AMP LIMITED — Annual Report 2014

Feb 18, 2015

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19 February 2015

Manager Client and Market Services Team ASX Market Announcements NZX Limited Australian Securities Exchange Level 1, NZX Centre, 11 Cable Street Level 4, 20 Bridge Street PO Box 2959 Sydney NSW 2000 Wellington, New Zealand

Announcement No: 03/2015 AMP Limited (ASX/NZX: AMP)

Full Year Financial Results

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Part One: Appendix 4E Appendix 3A.1 Part Two: AMP reports A$884 million net profit FY 14

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Part Three: Investor Presentation

Part Four: Investor Report

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Public Affairs T 02 9257 6127 E media@amp.com.au W AMP.com.au/media

AMP Limited 33 Alfred Street, Sydney NSW 2000 Australia ABN 49 079 354 519

AMP_AU

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19 February 2015

AMP reports A$884 million net profit for FY 14

AMP Limited has reported a net profit of A$884 million for the full year to 31 December 2014[1] , up 32 per cent on A$672 million reported for FY 13.

Underlying profit[2] was A$1,045 million compared with A$849 million for FY 13, up 23 per cent year on year, driven by double digit growth in operating earnings across all contemporary businesses.

The Board has declared a 17 per cent increase to the final dividend to 13.5 cents per share compared with 11.5 cents per share for the 2013 final dividend. This represents a FY 14 payout ratio of 74 per cent of underlying profit and is within AMP’s target range of paying 70 to 80 per cent of underlying profit.

Chief Executive Craig Meller said: “An increase of 23 per cent in underlying profit reflects a strong result in our domestic franchises of wealth and investment management, targeted offshore expansion and improving performance in our wealth protection business.

“In 2014 we made marked progress on our strategy to be an increasingly customer-driven organisation that is leaner and more efficient. The other element of AMP’s strategy, to invest selectively in Asia and take our expertise into new markets, is starting to deliver good cashflows with strong long-term growth potential.

“These results demonstrate that we are executing well on our strategy and the potential of AMP’s business model,” Mr Meller said.

Performance against key measures:

• Underlying profit: A$1,045 million in FY 14, up 23 per cent on FY 13.

• Cost to income ratio: The group cost to income ratio was managed tightly to 44.8 per cent for FY 14, down from 49.4 per cent in FY 13. Controllable costs increased 1.1 per cent and are tracking in line with guidance having been impacted positively by the business efficiency program.

1 AMP’s profit measures exclude MUTB’s 15 per cent share of AMP Capital’s earnings.

2 Underlying profit is the basis on which the AMP Board determines the dividend payment and reflects the business performance of AMP. It is AMP’s preferred measure of profitability as it removes one off costs, the impact of some investment market volatility and accounting mismatches.

AMP Limited 33 Alfred Street, Sydney, NSW, 2000 ABN 49 079 354 519

Public Affairs T 02 9257 6127 E media@amp.com.au W AMP.com.au/media AMP_AU

AMP reports A$884 Million net profit for FY 14 / 2

• Cashflows:

• Australian wealth management net cashflows were A$2.3 billion in FY 14, up A$115 million on net cashflows of A$2.2 billion in FY 13. AUM rose 9 per cent over the year to $109.5 billion, against a relatively flat Australian market. Total net cashflows on AMP platforms continue to perform strongly, growing 35 per cent to A$3.6 billion in FY 14.

• AMP Capital external net cashflows were A$3.7 billion, a A$4.8 billion improvement from net cash outflows of A$1,039 million in FY 13.

• Underlying return on equity: Increased to 12.7 per cent in FY 14 from 10.7 per cent in FY 13, reflecting the 23 per cent increase in underlying profit.

In Australian wealth management, operating earnings for FY 14 were up 13 per cent compared with FY 13, reflecting higher net cashflows supporting good growth in AUM and disciplined cost control in a growing business.

Australian wealth protection has recovered well with operating earnings of A$188 million compared with A$64 million in 2013.

“Pleasingly the wealth protection business improvement plan is delivering results and our focus is now on ensuring the changes are sustained with continued improvement to processes, products and culture,” Mr Meller said.

