Slide 1: Annual results 2004
Annual results 2004 Andrew Mohl Chief Executive Officer 17 February 2005
Slide 2: Summary - 2004
Summary - 2004 2004 focus on operational excellence to deliver shareholder value » Running the business better than it’s ever been run before Strong operating performance * Most favourable market environment since 1999 » A$934m consolidated profit after A$5.5b loss in FY 03 = AFS Value of New Busine
Slide 3: Summary — longer term trends
Summary — longer term trends AMP is transforming from a traditional life company to a modern wealth management company: » High earnings growth in open business while maintaining mature book profit streams » Increasing value from new business = Capturing scale benefits and focusing on costs to drive
Slide 4: Outline
Outline « Group overview Capital management initiatives Business Unit review Longer term trends Outlook and wrap up Appendix - IFRS
Slide 5: Overview — 2004 profit and loss
Overview — 2004 profit and loss A$m 2004 2003 AMP Financial Services’ 475 414 AMP Capital Investors 73 68 Cobait/Gordian 51 58 BU operating margins 599 540 Discontinued businesses? (2) 2 Group Office costs (33) (34) Total operating margins 564 508 Underlying investment income 220 210 Interest expens
Slide 6: Overview — underlying contribution
Overview — underlying contribution 61 5 (?) 10 1 (4) 671 eee 609 (50) 46 (=e ASm 2003 interest Lower AFS ANMPCI Cobait / Underlying Group Discontinued 2004 underlying expense on interest margins margins Gordian investment office costs businesses underlying contribution HHG debt expense on margins in
Slide 7: Overview — earnings and dividend
Overview — earnings and dividend 2004 2003 Average shares on issue 1,853m 1,386m Earnings per share A$0.50 A$0.48 (actual) Earnings per share . A$0.36 A$0.44 (underlying) Dividend per share A$0.27 A$0.16 15% 1H Franking 75% o% 103 85% 2HO3
Slide 8: Overview — 2004 total shareholder returns
Overview — 2004 total shareholder returns 160.0 16.0 oe ANP 150.6 14.0 . ASX200 } left hand scale Market capitalisation — right hand scale 140.0" 130.0" 120.0 Dec 31, 2003 = 100 170.0: 100.0 / a 90.0: 80.0 0.0 Dec-03 dan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec-04
Slide 9: Overview - cash flows
Overview - cash flows 19% increase in AFS cash inflows over FY 03, driven by increasing planner and customer confidence, stronger markets and better investor sentiment » 3% reduction in AFS cash outflows as persistency strengthened « AFS net cash flows of A$1.2b, A$1.7b turnaround on FY 03 « AMP Cap
Slide 10: Overview — group costs and cost ratio
Overview — group costs and cost ratio 3,500 3,000: 2,500 2,000 1,500: 1,000: $60 AgSm 0 64% 62% FYot* Controllable costs Left hand scale “ AMP group including previously owned HHG entities Fyo2* FY03* =@= Cost to income ratio Right hand scale * Demerged AMP, includes Cobalt / Gordian costs 70 60 50
Slide 11: Overview — investment value added to Life No Fund
Overview — investment value added to Life No 1 Fund ee ey i, L a (37) FY02 FY03 FY04 11
Slide 12: Overview - debt and gearing
Overview - debt and gearing 6,000 60 5,000 50 4,000 40 3,000 30 2,000' 20 1,000 10 A$Sm 0 0% 31/12/2000 34/12/2001 34/12/2002 31/12/2003 31/12/2004 Group debt (excl operational debt) moon Gearing defined as debt / (debt + equity) Left hand scale Right hand scale 12
Slide 13: Capital management initiatives
Capital management initiatives
Slide 14: Shareholder capital invested
Shareholder capital invested Notional allocation at 30 December 2004 31 December 2003 i Tenge. ASm “regulatory aaa) ) | Tegquirements Li Lo | requirements» Le la AMP Financial Services 4,021 2,112 687 2,799 1,228 2,884 713 3,597 AMP Life statutory funds 877 1,781 - 1,781 1,075 2,556 - 2,556 AMP Life
Slide 15: 2005 capital plan — key initiatives
2005 capital plan — key initiatives # Group Office capital A$2,133m at end December 2004 « Proposed capital reduction around A$1b comprising: « A$750m capital return to shareholders, with shareholders to receive cash of 40c per share in mid-June «= Redemption of A$265m in outstanding Income Securiti
