AMP 08/2015 - Part 1 - 2014 annual report

137 Pages·2015·1.53 MB·English

by  Caroline Webb

26 March 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: 08/2015
AMP Limited (ASX/NZX: AMP)

Part One: 2014 annual report
Part Two: 2014 shareholder review
Part Three: 2015 notice of annual general meeting, proxy form and information session flyer

Public Affairs
T 02 9257 6127
AMP Limited E [email protected]
33 Alfred Street, Sydney NSW 2000 Australia W AMP.com.au/media
ABN 49 079 354 519 AMP_AU
2014
annual report
AMP Limited ABN 49 079 354 519
Unless otherwise specifi ed, all amounts are in Australian dollars.
Information in this report is current as at 2 March 2015.
Contents
1 Chairman’s foreword
2 Five-year fi nancial summary
3 2014 results at a glance
4 Directors’ report
14 Remuneration report
33 Analysis of shareholder profi t
34 Corporate governance statement
42 Financial report
43 Income statement
44 Statement of comprehensive income
45 Statement of fi nancial position
46 Statement of changes in equity
48 Statement of cash fl ows
49 Notes to the fi nancial statements
130 Directors’ declaration
131 Independent auditor’s report
132 Shareholder information
IBC Glossary
Chairman’s foreword
2014 is likely to be seen as a watershed year for your company,
as a renewed drive to become a more customer-centred and efficient
business began to pay dividends.
We successfully implemented the fi rst year of our fi ve-year We are also very aware of the work in front of us to continue
strategy to transform AMP to drive stronger growth, while at to drive the changes necessary in this company, to meet our
the same time we delivered better fi nancial results for the year. customers’ expectations and deliver stronger total returns
to our shareholders.
Our key business areas have delivered double digit growth
in operating earnings, with good growth in cashfl ows, above- AMP has a signifi cant part to play in helping manage
system growth in mortgages, strong investment performance the impact of what is one of mankind’s most remarkable
and tight cost control. achievements – the increase in longevity that we have seen
in our lifetimes. Our role is to help ensure those longer lives
We’ve also made signifi cant progress on our selective
are lived in fi nancial security.
expansion in Asia, launching our fi rst funds through our joint
venture, the China Life AMP Asset Management Company, and It is a responsibility your company must discharge with energy
also acquiring a 19.99% stake in China Life Pension Company, and commitment.
the largest pension company in China.
I am optimistic about the resilience and strength of AMP
Our insurance business is recovering from a poor performance to build on the successes of 2014 to create increasing value
in 2013 and, while there is still more work to be done,, we are for our shareholders and better outcomes for our customers.
pleased with the progress made.
That has enabled your board to deeeccclllaaarrreee aaa fififi nnnaaall 222000111444 dddiiivviiidddeenndd
of 13.5 cents per share (up 17% onnn ttthhheee 222000111333 fififi nnnaalll dddiiivviiddeennnddd)),,
which will be paid on 10 April 20111555... TTThhheee fififi nnnaaalll dddiiivvviiidddeeennnddd wwwiilllll bbee
80% franked and represents a payyyooouuuttt ooofff 777444%%% ooofff uuunnndddeeerrrlllyyyiiinnnggg
profi t for the year. The fi nal divideeennnddd,,, tttooogggeeettthhheeerrr wwwiiittthhh ttthhheee
increased interim dividend of 12.555 ccceeennntttsss pppeeerrr ssshhhaaarrreee,,, aaannnddd aaa
share price increase of 25% in 20111444,,, hhheeelllpppeeeddd gggeeennneeerrraaattteee bbbeeettttteeerr
total returns for our shareholders ooovvveeeerrr ttthhheee yyyeeeeaaarrr...
We will purchase dividend reinvessstttmmmeeennntttt ppplllaaannn ssshhhaaarrreeesss ooonn
market to avoid diluting the valueee ooofff cccuuurrrrrreeennntttt ssshhhaaarrrreeehhhooollldddiiinnggss..
AMP’s capital position also remainnnneeeedddd ssstttrrrooonnnggg,,, wwwiiittthhh $$$222 bbbiilllliioonn
of shareholder regulatory capital rrreeeesssooouuuurrrccceeesss hhheeelllddd aaabbbooovvee
minimum requirements at 31 Deccceeemmmbbbeeeerrr 2220001111444...