Other key highlights include:

• AMP Capital’s improved performance : Operating earnings increased 16 per cent reflecting strong fee growth and investment returns. The internationalisation of the business drove this with global investors attracted by leading infrastructure and property capabilities alongside new inflows generated by the China Life AMP Asset Management joint venture and improved flows from the MUTB alliance. The cost to income ratio of 63 per cent was within AMP Capital’s target range of 60 to 65 per cent.

• Seventh quarter of more than A$1 billion net cashflows on North platform: Net cashflows improved 34 per cent to A$5.5 billion for FY 14 and North AUM grew 66 per cent to A$16 billion since December 2013. North also had 50 per cent growth in customers with a total of over 76,000 customers on the platform in 2014.

• AMP Bank : The bank delivered A$91 million in operating earnings, up 10 per cent compared with FY 13, reflecting an increase in residential mortgages with AMP growing above system in an intensely competitive environment and AMP aligned advisers contributing a quarter of new business.

• New Zealand achieved improved cashflows : Operating earnings of A$110 million, up 13 per cent compared with FY 13, reflecting growth in profit margins, experience profits and favourable currency movements.

• Future of advice strategy : A package of measures to lift the quality of advice is being introduced along with a new approach to advice being piloted in five locations. AMP is also investing in services, platforms and digital capabilities to improve adviser quality and productivity. Australian adviser numbers are up slightly at 3,844 in a period of regulatory uncertainty.

AMP reports A$884 Million net profit for FY 14 / 3

Capital management

AMP continues to hold an appropriate capital surplus, with A$2.0 billion capital above minimum regulatory requirements at 31 December 2014, down from A$2.1 billion at 31 December 2013. The decrease was driven by the redemption of AMP Notes and the impact of falling bond yields, partially offset by retained profits and other capital impacts.

AMP maintains a strong balance sheet and has access to significant liquidity.

AMP continues to offer a DRP to eligible shareholders and no discount will apply to the allocation price. Shares will again be bought on market and the dividend will be 80 per cent franked with the unfranked amount being declared as conduit foreign income.

Important note:

Forward-looking statements in this release are based on AMP’s current views and assumptions and involve known and unknown risks and uncertainties, many of which are beyond AMP’s control and could cause actual results to differ materially from those expressed or implied. They are not guarantees or representations of future performance, and should not be relied upon as such.

Attached below are AMP Limited’s FY 14 financial summary, and for the quarter ending 31 December 2014 cashflows and AUM.

For more information:

Shareholders are invited to join a live webcast of the investment analyst briefing at 12.30pm today by visiting www.amp.com.au/shareholdercentre/webcasts.

A replay of the presentation will also be available shortly after the briefing has concluded.

Media enquiries

Julia Quinn Phone: +61 2 9257 9870 Mobile: +61 409 311 176

Investor enquiries

Howard Marks Phone: +61 2 9257 7109 Mobile: +61 402 438 019

Lara Evans Phone: +61 2 9257 6168 Mobile: +61 419 226 449

Stephen Daly Phone: +61 2 9257 5207 Mobile: +61 416 289 535

AMP reports A$884 Million net profit for FY 14 / 4

Financial summary

A$m	FY 14	FY 13
Profit and Loss
Australian wealth management	374	330
AMP Capital	115	99
Australian wealth protection	188	64
AMP Bank	91	83
New Zealand financial services	110	97
Australian mature	174	178
BU operating earnings	1,052	851
Group Office costs	(62)	(62)
Total operating earnings	990	789
Underlying investment income	132	135
Interest expense on corporate debt	(77)	(75)
Underlying profit	1,045	849
Other items	7	(2)
AXA integration costs	(20)	(57)
Business efficiency program costs	(100)	(39)
Amortisation of AXA acquired intangible assets	(89)	(91)
Profit before market adjustments and accounting mismatches	843	660
Market adjustment – investment income	42	2
Market adjustment – annuity fair value	6	27
Market adjustment – risk products	11	(5)
Accounting mismatches	(18)	(12)
Profit attributable to shareholders of AMP Limited	884	672

