Slide 1: ASX Announcement: Part Two Investor Presentation
ASX Announcement 18 February 2010 For personal use only Manager Manager Company Announcements Office Market Information Services Section Australian Securities Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand Ann
Slide 2: 2009 full year results
For personal use only 2009 full year results Craig Dunn Chief Executive Officer Paul Leaming Chief Financial Officer 18 February 2010
Slide 3: Executive summary
Executive summary Robust financial results reflect resilient business model For personal use only and decisive response to market conditions Underlying profit of A$772m, down 5% on FY 08 (A$810m), with earnings momentum improving in 2H 09 Controllable costs down 5% on FY 08 to A$837m Resilie
Slide 4: Outline
Outline For personal use only Group overview Business line review Financial overview Outlook and strategy Summary 3
Slide 5: Key performance measures
Key performance measures Underlying return on equity 31.6%, down from 38.9% in FY 08, For personal use only following November 08 capital raising to strengthen balance sheet Underlying profit A$772m, down 5% on FY 08 (2H 09 up 10% on 1H 09) Growth measures: Net cashflows in AMP Financial Ser
Slide 6: Overview – 2009 profit summary
Overview – 2009 profit summary A$m FY 09 FY 08 FY/FY % change For personal use only AFS Contemporary Wealth Management 278 266 +5% AFS Contemporary Wealth Protection¹ 164 154 +7% (+13%) AFS Mature¹ 151 161 -6% (-11%) AFS New Zealand 54 56 -4% AMP Capital Investors 91 136 -33% BU operating earnings 7
Slide 7: Overview – assets under management
Overview – assets under management For personal use only 140 128 129 120 122 117 112 114 105 106 100 104 97 80 A$b 60 FY 05 FY 06 FY 07 FY 08 FY 09 Average AUM Closing AUM 6
Slide 8: Overview – group cost performance
Overview – group cost performance For personal use only 900 871 879 837 812 800 780 81bps 79bps 700 72bps 75bps 68bps 600 41.7% 41.7% 41.3% 39.6% 39.7% 500 A$m 400 FY 05 FY 06 FY 07 FY 08 FY 09 Controllable costs Cost to income ratio Controllable costs to AUM 7
Slide 9: Overview – shareholder returns
Overview – shareholder returns 45 Underlying return on equity For personal use only 40 38.9% 37.9% 35 31.6% 30.3% 30 25.0% 25 20 % 0 FY05 FY06 FY07 FY08 FY09 • Underlying RoE remains high at 31.6%, despite capital raising to strengthen balance sheet • Final dividend payment of 16cps represents a pay
Slide 10: Overview – AXA update
Overview – AXA update AXA remains attractive to us as an option to accelerate For personal use only parts of our growth strategy, and will enhance industry competition Regulatory and other hurdles mean still a long way to go before any transaction is approved by AXA AP minority shareholders AC
Slide 11: Business line review
For personal use only Business line review 10
Slide 12: AMP Financial Services – FY highlights
AMP Financial Services – FY 09 highlights Good result in tough environment, with operating earnings For personal use only up 2% to A$647m CWM operating earnings of A$278m up 5% on FY 08, with strong cost control and resilient cashflows continuing to offset market downturn AMP Bank operating ea
Slide 13: AFS overview – FY cashflows
AFS overview – FY 09 cashflows Resilient business model and strong mandated superannuation For personal use only position continue to attract solid net cashflows Total net cashflows of A$1,661m, up 17% on FY 08 Retail superannuation and pensions/annuities net cashflows down 33% to A$834m Cor
Slide 14: AFS overview – FY cashflows
AFS overview – FY 09 cashflows Aligned planner channel cashflows reflected ongoing lower For personal use only discretionary inflows and effect of delayed retirement activity AMP Financial Planning net cashflows of A$748m in FY 09 compared to A$863m in FY 08 Hillross net cashflows of A$318m co
