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Grupa Azoty2021
Annual report
For the investor
in all of us
CONTENTS
CONTENTS
OVERVIEW
BUSINESS REVIEW
DIRECTORS’ REPORT
BUSINESS REVIEW
10
10
Our strategy
Our strategy
12
12
Group financial
performance
Group financial
performance
16
16
Business review
Business review
20
20
Sustainability
overview
Sustainability
overview
DIRECTORS’ REPORT
22 Board of directors
26 Management team
22 Board of directors
30 Directors’ report
26 Management team
42 Remuneration report
30 Directors’ report
42 Remuneration report
FINANCIAL REPORT
FINANCIAL REPORT
72 Financial statements
78
72 Financial statements
Notes to the financial
statements
78
Notes to the financial
155 Directors’ declaration
statements
156 Independent auditor’s report
155 Directors’ declaration
156 Independent auditor’s report
ADDITIONAL
INFORMATION
ADDITIONAL
INFORMATION
162 Securityholder information
165 Glossary
162 Securityholder information
165 Glossary
OVERVIEW
02
02
2021 Highlights
2021 Highlights
04
04
Chair message
Chair message
06
06
CEO message
CEO message
08
08
For the investor
in all of us
For the investor
in all of us
About this report
We take our reporting obligations seriously and we provide concise and up-to-date
About this report
information about your company at amp.com.au/shares.
We take our reporting obligations seriously and we provide concise and up-to-date
AMP’s board-approved Corporate Governance Statement, dated 8 March 2022,
information about your company at amp.com.au/shares.
is available on our website at amp.com.au/corporategovernance.
AMP’s board-approved Corporate Governance Statement, dated 8 March 2022,
The Directors’ report, Financial report and the Independent Auditor’s report
is available on our website at amp.com.au/corporategovernance.
are dated and current as at 10 February 2022.
The Directors’ report, Financial report and the Independent Auditor’s report
Unless otherwise specified, all amounts are in Australian dollars.
are dated and current as at 10 February 2022.
AMP Limited ABN 49 079 354 519. Authorised for release by the AMP Limited Board.
Unless otherwise specified, all amounts are in Australian dollars.
AMP Limited ABN 49 079 354 519. Authorised for release by the AMP Limited Board.
This is an interactive PDF designed to enhance your experience. The best way
to view this report is with Adobe Reader. Click on the links on the contents
pages or use the home button
in the footer to navigate the report.
Acknowledgement of Country
AMP acknowledges all First
Nations Peoples across Australia.
Acknowledgement of Country
We recognise the Traditional
AMP acknowledges all First
Custodians of the land and value
Nations Peoples across Australia.
the connection to Country,
We recognise the Traditional
waterways and sky.
Custodians of the land and value
We pay our respects to the Elders
the connection to Country,
for their resilience, courage
waterways and sky.
and wisdom; for ensuring the
We pay our respects to the Elders
survival of this country’s rich
for their resilience, courage
culture and heritage.
and wisdom; for ensuring the
Our hope for the future is to
survival of this country’s rich
unite as one people, to listen
culture and heritage.
and learn from each other
Our hope for the future is to
with respect and walk the path
unite as one people, to listen
to reconciliation together.
and learn from each other
with respect and walk the path
to reconciliation together.
CONTENTS
OVERVIEW
BUSINESS REVIEW
DIRECTORS’ REPORT
02
2021 Highlights
Our strategy
10
12
16
Group financial
performance
Business review
20
Sustainability
overview
Chair message
CEO message
04
06
08
For the investor
in all of us
About this report
We take our reporting obligations seriously and we provide concise and up-to-date
information about your company at amp.com.au/shares.
AMP’s board-approved Corporate Governance Statement, dated 8 March 2022,
is available on our website at amp.com.au/corporategovernance.
The Directors’ report, Financial report and the Independent Auditor’s report
are dated and current as at 10 February 2022.
Unless otherwise specified, all amounts are in Australian dollars.
AMP Limited ABN 49 079 354 519. Authorised for release by the AMP Limited Board.
22 Board of directors
26 Management team
30 Directors’ report
42 Remuneration report
FINANCIAL REPORT
72 Financial statements
78
Notes to the financial
statements
155 Directors’ declaration
156 Independent auditor’s report
ADDITIONAL
INFORMATION
162 Securityholder information
165 Glossary
Acknowledgement of Country
AMP acknowledges all First
Nations Peoples across Australia.
We recognise the Traditional
Custodians of the land and value
the connection to Country,
waterways and sky.
We pay our respects to the Elders
for their resilience, courage
and wisdom; for ensuring the
survival of this country’s rich
culture and heritage.
Our hope for the future is to
unite as one people, to listen
and learn from each other
with respect and walk the path
to reconciliation together.
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We are transforming
AMP, building on its
heritage of supporting
Australians for more
than 170 years, to meet
the needs of customers
today and in the future.
