Amp Limited · ASX:AMP
Amp — Morgan Stanley Asia Pacific Summit 2005
27 slides from Amp's conference presentation, Nov 16, 2005
Slide 1: ASX Announcement: CEO presentation to Morgan Stanley Asia Pacific Summit
ASX Announcement 16 November 2005 Manager Manager Company Announcements Office Market Information Services Section Australian Stock Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 9, ASB Tower, 2 Hunter Street Sydney NSW 2000 Wellington New Zealand Announcement No: 52/05 CEO Andr
Slide 2: AMP - realising the potential
AMP - realising the potential Andrew Mohl Chief Executive Officer 16 November 2005
Slide 3: Outline
Outline * Business overview « Business drivers > Costs | » Cashflows & AUM _» Value metrics | > Capital _* Business outlook
Slide 4: Australian wealth management company operating across the value chain
Australian wealth management company operating across the value chain Distribution - dealer groups Products & Investment platforms management Distribution - planners AMP and AMP Financial AMP Financial AMP Capital aligned planners Services - Advice Services - Product Investors Based Distribution Man
Slide 5: Clear strategic focus
Clear strategic focus Positioning AMP in Australia and New Zealand as the leading provider of: > Quality advice » Simple, value for money products > Superior investment performance Focusing on operational excellence to drive shareholder value » Capturing scale benefits from volume and market growth
Slide 6: 2005 half-year summary
2005 half-year summary » Encouraging growth in earnings and value » Underlying contribution up 24% » AFS embedded value up 11% In half-year « Good progress on key performance indicators Underlying return on equity up to 22.4% AFS value of new business up 13% Operating margins up 21% Controllable cos
Slide 7: Group underlying contribution up 24%
Group underlying contribution up 24% 5 (5) 7 2 40 anes ase Me" " ...... ZZ A$200m 1H 04 AFS AFSNZ AFSmature AMPCI Cobalt / Other? underlying contemporary — margins margins: margins Gordian contribution’ — margins margins 4 Restated to reflect AIFRS 2 |ncludes transitional tax relief, Group office co
Slide 8: Group underlying return on equity is rising
Group underlying return on equity is rising 30 4 25 4 20 4 415 4 FY 02* FY 03* “=H Underlying return on equity * AMP group including previously owned HHG entities a Demerged AMP, not restated for AIFRS *Restated to reflect AIFRS
Slide 9: AMP Financial Services (AFS) — volumes and profit margins expanding
AMP Financial Services (AFS) — volumes and profit margins expanding FY 02 FY 03 FY 04 1H 05 points | Average AUM in period = Operating margin after tax - basis points All numbers restated to exclude transitional tax relief. FY 04 numbers reflect AIFRS. FY 03 and FY 02 numbers are on a pre-AIFRS basi
Slide 10: AFS contemporary business — a diversified, high growth, high return business
AFS contemporary business — a diversified, high growth, high return business Contemporary e 1H 05 1H 04 Operating margins’ Controllable costs? Cost to income ratio Net cashflows Risk annual premium income Persistency AUM RoBUE* AS144m A$i199m 45% A$1,560m A$363m 84% A$36.5b 29.6% AS104m A&S211m 53%
Slide 11: AMP Capital Investors (AMPCI) — volumes and profit margins expanding
AMP Capital Investors (AMPCI) — volumes and profit margins expanding FY 02* FY 03°" FY 04% 4H 05 ( Average AUM in period —@— Operating margins after tax - basis points “ FY 02 and FY 03 exclude Listed Property Trusts AUM and profit margins as these businesses were divested in FY 03. ’ Restated to in
Slide 12: Business drivers
Business drivers
Slide 13: Group cost ratio down to 42%
Group cost ratio down to 42% Restated 1H 04” [J controllable costs = Cost to income ratio *Demerged basis, excluding UK costs and not restated tor AIERS. "Restated to reflect AIFRS. All numbers restated to exclude transitional tax relief
Slide 14: AFS costs fall for fifth successive year
AFS costs fall for fifth successive year 1H 01 4H 02 1H 03 1H 04* yy Controllable costs © =*=Cost to income ratio AFS cost numbers restated for all previous periods fo include AMP Banking and exclude transitional tax relief. * 1H 04 costs also restated to reflect AFIRS.