Slide 15: AFS – cost performance
AFS – cost performance For personal use only 600 560 553 533 535 529 500 87bps 400 76bps 75bps 76bps 69bps 300 38.5% 200 35.2% 35.4% 34.2% 34.0% 100 A$m 0 FY 05 FY 06 FY 07 FY 08 FY 09 Controllable costs Cost to income ratio Controllable costs to AUM 14
Slide 16: AFS Australian contemporary wealth management
AFS Australian contemporary wealth management For personal use only Contemporary wealth management (CWM) FY 09 FY 08 Change Operating earnings A$278m A$266m + 5% Controllable costs A$340m A$354m - 4% Cost to income ratio 44.9% 46.5% - 1.6 percentage points Net cashflows1 A$2,189m A$2,180m + A$9m Ope
Slide 17: AFS Australian contemporary wealth protection
AFS Australian contemporary wealth protection For personal use only Contemporary wealth protection (CWP) FY 09 FY 08 Change Profit margins A$144m A$135m + 7% Experience profits A$20m A$19m + 5% Operating earnings¹ A$164m A$154m + 7% Operating earnings / API² 22.5% 23.9% - 1.4 percentage points Contr
Slide 18: AFS Australian mature
AFS Australian mature For personal use only Mature FY 09 FY 08 Change Operating earnings1 A$151m A$161m - 6% Controllable costs A$60m A$64m - 6% Controllable costs/AUM2 32bps 37bps - 5 basis points Net cashflows3 (A$1,201m) (A$1,276m) + 6% Persistency 89.5% 89.7% - 0.2 percentage point AUM (pre-capi
Slide 19: AFS New Zealand
AFS New Zealand For personal use only New Zealand FY 09 FY 08 Change Profit margins A$65m A$50m + 30% Experience profits / losses (A$11m) A$6m - A$17m Operating earnings A$54m A$56m - 4% Controllable costs A$54m A$64m - 16% Cost to income ratio 37.9% 41.4% - 3.5 percentage points Individual risk API
Slide 20: AMP Capital Investors – FY highlights
AMP Capital Investors – FY 09 highlights Improving investment performance, with 67% of AUM meeting For personal use only or exceeding benchmark in 12 months to 31 December 2009; 72% over the five years to 31 December 2009 Operating earnings of A$91m (A$136m in FY 08) reflected lower performance
Slide 21: AMPCI overview – FY key financial results
AMPCI overview – FY 09 key financial results AMP Capital Investors (AMPCI) For personal use only FY 09 FY 08 Change Operating earnings A$91m A$136m - 33% Management fees – AUM based A$284m A$314m - 10% Management fees – non-AUM A$57m A$73m - 22% based¹ Total performance & transaction A$38m A$86m - A
Slide 22: AMPCI – drivers of cashflows
AMPCI – drivers of cashflows For personal use only 100 6.5 95 96.9 0.7 0.4 0.2 0.7 0.5 90 91.8 (0.5) (1.8) (1.6) 85 80 75 External Internal A$b 70 AUM at Transfer of Australian Asian NZ market Australian AMP Australian NZ Investment AUM at 31 Dec Cobalt/ market flows distribution flows contemporary
Slide 23: AMPCI – volumes and profit margins
AMPCI – volumes and profit margins For personal use only 14.4bps 120 13.6bps 11.7bps 100 10.8bps 39.2 41.5 10.0bps 35.7 80 35.0 28.8 60 40 20 56.0 62.1 69.0 62.4 57.2 A$b 0 FY 05 FY 06 FY 07 FY 08 FY 09 Average external AUM Average internal AUM Operating earnings after tax before net seed pool incom
Slide 24: AMPCI – performance against benchmarks
AMPCI – performance against benchmarks 72% of AUM met or exceeded benchmark over five years 48% over three years For personal use only 67% over one year AMPCI managed* Multi-manager and Multi-Asset Group 99 100 96 88 85 78 78 73 75 Target 75% 65 65 67 55 45 43 37 17 15 10 9 0 % Australasian Australa
Slide 25: AMPCI – cost performance
AMPCI – cost performance For personal use only 65.2% 300 57.8% 56.0% 268 257 255 250 56.3% 223 53.1% 198 200 26.4 27.7 23.3 22.8 23.3 bps bps bps bps bps 150 100 50 A$m 0 FY 05 FY 06 FY 07 FY 08 FY 09 Controllable costs Cost to income ratio Controllable costs to average AUM – basis points* * Based o
