Amp Limited · ASX:AMP
Amp — Non-Deal Roadshow (September 2008)
76 slides from Amp's roadshow presentation, Sep 18, 2008
Slide 1: ASX Announcement: Investor Roadshow Materials
ASX Announcement 18 September 2008 For personal use only Manager Manager Company Announcements Office Market Information Services Section Australian Stock Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand Announc
Slide 2: AMP – driving growth
For personal use only AMP – driving growth Craig Dunn Chief Executive Officer September 2008
Slide 3: Executive summary
Executive summary AMP is a financially strong company that is For personal use only strategically well positioned in attractive markets with a resilient business model Our sound operating result in first half 2008 demonstrates this strength and resilience We are pursuing a growth strategy to d
Slide 4: Outline
Outline AMP overview For personal use only Business performance Capital management Strategy Outlook Summary 3
Slide 5: AMP overview
For personal use only AMP overview 4
Slide 6: AMP is a leading Australasian wealth manager with a broadening asset management footprint in Asia
AMP is a leading Australasian wealth manager with a broadening asset management footprint in Asia Contemporary wealth management company with resilient For personal use only business model built on ¾ Pre-eminent brand ¾ Low cost, scaleable manufacturing platform ¾ Large aligned financial planning
Slide 7: Earnings shift reflects ongoing transformation of AMP into contemporary wealth manager
Earnings shift reflects ongoing transformation of AMP into contemporary wealth manager For personal use only 412 401 345 89 95 292 92 245 83 88 306 323 110 101 253 99 90 209 73 157 A$m 1H 04 1H 05 1H 06 1H 07 1H 08 BU op earnings - open businesses BU op earnings – Underlying closed businesses invest
Slide 8: AMP strategically well positioned in high growth markets
AMP strategically well positioned in high growth markets Australian and Asian private pension markets forecast to For personal use only double by 2015¹ AMP holds leading market positions in ¾ Superannuation ranked #1² ¾ Retirement incomes ranked #2² ¾ Insurance ranked #4 3 ¾ One of Australasia’s
Slide 9: AMP well positioned to manage through current market conditions
AMP well positioned to manage through current market conditions Global market volatility For personal use only ¾ 47% of 1H 08 BU earnings largely immune to short-term investment volatility ¾ Low cost ratios moderate impact of any potential profit decline relative to higher cost competitors Fundi
Slide 10: Business performance – Group
For personal use only Business performance – Group 9
Slide 11: First half 2008 performance
First half 2008 performance Sound operating result in challenging market conditions For personal use only Underlying profit down 2% to A$437m Key performance measures mixed Underlying return on equity up from 38.0% to 40.5% Total operating earnings up 3% to A$394m¹ Cost ratio up from 38.5%¹
Slide 12: Cashflow performance
Cashflow performance AMP Financial Services cashflows impacted by market For personal use only downturn which reduced discretionary contributions in 1H 08 in contrast to regulatory-driven boosts for super flows in 1H 071 ¾ Net cashflows down 69% to A$760m ¾ Superannuation guarantee contributions r
Slide 13: Group assets under management
Group assets under management For personal use only 140 129.6 120 19.5 117.1 110.4 1.9 17.3 100 96.4 19.0 1.7 2.9 82.8 19.2 80 19.2 2.6 60 3.2 108.2 98.1 88.5 40 74.6 60.4 20 A$b 0 1H 04 1H 05 1H 06 1H 07 1H 08 Open business Group Closed business (1H 04 to 1H 07 AFS Mature and Cobalt/Gordian; 1H 08
Slide 14: Group cost performance
Group cost performance For personal use only 500 442 421 393 400 379 375 95bps 81bps 300 44.0% 73bps 72bps 67bps 41.1% 200 39.9% 39.2% 38.5% 100 A$m 0 1H 04 1H 05 1H 06 1H 07 1H 08 Controllable costs Cost to income ratio Controllable costs to AUM All prior period numbers have been restated to remove
Slide 15: Business performance - business lines
For personal use only Business performance - business lines 14
Slide 16: AMP Financial Services – first half 2008 highlights
AMP Financial Services – first half 2008 highlights For personal use only Resilient, diversified business delivered 3% increase in operating earnings to A$334m Contemporary Wealth Management’s operating earnings down only 2%, despite falling markets Operating earnings for Contemporary Wealth P
Slide 17: AFS key financial metrics by business line