AMP’s 2014 performance was achhhiiieeeevvvveeeddd ddduuurrriinnnggg aaa yyyeeeaaarr ooff
unsettled global markets, declininnnnnggggggg iiiinnntttteeerrreeesssttt rrraaattteeesss aaannnddd aa
high level of political and communnnnnnniiiiiiittttyyyyyy ssssscccrrruuutttiiinnnyyy ooofff pppaaarrttss oofff
our industry. In this environment wwwwweee hhhhaaavvvveee ssshhhooowwwnnn oouuurrsseellvveess
to be a more agile and responsiveee cccoooommmmppppppppaaaaaaannnnnnnyyyyyyy;;;;;; oooooonnnneeee tthhhaatt iiss
more resilient to market changes...
Simon McKeon AO Chairmmmaaannn
11
Five-year financial summary
Restated Restated
2014 2013 2012 2011 2010
Year ended 31 December $m $m $m $m $m
Consolidated Income statement
Net premium, fee and other revenue 5,343 5,136 5,166 4,217 2,824
Investment gains (losses) 12,244 14,963 12,258 1,548 4,840
Profi t (loss) before income tax from continuing operations 1,814 1,498 1,387 743 881
Income tax (expense) credit (843) (782) (688) 4 (126)
Non-controlling interests (87) (44) (10) 12 20
Profi t after tax attributable to shareholders of AMP Limited 884 672 689 759 775
Consolidated Statement of fi nancial position
Cash and cash equivalents 3,581 2,938 4,388 4,816 3,325
Investment assets 123,292 121,781 107,721 98,221 85,120
Intangibles 4,042 4,136 4,502 4,677 919
Assets of disposal groups 100 42 187 – –
Other assets 3,840 4,327 4,566 4,999 2,241
Total assets 134,855 133,224 121,364 112,713 91,605
Borrowings and subordinated debt 16,502 16,243 13,473 13,322 11,136
Life insurance contract liabilities 24,403 24,934 25,055 24,399 17,762
Investment contract liabilities 66,980 66,049 58,385 52,940 48,579
Liabilities of disposal groups 69 8 74 – –
Other liabilities 18,516 17,790 16,734 15,066 11,130
Total liabilities 126,470 125,024 113,721 105,727 88,607
Net assets 8,385 8,200 7,643 6,986 2,998
Contributed equity 9,508 9,602 9,333 9,074 5,051
Reserves (1,888) (1,973) (2,157) (2,540) (2,565)
Retained earnings 566 461 332 364 452
Total equity attributable to shareholders of AMP Limited 8,186 8,090 7,508 6,898 2,938
Non-controlling interests 199 110 135 88 60
Total equity 8,385 8,200 7,643 6,986 2,998
Restated Restated
2014 2013 2012 2011 2010
Other fi nancial data
Basic earnings per ordinary share ($ps) $0.30 $0.23 $0.24 $0.29 $0.38
Diluted earnings per ordinary share ($ps) $0.30 $0.23 $0.24 $0.29 $0.38
Dividends per ordinary share ($ps) $0.26 $0.23 $0.25 $0.29 $0.30
Number of ordinary shares (m) 2,958 2,958 2,930 2,855 2,094
Assets under management ($b) 215 197 173 159 115
2
2014 results at a glance
Dividend
Dividends
cents per share
Final dividend
Interim dividend
Total dividend
30 9 2 6
30 2 6 cents per share
5 5 2
1 4 2
1 3
2
5
20 12.5 1.5 13. up 3 cents
1
5 5 The fi nal dividend of 13.5 cents per share is
1 1
10 12.5 1.5 12.5 payable on 10 April 2015 and will be 80% franked.
1
0
2010 2011 2012 2013 2014
Profit
Profi t attributable to shareholders
$ million
750 Profi t attributable to shareholders
$ 884
m
500
up 32%
250 m m m m m
5 8 9 2 4
7 8 8 7 8
7 6 6 6 8
$ $ $ $ $
0
2010 2011 2012 2013 2014
Underlying profi t
$ 1,045
Underlying profi t m
$ million
up 23%
1,000
750 Underlying profi t is AMP’s preferred measure of profi tability,
as it best refl ects the underlying performance of AMP and is
the basis from which the board determines dividends.
500
The main difference between these two numbers comes from
movements in investment markets and specifi c program costs.
250 760m 909m 950m 849m 1,045m Tsahhccaisor euinhncotleluddde efross r rt eahl e$a t1cio0vse0t t moof iu lAlniModneP rr’sely dbinuugcsit pnioreonsfi si nte. fpAfi r coriefie cnto canytc tpirliirbaotugitoraanbm ole,f w toh ich
$ $ $ $ $
profi t attributable to shareholders and underlying profi t can
0
2010 2011 2012 2013 2014 be found on pages 9 and 63.