Slide 26: Financial overview
For personal use only Financial overview Paul Leaming Chief Financial Officer 25
Slide 27: Financial overview – key points on P&L
Financial overview – key points on P&L A$m FY 09 2H 09 1H 09 FY 08 For personal use only Underlying profit 772 405 367 810 Market adjustment – investment income (13) 13 (26) (266) Other items 10 (43) 53 73 1 Seed pool valuation adjustments (30) 5 (35) (42) Profit after income tax before timing diffe
Slide 28: Financial overview – capital management strategy
Financial overview – capital management For personal use only strategy AMP remains strongly capitalised, with A$1.2b in surplus capital above MRR at 31 December 2009 Capital management strategy aims to deliver: strong balance sheet, with focus on capital preservation and capturing upside of ma
Slide 29: Financial overview – tactical equity protection for SF1
Financial overview – tactical equity protection For personal use only for SF1 Dec 08 Jun 09 Dec 09 Level of cover $ 1.0 bn $ 1.7 bn $ 1.4 bn Principal cover instrument Short futures Short futures + call spreads Equity collars Maturity of cover n/a Sept 09 / Dec 09 Mar 10 / Jun 10 Effective equity ex
Slide 30: Financial overview – regulatory capital
For personal use only 400 600 800 1,000 1,200 1,400 1,600 1,800 A$m Reg. capital above 898 898 MRR at FY 08 Net profit attributable to 739 shareholders of AMP Limited Dividends (net of DRP) (296) AMP Notes issue movements FY 09 296 Subordinated loan to AMP Bank (100) Amortisation of (53) subordinate
Slide 31: Financial overview – movements in MRR
For personal use only 500 600 700 800 900 A$m 1,100 1,000 MRR at FY 08 829 Impact of investment (64) markets and bond yields Asset mix changes 211 (incl. protection strategies) Par business smoothing (123) Net risk business 97 capital requirements Movement in 34 AMP Bank MRR Increase in 19 investmen
Slide 32: Financial overview – capital sensitivity
Financial overview – capital sensitivity These sensitivities are a point-in-time view of the impact of movements in equity markets, bond yields and property values on the 31 December 2009 capital position For personal use only AMP’s dynamic capital management framework includes market-related tr
Slide 33: Financial overview – dividend
Financial overview – dividend Final dividend of 16cps, franked to 50%, brings total 2009 For personal use only dividend to 30cps Represents a final dividend payout ratio of 80% of underlying profit Dividend decision driven by: current cash earnings target payout policy of 75% to 85% of und
Slide 34: Financial overview – corporate debt
Financial overview – corporate debt 31 Dec 2009 31 Dec 2008 For personal use only Repayment (years) Repayment (years) A$m 0-1 1-2 2-5 5-10 10+ Total 0-1 1-2 2-5 5-10 10+ Total Gross corporate debt¹ 362 350 694 - 83 1,489 443 230 748 - 83 1,504 Loans to AMP Bank (200) - (100) - - (300) - - - - - - Ne
Slide 35: Financial overview – summary
Financial overview – summary Dynamic management of capital resources has For personal use only strengthened AMP’s capital position and captured upside through turbulent market conditions Management retains significant capacity to act quickly to preserve capital against further market downturn an
Slide 36: Outlook & strategy
For personal use only Outlook & strategy Craig Dunn Chief Executive Officer 35
Slide 37: Outlook
Outlook Short term: For personal use only Economic outlook improving but markets still subject to volatility Subdued retail investor sentiment may take some time to recover fully Ongoing regulatory change creating challenges and opportunities Medium to long term: Robust growth outlook for co
Slide 38: Short term outlook – cost outcomes