AFS key financial metrics by business line Contemporary wealth management Contemporary wealth protection 1H 08 1H 07 Change 1H 08 1H 07 Change For personal use only Operating earnings A$142m A$145m - 2% Profit margins A$66m A$57m + 16% Controllable costs A$172m A$174m - 1% Experience profits A$10m A
Slide 18: AFS - cost performance
AFS - cost performance For personal use only 300 274 278 267 270 262 104bps 250 41.8% 89bps 200 78bps 38.6% 68bps 71bps 150 36.1% 34.0% 34.0% 100 50 A$m 0 1H 04 1H 05 1H 06 1H 07* 1H 08 Controllable costs Cost to income ratio Controllable costs to AUM Planner related variable costs previously includ
Slide 19: AMP Capital Investors – first half 2008 highlights
AMP Capital Investors – first half 2008 highlights Higher fee income from diverse investment base held For personal use only operating earnings steady at A$78m in weaker market ¾ Performance and transaction fees up 23%, primarily from infrastructure, equities and property ¾ Total management fees u
Slide 20: AMPCI overview
AMPCI overview AMPCI Change For personal use only 1H 08 1H 07 Operating earnings A$78m A$78m Steady Internal management fees¹ A$88m A$83m + 6% External management fees¹ A$105m A$101m + 4% Total performance & A$59m A$48m + 23% transaction fees Controllable costs A$138m A$124m + 11% Cost to income rat
Slide 21: AMPCI - volumes and profit margins
AMPCI - volumes and profit margins 15.3bps For personal use only 13.9bps 120 11.6bps 68.1 100 10.3bps 65.1 9.7bps 60.9 80 54.4 48.8 60 40 20 21.6 26.9 33.6 40.9 40.1 $Ab 0 1H 04 1H 05 1H 06 1H 07 1H 08 Average external AUM Average internal AUM Operating earnings after tax before net seed pool income
Slide 22: AMPCI - performance against benchmarks
AMPCI - performance against benchmarks 57% of AUM met or exceeded benchmark in 12 months to 30 June For personal use only AMPCI managed Multi-manager Diversified 99% 89% 92% 81% 84% 80% 79% 77% 71% Target 75% 64% 61% 40% 29% 22% 8% 7% Australasian Australasian Infrastructure Property Future Internat
Slide 23: Capital management
For personal use only Capital management 22
Slide 24: Dividends and capital returns
Dividends and capital returns For personal use only 46 40 2 32 22 27 21 18 2 14 40 40 40 19 22 13 14 22 Cents per share 2004 2005 2006 2007 2008 15% franked - interim 75% franked 75% franked 85% franked 85% franked 85% franked - final Interim dividend Final dividend Capital return Cobalt/Gordian sal
Slide 25: Capital management - strength and strategy
Capital management - strength and strategy Disciplined approach to capital management means AMP remains soundly capitalised, with surplus capital above target For personal use only level and A$665m above minimum regulatory requirements AMP Life has surplus capital above target level even at rece
Slide 26: Capital management - actions
Capital management - actions Evaluating options to raise Tier 2 capital in line with strategy to optimise capital mix - any raising would be used to provide For personal use only replacement funding for 2009 subordinated debt maturity of A$267m No plans for a buyback in this environment Two ke
Slide 27: Strategy
For personal use only Strategy 26
Slide 28: Strategy to invest in distribution and enhanced products & services to drive long-term growth
Strategy to invest in distribution and enhanced products & services to drive long-term growth For personal use only AMP’s investment aimed at driving strong value growth 1. Growing planner capacity and broadening distribution 2. Expanding to Asia through AMP Capital Investors 3. Growing customers in
Slide 29: 1. Growing planner capacity and broadening distribution
1. Growing planner capacity and broadening For personal use only distribution Goal: Strengthen core planner franchise, while building new channels to reach more customers in high-value segments by increasing planner numbers and improving their productivity in the short term ¾ Planner numbers up 3%
Slide 30: 2. Expanding to Asia through AMP Capital Investors
2. Expanding to Asia through AMP Capital Investors For personal use only Goal: Establish AMPCI as strong competitor in select investment capabilities in strongly growing Asian funds management markets by expanding Asian distribution channels and alliances to market existing Australian and global p
Slide 31: Growing customers, reshaping AMPCI and other growth enablers
