Shareholder Review 2011 A summary of AMP’s 2011 fi nancial results In a worldpossibilities of endless AMP is creating a better tomorrow for our customers, our advisers and our shareholders. With innovative investment opportunities and quality advice for everyone, we are helping people turn their possibilities into realities. AMP Limited ABN 49 079 354 519. Unless otherwise specifi ed, all amounts are in Australian dollars. Information in the review is current as at 2 March 2012. 1 Who we are AMP is the leading independent wealth management company in Australia and New Zealand. We help people and organisations build fi nancial security and we’ve been doing this since 1849. We provide: – fi nancial advice – superannuation, retirement income and other investment products for individuals – superannuation services for businesses – income protection, disability and life insurance – selected retail banking products, and – investments in shares, fi xed income, property, infrastructure and multi-asset funds. We believe fi nancial security can help people turn their possibilities into realities. In March 2011, AMP merged with the Australian and New Zealand businesses of AXA Asia Pacifi c Holdings. Together we are helping more people own tomorrow. 2 Our 2011 performance Profi t Net profi t attributable to shareholders Full year profi t of $688 million ▼ 11% $ million AMP’s net profi t attributable to shareholders in 2011 was $688 million, compared with 985 909 $775 million in 2010. 882 810 ▲ 775 Underlying profi t of $909 million 20% 772 760 739 AMP delivered an underlying profi t of 688 $909 million in 2011. This compares with 580 an underlying profi t of $760 million in 2010. These fi gures include a nine-month contribution from AXA. Underlying profi t is AMP’s preferred measure of profi tability as it removes merger related costs and some of the impact of investment market volatility. It is the earnings base on which the board 2007 2008 2009 2010 2011 determines the dividend payment and refl ects the underlying performance of AMP. Net profi t attributable to shareholders Underlying profi t The main difference between the two reported numbers comes from the movements in investment markets and costs from the AXA transaction. A reconciliation of Net Profi t and Dividends and payments to shareholders Underlying Profi t can be found on pages 9 cents per share and 59 of the AMP Annual Report 2011. 46 Dividend 40 40 22 40 16 40 21 Final dividend of 14 cents per share 30 30 29 This brings the total dividend for 2011 to 15 16 29 cents per share. The fi nal dividend will 14 be 50 per cent franked and will be paid on 22 22 5 April 2012. 15 15 The payout ratio for the full 2011 dividend 14 is 84 per cent of the underlying profi t from 2011, which is within AMP’s target payout range of 75–85 per cent of underlying profi t. 2007 2008 2009 2010 2011 AMP has set a new target payout range of Final dividends 2 cent Cobalt sale 70–80 per cent of underlying profi t. Interim dividends Capital return AMP Shareholder Review 2011 Key performance indicators 15.1% $909m –$581m –$1.2b $215m 52% Underlying Underlying profi t AMP Financial AMP Capital Value of risk AMP Capital return on equity increased by 20% Services net external net new business funds: decreased on 2010. cashfl ows cashfl ows increased by 52% met or 11.1 percentage This includes were down were down $107m to exceeded their points. a nine-month from infl ows of from infl ows of $215m. benchmark This refl ects contribution $789m in 2010. $2.6b in 2010. The value of risk in 2011. the merger from AXA. new business Performance with AXA. Net cashfl ows from customers almost doubled was affected and clients saw the outfl ows in in 2011 following by volatile local more traditional platforms and the merger with and overseas products mask good infl ows in AXA and good markets. The new platforms and products. new business target is 75%. growth. Where our earnings came from Wealth management Investment management Financial advice, (AMP Capital) superannuation and Investments in shares, fixed investment products income, property, infrastructure 31% 10% and multi-asset funds Banking Home loans and bank 7% New Zealand deposit accounts 9% Financial advice, superannuation and insurance products for New Zealand customers Insurance 25% 18% Life insurance, Closed products income protection and Insurance and superannuation trauma insurance for products no longer sold by AMP Australian customers but still managed for our customers 4 Message from the Chairman “Our 2011 results show a new, stronger, more competitive AMP” In 2011, your company embarked on a payout ratio of 84 per cent of underlying a journey that has made the Australian profi t in 2011, which is within our target and New Zealand fi nancial services sector range of 75 to 85 per cent of underlying more competitive. Our 2011 fi nancial results profi t. In the future, the target dividend demonstrate that we are making good payout range will be 70 to 80 per cent