Short term outlook – cost outcomes Continuing to manage costs tightly across the company, For personal use only to drive cost-efficient growth AFS 2010 costs expected to be 4-5% higher in 2010, reflecting continued investment in growth initiatives including Horizons planner academy and practice,
Slide 39: Focused growth strategy underpins flexibility and responsiveness
Focused growth strategy underpins flexibility For personal use only and responsiveness AMP’s five growth platforms are key to future success 1. Growing planner capacity and broadening distribution 2. Expanding to Asia through AMP Capital Investors 3. Growing customers in high-value segments 4. Res
Slide 40: Focused growth strategy gaining traction
Focused growth strategy gaining traction In past 12 months, AMP has: For personal use only added 48 more planners and 26 more practices in total in Australia completed largest-ever rollout of new planner software to AMPFP and Hillross planners to drive productivity improvements launched high
Slide 41: Role of M&A and alliances in AMP's growth strategy
Role of M&A and alliances in AMP’s growth strategy For personal use only Current environment is providing attractive inorganic opportunities Several bolt-on acquisitions completed and alliances formed in 2009: Acquired Rabo Financial Advisers – A$231m in additional AUM Acquired remaining int
Slide 42: Reshaping the business: growing planner capacity
Reshaping the business 1. Growing planner capacity and broadening distribution For personal use only Added 48 more planners in total in Australia – driven by Horizons and acquisition of Rabo Financial Advisers Improved planner efficiency through rollout of new financial planning software to all
Slide 43: Reshaping the business: expanding to Asia
Reshaping the business 2. Expanding to Asia through AMP Capital Investors For personal use only Growing FUM sourced from Asia; currently 6% Appointed Hong Kong-based head of international business to drive expansion in region; also appointed managing director, South East Asia and Middle East and
Slide 44: Reshaping the business: growing customers in high-value segments
Reshaping the business 3. Growing customers in high-value segments For personal use only Launched new products and services targeting new market segments • Flexible Lifetime – Super Easy, award-winning, simple, low-cost super product for 25-50 year olds with no built-in commissions • Flexible Life
Slide 45: Reshaping AMP Capital Investors into a value-add manager
Reshaping the business 4. Reshaping AMP Capital investors into a high value-add For personal use only investment manager Extended partnership with Brookfield Investment Management to form A$6b joint venture giving investors access to global listed real estate and infrastructure opportunities; AMP
Slide 46: Reshaping the business for success
Reshaping the business for success Successful execution of growth strategy will enable AMP to For personal use only deliver quality, flexible, transparently-priced wealth management products that respond to the needs of fast-growing consumer segments in Australia and New Zealand a highly profe
Slide 47: Summary
Summary Entering 2010 in stronger and better position For personal use only owing to early, decisive calls on balance sheet, costs and business evolution Change program successfully reshaping business to meet demands of an evolving market Realising early success in growth initiatives while mai
Slide 48: Appendices
For personal use only Appendices 47
Slide 49: Further information
Further information Topic Chart For personal use only AMP’s earnings by business line 49 AFS cashflows by channel and product line 50-51 AMP Bank Business and funding model 52 Business profile 53 Non-listed asset valuations 54-55 Shareholder funds portfolio 56 Franking 57 Dividends
