FY 19 Results
Today we have released AMP’s full year results for 2019 and provided a progress report on the implementation of our strategy.
AMP’s performance in 2019 reflects the significant changes underway as we execute our new strategy, reposition the sale of AMP Life, deal with legacy issues, and work with a vast array of new regulation.
The business reported an underlying profit of A$464 million for the year. This was 32% lower than underlying profit in 2018 and largely reflected the challenging conditions faced by our Australian wealth management business. Our investment management business, AMP Capital, posted a strong performance with earnings rising 19% and AMP Bank also produced a resilient performance in a competitive market.
The net loss attributable to shareholders for the year was A$2.5 billion. This is due to a predominantly non-cash impairment of A$2.35 billion (post-tax) taken in the first half to reflect major business changes. As a non-cash charge, this does not affect our financial stability.
Capital and dividend
AMP remains a well-capitalised business.
To allow us to immediately begin executing our strategy, we announced a capital raising at our half year results, that included an institutional placement and retail share purchase plan. We were pleased with the strong support received.
At the end of 2019, we held A$2.5 billion above minimum regulatory requirements, which includes proceeds from the capital raising. This strong surplus is necessary to ensure we meet our obligations to policyholders and superannuation members.
Given that we have yet to complete the sale of AMP Life, the Board has taken the decision not to declare a final dividend. As a result, AMP has not paid a dividend in 2019. We understand that shareholders will be disappointed, but we have made this decision for the long-term interests of your company.
AMP Life sale update
In August 2019, we announced a revised agreement to sell AMP Life to Resolution Life for A$2.5 billion in cash, as well as a A$500m interest in Resolution Life Australia, a new Australian based company controlled by Resolution Life.
This agreement replaces the original transaction with Resolution Life, which could not progress due to challenges in meeting the necessary conditions precedent to achieve regulatory approvals.
The Board maintains its view that the sale to Resolution Life delivers the best outcomes for our shareholders, policyholders and business. We continue to progress the transaction, which is expected to complete by June 30, 2020.
Proceeds from the sale will be used to fund delivery of our new strategy, repay debt and fund the separation of AMP Life. Beyond this, we will assess a range of options with the intent to return available capital to shareholders, subject to unforeseen circumstances.
In 2019, we made good progress on our client remediation program for clients of advisers who received inappropriate advice, or who paid fees where there was no evidence of service delivered. The program made A$190 million of payments in the second half of the year and remains on track for completion in 2021.
After setting out our new strategy in August, AMP has made progress on implementation in the second half of the year.
In Australian wealth management we made significant changes in our advice network, designed to improve productivity and compliance. We began the process of simplifying our superannuation offers and our North platform continues to grow assets under management. In AMP Bank, we continue to experience growth in residential mortgages and deposits, as we focus on meeting clients’ whole of wealth needs.
AMP Capital made good progress against its long-term international growth plan, exhibited by two large infrastructure fundraisings during 2019.
In August, we also announced that we were looking at options for our New Zealand wealth management business. The business is effectively managed and operating in a standalone capacity from the group. We are in discussions with a number of interested parties and expect to provide an update at or before our first half results in August 2020.
As part of our strategy, the company has also committed to delivering A$300 million of gross cost savings by the end of the 2022 financial year. We have made a strong start on this program in 2019.
We have begun the turnaround of AMP, with much work still to be done as part of our three-year roadmap for recovery. The Board and I are cognisant that every action we take must reflect the long-term interests of you, our shareholders and owners of this business, as we work to build a simpler, stronger and more successful AMP.
Chairman, AMP Limited
Watch the live webcast by Francesco De Ferrari, CEO at 11am Sydney time: https://edge.media-server.com/mmc/p/ejgn8umc
A replay of this briefing will be available online after 2pm
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