Slide 15: Strong growth in first-half cashflows
Strong growth in first-half cashflows Cash inflows up 13% to A$5.0b >» AMP Financial Planning up A$300m (12%) >» Corporate Super Direct Sales up A$450m (194%) Risk Annual Premium Income up 12.5% to A$440m » Annual lapse rate of 9.8% in Australia vs 2004 industry average of 13% » Annual lapse rate of
Slide 16: AFS - net retail cashflows and industry share
AFS - net retail cashflows and industry share _ ae / Ame rolling 12 mth net ‘cashflows (excl CMTs), rank _AMP cashflows and AMP cashflows as % of industry 35007 - a. fe 3.000 + , 14% : F 129 2,500 | a ; 10% 2,000 + : : F 8% 1,500 | : _ 6% 4,000 | 4% 500 | : a ae | 2% Asm 01 : — 0% Jun-01 — dun-02.——
Slide 17: Strong growth in both value measures
Strong growth in both value measures = Embedded value (3% dm) > AFSEV up 11% to A$6,044m, before transfers (Return on EV 25% in FY 04) > Contemporary EV up 13.4% to A$3,598m (Return on EV 31% in FY 04) >» EV driven by growth in AUM on lower cost base » First half EV does not reflect above-plan impro
Slide 18: Group office capital exceeded A$1.5b at June
Group office capital exceeded A$1.5b at June 30 2,140 (265) | 167 (8) 471 ee (225) enenenmne A$Sm re 1 r + ~ Group office AMPincome Capital Dividends Transfers Movements Group office Group office capitaiat1 Securities return paid jess from BUs in Cobalt; netearnings capital at 30 Jan 05 repayment di
Slide 19: Capital management — initiatives and next steps
Capital management — initiatives and next steps A$1 billion capital reduction initiative completed in 1H 05 >» A$265m in outstanding Income Securities redeemed in May » A$746m capital returned to shareholders in mid-June Credit rating upgraded one notch to ‘A’ in July HGI stake sold in September 200
Slide 20: Business outlook
Business outlook
Slide 21: Medium term positioning of AMP is attractive
Medium term positioning of AMP is attractive Australian retirement savings industry set to grow by over 10% pa in next decade* AMP holds market-leading AUM positions in fastest growing segments of this market » Superannuation » Retirement incomes AMP has strong competitive advantage in two key distr
Slide 22: Superannuation to grow strongly through key distribution channels
Superannuation to grow strongly through key distribution channels of planners and employer sponsored master trusts Market growth - contemporary super * : Market share FUM : : d AGR 2004-2014 : 4,600,000 CAG o June 2004 June 2014 oo A$550 billion SIS trilfion 1,200,000 coe 800,000 7 $00,000 400,000 +
Slide 23: Comparative advantage of AMP in planner distribution
Comparative advantage of AMP in planner distribution — scale, quality, age and tenure Number of Australian financial planners Planner age profile June 2005 Average age 46 4,562 1,022 : : ae ) ‘surveyed _— , 0% 20% 40% 60% BO%. 400%: Dlessyo. >a5and<asy.0 = [I] +=45 and <60y.0. a | Ed --soand<s5y0 Ul
Slide 24: AMP corporate super — a high growth opportunity
AMP corporate super — a high growth opportunity From client perspective Eliminates complexities, risks and costs of stand-alone corporate fund AMP has leading market position and brand Strong range of features and benefits, according to independent review Scale position of $25 billion* across one su
Slide 25: 'Downstream' value of AMP corporate super
‘Downstream’ value of AMP corporate super Job change ~ Corporate Super _ || | Jobchange ~ Job change - _ Retirement Life event
Slide 26: AMPCI focusing on core capabilities, local and Asian markets, and talent
AMPCI focusing on core capabilities, local and Asian markets, and talent = Strengthen core capabilities > Australian Equities > Property > Diversified >» Australian Fixed interest > Infrastructure * Deepen domestic market penetration > AFS > External retail » Institutional > DIY = Expand offshore in
Slide 27: Guidance and medium term outlook
Guidance and medium term outlook » FY 05 results are tracking well and better than expected at start of year » Operating margins in AFS and AMPCI are now expected to grow by at least 15% in FY 05 Sound basis in place for strong value creation for shareholders in 2005 and beyond, consistent with medi