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As indicated by the name, a company's annual report is an official document that presents statements of information of a company for that year. This information ranges from the products they sell to analysis of how they have performed. Whilst they tend to be long, it is a useful skill to learn how to read through a report for a deeper understanding of a company, for trading and investing purposes or to prepare for an upcoming interview with a specific company. To begin with, it can seem daunting to read through an annual report as they can use terminology that make it seem very complicated, it can be very long and it is also sometimes hard to ascertain what pieces of information are relevant. To start practising, go to annualreports.com and search up a company that you are interested in. This is important because it makes the process of learning the skill more engaging and it could also be useful while preparing for an interview with a specific company. For example, if you have an interview with Credit Suisse coming up, there is no harm in flicking through the relevant parts of their annual report to get a better understanding of how the company performed that year and what they are looking to do in the future, and then using that information to show how invested you are in their company in the interview. Breakdown of the parts of an annual report: Business - This section looks at the company's business as a whole, including the products they sell, the industry they operate in, the services they provide, the market they are in and the competition within it and any major events that have impacted their business such as COVID-19. Risks - This section engages with the risk factors that the company faces and typically discusses: macroeconomic/industry, business, financial, legal and general risks. Within each sub-section, there are either one or more main risk statements and they are expanded upon. This information is useful if you are weighing up which stocks to invest in. Properties - This section lists the headquarters of the company and any other properties or land it owns and for what purposes. Legal Proceedings - This section contains information of any legal proceedings or claims that the company was involved in. Analysis - This is a longer section split into multiple parts involving management discussion and analysis (MD&A) on different aspects of the company revolving around their financial condition. An example of such a sub-topic could be stockholder matters, risk assessment or accounting. Corporate governance - This lists all the various committees of the company and the executives. What to be looking for: The company's values and goals Their industry and market The goods and services they provide How they are performing Note that this checklist has been simplified a lot and should be used as a guide whilst you are practising how to read through an annual report. Upon mastery of these skills you should then go on to read annual reports in their entirety as that will ultimately give you the best understanding of the company. These 4 points will give you a general understanding of the company from the report and are usually the most relevant. However, you will realise that the information for the same point can be found in different sections, from the MD&A to the coverage of recent events. With practice, over time, you will be able to easily locate this information. Now let us practise. Case Study: Apple's 2022 annual report ¹ - https://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AAPL_2022.pdf They are a company that "designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories, and sells a variety of related services" - found in Section 1 Item 1 under "Company Background" Their products include: iPhone, Mac, iPad, AirPods, Apple TV, Apple Watch, Beats Their services include: Advertising, AppleCare, Cloud Services, Digital Content, Payment Services - found in Section 1 Item 1 under "Services" Their market is in the, "consumer, small and mid-sized business, education, enterprise and government markets" and it sells their products and services through their online and retail stores - found in Section 1 Item 1 under "Markets and Distribution" Their company stock price has increased in the last 5 years with $100 in September 2017 equating to $411 in September 2022 - found in Section 2 Item 5 under "Company Stock Performance" They had an improvement in sales in 2022 compared to 2021 of 8% or $28.5 billion which they say is due to, "higher net sales of iPhone, Services and Mac" as a result of their release of new products throughout the year. However, they also say that weaknesses in other foreign currencies relative to the U.S. dollar had a detrimental impact on overall net sales in 2022 - found in Section 2 Item 7 under "Fiscal Year Highlights" Sales of all products and services increased in 2022 - found in Section 2 Item 7 under "Products and Services Performance" Sales in each of their listed geographical areas increased bar Japan where sales decreased due to the yen being weaker - found in Section 2 Item 7 under "Segment Operating Performance" Their products gross margin increased due to "a different Products mix and higher Products volume, partially offset by the weakness in foreign currencies relative to the U.S. dollar" - found in Section 2 Item 7 under "Gross Margin" Their services gross margin increased due to an increase in net sales - found in Section 2 Item 7 under "Gross Margin" Operating expenses increased due to an increase in staff, engineering program costs and advertising costs - found in Section 2 Item 7 under "Operating Expenses" This list covers the general points you should be looking for whilst going through the report for the first time. However, there is much more information to be obtained from other sections such as their risk statements and analysis which can be found in Section 1 and 2 respectively or their legal proceedings with Epic Games in Section 1 Item 3. Practise drawing out the key sentences or paragraphs from these sections with other company's annual reports. References: 1 - Apple Inc. (2022). Form 10-K. https://www.annualreports.com/HostedData/AnnualReports/PDF/NASDAQ_AAPL_2022.pdf