Slide 50: AMP's operating earnings by business line
AMP’s operating earnings by business line For personal use only AFS Contemporary Wealth Management AMP Capital Investors AFS Mature 150 190 190 306 136 266 278 115 171 244 92 91 161 187 151 A$m A$m A$m FY 05 FY 06 FY 07 FY 08 FY 09 FY 05 FY 06 FY 07 FY 08 FY 09 FY 05 FY 06 FY 07 FY 08 FY 09 AFS Cont
Slide 51: AFS cashflows by channel
For personal use only 0 100 200 300 400 500 600 700 800 0 500 1,000 1,500 2,000 2,500 3,000 3,500 Q4 02 Q4 02 Q1 03 Q1 03 Q2 03 Q2 03 (A$m) Q3 03 Q3 03 Q4 03 Q4 03 Q1 04 Q1 04 Corporate Super Q2 04 Q2 04 Q3 04 Q3 04 Q4 04 Q4 04 Q1 05 Q1 05 Q2 05 Q2 05 Q3 05 Corporate Super – exc. mandate wins Q3 05
Slide 52: AFS cashflows by product line
For personal use only 2. 1. 2,000 3,000 1,000 2,500 3,500 1,500 -200 0 200 400 600 800 1,000 500 0 Q4 02 Q4 02 Q1 03 Q1 03 Q2 03 Q2 03 Q3 03 (A$m) Q3 03 Q4 03 Q4 03 Q1 04 Q1 04 Q2 04 Q2 04 Corporate Super Q3 04 Q3 04 Q4 04 Q4 04 Q1 05 Q1 05 Q2 05 Q2 05 Q3 05 Q3 05 Q4 05 Corporate Super – exc. mandat
Slide 53: AMP Bank – business and funding model
AMP Bank – business and funding model Direct Australian bank offering residential mortgages, deposits and white-labeled credit For personal use only cards Direct and third-party distribution, including AMPFP and mortgage brokers Operating earnings of A$35m in FY09 (A$21m at FY 08) Capital ad
Slide 54: AMP Bank – business profile
AMP Bank – business profile Deposit mix (excluding wholesale) Credit quality improving For personal use only 2008 2009 Cash Management 9% 3% 7% 90+ days past due 1.00% 2% 10% 4% 0.90% Business Saver 0.80% Investment accts 3% 41% 0.70% 46% 4% 0.60% Transaction accts 0.50% 23% 0.40% Savings accts 0.30
Slide 55: Non-listed asset valuations
Non-listed asset valuations Portfolio For personal use only Asset type Valuation approach in current market Outcome size Property AMP Life In stable markets, valuation cycle yearly, with High quality core property portfolio major properties valued every 6 months Gross values of the Australian
Slide 56: Non-listed asset valuations
Non-listed asset valuations Portfolio For personal use only Asset type Valuation approach in current market Outcome size Private equity AMP Life Valuations prepared every six months AMPCI managed private equity valuations, A$0.48b Interest in largest asset valued by independent in the past 12
Slide 57: Shareholder funds portfolio – how invested
Shareholder funds portfolio – how invested Dec 2009 Dec 2008 For personal use only Cash 56% 57% Fixed Interest 25% 21% Equities 8% 11% Property 11% 11% Key changes in FY 09 In view of the equity market exposure in the business (e.g. through fees on AUM), AMP continued to reduce its direct exposure
Slide 58: Franking
Franking Taxable profit and franking capacity has been affected by market For personal use only conditions and temporary differences to accounting profit Underlying profit Net profit after tax Taxable profit1 Drives dividend declaration (NPAT) Generates franking capacity FY 08 A$810m A$580m A$338m
Slide 59: Dividends and capital returns
Dividends and capital returns For personal use only 46 2 40 40 2 32 30 22 21 16 18 16 40 40 40 19 22 22 14 14 Cents 2005 2006 2007 2008 2009 per share 75% franked 75% franked 85% franked 85% franked 50% franked Interim dividend Final dividend Capital return Cobalt/Gordian sale proceeds 58
Slide 60: Change in AFS Wealth Protection VNB
Change in AFS Wealth Protection VNB For personal use only • Australia and New Zealand • At a discount rate of 3% above the bond yield 144 136 128 120 114 112 4 9 102 104 (1) 96 (5) 88 (19) 80 72 64 56 48 40 32 24 16 8 A$m FY 08 VNB Future economic / Volume, business Persistency Product changes NZ ex