ABN AMRO HOLDING NV BUSINESS PLAN
...operating from over 20 locations worldwide and managing EUR 161 billion worth of assets as of year-end 2004 for private investors and institutional clients. Transaction Banking Group, which is covering all payments and trade in the bank for our retail, private client, commercial and wholesale markets. Group Shared Services was established to create cost savings through consolidation and standardization. GSS focuses on further exploiting new market solutions for support services with the aim to achieve better products and services for our clients at lower costs. Group Functions, whose basic functions are governance, which is facilitating the implementation of Managing Board policy throughout the bank; standard and policy setting, which is setting the parameters within which the BUs work; and sharing its expertise with all SBUs. 3.2.2 External analysis Opportunities The company is operating in banking industry, a fast-changing and full-of-opportunities environment. The current economic trends and financial development in countries from Asia and Latin America are expected to go up very fast as well as the ones in Central and Eastern Europe (considered New Growth Markets – NGM). The expansion to geographical areas with strong potential for growth shall lead to a fast business development and increased turnover. Threats Main threat for the company is the fast-changing business environment, which provides also many opportunities but not without high challenge. The resources of the company have to adapt quickly to those changes and this is a very difficult task having in view the size and geographic network of ABN AMRO. The legislation is an important part of the changing environment and latest modifications leave the companies active in banking industry almost breathless. 4 COMPETITIVE ADVANTAGES ABN AMRO’s main specific strenghts are tangible: human resources, its solid financial background plus the diversified and reliable products and intangible: reputation and knowledge acquired through over 180 years of experience in banking and investment services. Competitive advantage lead the company to high profitability, by increasing the value placed by customers on its products and services, a reasonable pricing of the respective products and services plus balanced costs for providing customers with the right products and services. Innovation, highly encouraged and stimulated within the company by the experienced management is another important competency that repays over the years. 5 ETHICAL CONCERNS The specifics of the banking industry require that the companies from this sector comply with a series of regulations referring to legal and ethical responsibilities towards customers, central banks and local communities. The company’s ethical responsibility towards consumers is fulfilled by the development and manufacturing of diversified products, having high functional and practicability values, using carefully monitored processes, employing quality management techniques, and by anticipating and meeting immediate market needs. The group’s responsibility towards Central Banks allover the world wherever ABN AMRO is presents requests a deployment of resources and investments that the company is always ready to undertake. The main responsibility is given by the fact that, in order to offer quality products to consumers, the company shall maintain competitive prices and specific quality requirements toghether with the compliance with local specific regulations (currency, inflation, minimum reserves, capital adequacy, liquidity aso). The ethical responsibility towards local communities is generated by the strong impact of its local presence in almost all countries in the world. ABN AMRO is one of the biggest multinational companies and by opening facilities in one geographical area it generates employment opportunities for the local workforce, attracts long-term investors and enhances the local community wellbeing and prosperity. ABN AMROM is also highly involved in the welfare of the local civil society through initiatives related to social aid, inter-cultural exchange and youth educational development. 