AMP 2014 annual report 3
Directors’ report
for the year ended 31 December 2014
Your directors present their report on the consolidated entity consisting of AMP Limited and the entities it controlled at the end of
or during the year ended 31 December 2014.
Directors’ details
The directors of AMP Limited during the year ended 31 December 2014 and up to the date of this report are listed below. Directors
were in offi ce for this entire period (except where stated otherwise): Simon McKeon (Chairman) (appointed Chairman 8 May 2014),
Peter Mason (Chairman) (retired 8 May 2014), Craig Meller (Chief Executive Offi cer and Managing Director) (appointed 1 January
2014), Patricia Akopiantz, Richard Allert (retired 8 May 2014), Catherine Brenner, Brian Clark, Paul Fegan, Trevor Matthews (appointed
3 March 2014), John Palmer and Peter Shergold. Details of each of the current director’s qualifi cations, experience and special
responsibilities are set out below.
Simon McKeon AO
Chairman BCom, LLB. Age 59
Simon was appointed to the AMP Limited Board in March 2013 and assumed the
role of Chairman in May 2014. He also became a member of the Nomination and
Governance Committee and the People and Remuneration Committee in May 2014.
Experience
Simon has a career spanning 30 years, specialising in corporate mergers and
acquisitions, fund raising and strategic advice with Macquarie Group, where he
ultimately served as Chairman of its Melbourne offi ce. He is currently retained as
a consultant to Macquarie. Prior to joining Macquarie, Simon was a solicitor with
Dawson Waldron and from 2006–2009 was Chairman of MYOB.
Simon was made an Offi cer of the Order of Australia in 2012 for distinguished
Simon McKeon AO service to business and commerce through leadership and advisory roles, and to the
community as a supporter of national and international charitable, educational and
sporting organisations. He was Australian of the Year in 2011. Simon is the Chairman
of CSIRO and was the Founding President of the Australian Takeovers Panel. He is the
inaugural President of the Review Panel for the banking industry’s Banking and Finance
Oath and was the 2011 Australian Banking Ambassador of the Year. His extensive
involvement in the community includes being an Australia Day Ambassador for the
Victorian Government and wide ranging philanthropic interests.
Government and community involvement
– Chairman of CSIRO
– Director of Red Dust Role Models
– Member of the Big Issue Advisory Board
– Patron of MS Research Australia
Craig Meller
Chief Executive Offi cer and Managing Director BSc (Hons). Age 52
Craig was appointed Chief Executive Offi cer (CEO) and Managing Director (MD)
in January 2014. He has been a Director of AMP Life Limited since October 2007,
a Director of The National Mutual Life Association of Australasia Limited (NMLA)
since March 2011 and was appointed a Director of AMP Capital Holdings Limited
in January 2014.
Experience
Prior to becoming CEO, Craig was MD of AMP Financial Services from 2007–2013.
Craig started with the AMP group’s United Kingdom (UK) business in 2001 before
coming to Australia in 2002 to take up the role of MD, AMP Banking. He moved to
the role of Director of Product Manufacturing in 2003.
Craig Meller Craig started his career at Lloyds TSB in the UK where he spent more than 14 years
working across the business in a number of management roles. From 1998 he worked
at Virgin Direct where he was MD from 1999–2001.
Craig is an executive member of the Australia Japan Business Co-operation Committee.
4
Patricia (Patty) Akopiantz
Director BA, MBA. Age 51
Patty was appointed to the AMP Limited Board and the People and Remuneration
Committee in March 2011, becoming Chairman of that committee in August 2014.
She was appointed a member of the Audit Committee in May 2014 and a member
of the Risk Committee in November 2014. Patty was appointed a Director of AMP
Bank Limited in November 2011. In June 2012, she became a member of the AMP
Bank Audit Committee. She was also appointed Chairman of the AMP Bank Risk
Committee in November 2014.
Experience
Patty has over 25 years senior management and consultancy experience, primarily in
the retail and consumer industries both in Australia and overseas. During her executive
career, she served as General Manager of Marketing at David Jones and Vice President
Patty Akopiantz
for a United States (US) apparel manufacturer. As a management consultant with
McKinsey she helped lead its Retail and Consumer Goods Practice, advising some of
Australia’s leading companies on strategy and organisational change.
Over the last 13 years, Patty has served on numerous boards including AXA Asia Pacifi c
Holdings and Coles Group. In 2003, she was awarded a Centenary Medal for services
to Australian society in business leadership.
Catherine Brenner
Director BEc, LLB, MBA. Age 44
Catherine was appointed to the AMP Limited Board in June 2010 and as Chairman of
its Nomination and Governance Committee in May 2013. She was appointed Chairman
of the AMP Life Limited Board in May 2011, having been a member of that board and
its Audit Committee since May 2009. Catherine has been Chairman of the NMLA Board
and a member of its Audit Committee since March 2011. She was also appointed as a
member of the AMP Life and NMLA Risk Committees in November 2014.