3. Growing customers in high-value segments Goal: Attract new customers and develop stronger relationships with existing customers in high-value segments with new offers based For personal use only on customer needs by continuing to drive growth in the at-retirement market in the short term deve
Slide 32: Outlook
For personal use only Outlook 31
Slide 33: Outlook - overview and assumptions over five-year cycle
Outlook - overview and assumptions over five- year cycle For personal use only Top quartile TSR performance Requires 15% average annual growth in the value* of an investment in AMP over every 5-year cycle Operating earnings Dividend payout ratio Ongoing capital growth of 10-12% CAGR initiatives wher
Slide 34: Outlook - short term
Outlook - short term Global credit and sharemarket volatility likely to continue in For personal use only short term Continued market volatility means more challenging outlook at least for remainder of 2008 AMP remains focused on making targeted investment to grow through the cycle, while prud
Slide 35: Summary
Summary Solid first half 2008 operating result in very challenging For personal use only market Demonstrated financial strength and business resilience to withstand current market volatility Remain strategically well positioned for the medium term, with clear strategy and investment profile to
Slide 36: Investor discussion pack
For personal use only Investor discussion pack Craig Dunn Chief Executive Officer Paul Leaming Chief Financial Officer Howard Marks Director, Investor Relations September 2008
Slide 37: AMP – well positioned in high growth markets
AMP – well positioned in high growth markets Australasian wealth management group, with flexible, For personal use only robust, scaleable business model Focused on attractive, high-growth markets, where it holds strong competitive positions Diverse earnings streams, proving resilient in diffic
Slide 38: Outline
Outline Market environment For personal use only AMP today Business operations Strategy for growth Resilience Outlook 3
Slide 39: Market environment
For personal use only Market environment 4
Slide 40: Legislative environment highly supportive of superannuation
Legislative environment highly supportive of superannuation For personal use only Australia world’s 4th largest pensions market, underpinned by government mandate ¾ All employed Australians must contribute 9% of their salary to superannuation Successive governments over two decades have shaped s
Slide 41: Growth in Australian retail superannuation market over years
Growth in Australian retail superannuation market over 10 years For personal use only June 1998 retail super market June 2008 retail super market Total A$70.3 billion Total A$235.8 billion Other AMP AMP 18% 18% 16% Other 27% AXA SGB 7% AXA 4% 5% BT/WBC BT/WBC 10% 6% NAB SGB 16% 4% MQG CBA 3% ING 17%
Slide 42: Australian superannuation market – the size of the opportunity
Australian superannuation market – the size of the opportunity For personal use only Australian private pension market forecast to more than double by 2015 to US$1,936bn1 Supportive superannuation structure and environment: mandated system, tax incentives and ageing population Robust outlook f
Slide 43: Australian superannuation market – set to more than double
Australian superannuation market – set to more than double For personal use only 2006 2015 Total US$1,858 billion Total US$4,114 billion China China 13% 4.4% Singapore Australia Hong Kong 4.5% 47.0% 3% South Korea India 6.4% 2.9% Other countries India Australia 43.1% 5.0% 3.1% US$801.0bn Singapore U
Slide 44: Success in Australian market providing a springboard into Asia
Success in Australian market providing a springboard into Asia For personal use only Record growth of Asian pension industry ¾ Asian private pension market forecast to double by 2015 to US$2,178bn – China expected to grow by more than 6 times1 Shift from savings to investments ¾ During next 5 ye
Slide 45: AMP today
For personal use only AMP today 10
Slide 46: AMP today
AMP today AMP is a leading wealth management company operating For personal use only in Australia and New Zealand, with a broadening investment management footprint in Asia It is the leading superannuation provider in the Australian market* AMP is one of the region’s largest investment manager
Slide 47: AMP's key performance measures
For personal use only AMP’s key performance measures Short term Longer term Underlying return on equity 15% average annual growth in Total operating earnings the value of an investment in AMP over every 5-year cycle Cost to income ratio ¾ This value is measured by Growth measures: share pr
