AMP Group Holdings Limited 2011 Financial Statements

112 Pages·2012·1.1 MB·English

AMP Group Holdings Limited
ABN 88 079 804 676

Directors’ Report
for the year ended
31 December 2011
AMP Group Holdings Limited
DIRECTORS’ REPORT
for the year ended 31 December 2011

Your directors present their report on the consolidated entity (AMPGH group) consisting of AMP Group Holdings
Limited (the company) and the entities it controlled at the end of or during the year ended 31 December 2011.

Directors’ details
The Directors of the company during the year ended 31 December 2011 and up to the date of this report are
shown below. Directors were in office for this entire period, except where stated otherwise:

- Colin Storrie (appointed 18 February 2011)
- Simon Hoole
- David Rowe (appointed 16 December 2011)
- Paul Leaming (resigned 31 December 2011)
- Brian Salter (resigned 21 February 2011)

Principal activities
AMP Group Holdings Limited is a wholly owned controlled entity of AMP Limited and is the holding company of
the majority of the controlled entities of the AMP Limited group (AMP). AMP Bank is wholly owned by AMP
Limited and is not part of the AMPGH group. However, AMP Group Holdings Limited provides an unconditional
and irrevocable guarantee over AMP Bank Limited.

AMPGH group is Australia and New Zealand’s leading independent wealth management company with a
growing international investment management business. It provides financial advice, products and services and
investment opportunities to help people and organisations build financial security.

AMP merged with the Australian and New Zealand businesses of AXA Asia Pacific Holdings Limited (AXA) in
March 2011, creating a new competitive force in wealth management.

AMP today holds number one or two rankings across key market segments in Australian and New Zealand, is
Australia’s largest superannuation provider and one of the largest domestic investment managers.

AMP Financial Services
AMP Financial Services provides customers in Australia and New Zealand with financial advice,
superannuation, retirement income and other investment products, superannuation services for businesses,
income protection, disability and life insurance products. These products and services are primarily distributed
through a network of 4,100 aligned and employed advisers and planners in Australia and New Zealand, as well
as through extensive relationships with independent financial advisers.

On 31 December 2011, AMP sold its general insurance distribution business.

AMP Capital
AMP Capital is a diversified investment manager, managing around $120 billion in assets for investors. Through
a team of 240 investment professionals and a carefully selected global network of investment partners, AMP
Capital invests in equities, fixed interest, infrastructure, property, diversified funds and multi-manager funds.
AMP Capital also provides commercial, industrial and retail property management services. In addition to its
well established operations in Australia and New Zealand, AMP Capital has a growing international presence
with offices in Bahrain, China, Hong Kong, India, Japan, Luxembourg, Singapore, the United Kingdom and the
United States.

On 9 December 2011, AMP Capital announced a strategic business alliance with a leading Japanese trust
bank, Mitsubishi UFJ Trust and Banking Corporation (MUTB). The alliance will accelerate AMP Capital’s growth
in Asia and significantly expand its distribution footprint in Japan. MUTB will acquire a 15 per cent minority
interest in AMP Capital Holdings Limited, the parent company of the AMP Capital group of companies, for
$425m. The transaction is expected to complete in March 2012, subject to regulatory approval.

Review of operations and results
AMPGH group operates in one of the largest and fastest growing wealth management markets in the world. The
company is financially strong, with a disciplined, prudent approach to costs and capital management. This
business model is characterised by a large customer base, scale in key market segments, the largest and most
qualified financial adviser network in Australia and New Zealand, high quality, contemporary and diverse
products, platforms and investment capabilities, one of the largest investment management houses in the Asia
Pacific region and a trusted brand.
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AMP Group Holdings Limited
DIRECTORS’ REPORT
for the year ended 31 December 2011

AMPGH group's statutory profit attributable to shareholders of AMP Group Holdings Limited for the year ended
31 December 2011 was $532 million, compared to $689 million for the previous corresponding period.

Capital management
Equity and reserves of the AMPGH group attributable to shareholders increased to $5,772 million at 31
December 2011 from $1,911 million at 31 December 2010. This was a result of share capital of $3,700 million
issued for the acquisition of AXA Asia Pacific Holdings Limited, profits to 31 December 2011 and other
movements in reserves, partially offset by dividends paid up to 31 December 2011.

Significant changes to the state of affairs
Details of capital changes during 2011 are set out in the previous paragraph..

