Amp Limited · ASX:AMP
Amp — Citigroup Australia New Zealand 4th Annual Investment Conference (March 2007)
31 slides from Amp's conference presentation, Mar 6, 2007
Slide 1: ASX Announcement
ASX Announcement 6 March 2007 Manager Manager Company Announcements Office Market Information Services Section Australian Stock Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Levei 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand Announcement No: 11/07 Investor Pr
Slide 2: AMP — Driving shareholder value through simplicity, scale and efficiency
AMP — Driving shareholder value through simplicity, scale and efficiency Andrew Mohi Chief Executive Officer March 2007
Slide 3: AMP today — simple, scaleable model in a high growth industry
AMP today — simple, scaleable model in a high growth industry focused on operational excellence « Australasian wealth management group » Integrated business model # High growth industry « Highly scaleable business » Low cost manufacturing platform # Reducing capital intensity # Focusing on operation
Slide 4: Outline
Outline AMP business model and industry overview 2006 financial performance Capital management Outlook
Slide 5: Powerful business model
Powerful business model Six drivers Products & Platfor pidly growing AM Lee)
Slide 6: Model generates margins across the industry value chain
Model generates margins across the industry value chain Distribution — Products & Asset Dealer groups / planners platforms management Pricing - typical industry range for balanced growth fund AMP retail platform with AMPCI investment without AMPC! investment Non-AMP retail platform Third party retai
Slide 7: Model driving strong earnings from contemporary businesses
Model driving strong earnings from contemporary businesses ASm 2003 2004 2005 2006 @ Cobalt/Gordian and AFS Mature AMP Capital investors, AFS Contemporary (businesses in run-off) Weaith Management, AFS Contemporary Wealth Protection, AFS New Zealand
Slide 8: Legislative changes highly supportive of superannuation
Legislative changes highly supportive of superannuation 2 Superannuation is the flagship product in financial services sector = Successive governments over two decades have shaped superannuation as the preferred vehicle for retirement savings « Major reforms during the past two years have cemented t
Slide 9: Robust growth outlook in all key segments of superannuation industry
Robust growth outlook in all key segments of superannuation industry Superannuation asset projections (AUM) ($biflion) 700 4 - 142.24 600 4 SMSF - CAGR: 12.2% Retail - CAGR: 10.8% 500 4 Industry funds - CAGR: 12.8% 400 4 5 Post retirement -~ CAGR: 18.4% 300 4 200 4 ene i? all 400 4 geen en joo 2005
Slide 10: Australian private pension market predicted to triple
Australian private pension market predicted to triple in 10 years and exceed all of Asia 2004 Total US$1,452 billion 2015 Total US$3,744 billion Australia 36.3% Other countries 1.7% South Korea 2.2% Hong Kong 2.7% Singapore 47% Japan 52.4% Other countries 9.8% Australia $1.0 % 3.6% NN US$1,908.7b So
Slide 11: 2006 financial performance
2006 financial performance
Slide 12: Key performance indicators
Key performance indicators = Return on equity up 6 percentage points to 31.0% = Operating earnings up 16% to A$752m « Cost ratio down 1.6 percentage points to 39.4% = AFS embedded value up 27% to $7.7b’ before transfers = AFS value of new business up 17% to A$364m? « Top ranking Balanced Fund’ and 7
Slide 13: Cashflows and AUM
Cashflows and AUM » Strong cashflows >» AMP Financial Services (AFS) net cashflows up 53% to A$3.5b; cash inflows up 22% to A$13.7b > AMP Capital Investors (AMPCI) external net cashflows up 9% to A$2.4b » Strong growth in assets under management >» Group up 17% to A$122b > AFS up 15% to A$76b > AMPC
Slide 14: Group costs and cost ratios
Group costs and cost ratios 900 832 851 60 3 120 800 50 = 100 700 600 40 = 80 500 30 = 60 400 § 300 ¥ 20 © 40 200 § 10 = 20 100 § ASm 04 0% | O bps FY 04* FY 05* FY 06 Controllable cosis stn Cost to income ratio =m Cost to AUM ratio * Some minor restatements to reflect a change in the definition of
Slide 15: AFS contemporary wealth management
AMP Financial Services (AFS) contemporary wealth management — a scaleable, high growth, high return business Contemporary wealth management FY 06 FY 05 Operating earnings A$244m A$187m +30% Controllable costs A$359m A$357m +1% Cost to income ratio 48.0% 54.0% -6 percentage points Net cashflows A$4,4
Slide 16: AFS contemporary wealth management — significant operational leverage
AFS contemporary wealth management — significant operational leverage 400 360 350 306 250 200 150 100 50 ASm 04 1H 05 2H 05 1H 06 2H 06 Bi Revenue fess variable costs Controllable costs