Slide 48: AMP's competitive advantages
For personal use only AMP’s competitive advantages Products & Cost Asset Brand Distribution Packaging platforms efficiency management Large Large, Pre-eminent footprints in scaleable Cost to Broadly Growing brand in planner and contemporary income ratio based AUM AUM retirement corporate platform 39
Slide 49: AMP's structure
For personal use only AMP’s structure AMP Capital Investors AMP AMP Financial Services Contemporary Wealth Management Contemporary Wealth Protection Mature New Zealand 14
Slide 50: Business line contribution to 1H earnings
For personal use only Business line contribution to 1H 08 earnings NZ 7% AMP Capital Investors 19% Mature 22% Contemporary Wealth Contemporary Management Wealth Protection 34% 18% Based on 1H 08 BU operating earnings 15
Slide 51: Five year summary of earnings by business line
Five year summary of earnings by business line For personal use only AFS Contemporary Wealth Management AMP Capital Investors operating AFS Mature operating earnings operating earnings 145 earnings 142 116 89 92 95 88 89 78 78 83 62 55 42 35 A$m A$m A$m 1H 08 1H 04 1H 05 1H 06 1H 07 1H 08 1H 04 1H 0
Slide 52: Increasing quality of earnings, driven by contemporary businesses
Increasing quality of earnings, driven by contemporary businesses For personal use only 1H 08 78% 22% A$412m 1H 07 76% 24% A$401m 1H 06 73% 27% A$345m 1H 05 72% 28% A$292m 1H 04 64% 36% A$245m 0 $100m $200m $300m $400m $500m Contemporary businesses Closed business AMP Capital Investors, AFS Contempo
Slide 53: Business model generates margins across the industry value chain
Business model generates margins across the industry value chain For personal use only Products & Distribution – Products & Platforms Asset Dealer groups / planners platforms management 75 – 115 bps 40 – 95 bps 20 – 40 bps AMP retail platform with AMPCI investment AMP retail platform without AMPCI i
Slide 54: Business operations
For personal use only Business operations 19
Slide 55: AMP Financial Services and AMP Capital Investors
AMP Financial Services and AMP Capital Investors AMP Financial Services (AFS) provides AMP Capital Investors (AMPCI) For personal use only financial planning and advice to customers in One of Australia and NZ’s leading and Australia and NZ largest specialist investment managers superannuation,
Slide 56: AMP Financial Services is a scaleable, flexible leading wealth management business
AMP Financial Services is a scaleable, flexible leading wealth management business For personal use only AMP Financial Services is a scaleable wealth management business, with market leading positions in superannuation in Australia and New Zealand Strong competitive distribution advantage, with
Slide 57: AFS holds leading market positions in Australia
For personal use only AFS holds leading market positions in Australia June 2008 June 2007 June 2004 Market share - Australia Total market Market Market Total Market Market Total Market Market size A$b position share % market position share % market position share (rank) size A$b (rank) size A$b (ran
Slide 58: Superannuation market by channel
For personal use only Superannuation market by channel (By FUM) Accountants / solicitors / stockbrokers / other 18% Financial planners 51% Employers 31% Supply-side constrained market Unmet demand for financial advice AFS has strong positions in two largest distribution channels Source: AMP an
Slide 59: AFS's aligned planner channel has scale and is highly productive
AFS’s aligned planner channel has scale and is highly productive For personal use only 1,600 PIS AMP Financial 1,400 Planning 1,200 Number of Planners 1,000 Count 800 CBA FP Millenium3 600 Westpac NAB FP ABN Amro Garvan/MLC Financial Wisdom ANZ Securitor 400 Genesys Wealthsure Bridges Hillross 200 A
Slide 60: AFS's employer channel is strong and growing
AFS’s employer channel is strong and growing Employer sponsored products by assets under management 10,000 For personal use only UniSuper (total) 9,000 Australian Super (ARF/STA) (total) 8,000 Net cash flow ($m) 4 years to 31/03/2008 7,000 SunSuper (total) AMP total retail and employer 6,000 AMP (to
Slide 61: AMP Capital Investors is a leading specialist investment manager
AMP Capital Investors is a leading specialist investment manager For personal use only AMP Capital Investors is one of the largest investment managers in Australia / New Zealand with $101bn* in assets under management Specialist property and infrastructure investment manager ¾ Market leader in g