On 30 March 2011, AMP completed its acquisition of AXA Asia Pacific Holdings Limited for the purposes of
merging the Australian and New Zealand operations of both entities. The merger was effected by AMP acquiring
100 per cent of the issued shares in AXA Asia Pacific Holdings Limited though a contractual arrangement with
its parent entity, AXA SA, and a scheme of arrangement with its minority shareholders. The contractual
arrangement to acquire the shares held by AXA SA was conditional upon the approval of the scheme of
arrangement with the minority shareholders of AXA Asia Pacific Holdings Limited which was approved by those
shareholders on 2 March 2011 and subsequently approved by the Supreme Court of Victoria on 7 March 2011.
AMP obtained control of AXA Asia Pacific Holdings Limited on 30 March 2011, which is the date that AMP
acquired 100 per cent of AXA Asia Pacific Holdings Limited shares and was able to appoint directors to the
board. Details of the financial impact of the transactions are provided in Note 3 of the Financial Report.

There have been no other significant changes in the state of affairs during this financial year.

Events occurring after the reporting date
As at the date of this report, the directors are not aware of any matter or circumstance that has arisen since the
end of the year that has significantly affected or may significantly affect the entity’s operations in future years,
the results of those operations in future years, or the entity’s state of affairs in future years which is not already
reflected in this report, other than the following:

- On 9 December 2011, AMP announced a strategic business alliance with Mitsubishi UFJ Trust and
Banking Corporation (MUTB) which included the sale to MUTB of a 15 per cent interest in AMP Capital
Holdings Limited. The settlement date for this transaction is in March 2012 (subject to regulatory
approval).

Likely developments
In the opinion of the directors, disclosure of further information about likely developments in AMPGH group’s
businesses is commercially sensitive and would likely be detrimental and result in unreasonable prejudice to the
company.

The environment
AMPGH group manages its environmental impact through the broader framework of AMP’s Environmental
Policy guiding improvements in direct environmental impacts by reducing the organisation’s use of energy,
water, paper and other materials. It also outlines environmental considerations in AMP’s purchasing decisions
and product design. The Environment Policy is available on AMP’s website: www.amp.com.au

AMP has an environment leadership team that drives improvements in AMP's operational environmental
performance and is chaired by the Managing Director of AMP Capital. The team has established key targets for
energy use and waste recycling, and these have been endorsed by senior management. Over the past three
years, initiatives have been implemented to increase the number of buildings with recycling programs, automatic
PC shutdown, server virtualisation, low energy lighting, additional timers and sensors. Employee awareness and
participation activities have also been introduced to help the organisation meet the key targets.

As an investor, AMP believes engagement with companies on environmental issues is an effective way to
influence management practices for the benefit of customers and the environment. During 2011, AMP Capital
continued to be a signatory to the Carbon Disclosure Project (CDP) (www.cdproject.net). AMP was listed in the
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AMP Group Holdings Limited
DIRECTORS’ REPORT
for the year ended 31 December 2011

CDP 2011 ASX200 and NZX50 Carbon Disclosure Leadership Index and was an active participant in the
Investor Group on Climate Change (www.igcc.org.au). AMP Capital is also a signatory to the United Nations
Principles of Responsible Investment.

In the normal course of its business operations, AMP is subject to a range of environmental regulations, of
which there have been no material breaches during the year.

AMP reports energy use and greenhouse gas emissions through compliance with the Energy Efficiency
Opportunities Act 2006 (EEO Act) and the National Greenhouse and Energy Reporting Act 2007 (NGER Act).

Both these Acts require AMP to report on energy consumption levels. The EEO Act aims to encourage more
efficient use of energy by large energy-using businesses, while the NGER Act provides for the reporting and
dissemination of information related to greenhouse gas emissions, greenhouse gas projects, energy production
and energy consumption.

Reporting to the Australian Government Department of Resources, Energy and Tourism and the Australian
Government Department of Climate Change and Energy Efficiency (the responsible government bodies) is
performed at an AMP Limited level, with AMP Capital making up a core component of the reporting through its
property and infrastructure divisions.

AMP’s 2011 report on Energy Efficient Opportunities is available at www.amp.com.au/socialresponsibility.

Indemnification and insurance of directors and officers
Under its Constitution, the company indemnifies, to the extent permitted by law, all officers of the company
(including the directors) against any liability (including the costs and expenses of defending actions for an actual
or alleged liability) incurred in their capacity as an officer of the company.

This indemnity is not extended to current or former employees of the AMP group against liability incurred in their
capacity as an employee, unless approved by the board of AMP Limited. No such indemnities have been
provided during or since the end of the financial year.

During the financial year, AMP Limited agreed to insure all of the officers of the company against certain
liabilities as permitted by the Corporations Act. The insurance policy prohibits disclosure of the nature of the
cover, the amount of the premium, the limit of liability and other terms.