Slide 17: AFS contemporary wealth protection
AFS contemporary wealth protection — a solid growth, high return business Gontemporary wealth protection FY06 =| FY05 Operating earnings A$121m i A$107m +13% Operating earnings / API 22.6% H 22.3% +0.3 percentage points Controllable costs AS65m A$6im +7% Cost to income ratio 22.5% 23.9% -1.4 percent
Slide 18: AFS mature — a slowly declining, large scale business
AFS mature — a slowly declining, large scale, outstanding return business Mature Change FYo6 | FY0S Operating earnings AS190m A$171m +11% Controllable costs A$6Om A$66m 9% Controllable costs/AUM' 32bps 36bps -4 basis points Net cashflows (A$1,136m) (A$1,279m) +44% Persistency 88.1% 87.3% +0.8 percen
Slide 19: AFS New Zealand — a life risk-driven, high return business
AFS New Zealand — a life risk-driven, high return business New Zealand Change FY 06 FY 05 Operating earnings NZ$60m NZ$54m +12%! Controllable costs NZ$69m NZ$6 4m +13% Cost to income ratio 414.4% 44.1% Steady Net cashflows NZ$t4m (NZ$49m) +NZ$65m Risk annual premium income NZ$104m NZ$90m +16% Lapse
Slide 20: AMP Capital Investors (AMPCI) — a high growth business
AMP Capital Investors (AMPCI) — a high growth, outstanding return business AMPCI Change FY 06 FY 05 Operating earnings A$115m A$92m +25% Fee income A$385m A$328m 417% Controllable costs A$223m A$198m 413% Cost to income ratio 56.0% 57.8% -1.8 percentage points External net cashflows A$2.4b A$2.2b +9
Slide 21: AMPCI — volumes and margins expanding
AMPCI — volumes and margins expanding 100 97.8 7 14 90 12 80 70 10 60 Lg 50 40 6 30 nA 20 2 10 Basis A$b 0 FO points FY 03*4 FY 044 FY 05 FY 06 Average AUM in period sm Operating earnings after tax - basis points * FY 03 excludes Listed Property Trusts AUM and profit earnings as these businesses wer
Slide 22: Capital management
Capital management
Slide 23: Strong balance sheet and capital efficiency
Strong balance sheet and capital efficiency « Capital efficiency has been pursued by: > leveraging the strong share market performance since early 2003 > growing the contemporary and asset management businesses that are relatively low in capital intensity > running off the more capital intensive mat
Slide 24: Major capital initiatives since 2004
Major capital initiatives since 2004 «= A$600m reduction in Group debt » S&P gearing now 12% and underlying interest cover over 15 times « Dividends per share up from 27c to 40c per annum # Dividend payout ratio now 85% (85% franked) # A$2.25b in capital returns to shareholders, including proposed t
Slide 25: Future capital initiatives
Future capital initiatives « AMP is today a “capital light” organisation with close to 100% free cashflow of earnings « Surplus capital position within target range post proposed FY 07 capital return « Excess capital will continue to be returned to shareholders, however future capital initiatives ar
Slide 26: Underlying return on equity strong and rising
Underlying return on equity strong and rising 35 ily 45 18.1% FY 03 FY 04 FY 05 FY 06 @=» Underlying return on equity
Slide 27: Outlook
Outlook
Slide 28: Goal to double the value of an investment in AMP from mid 05 to mid 2009
Goal to double the value of an investment in AMP from mid 2005 to mid 2009 progressing well H a 55% change in 18 months ‘ bs o ‘ie ca 17.9 4 e =i i ‘o “it i 13.5 " ts a 11.6 * ‘it 4 ‘i i % ‘o ‘ 4 it = + Sd st ‘o it 5 7 ie i ‘o a i A$b Opening value - Opening value - Dividends Capital return- Changei
Slide 29: Strategic plan to double value over years to 2011
Strategic plan to double value over 5 years to 2011 (grow value by 15% pa) — cornerstone assumptions « Equity markets growing around 6% pa, net of dividends « Realising scale benefits from volume and market growth > 10%-plus pa growth in retirement savings and post retirement sectors! projected over
Slide 30: Key strategic initiatives
Key strategic initiatives « Key strategic initiatives to enhance and strengthen the core of AMP’s business model: >» Increasing planner productivity by leveraging process excellence skills and enhancing technology platform > Growing planner numbers at above market rates >» Developing complementary a
Slide 31: AMP today — simple, scaleable model in a high growth industry
AMP today — simple, scaleable model in a high growth industry focused on operational excellence Australasian wealth management group « Integrated business model # High growth industry « Highly scaleable business « Low cost manufacturing platform # Reducing capital intensity # Focusing on operational
AMP — Citigroup Australia New Zealand 4th Annual Investment Conference (March 2007) on 6ix