Entry into an Investment Bank A guide on how to get into an Investment Bank Your path... If becoming an investment banker is your dream or if it just another career path that you are interested in, then we have some tips and advice to help you. Below are things that you could and should be doing to help you realise your goal, from extracurriculars in school all the way up to the interview. At school If you are already considering investment banking as a potential career path, then there are many things that you could be doing to help realise that. Do some research: Go online and find out more about the world of investment banking or look at the other resources on our website Visit company pages and understand the ethos and what they do Read: Read newspapers like The Economist or The Financial Times Sign up for online newsletters and briefings from AmplifyMe and the New York Times to keep up to date Read books like The Intelligent Investor or Principles Clubs : See if your school offers an investing or financial society If they don't, then try and start your own one, you could invite speakers and hold talks - this shows great initiative Start a weekly briefing or a school newspaper that discusses what is currently happening in the markets Summer Courses: Sign up for InvestIN's Young Investment Banker Summer Experience to learn more about the details of investment banking and network with professionals in the industry Go online and find introductory courses to investment banking with organisations like edX Work Experience/Shadowing: Find work experience programs at investment banks JP Morgan offer a week placement in their offices in the summer for children 14-17 This is a good website that shows programs for children in the UK https://www.studentladder.co.uk/year-12/work-experience-opportunities/banking/ Contact professionals in the industry on LinkedIn or that you have met and ask them if you could shadow them for a day - we will discuss how to go about this later University + College These next steps will be crucial to landing a job at an investment bank - remember networking is key. Degree: Although your choice of degree does not actually impact your chances of getting into an investment bank, we recommend a degree in economics, finance or business However, it is not essential to do one of the three above as they are looking for people with certain skillsets that would allow them to more easily adapt to the different world of investment banking Major school: The big investment banks tend to do a lot of on-campus recruiting and this mainly occurs at the top-tier universities and colleges. In the UK, this would be at the Russell Group universities and in the USA, they would be looking at the Ivy League colleges as well as the other prestigious colleges such as Stanford and MIT Whilst attending one of these top-tier universities will boost your chances it is not necessary. However, networking and your other related activities will need to be very important Internship: An internship is the best way to get yourself affiliated with a company or industry Preferably, find an investment bank that you line with the core values of or that you like the culture of Apply for an internship over the summer where you will doing some tasks around the bank and be given the opportunity to learn more It is vital to stand out throughout the duration of your internship so that they are more likely to offer you a full-time job after you finish university Also, make sure to network whilst you are there, it makes yourself better known and can allow you to integrate into the community a lot faster Apprenticeship If you would rather opt for an apprenticeship than going to university or college, then there are plenty of options in the investment banking world. The first thing to decide is whether an apprenticeship is right for you. Below are aspects that you should expect of an apprenticeship and hopefully you can tell whether or not it suits you. Duration: They can vary in duration but typically span from 1 - 3 years. Longer-term apprenticeships may be combined with formal education, such as earning a finance-related degree. Structured Learning: They often include a structured curriculum that covers fundamental concepts in finance, investment banking, financial modelling, valuation, and other relevant topics. This curriculum may be delivered through in-house training sessions, online courses, or formal educational institutions. On-the-Job Training: The core of an investment banking apprenticeship is the hands-on experience. Apprentices work closely with experienced professionals on real-world projects, such as financial analysis, due diligence, M&A transactions, and capital raising. They may rotate through different departments as well. Mentorship: Apprentices often receive mentorship from senior bankers who provide guidance, answer questions, and help apprentices navigate the complexities of investment banking. Networking Opportunities: As we have said, networking is key, and apprenticeships are a great way to achieve this due to you working with the professionals. Responsibilities: They also give you a lot of responsibilities including conducting financial analysis, creating pitch materials, attending client meetings, and participating in due diligence efforts. Exams and Certification: Some apprenticeships may require individuals to pass exams or obtain certifications related to finance and investment banking, such as the Chartered Financial Analyst (CFA) or Chartered Investment Banking Analyst (CIBA) designation. Potential Full-Time Offer: Successful completion of an investment banking apprenticeship can lead to a full-time position as an analyst or associate within the same firm. It can also lead to full-time positions at other firms since the apprenticeship, in itself, is a qualification. If you are very keen on investment banking then an apprenticeship is a great way to dive straight into the industry. However, make sure that you are comfortable with the decision you have made as there are many factors to consider, for example, an apprenticeship can hinder your chances of working in different industries as it is a specific course in a specific sector. The Interview The first step in this process is to land an interview. This will be the other route getting into an investment bank if you have not been offered a full-time job already from either an internship or apprenticeship. To do this, you can either apply to the banks that you are interested in or try and land an interview through networking. To achieve the latter, you can contact someone working in the company you are interested in via email or LinkedIn. Choose somebody that either you know or that went to the same school as you. This builds an initial connection. Ask them if you could meet up for a coffee or you could ask about any job opportunities. Make sure you come across as respectful and qualified. Then see what their response is. You might have to talk to a few people before you succeed. Once you have landed an interview, you must prepare. Firstly, you should already know a good amount about the industry and how an investment bank works. Keep up to date with current affairs in the markets by reading newspapers. It is always good to know the prices of certain major stocks and indices the day of your interview, this shows a genuine interest. Hopefully, you have an idea of which division in the investment bank you want to work in. Before you go in, you should know more about this division and what the work entails. Research the company's core values and ethos and try and tailor your personal responses to show that you align with them. Remember, treat each interview individually, you must show a genuine interest in the company and by referencing their ethos it shows that you have conducted your research and are a good fit for them. Don't forget to practise