2018. On the elusive nature of critical (accounting) research. Critical Perspectives
on Accounting. 50. pp.1-12
Gornik-Tomaszewski, S. and Choi, Y.C., 2018. The Conceptual Framework: Past, Present, and
Future. Review of Business. 38(1).
He, L., Evans, E. and He, R., 2016. The Impact of AASB 8 Operating Segments on Analysts’
Earnings Forecasts: Australian Evidence. Australian Accounting Review. 26(4). pp.330-
340.
Huber, W. D., 2017. Irreconcilable differences? The FASB's conceptual framework and the
public interest. International Journal of Critical Accounting, 9(5-6), pp.514-523.
Joubert, M., Garvie, L. and Parle, G., 2017. Implications of the New Accounting Standard for
Leases AASB 16 (IFRS 16) with the Inclusion of Operating Leases in the Balance Sheet.
Journal of New Business Ideas & Trends. 15(2).
Kapp, K.W., 2018. Environmental disruption: General issues and methodological problems. In
Green Accounting (pp. 31-48). Routledge.