AMP reports A$884 Million net profit for FY 14 / 5

Q4 14 Cashflows

Australian wealth management

Australian wealth management	Cash inflows	Cash inflows	Cash outflows		Net cashflows
Cashflows by product (A$m)	Q4 14	Q4 13	Q4 14	Q4 13	Q4 14	Q4 13
AMP Flexible Super1	2,607	1,617	(1,870)	(1,073)	737	544
North2	3,679	2,222	(1,966)	(981)	1,713	1,241
Summit, Generations and iAccess3	713	506	(1,268)	(942)	(555)	(436)
Flexible Lifetime (superannuation and pension)4	626	556	(1,396)	(1,045)	(770)	(489)
Other retail investment andplatforms5	108	101	(232)	(154)	(124)	(53)
Total retail on AMPplatforms	7,733	5,002	(6,732)	(4,195)	1,001	807
SignatureSuper and AMP Flexible Super - Employer	823	653	(592)	(501)	231	152
Other corporate superannuation6	426	390	(560)	(506)	(134)	(116)
Total corporate superannuation	1,249	1,043	(1,152)	(1,007)	97	36
Total retail and corporate super on AMP Platforms	8,982	6,045	(7,884)	(5,202)	1,098	843
Externalplatforms7	649	519	(1,057)	(785)	(408)	(266)
Total Australian wealth management	9,631	6,564	(8,941)	(5,987)	690	577

• 1 AMP Flexible Super is a flexible all in one superannuation and retirement account for individual retail business.

• 2 North is a market leading fully functioning wrap platform which includes guaranteed and non-guaranteed options.

• 3 Summit and Generations are owned and developed platforms. iAccess is ipac badged on Summit.

• 4 Flexible Lifetime Super (superannuation and pension) was closed to new business from 1 July 2010. A small component of corporate superannuation schemes are included.

• 5 Other retail investment and platforms include Flexible Lifetime - Investments, AMP Personalised Portfolio and Synergy.

• 6 Other corporate superannuation comprises CustomSuper, SuperLeader and Business Super.

• 7 External platforms comprise Asgard, Macquarie and BT Wrap platforms.

Australian wealth management	Q3 14		Q4 14 Net cashflows		Total			Q4 14
AUM (A$m)	AUM	Superannuation	Pension	Investment	net cashflows	Other movements1		AUM
AMP Flexible Super	11,883	103	634	-	737		463	13,083
North	13,750	225	1,203	285	1,713		493	15,956
Summit, Generations and iAccess	13,938	(255)	(214)	(86)	(555)		479	13,862
Flexible Lifetime Super (superannuation and pension)	24,439	(480)	(290)	-	(770)		904	24,573
Other retail investment andplatforms	3,086	(30)	(33)	(61)	(124)		89	3,051
Total retail on AMPplatforms	67,096	(437)	1,300	138	1,001	2,428		70,525
SignatureSuper and AMP Flexible Super - Employer	12,259	202	29	-	231		447	12,937
Other corporate superannuation	12,904	(134)	-	-	(134)		404	13,174
Total corporate superannuation	25,163	68	29	-	97		851	26,111
Total retail and corporate super on AMPplatforms	92,259	(369)	1,329	138	1,098	3,279		96,636
Externalplatforms	12,908	(148)	(197)	(63)	(408)		371	12,871
Total Australian wealth management	105,167	(517)	1,132	75	690	3,650		109,507
Australian wealth management - AMP SMSF2 Assets under administration	18,494						400	18,894

• 1 Other movements include fees, investment returns and taxes.

• 2 AMP SMSF includes Multiport, Cavendish, SuperIQ, Your SMSF and Ascend administration platforms. SuperIQ is 49% owned by AMP, however 100% of assets under administration are included.