Slide 16: 2005 capital plan — next steps and outlook
2005 capital plan — next steps and outlook « Proposed capital return subject to shareholder approval — resolution to be put to 19 May Annual General Meeting » Redemption of Income Securities will occur with next interest payment on 10 May « Further capital initiative planned in 2006, subject to fair
Slide 17: Proposed capital plan timetable
Proposed capital plan timetable Date Event Begin mailing AGM notice and Explanatory 1 April 2005 Statement to shareholders with annual report 10 May 2005 Redeem Income Securities 19 May 2005 Resolution put to shareholders at AGM 20 May 2005 AMP shares trade ‘ex’ return 26 May 2005 Record date for en
Slide 18: Business Unit review
Business Unit review
Slide 19: AMP Financial Services
AMP Financial Services « Operating margins up 15% on FY 03 to A$475m, driven by markets, cash flows, cost reductions and claims management » Return on Invested Capital (RolC) up to 17% from 14.8%, reflecting higher operating margins and enhanced capital management * Controllable costs down 4% to A$4
Slide 20: AMP Financial Services — operating margins
AMP Financial Services — operating margins (5) 476 . ee #8 | 18 aauee 38 (10) . 8 eel) a mn... Agm EI FYo3 2003 public = Growth in Mature Persistency Mortality / Market Lower Reduced AMP 2003 tax Other FYO4 operating tax ruling business run-off morbidity movements contemporary Banking —_ experience
Slide 21: AMP Financial Services — net retail cash flows relative to major competitors
AMP Financial Services — net retail cash flows relative to major competitors @ Sep-03 HDec-03 @Mar-04 @ Jun-64 m Sep-04 @ Dec-04: 306 (734) AXA Australia Commonwealth BT / Westpac ING Australia National Australia Group / Colonial Group Group Group 1 MLC Group | Reta AUM | Sept 04 ASb Quarterly net c
Slide 22: AMP Financial Services — net retail cash flows and industry share
AMP Financial Services — net retail cash flows and industry share AMP rolling 12 mth net cash flows (excl CMTs) A$m — left hand scale =$= AMP rolling 12 mth cash flows as % of industry flows — right AMP hand scale cash flows 3,400 5 — 16% 9 2,900 4 14% 12% 2,400 4 10% 4,900 5 8% 4,400 6% 900 5 4% 40
Slide 23: AMP Financial Services — costs and cost ratios
AMP Financial Services — costs and cost ratios 9007 70 790 8007 60 7007 &0 600% S007 40 400% 30 3007 20 200% 10 100% ASm 0 0% FY0O FYO1 FY02 FY03 FY04 Controllable costs exciuding AMP Banking = Cost to income ratio excluding AMP Banking Left hand scale Right hand scale 23
Slide 24: AMP Financial Services — Australian contemporary business
AMP Financial Services — Australian contemporary business Contemporary Change 2004 i 2003 AUM A$33.9b A$27.8b +22% Total profit margins A$241m | A$180m +34% Controllable costs A$426m | A$443m - 4% Costs to income ratio 48.6% 57.9% -9.3 percentage points Net cash flow A$2,624m A$ ,478m +78% VNB' @ 3%
Slide 25: AMP Financial Services — Australian mature business
AMP Financial Services — Australian mature business Mature Change 2004 2003 AUM A$17.5b i A$17.3b +1% Total profit margins A$168m A$176m -5% Controllable costs A$69m A$77m -10% Cost to income ratio! 174% H 14.9% +2.5 percentage points Net cashflow (A$1,392m) (A$1,863m) +25% VNB? @ 3% discount margin
Slide 26: AMP Financial Services — New Zealand business
AMP Financial Services — New Zealand business New Zealand Change 2004 | 2003 AUM A$4.1b | AS3.7b +11% Total profit margins A$38m A$36m +6% Controllable costs! A$58m A$55m +5% Cost to income ratio 41.9% 42.4% -0.5 percentage points Net cashflow {A$55m) | {A$152m) +64% VNB? @ 3% discount margin A$30m
Slide 27: AMP Financial Services — value of new business
AMP Financial Services — Market consistent VNB 2004 2003 A$316m AS268m A$280m AS$234' —— | | With agency costs of 0% With agency costs of 5% 239 value of new business Traditional VNB@ 3% discount margin 6 (2) (17) 284 22 cose nee | =_ ccna AgSm FYO3 VNB Investment & bond yields Volume and mix Cost s
Slide 28: AMP Financial Services — embedded value