The company has entered into a deed of indemnity and access with each director of the company. Each deed
of indemnity and access provides that:
• the director will have access to the books of the company for their period of office and for seven years after
they cease to hold office (subject to certain conditions); and
• the company agrees to indemnify the director, to the extent permitted by law, against any liability incurred by
the Director in his or her capacity as a director of the company and of other AMP group companies.

Rounding
In accordance with the Australian Securities and Investments Commission Class Order 98/0100, amounts in this
Directors’ Report and the accompanying Financial Report have been rounded off to the nearest million
Australian dollars, unless stated otherwise.

Auditor’s independence declaration to the directors of AMP Group Holdings Limited

The directors have obtained an independence declaration from the company’s auditor, Ernst & Young, a copy of
which is attached to this report and forms part of the Directors’ report for the year ended 31 December 2011.

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AMP Group Holdings Limited
DIRECTORS’ REPORT
for the year ended 31 December 2011

Signed in accordance with a resolution of the directors.

Colin Storrie Simon Hoole
Director Director

Sydney, 27 February 2012
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AMP Group Holdings Limited
ABN 88 079 804 676

Financial Report
for the year ended
31 December 2011
AMP GROUP HOLDINGS LIMITED
ABN 88 079 804 676
FINANCIAL REPORT
31 DECEMBER 2011

TABLE OF CONTENTS
(cid:2)
INCOME STATEMENT ............................................................................................................................................................................ 1
(cid:2)
STATEMENT OF COMPREHENSIVE INCOME ....................................................................................................................................... 2
(cid:2)
STATEMENT OF FINANCIAL POSITION ................................................................................................................................................. 3
(cid:2)
STATEMENT OF CHANGES IN EQUITY ................................................................................................................................................. 4
(cid:2)
STATEMENT OF CASH FLOWS ............................................................................................................................................................. 6
(cid:2)
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................................................................... 7
(cid:2) (cid:2)
1. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ...................................................... 7
(cid:2) (cid:2)
2. SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS................................................................ 19
(cid:2) (cid:2)
3. MERGER WITH THE AUSTRALIAN AND NEW ZEALAND BUSINESSES OF AXA ASIA PACIFIC HOLDINGS LIMITED ...... 21
(cid:2) (cid:2)
4. INFORMATION RELATING TO THE PARENT ENTITY ........................................................................................................... 24
(cid:2) (cid:2)
5. INCOME .................................................................................................................................................................................. 25
(cid:2) (cid:2)
6. INVESTMENT GAINS AND (LOSSES) .................................................................................................................................... 26
(cid:2) (cid:2)
7. EXPENSES ............................................................................................................................................................................. 27
(cid:2) (cid:2)
8. INCOME TAX .......................................................................................................................................................................... 28
(cid:2) (cid:2)
9. RECEIVABLES ........................................................................................................................................................................ 30
(cid:2) (cid:2)
10. INVENTORIES AND OTHER ASSETS .................................................................................................................................... 31
(cid:2) (cid:2)
11. INVESTMENTS IN FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITIES ................................................................... 32
(cid:2) (cid:2)
12. INVESTMENT PROPERTY ..................................................................................................................................................... 33
(cid:2) (cid:2)
13. PROPERTY, PLANT AND EQUIPMENT ................................................................................................................................. 34
(cid:2) (cid:2)
14. INTANGIBLES ......................................................................................................................................................................... 35
(cid:2) (cid:2)
15. PAYABLES .............................................................................................................................................................................. 37
(cid:2) (cid:2)
16. PROVISIONS .......................................................................................................................................................................... 38
(cid:2) (cid:2)
17. BORROWINGS ....................................................................................................................................................................... 39
(cid:2) (cid:2)
18. SUBORDINATED DEBT .......................................................................................................................................................... 40
(cid:2) (cid:2)
19. DIVIDENDS ............................................................................................................................................................................. 41
(cid:2) (cid:2)
20. CONTRIBUTED EQUITY ......................................................................................................................................................... 42
(cid:2) (cid:2)
21. LIFE INSURANCE CONTRACTS ............................................................................................................................................ 43
(cid:2) (cid:2)
22. OTHER LIFE INSURANCE AND INVESTMENT CONTRACT DISCLOSURES ....................................................................... 54
(cid:2) (cid:2)
23. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION .............................................................................. 58
(cid:2) (cid:2)
24. CAPITAL MANAGEMENT ....................................................................................................................................................... 71
(cid:2) (cid:2)
25. NOTES TO STATEMENT OF CASH FLOWS .......................................................................................................................... 72
(cid:2) (cid:2)
26. SUPERANNUATION FUNDS .................................................................................................................................................. 74
(cid:2) (cid:2)
27. SHARE-BASED PAYMENTS ................................................................................................................................................... 79
(cid:2) (cid:2)
28. GROUP CONTROLLED ENTITY HOLDINGS .......................................................................................................................... 84
(cid:2) (cid:2)
29. ASSOCIATES .......................................................................................................................................................................... 95
(cid:2) (cid:2)
30. FORWARD INVESTMENTS, LEASING AND OTHER COMMITMENTS .................................................................................. 97
(cid:2) (cid:2)
31. CONTINGENT LIABILITIES ..................................................................................................................................................... 98
(cid:2) (cid:2)
32. RELATED-PARTY DISCLOSURES ......................................................................................................................................... 99
(cid:2) (cid:2)
33. AUDITORS’ REMUNERATION .............................................................................................................................................. 100
(cid:2) (cid:2)
34. EVENTS OCCURRING AFTER REPORTING DATE ............................................................................................................. 101
(cid:2)
DIRECTORS’ DECLARATION ............................................................................................................................................................. 102
(cid:2)
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AMP GROUP HOLDINGS LIMITED ................................................. 103