the basic interview questions such as Why should we hire you?, What will you bring to the company?, What three words would your friends describe you as? . They may also ask questions like Why is teamwork so important? or How would you deal with a difficult client? Obviously, since it is an investment banking interview, they are going to ask more specific questions about topics like accounting, valuations, M&As and the markets. To make sure that you are prepared for them, read through the other pages on the website. On the day of the interview, make sure you are prepared for the weather and traffic. You have to turn up on time and presentable. Wearing smart clothes is key as it shows professionalism and that you are taking this job offer seriously. Some companies do an initial screening process where the receptionist tells the interviewer their initial impressions of the candidate. They observe the time you arrive, the state you arrive in, your manners and what you do in the waiting room. Don't fidget or go on your phone, prepare questions in your head or read a newspaper. In the interview itself, maintain eye contact, a friendly demeanour and don't fidget. Try and make the interview more personal and memorable. Find a connection with your interviewer or some common ground and work with it. If you treat it more like a conversation whilst proving that you are more than qualified, you have a much better chance of success. Back to Learn Next Page

Asset Management Asset management involves the management of investments on behalf of clients in order to achieve their specific financial goals. Key aspects Financial institutions such as hedge funds provide this service to manage their clients' portfolios of various assets. These assets include stocks, bonds, property among other investments. Clients come to them usually to increase their wealth and asset managers need to manage risk effectively and generate income. The roles of asset managers are listed below. Portfolio Management They need to create and manage an investment portfolio that it is suitable for their client's risk tolerance, investment goals, and time horizon. This involves diversifying the portfolio and making vital decisions on which assets to invest in and how much they should invest in an asset. Investment Strategy They also need to develop an investment strategy based on their analysis of the market and current/future economic conditions as wells as their client's preferences. Active management involves frequently buying and selling assets to outperform the market - this seeks high returns but has higher risk. Passive management aims to match the market's performance, often through index funds. Risk Management This involves identifying and addressing associated risks with the investments. Common mitigation techniques involve diversifying their portfolio, hedging and portfolio rebalancing. Hedging is an investment strategy that mitigates risk by taking an opposite position in a related asset in case there are unexpected price changes. Client Relationship Understanding the financial needs and goals of the client is very important in developing an appropriate investment strategy. Providing the client with regular updates and reports on the portfolio's performance, the market conditions and advice is also required to maintain a strong relationship. Complying to Regulations Asset managers also must ensure all their investment activities comply with regulatory requirements and industry standards. Back to Learn Next Page

Valuation In an M&A deal, the seller will always try to sell for the highest price and the buyers will always wish to buy the company at the lowest price. Thus each company values the target company differently. However, there are definitive measurements for the value of a company that can be used to help out in the process Types of Valuation The measurement used will often depend on the circumstances and the type of deal or required analysis. Below are listed some valuation methods used in an investment bank. Discounted Cash Flow Discounted Cash Flow (DCF) is a valuation method that estimates the value of a company based on its expected future cash flows. The underlying principle that backs this method is that the value of money today is worth more than the same amount of money in the future, this is due to the time value of money and potential risks or crises. First, you have to calculate the present and expected cash flows of the compnay. Cash flow is the amount of money that flows in and out of the company in a given time period, usually a year. This is done through calculating expected revenues, expenses and taxes as well as any other relevant factors. Then, you find the discount rate, which the the rate of interest provided by the central bank. This rate represents the return an investor would expect from an investment with similar risk and characteristics. It takes into account the rate of inflation, interest rates and risk profile of the invesment. Finally, you use the above information to calculate the discounted cash flow which brings the value of the company back to its present value. This involves dividing each future cash flow by (1 + discount rate) to the power of the respective time period. Once you sum up all the present values of the future cash flows you get the net present value (NPV). This is the equation for calculating the DCF where: PV = Present Value of Cash Flows CF = Cash in that time period r = Discount Rate n = Number of time periods into the future P/E Ratio The price-to-earnings ratio is a simple, commonly used calculation to value companies and then compare them. It takes the market price of a company's shares and compares it to its earnings per share (EPS). P/E Ratio = Market Price per Share / Earnings per Share (EPS) Market Price per Share = Current market price of one share of the company's stock Earnings per Share (EPS) = EPS is the company's net income divided by the number of outstanding shares of its stock (EPS = Net income/Number of Outstanding Shares) EBITDA The EBITDA multiple is a valuation metric that compares the enterprise value of a company to its EBITDA. EBITDA Multiple = Enterprise Value / EBITDA Enterprise Value = Total value of a company, including its equity value, debt, and cash equivalents (Enterprise Value = Market Capitalisation + Total Debt - Cash and Cash Equivalents) EBITDA = Earnings Before Interest, Taxes, Depreciation, and Amortisation Further breaking down EBITDA: Earnings = C ompany's net income Before: EBITDA is a measure of profitability "before" taking into account certain expenses. Interest: Interest expenses are the costs associated with borrowing money Taxes: Income taxes, both federal and state are excluded because they are considered financial expenses Depreciation: Depreciation is a non-cash accounting expense that reflects the gradual decrease in the value of tangible assets over time. Amortisation: Amortisation is similar to depreciation but pertains to intangible assets Back to Learn Next Page

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