AMP Financial Services — embedded value Market consistent EV 2004 2003 Traditional EV@ 3% discount margin After transfers, with agency costs of 0% A$5,641m A$5,939m After transfers, with agency costs of 5% A$5, 359m A$5,642m 284 63 ad a (95) 7458 (4,736) age == [ne oe a oT aie || susaee 5423 ASm FY0
Slide 29: AMP Life — financial strength
AMP Life — financial strength = Total FY 04 transfer from all AFS entities to AMP Ltd of A$1,736m comprised: « A$593m statutory life fund profits » A$98m net transfer from other AFS subsidiaries » A$265m franking credits value transferred to Group » A$780m excess capital in AMP Life from strong inve
Slide 30: AMP Financial Services — profit and capital releases
AMP Financial Services — profit and capital releases AFS AFS underlying Investment Additional Cash transfer operating investment income market transfers (XO) from AFS © margin? income? adjustment? 2000 350 258 243 148 999 2001 366 234 (93) (327) 180 2002 334 221 (258) 674 971 2003 407 169 42 422 1,0
Slide 31: AMP Capital Investors
AMP Capital Investors « Operating margins up 7% on FY 03 to A$73m, despite loss of LPT margins, driven by higher performance, transaction and AUM-based management fees « Strong investment performance across all asset classes, with 86% of Australian assets under management meeting or exceeding benchm
Slide 32: AMP Capital Investors — investment performance
AMP Capital Investors — investment performance Australian AUM 89% 87% 86% 9 76% 74% ASb } Listed Assets Private Capital Property Future Directions Total Funds & Dec-03 & Dec-04 All figures for 12 months to 31 December % indicates assets under management meeting or exceeding benchmarks 32
Slide 33: AMP Capital Investors — investment performance
AMP Capital Investors — investment performance Comparison with the Mercer pooled funds survey ~ balanced funds universe Rates of Performance after tax and after fees for periods ended December 2004 Return % 20 G 48 |] rrr 10 w 5 0 6 months (%) 1 Year (%) 3 Years (%) 5 Years (%) 10 Years (%) ANP Capi
Slide 34: AMP Capital Investors — cash flows and assets under management
AMP Capital Investors — cash flows and assets under management 1 78.9 1.6 (2.7) 67.2 0.9 (0.3) seceoces 4.2 AS AUM 31 Dec Australian NZ market Japan / Asia Mature, Contemporary Market AUM 31 Dec 2003 market flows flows distribution | shareholder & movements 2004 channel | debt reduction External Int
Slide 35: AMP Capital Investors — operating margins
ASm AMP Capital Investors — operating margins 6 (3) 3 0 as (1) 68 (9) GC essses apts 44 i (8) _ FY03 operating Staff Loss of LPT Higher AUM Higher Higher Higher Other FY04 operating margins incentives margins based mgt transaction performance performance costs margins {low FY03 fees fees fees bonuse
Slide 36: Cobalt/Gordian
Cobalt/Gordian # Run-off continues with pleasing results « Operating margins of A$51m, ahead of plan, reflecting positive net claims and commutations experience » Risk margins released to profit as claims managed down « Tightly managed with a focus on maximising profit and increasing surplus capital
Slide 37: Cobalt/Gordian — gross reserves
Cobalt/Gordian — gross reserves 3,0004 2,5004 2,201 2,0004 14,5004 1,071 41,0004 500" A$Sm 0 1999 2000 2001 2002 2003 2004 Gross discounted claims including risk margins. Prior years adjusted to 31 December 2004 exchange rates. 37
Slide 38: Cobalt/Gordian — operating margins
Cobalt/Gordian — operating margins 103 oo 58 i — 51 A$m FY00 FY01 FY02 FY03 FY04 38
Slide 39: Longer term trends
Longer term trends
Slide 40: High earnings growth in open business, while maintaining mature book profit streams
High earnings growth in open business, while maintaining mature book profit streams 400 5 3504 3004 2504 2004 150% Open business operating margins Closed business operating margins {(AFS contemporary, NZ and AMP Capital) {AFS mature, Cobalt / Gordian) i FYoo i FY02 Gi FyYo4 40
Slide 41: Increasing value from new business
