Slide 1: Interim results 2007
For personal use only Interim results 2007 Andrew Mohl Chief Executive Officer 23 August 2007 Focused strategy is driving shareholder value Strategic focus is “to run the business better than it’s ever been run before” Key performance measures tracking well ¾ Underlying return on equity up from
Slide 2: Focused strategy is driving shareholder value
Focused strategy is driving shareholder value For personal use only Powerful platform for growth ¾ Record retail net cashflows – up 62% to A$2.1b ¾ Group assets under management up 18% to A$130b ¾ Revenue growth easily outstripping costs driving operating leverage • AFS Contemporary Wealth Managem
Slide 3: Overview – 2007 first half profit summary
Overview – 2007 first half profit summary For personal use only A$m 1H 07 1H 06 % change AFS Contemporary Wealth Management 145 116 +25% AFS Contemporary Wealth Protection 59 59 - AFS Mature 95 92 +3% AFS New Zealand 24 23 +4% AMP Capital Investors 78 55 +42% Cobalt/Gordian 78 15 large BU operating
Slide 4: Overview – costs and cost ratios
Overview – costs and cost ratios For personal use only 439 412 397 399 392 50 46.5% 120 43.9% 45 41.9% 40.1% 100 40 101bps 101bps 36.5% 35 84bps 80 30 77bps 70bps 25 60 20 40 15 10 20 5 A$m % 0 0 bps 1H 03 1H 04 1H 05 1H 06 1H 07 1H 03 1H 04 1H 05 1H 06 1H 07 Controllable costs Cost to income ratio
Slide 5: Overview – dividends and capital returns
Overview – dividends and capital returns For personal use only 40 40 40 22 19 13 14 Cents 7 per share 1H 03 1H 04 1H 05 1H 06 1H 07 15% franked 75% franked 75% franked 85% franked 85% franked Interim dividend Capital return 9 Overview - growth in shareholder value Value of an investment* in AMP has
Slide 6: Overview – underlying return on equity
Overview – underlying return on equity For personal use only 50 48.4% 40 38.7% 30 21.0% 26.6% 20 22.9% 10 6.9% % 0 1H 03* 1H 04 1H 05 1H 06 1H 07 1H 07 assuming capital return on 1 Jan 07 * Pre-demerger Underlying return on equity 11 Business line review 6
Slide 7: AMP's earnings by business lines
AMP’s earnings by business lines For personal use only AFS Contemporary Wealth AMP Capital Investors AFS Mature operating earnings Management operating 145 operating earnings earnings 116 89 92 95 89 88 83 78 62 55 42 34 35 25 A$m A$m A$m 1H 03* 1H 04* 1H 05 1H 06 1H 07 1H 03 1H 04 1H 05 1H 06 1H 07
Slide 8: AFS wealth management – drivers of operating profit margin
AFS Australian contemporary wealth management – For personal use only drivers of operating profit margin 9 (3) (2) 53bps 52bps (1) (2) 45bps 2H 06 operating Lower AUM Lower other Improvements Higher variable Higher tax 1H 07 operating earnings to related revenue revenue in controllable costs to AUM
Slide 9: AFS Australian contemporary wealth protection
AFS Australian contemporary wealth protection For personal use only 1H 07 earnings impacted by: ¾ fall in experience profits due to less favourable claims experience ¾ lower API growth due to price reduction coupled with lower than expected sales as planners focused on superannuation opportunities
Slide 10: AFS New Zealand
AFS New Zealand For personal use only New Zealand Change 1H 07 1H 06 Profit margins A$26m A$22m + 18% Experience profits (A$2m) A$1m - Operating earnings A$24m A$23m + 4% Controllable costs A$29m A$31m - 6% Cost to income ratio 42.5% 44.4% - 1.9 percentage points Individual risk annual premium incom
Slide 11: AFS overview – net cashflows by major channel
AFS overview – net cashflows by major channel on rolling 12 month basis For personal use only (A$m) Corporate Super direct AMP Financial Planning 2,300 3,500 Corporate Super Direct incl SignatureSuper mandate wins Corporate Super Direct excl SignatureSuper mandate wins 3,000 1,800 2,500 1,300 2,000
Slide 12: Super contribution pattern in first half 2007
Super contribution pattern in first half 2007 consistent with AMP market positioning For personal use only 1,200 FLS, Corporate Super*, external platforms 1,000 Total super contributions – 800 600 400 200 A$m 0 $0 - $1000 $1000 - $100K $100K - $250K $250K - $450K $450K - $1M $1M+ Super contribution