Experience
Catherine is a former senior investment banker and corporate lawyer with experience
in corporate advisory and equity capital markets. As an investment banker she provided
advice on takeovers, capital raisings, trade sales and privatisations to both government
and private organisations and held the position of Managing Director, Investment
Catherine Brenner Banking at ABN AMRO.
Listed directorships
– Director of Boral Limited (appointed September 2010)
– Director of Coca-Cola Amatil Limited (appointed April 2008)
Government and community involvement
– Trustee of the Sydney Opera House Trust
– Director of SCEGGS Darlinghurst Limited
Brian Clark
Director BSc, MSc, DSc. Age 66
Brian was appointed to the AMP Limited Board in January 2008. He was appointed a
member of the Nomination and Governance Committee in July 2008 and a member
of the People and Remuneration Committee in May 2009. Brian was also appointed a
member of the AMP Capital Holdings Limited Board and its Audit and Risk Committee
in February 2008. He became Chairman of the AMP Capital Holdings Limited Board
in March 2009.
Experience
Brian spent 10 years in a variety of senior executive roles at Vodafone internationally,
most recently in the UK as Group Human Resources Director. He was CEO of Vodafone’s
Australian business as well as CEO of the Asia Pacifi c region, based in Tokyo. Before
joining Vodafone, Brian spent three years as CEO of Telkom SA Ltd, in South Africa.
Brian Clark
He began his career at the Council for Scientifi c and Industrial Research (CSIR) in
Pretoria, South Africa, rising to the role of President and overseeing its change from
a government institution into a commercially focused contract research business.
Listed directorships
– Director of Boral Limited (appointed May 2007)
AMP 2014 annual report 5
Directors’ report
for the year ended 31 December 2014 continued
Paul Fegan
Director MBA. Age 53
Paul was appointed to the AMP Limited Board in August 2009. He was appointed to
the Audit Committee in November 2009 and became Chairman of that committee
in December 2010. Paul was also appointed as a member of the Risk Committee in
November 2014. Paul was appointed Chairman of AMP Bank Limited in March 2014.
Experience
Paul has over 30 years experience in the fi nancial services industry, holding positions
including Chief Financial Offi cer (CFO) of Genworth Australia and Group MD, Strategy
and Corporate Services with Telstra. Paul was the CEO and MD of St.George Bank until
its merger with Westpac Banking Corporation. He was also a Director of St.George’s
funds administration subsidiary, Asgard Wealth Solutions. Prior to joining St.George,
Paul was based in the UK as Chief Operating Offi cer of Yorkshire Bank. He held
Paul Fegan
director positions in both Yorkshire Bank and Clydesdale Bank and a series of senior
appointments with National Australia Bank in Australia, the US, Hong Kong, the
UK and Ireland. Paul is a Senior Advisor with Gresham Partners.
Trevor Matthews
Director MA. Age 62
Trevor was appointed to the AMP Limited Board in March 2014 and became a
member of its Audit Committee in May 2014. He was also appointed a member
of the Risk Committee in November 2014. Trevor joined the AMP Life Limited and
NMLA Boards and their respective Audit Committees in June 2014 and was appointed
Chairman of those Audit Committees and a member of the AMP Life and NMLA Risk
Committees in November 2014.
Experience
Trevor has extensive life insurance experience in Australia, Canada, Japan and the
UK. He was previously with Aviva, most recently as Executive Director and Chairman,
Developed Markets and prior to that CEO of Aviva UK. Trevor has also held the position
of CEO with Friends Provident and Standard Life, both based in the UK, as well as
Trevor Matthews Manulife Financial in Japan. He has also held senior roles with National Australia
Bank and Legal & General in Australia.
Trevor has served as Commissioner for the UK Commission for Employment and
Skills, Chairman of the Financial Services Skills Council in the UK, and has served on
the boards of the Life Insurance Association of Japan, the Life Offi ce Management
Association in the US, and the Life Investment and Superannuation Association in
Australia. Trevor is a director of the Bupa Australia and New Zealand group. He is
a Fellow of the Institute of Actuaries in both Australia and the UK.
Listed directorships
– Director of Cover-More Group Limited (appointed December 2013)
John Palmer ONZM
Director BAgrSc, Hon. DCom. Age 67
John was appointed to the AMP Limited Board in July 2007. He retired from the
AMP Life Limited board in June 2014 after 10 years service. He joined the AMP
Capital Holdings Limited Board and its Audit and Risk Committee in May 2014.