Increasing value from new business @ 3% discount margin ASm 300: 250° 200: 160 100 50 AFS Value of New Business (VNB) Left hand scale FY02 FYO3 FY04 ==@= VNB as a percentage of AFS cash inflows Right hand scale 44
Slide 42: Capturing scale benefits and focusing on costs to drive cost efficiency
Capturing scale benefits and focusing on costs to drive cost efficiency 1,400 1,200 1,000) 8005 6004 4004 2005 1,264 ASm 9 FYO0 FY01 FY02 Controllable costs (demerged AMP) Left hand scale FY03 FYO4 200 180 160 140 120 100 80 60 40 20 =m@m= Costs to assets under management ratio Right hand scale (bas
Slide 43: Substantially lowering risk capital requirements
Substantially lowering risk capital requirements’ 20 18 12.6 44 14 Be As at 30/6/2002 As at 30/6/2003 As at 30/6/2004 & Australia UK ’ Risk capital is the amount of shareholder capital AMP’s intemal risk assessment determines is required, at a target confidence level, to cover all possible risks fac
Slide 44: Significant reduction in capital intensity and increasing RoE to shareholders in prospect
Significant reduction in capital intensity and increasing RoE to shareholders in prospect h% o FYO0* FY01* Fyo2* FY03* FY04* Post capital initiatives & IFRS in mom Actual Return on Equity (RoE) we Underlying RoE medium term * AMP group including previously owned HHG entities * Demerged AMP 44
Slide 45: Outlook and wrap up
Outlook and wrap up
Slide 46: 2005 outlook — priorities
2005 outlook — priorities « Strategic focus remains on operational excellence to drive shareholder value % Running the business better than it's ever been run before « Positioning AMP as the leading provider of quality financial advice; simple, value for money products; and superior investment perfo
Slide 47: 2005 outlook — impact of IFRS
2005 outlook — impact of IFRS * Main impact will be a reduction in opening capital position, reflecting different treatment of assets and liabilities under International Financial Reporting Standards (IFRS) * Non cash accounting changes » No impact on value = No impact on dividends * Positive impact
Slide 48: 2005 outlook — guidance based on fair markets
2005 outlook — guidance based on fair markets « Moderate growth expected in AFS operating margins — below medium-term trend due to loss of transitional tax relief = VNB and EV expected to grow strongly after very strong growth in 2004 * Solid growth expected in AMP Capital Investors operating margin
Slide 49: Wrap up
Wrap up # Encouraging results in 2004 # Strong momentum entering 2005 # AMP’s broader positioning remains attractive: « Qperating in high growth retirement savings markets » Pre-eminent and resilient brand » Market-leading distribution and cost efficiency * Broadly-based investment capability # Incr
Slide 50: Appendix - IFRS
Appendix - IFRS Paul ui reaming
Slide 51: IFRS update
IFRS update Move from Australian Generally Accepted Accounting Principles (AGAAP) to International Financial Reporting Standards (IFRS) is an accounting change not a value change @ Key measures of value —- EV and VNB - not impacted by IFRS Local equivalent of IFRS applies to Australian financial sta
Slide 52: IFRS update — key areas of difference
IFRS Key area of difference update What it is Under AGAAP. Under IFRS DAC Costs associated with Deferred and written off over time Expensed at inception of Reduction in opening acquiring new investment contract capital with contracts negligible impact on P&L EMVONA Amount by which fair Recognised as
Slide 53: IFRS update
IFRS update * Complying with IFRS will require an adjustment to AMP’s opening capital position to reflect the different treatment of assets and liabilities « Modelling shows main changes under IFRS to 1 January 2004 opening capital position of: a @ a reduction of A$440m in DAC a reduction of A$255m
Slide 54: IFRS update - summary
IFRS update - summary « Major impact of IFRS on AMP’s 2005 financial statements will be a reduction in opening capital position # With lower reported equity, RoE will be higher « Changes to opening capital position will not impact ability to pay dividends # APRA ‘looking through’ IFRS-related change