6 FINANCIAL ANALYSIS Income Statement PERIOD ENDING 31-Dec-04 31-Dec-03 31-Dec-02 Total Revenue 46,423,710 41,808,532 39,770,405 Cost of Revenue 11,551,010 873,967 8,327,695 Gross Profit 34,872,700 40,934,564 31,442,710 Operating Expenses Research Development - - - Selling General and Administrative 7,796,182 14,670,343 5,312,784 Non Recurring 99,601 - - Others 1,758,712 2,787,654 3,868,227 Total Operating Expenses - - - Operating Income or Loss 25,218,205 23,476,567 22,261,699 Income from Continuing Operations Total Other Income/Expenses Net (1,735,517) 96,689 - Earnings Before Interest And Taxes 23,482,688 23,254,308 22,261,699 Interest Expense 18,460,332 17,336,194 18,371,458 Income Before Tax 5,022,356 5,918,114 3,890,241 Income Tax Expense 799,538 2,001,586 1,460,282 Minority Interest (369,752) (318,948) (218,046) Net Income From Continuing Ops 3,853,066 3,916,528 2,211,913 Non-recurring Events Discontinued Operations - - - Extraordinary Items - - - Effect Of Accounting Changes - - - Other Items - - - Net Income 3,853,066 3,916,528 2,211,913 Preferred Stock And Other Adjustments - - - Net Income Applicable To Common Shares $3,853,066 $3,916,528 $2,211,913 Key Statistics Fiscal Year Fiscal Year Ends: 31-Dec Most Recent Quarter (mrq): 31-Mar-05 Profitability Profit Margin (ttm): 14.31% Operating Margin (ttm): 31.88% Management Effectiveness Return on Assets (ttm): 0.43% Return on Equity (ttm): 19.63% Income Statement Revenue (ttm): 24.38B Revenue Per Share (ttm): 14.665 Qtrly Revenue Growth (yoy): 14.30% Gross Profit (ttm): 34.87B EBITDA (ttm): N/A Net Income Avl to Common (ttm): 3.50B Diluted EPS (ttm): 2.06 Qtrly Earnings Growth (yoy): -4.20% Balance Sheet Total Cash (mrq): 216.77B Total Cash Per Share (mrq): 129.863 Total Debt (mrq): 484.54B Book Value Per Share (mrq): 11.641 Balance Sheet PERIOD ENDING 31-Dec-04 31-Dec-03 31-Dec-02 Assets Current Assets Cash And Cash Equivalents 24,278,134 33,733,125 9,911,677 Short Term Investments 22,619,023 11,602,668 4,089,418 Net Receivables - 335,272 - Inventory - - - Other Current Assets - - - Total Current Assets - - - Long Term Investments 745,940,675 621,828,919 537,037,800 Property Plant and Equipment 9,137,387 8,853,941 7,260,526 Goodwill 6,812,449 7,330,777 6,708,072 Intangible Assets - 462,098 - Accumulated Amortization - - - Other Assets 30,574,840 26,996,294 24,638,195 Deferred Long Term Asset Charges - 1,508,096 - Total Assets 839,362,507 712,651,188 589,645,687 Liabilities Current Liabilities Accounts Payable 13,338,374 14,867,488 9,667,423 Short/Current Long Term Debt 181,099,541 - - Other Current Liabilities 400,529,171 385,899,213 250,840,369 Total Current Liabilities - - - Long Term Debt 130,388,886 224,799,181 190,131,219 Other Liabilities 78,783,185 55,797,030 115,081,326 Deferred Long Term Liability Charges - 1,332,298 - Minority Interest 5,838,268 4,662,414 3,994,023 Negative Goodwill - - - Total Liabilities 809,977,424 687,357,623 569,714,360 Stockholders' Equity Misc Stocks Options Warrants - - - Redeemable Preferred Stock - - - Preferred Stock 1,046,495 1,020,884 853,316 Common Stock 1,301,638 1,153,988 932,987 Retained Earnings - 11,156,895 9,049,974 Treasury Stock (862,301) (149,428) (131,038) Capital Surplus 3,499,686 3,200,779 2,665,827 Other Stockholder Equity 24,399,565 8,910,447 6,560,261 Total Stockholder Equity 29,385,083 25,293,565 19,931,328 Net Tangible Assets $22,572,634 $17,500,691 $13,223,256 Cash Flow All numbers in thousands PERIOD ENDING 31-Dec-04 31-Dec-03 31-Dec-02 Net Income 3,853,066 3,916,528 2,211,913 Operating Activities, Cash Flows Provided By or Used In Depreciation 1,311,188 1,167,801 1,054,590 Adjustments To Net Income (60,152,303) 1,960,148 1,776,869 Changes In Accounts Receivables - (1,552,045) 2,386,979 Changes In Liabilities - 4,050,888 (2,290,536) Changes In Inventories - - - Changes In Other Operating Activities 26,391,589 (12,418,873) 14,240,107 Total Cash Flow From Operating Activities (26,473,453) (2,503,866) 19,699,654 Investing Activities, Cash Flows Provided By or Used In Capital Expenditures (1,427,162) (1,962,659) (1,354,404) Investments 5,146,517 (5,527,591) (23,152,754) Other Cashflows from Investing Activities 253,778 616,549 521,005 Total Cash Flows From Investing Activities 3,973,133 (6,873,702) (23,986,152) Financing Activities, Cash Flows Provided By or Used In Dividends Paid (1,315,282) (1,148,966) (1,047,252) Sale Purchase of Stock 188,287 28,881 111,120 Net Borrowings 22,261,550 12,621,041 645,753 Other Cash Flows from Financing Activities - - - Total Cash Flows From Financing Activities 21,134,556 11,...