Experience
John has extensive experience as a director and chairman of companies in the
agricultural and fi nance sectors. He has a track record of successfully leading change
and reconstruction of diverse corporates in marketing, agribusiness and aviation.
John has served numerous companies as Chairman or a Director including Air New
Zealand and Solid Energy New Zealand and is Chairman of Rabobank New Zealand.
In 1998, John received the Bledisloe Cup for outstanding contribution to the New
John Palmer ONZM Zealand fruit industry. In 1999, he was awarded with an Offi cer of the New Zealand
Order of Merit (ONZM) for service to the New Zealand kiwifruit industry.
Listed directorships
– Director of Air New Zealand Limited (November 2001–March 2014)
6
Professor Peter Shergold AC
Director BA (Hons), MA, PhD. Age 68
Peter was appointed to the AMP Limited Board in May 2008 and became a member
of its Audit Committee in July 2008. He was also appointed Chairman of the Risk
Committee in November 2014. Peter was appointed a Director of the AMP Life
Limited Board in August 2008 and a Director of the NMLA Board in March 2011.
Experience
Peter is Chancellor and Chair of the board of trustees of the University of Western
Sydney. He serves on a number of private sector, government and not-for-profi t boards,
including as Director of Corrs Chambers Westgarth and Chairman of Opal Aged Care.
Previously, Peter served as Secretary of the Department of the Prime Minister and
Cabinet for fi ve years. Peter had previously been CEO of the Aboriginal and Torres
Strait Islander Commission and Comcare, Public Service Commissioner, Secretary
Professor Peter Shergold AC
of the Department of Employment, Workplace Relations and Small Business, and
Secretary of the Department of Education, Science and Training.
He was appointed a Member of the Order of Australia in 1996, awarded a Centenary
Medal in 2003 and made a Companion of the Order of Australia in 2007, each being
for public service.
Listed directorships
– Director of Veda Group Limited (appointed October 2013)
Government and community involvement
– Chairman of the National Centre for Vocational Education Research
– Member of the Prime Minister’s Indigenous Advisory Council
– Chairman of the NSW Public Service Commission Advisory Board
– Chairman of the Tertiary Education Quality and Standards Agency (TEQSA)
Advisory Council
– Member of the Queensland Public Sector Renewal Board
Attendance at board and committee meetings
The table below shows details of attendance by directors of AMP Limited at meetings of boards and the committees of which they
were members during the year ended 31 December 2014. The directors also attended other meetings, including management
meetings and meetings of subsidiary boards or committees of which they were not a member during the year.
Nomination People and Subsidiary board
AMP Limited Audit Risk and Governance Remuneration Ad hoc and committee
Board/Committee Board meetings Committee Committee1 Committee Committee committees2 meetings3
Held/attended A B A B A B A B A B A B A B
Simon McKeon 13 13 3 3 – – 3 3 2 2 2 2 5 3
Craig Meller 13 13 – – – – – – – – 3 3 17 17
Patricia Akopiantz 13 13 3 3 1 1 – – 4 4 – – 12 12
Richard Allert4 5 5 3 3 – – – – – – – – 3 3
Catherine Brenner 13 13 – – – – 4 4 – – – – 17 17
Brian Clark 13 13 – – – – 4 4 4 4 – – 10 10
Paul Fegan 13 13 6 6 1 1 – – – – 3 3 6 6
Peter Mason5 5 5 – – – – 2 2 2 2 1 1 – –
Trevor Matthews6 10 10 3 3 1 1 – – – – – – 9 9
John Palmer 13 12 – – – – – – 2 2 – – 12 9
Peter Shergold 13 13 6 6 1 1 – – – – – – 12 12
Column A – indicates the number of meetings held while the director was a member of the board/committee.
Column B – indicates the number of those meetings attended.
1 In November 2014, a Risk Committee was established in accordance with the Australian Prudential Regulation Authority (APRA)
Prudential Standard CPS 510 Governance.
2 Ad hoc committees of the board were organised during the year in relation to fi nancial results and AMP group capital initiatives.
3 Subsidiary board and committee meetings include AMP Life/NMLA, AMP Bank and AMP Capital Holdings. Where meetings of AMP
Life/NMLA were held concurrently, only one meeting has been recorded in the above table.
4 Rick Allert retired as a Director on 8 May 2014.
5 Peter Mason retired as a Director on 8 May 2014.
6 Trevor Matthews was appointed as a Director on 3 March 2014, a member of the Audit Committee in May 2014 and a member of
the Risk Committee in November 2014.
AMP 2014 annual report 7