Slide 62: AMPCI – diversified asset management base
For personal use only AMPCI – diversified asset management base Property 19% Private equity Australian equities 1% 25% Infrastructure 4% International equities Fixed interest 19% 32% Based on assets at 30 June 2008 27
Slide 63: AMPCI – investment performance against benchmarks
AMPCI – investment performance against benchmarks For personal use only 57% of AUM met or exceeded benchmark in 12 months to 30 June AMPCI managed Multi-manager Diversified 99% 89% 92% 81% 84% 80% 79% 77% 71% Target 75% 64% 61% 40% 29% 22% 8% 7% Australasian Australasian Infrastructure Property Futu
Slide 64: Strategy for growth
For personal use only Strategy for growth 29
Slide 65: Strategy focused on addressing market trends
Strategy focused on addressing market trends Market trends Implications for AMP For personal use only 10%+ growth in retirement savings market Mandated superannuation Significant growth in pensions system and ageing demographics Unmet demand for advice Growing demand for higher yielding asse
Slide 66: Strategic emphasis on driving long term growth
Strategic emphasis on driving long term growth Our strategy is to grow smart – that is, to grow revenue strongly in For personal use only high value areas, while maintaining our cost and capital discipline AMP’s investment aimed at driving stronger value growth Investment biased to capturing opp
Slide 67: Five clear growth platforms
For personal use only Five clear growth platforms 1. Growing planner capacity and broadening distribution 2. Expanding to Asia through AMP Capital Investors 3. Growing customers in high-value segments 4. Reshaping AMP Capital Investors into a high value- add investment manager 5. Other investment fo
Slide 68: 1. Growing our planner capacity and broadening distribution
Distribution 1. Growing our planner capacity and broadening distribution For personal use only Increasing planner numbers and improving their productivity in the short term Rolling out new financial planning software Driving greater use of paraplanning services Increasing take-up of “low-touch
Slide 69: 2. Expanding to Asia through AMP Capital Investors
Distribution 2. Expanding to Asia through AMP Capital Investors For personal use only Products & services Expanding Asian distribution channels and alliances in the short term Build on existing distribution relationships in Asia Build on infrastructure partnership with China Life Asset Managemen
Slide 70: 3. Growing customers in high value segments
3. Growing customers in high value segments Distribution Extend relationships with customers Roll-out improved customer product/service offerings based on customer For personal use only Products & segmentation/value initiatives services Continuing investment in supporting technologies to impro
Slide 71: Resilient and well positioned
For personal use only Resilient and well positioned 36
Slide 72: AMP is well positioned to withstand market volatility
AMP is well positioned to withstand market volatility For personal use only Low cost ratios moderate impact of any potential profit decline relative to higher cost competitors 47% of 1H 08 total BU earnings largely immune to short-term investment volatility, demonstrating resilience of business
Slide 73: AMP is well positioned to withstand market volatility
AMP is well positioned to withstand market volatility For personal use only Prudently managed, diversified book of business means no shareholder or customer funds are disproportionately exposed to any one asset, asset class or counter-party Normal business exposures to counter-parties being prud
Slide 74: Outlook
For personal use only Outlook 39
Slide 75: Outlook over five-year cycle
For personal use only Outlook over five-year cycle Top quartile TSR performance Requires 15% average annual growth in the value* of an investment in AMP over every 5-year cycle Operating earnings Dividend payout ratio Ongoing capital growth of 10-12% CAGR initiatives where capital is policy of 85% o
Slide 76: Looking ahead
Looking ahead Focused on making targeted investment to grow through For personal use only the cycle, while prudently managing through current market conditions Demonstrated financial strength and business resilience to withstand current market volatility Remain strategically well positioned fo