Registered Office:
Level 24, 33 Alfred Street
Sydney NSW 2000 Australia

AMP Group Holdings Limited, a company limited by shares, is incorporated and domiciled in Australia.
AMP Group Holdings Limited Financial Report

Income statement
for the year ended 31 December 2011

Consolidated
Note 2011 2010
$m $m
Income and expenses of shareholders, policyholders, external unitholders and
non-controlling interests(1)
Life insurance premium and related revenue 5 1,877 1,100
Fee revenue 5 1,982 1,452
Other revenue 5 380 294
Investment gains and (losses) 6 773 4,208
Life insurance claims and related expenses 7 (1,790) (1,289)
Operating expenses 7 (3,398) (2,235)
Finance costs 7 (393) (408)
Share of profit or (loss) of associates accounted for using the equity method 4 6
Movement in external unitholder liabilities 225 (284)
Change in policyholder liabilities
- life insurance contracts 25 202
- investment contracts 868 (2,259)
Income tax (expense) credit 8 (33) (118)
Profit for the year 520 669
Profit for the year attributable to shareholders of AMP Group Holdings Limited 532 689
Profit (loss) for the year attributable to non-controlling interests (12) (20)
Profit for the year 520 669
Footnote:
(1) Income and expenses include amounts attributable to shareholders' interests, policyholders' interests in the life entities'
statutory funds, external unitholders' interests and non-controlling interests. Amounts included in respect of the life entities'
statutory funds have a substantial impact on most of the consolidated Income statement lines, especially Investment gains and
losses and income tax (expense) credit. In general, policyholders' interests in the transactions for the period are attributed to
them in the lines Change in policyholder liabilities.

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AMP Group Holdings Limited Financial Report

Statement of comprehensive income
for the year ended 31 December 2011

Consolidated
2011 2010
$m $m
Profit for the year 520 669
Other comprehensive income for the year recognised in retained earnings
Defined benefit plans(1)
- actuarial gains and (losses) (177) (15)
- income tax (expense) credit 53 4
(124) (11)
Other comprehensive income for the year recognised in reserves
Cash flow hedges
- gains and (losses) in fair value of cash flow hedges (8) (3)
- income tax (expense) credit 2 1
(6) (2)
Owner-occupied property revaluation
- gains (losses) in valuation of owner-occupied property 9 (1)
- income tax (expense) credit (1) -
8 (1)
Exchange difference on translation of foreign operations
- exchange gains (losses) 3 (21)
- transferred to profit for the year 2 -
- transferred to profit for the year - income tax (expense)/credit - -
5 (21)
Revaluation of hedge of net investments
- gains and (losses) in fair value of hedge of net investments 3 3
- income tax (expense) credit - (1)
- transferred to profit for the year - gross - (4)
- transferred to profit for the year - income tax (expense) credit - 1
3 (1)
Total comprehensive income for the year 406 633
Total comprehensive income for the year attributable to shareholders of AMP Group
Holdings Limited 418 653
Total comprehensive income (loss) for the year attributable to non-controlling interests (12) (20)
Total comprehensive income for the year
406 633
Footnote
(1) Actuarial gains and (losses) are determined in accordance with AASB119 Employee Benefits. This is not the same as the
calculation methods used to determine the funding requirements for the plans. Refer to Note 1(dd) and Note 26.

2