Australian wealth management	Q3 14	Q4 14
AUM (A$m)	AUM	AUM
AUM by product
Superannuation	62,862	64,554
Pension	29,711	31,897
Investment	12,594	13,056
Total	105,167	109,507
AUM by asset class
Cash and fixed interest	31%	30%
Australian equities	34%	33%
International equities	24%	25%
Property	6%	6%
Other	5%	6%
Total	100%	100%
Australian wealth management	Q3 14	Q4 14
AUM summary (A$b)	AUM	AUM
Closing AUM	105.2	109.5
Average AUM	105.4	107.0

AMP reports A$884 Million net profit for FY 14 / 6

AMP Capital

AMP Capital	Q3 14	Q4 14 Net cashflows		Total		Q4 14
AUM (A$m)	AUM	Cash inflows	Cash outflows	net cashflows	Other movements	AUM
External	43,852	4,955	(3,598)	1,357	1,675	46,884
Internal	101,557	7,075	(8,375)	(1,300)	4,331	104,588
Total AMP Capital	145,409	12,030	(11,973)	57	6,006	151,472
AMP Capital	Q3 14	Q4 14
AUM summary (A$b)	AUM	AUM
Closing AUM	145.4	151.5
Average AUM	146.0	147.9

New Zealand financial services

New Zealand financial services	Cash inflows	Cash inflows			Cash outflows			Net cashflows	Net cashflows
Cashflows by product (A$m)	Q4	14	Q4 13		Q4 14	Q4 13		Q4 14	Q4 13
KiwiSaver	144		126		(71)		(68)	73	58
Other1	590		175		(686)	(221)		(96)	(46)
Total New Zealand	734		301		(757)	(289)		(23)	12
New Zealand financial services	Q3 14		Q4 14	Net cashflows			Total		Q4 14
AUM (A$m)	AUM	Superannuation	Pension		Investment	Other	net cashflows	Other movements2	AUM
KiwiSaver	2,941	73		-	-	-	73	271	3,285
Other1	9,486	(54)		(1)	(53)	12	(96)	919	10,309
Total New Zealand	12,427	19		(1)	(53)	12	(23)	1,190	13,594

• 1 Other New Zealand financial services cashflows and AUM include New Zealand wealth protection, mature and non–KiwiSaver wealth management products.

• 2 Other movements include fees, investment returns, taxes, as well as foreign currency movements on New Zealand AUM.

New Zealand wealth protection	Q3 14	Q4 14
Risk Insurance Annual Premium In-force – API (A$m)	API	API
Individual lump sum	221	236
Individual income protection	46	49
GroupRisk	37	41
Total	304	326

Australian mature

Australian mature	Cash inflows	Cash inflows			Cash outflows			Net cashflows	Net cashflows
Cashflows by product (A$m)	Q4	14	Q4 13		Q4 14	Q4 13		Q4 14	Q4 13
Australian mature	194		158		(659)	(543)		(465)	(385)
Australian mature	Q3 14		Q4 14	Net cashflows			Total		Q4 14
AUM (A$m)	AUM	Superannuation	Pension		Investment	Other	net cashflows	Other movements1	AUM
Australian mature	22,239	(275)		(59)	(24)	(107)	(465)	490	22,264

• 1 Other movements include fees, investment returns and taxes.

AMP Bank

AMP Bank by product	Q3 14		Q4 14
Deposits and loans (A$m)	End balance	Other movements1	End balance
Deposits (Supercash, Super TDs & Platform TDs)2	4,279	37	4,316
Deposits (retail)	4,806	122	4,928
Loans	14,165	326	14,491

• 1 Represents movements in AMP Bank’s deposits and loan books.

• 2 At 31 December 2014, deposits include AMP Supercash and Super TD's (A$2.4bn), platform deposits (A$1.3bn), investment fund deposits (A$0.3bn) and other deposits (A$0.3bn).

AMP reports A$884 Million net profit for FY 14 / 7

Australian wealth protection

Australian wealth protection	Cash inflows	Cash inflows		Cash outflows		Net cashflows
Cashflows by product (A$m)	Q4 14		Q4 13	Q4 14	Q4 13	Q4 14	Q4 13
Individual risk	375		348	(187)	(147)	188	201
Grouprisk	113		85	(78)	(82)	35	3
Total Australian wealthprotection	488		433	(265)	(229)	223	204
Australian wealth protection	Q3 14	Q4 14
Annual Premium In-force – API (A$m)	API	API
Individual lump sum	1,083	1,077
Individual income protection	423	421
GroupRisk	429	438
Total	1,935	1,936