Slide 13: AFS overview – embedded value
AFS overview – embedded value For personal use only RoEV Traditional basis, @ 3% discount margin 1H 03 5.8% 47 8,178 (456) 115 1H 04 9.3% 176 17 4 1H 05 11.1% 1H 06 11.2% 215 7,722 1H 07 12.4% 327 759 7,277 6,518 A$6,000m FY 06 EV Restatement* FY 06 EV Expected return 1H 07 new Investment & Unit cos
Slide 14: AMPFP Enforceable Undertaking wrap-up
AMPFP Enforceable Undertaking (EU) wrap-up For personal use only Around 35,000 customers identified to be contacted and offered free review of advice Around 1,500 customers offered rectification To date, about 90 customers have responded to the offer to move back to original fund or funds EU
Slide 15: AMPCI – operating earnings
AMPCI – operating earnings For personal use only 2 (14) 8 1 18 78 8 55 A$m 1H 06 Higher internal Higher Higher Higher Net seed pool Higher 1H 07 operating operating management external performance transaction income* controllable earnings earnings fees management fees fees costs fees *Income relates
Slide 16: AMPCI – assets under management
AMPCI – assets under management For personal use only Opening AUM at 1 January 2007 A$105.6b Australian external market flows Institutional (0.5) Retail 0.7 Asian distribution channels 1.1 NZ market flows (0.2) AMP contemporary internal flows 1.3 AMP run-off businesses (1.4) AMP group (0.7) Investme
Slide 17: AMPCI – out performance in diversified funds
AMPCI – out performance in diversified funds For personal use only AMP Capital Balanced Growth Fund AMP Capital Conservative Fund Return Ranking Return Ranking Year 1 17.5% 1 Year 1 10.6% 1 Year 3 16.9% 1 Year 3 10.3% 1 Year 5 12.7% 1 Year 5 8.7% 1 Source: Mercer Pooled Fund Survey of institutional
Slide 18: Cobalt/Gordian – capital position
Cobalt/Gordian – capital position For personal use only 237 125 511 615 492 484 349 585 423 499 309 255 224 159 132 A$m FY 03 FY 04 FY 05 FY 06 1H 07 Minimum capital requirement Surplus capital held in licensed insurers } Loans to Group office * Excludes capital held in non-licensed entities and cap
Slide 19: Total capital resources
Total capital resources For personal use only 561 (394) (750) 3,689 100 28 3,234 A$m Total capital - 1H 07 profit Dividends paid Capital return Increase in Other Total capital - 31 Dec 06 attributable to less dividends Group debt movements 30 June 07 shareholders reinvested 37 AMP – financial streng
Slide 20: Capital management
Capital management For personal use only Capital management strategy since 2004 has driven: ¾ Significant increase in dividends per share ¾ A$2,250m in capital returns to shareholders ¾ A$500m reduction in group debt Capital management strategy going forward: ¾ AMP’s surplus regulatory capital p
Slide 21: Robust growth outlook for key market sectors
Robust growth outlook for key market sectors For personal use only Retirement savings projections to 2016 800 Post retirement - CAGR: 18.2% 700 Retail - CAGR: 9.4% 600 SMSF - CAGR: 9.5% Industry funds - CAGR: 12.3% 500 $billion 400 300 200 100 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 P
Slide 22: Evergreen goal to deliver 15% pa growth in value
AMP’s cultural profile For personal use only Financial services industry comparison Base profile = AMP 2006 Source: Human Synergistics International Overlay = Finance industry Copyright © 2005. All rights reserved 43 Evergreen goal to deliver 15% pa growth in value over each five year cycle Corner
Slide 23: Summary
Summary For personal use only Powerful platform for growth ¾ Industry growth high, buoyed by Simpler Super reforms ¾ Flexible, robust and scaleable business model Sharp focus on core business ¾ The better we get at running the business, the more opportunities we find to improve Broad basis to
Slide 24: Organisational culture inventory (OCI) – measuring behaviour styles
Organisational culture inventory (OCI) – measuring 12 behaviour styles For personal use only SELF- HUMANISTIC- AFFILIATIVE ACHIEVEMENT ACTUALISING ENCOURAGING Members are Members are Members are Members are expected to set expected to gain expected to be expected to be challenging but supportive, fr