of progress, showing a new, stronger, more underlying profi t, to fund business growth. competitive AMP. An AMP that is reaching Your board has a bias to holding more more customers and clients – in Australia, capital rather than less, because of ongoing New Zealand and in targeted overseas market volatility and ahead of anticipated markets – with more innovative products changes in regulatory capital requirements. and investment capabilities. This bias stood us in very good stead in the We have achieved much of this through second half of 2011 given falling investment our merger with AXA. The combination markets. AMP remains strongly capitalised, of our two great companies is creating a with $1.5 billion in surplus capital above strong and unique platform for future growth. minimum regulatory requirements at The merger itself is progressing well on all 31 December 2011. our key measures and, very importantly, the Conclusion company is maintaining its momentum with I believe that our investment in growth an expanding adviser force, sales growth and and our track record of adapting to change faster than anticipated synergies emerging. will ensure your company can deliver strong We have taken signifi cant steps to grow performance for clients and shareholders. your company, while anticipating market, regulatory and demographic change. These investments are yielding results, positioning us well on our journey to build a more competitive company and fi nancial services landscape. Dividend and capital position Your board has declared a fi nal 2011 dividend of 14 cents per share, which will be Peter Mason AM 50 per cent franked. The dividend represents Chairman AMP Shareholder Review 2011 Message from the Chief Executive Offi cer “We are building a company that is fi t for the future” Our 2011 fi nancial performance shows Increasingly, international investors are also a new, more competitive AMP emerging. accessing our leading investment capabilities While our net profi t of $688 million was down through our distribution alliances in Asia 11 per cent on 2010, as a result of investment and Europe. market movements and costs from the AXA merger, our underlying profi t rose. It increased Integration What I’ve been most pleased about in 20 per cent to $909 million, refl ecting the 2011 is the integration of the AXA business, merger with AXA and some good momentum which is tracking well. We are delivering on across our key products and channels. the key integration objectives and delivering This includes pleasing sales of our the benefi ts of the merger faster than contemporary wealth management products, we expected. As we’ve brought the two like AMP Flexible Super and North, and of our companies together we have been able to risk insurance and banking products. We also maintain business momentum while also attracted more than $1 billion in net cashfl ows establishing a stronger base for growth. from investors in Asia. Conclusion Challenging markets, however, did negatively Ultimately, our goal is to build a stronger, impact our results, particularly the revenue more competitive company that is very well earned by the parts of our business most placed to meet the changing needs of more exposed to investment markets. customers and clients, both domestically A new AMP and in selected offshore markets. We are What we are now building is a new, building a company that is fi t for the future. more competitive AMP with a formidable Australian and New Zealand business and growing investment management opportunities offshore. As a merged company, we offer a broader range of products, services and investment capabilities and more ways to access them. We operate a range of advice brands, which comprise Australia and New Zealand’s largest Craig Dunn and most qualifi ed fi nancial planning network. Chief Executive Offi cer 6 AMP Financial Services “We’ve shown real strength in the Australian and New Zealand markets and we’re in a great position to build on this in 2012” What we do AMP Financial Services provides customers in Australia and New Zealand with: – fi nancial planning and advice – superannuation, retirement income and other investment products for individuals – superannuation services for businesses and employer-sponsored schemes – income protection, disability and life insurance, and – selected banking products. What we did in 2011 418,612 87,007 22,960 12,734 65,713 2,893 Welcomed Helped Helped 22,960 Helped 12,734 Helped 65,713 Helped 2,893 418,612 new 87,007 people retirees start people enjoy people protect grieving customers roll over their the next stage the thrill of their families’ families by superannuation in their life buying a home future with paying out a new life life insurance insurance claims policy AMP Shareholder Review 2011 Craig Meller Managing Director, AMP Financial Services Operating earnings Our progress in 2011 $ million – Provided more ways to reach more Australians and New Zealanders with quality advice and services.