We have built good momentum in
our strategy to become a simpler,
purpose-led business.
2
2021
HIGHLIGHTS
AMP’s 2021 annual report summarises our activities and
performance for the financial year ended 31 December
2021. It provides a snapshot of our strategy and our
operations across all areas of our business.
This report forms part of our annual reporting suite, which brings together our
financial, non-financial and sustainability reports for the year. These reports
and our corporate governance statement are available to download on our
website corporate.amp.com.au/shareholder-centre/results-reporting/reports.
FINANCIAL PERFORMANCE
BUSINESS PROGRESS
Net profit after tax (NPAT)
(underlying)
Total assets under management
(AUM) and administration
$356m
$248b
Simplified portfolio
including operational
separation of AMP Capital’s
Private Markets business
(Collimate Capital)
Surplus capital above target
requirements
Growth in bank deposits
$383m
as at 31 December 2021
↑10%
Gross cost reductions
(excluding AMP Capital)
$140m
Increase in platform cashflows
from external financial advisers
↑18%
Strategies in place
for AMP and Collimate
Capital to reposition both
for growth opportunities
and efficiencies
Purpose and values
work underway to become
purpose-led, delivering for
our customers, shareholders
and employees
2
2021
HIGHLIGHTS
AMP’s 2021 annual report summarises our activities and
performance for the financial year ended 31 December
2021. It provides a snapshot of our strategy and our
operations across all areas of our business.
This report forms part of our annual reporting suite, which brings together our
financial, non-financial and sustainability reports for the year. These reports
and our corporate governance statement are available to download on our
website corporate.amp.com.au/shareholder-centre/results-reporting/reports.
FINANCIAL PERFORMANCE
BUSINESS PROGRESS
Net profit after tax (NPAT)
Total assets under management
Simplified portfolio
(underlying)
(AUM) and administration
$356m
$248b
Surplus capital above target
Growth in bank deposits
requirements
$383m
as at 31 December 2021
↑10%
Gross cost reductions
(excluding AMP Capital)
$140m
Increase in platform cashflows
from external financial advisers
↑18%
including operational
separation of AMP Capital’s
Private Markets business
(Collimate Capital)
Strategies in place
for AMP and Collimate
Capital to reposition both
for growth opportunities
and efficiencies
Purpose and values
work underway to become
purpose-led, delivering for
our customers, shareholders
and employees
CUSTOMERS
PEOPLE AND
PARTNERS
COMMUNITIES AND
ENVIRONMENT
$1.9b
PENSION PAYMENTS
for Australian customers
in retirement
+27NPS
Positive Net Promoter Score
for Australian customers
(stable vs FY 20)
71
A-
EMPLOYEE SATISFACTION
(eSat score) ↑67
rating from Carbon Disclosure
Project (CDP), second highest
rating available
+8,000
hours EMPLOYEE LEARNING
and DEVELOPMENT
↓36%
reduction in operational
SCOPE 1 AND 2 EMISSIONS
(from 2019 base year)
+3,300
40:40:20
+20
WITHDRAWALS on hardship
and compassionate grounds
valued at $36 million
GENDER DIVERSITY TARGETS MET
across board, middle management
and overall workforce
ESG FOCUSED INVESTMENT
OPTIONS added to our flagship
investment platform, MyNorth
+10,700
NEW HOME LOANS AMP Bank provided
96%
of aligned FINANCIAL ADVISERS
completed FASEA exam requirements
+$3.2m
DISTRIBUTED TO CHARITIES
AND INDIVIDUALS via the
AMP Foundation
~$1b
additional value created for AMP
CAPITAL REAL ESTATE clients through
shopping centre redevelopments
SHAREHOLDERS
488,237
TOTAL SHAREHOLDERS
COMPLETED SMALL SHAREHOLDING SALE FACILITY, ENABLING
205,148
SHAREHOLDERS
holding less than A$500 fully paid ordinary
shares to sell their holding without incurring
brokerage costs at $1.09 per share
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CHAIR
MESSAGE
The AMP board is
committed to meeting
the highest standards
of governance and
stewardship as the
company works through
its transformation.
I am pleased to present the AMP Limited Annual report for 2021.
It was a year of change and transformation for our business as
we welcomed Alexis George as our new CEO and made strong
progress on separating AMP Capital’s private markets business
(renamed Collimate Capital) from AMP Limited.
The impacts of COVID-19, including lockdowns, were a mainstay
of the year, but we continued to focus on supporting our
customers through that difficult and unsettling period.
I am proud of our people and their ability to meet those
challenges while also delivering major change programs and
a solid underlying profit result. This work sets up AMP for
a strong and sustainable future by further addressing legacy
matters and simplifying the business. We are committed
to continue this work to restore value and pride for AMP’s
shareholders, clients, people and the broader community.
Strategy and portfolio simplification
In November 2021 we outlined our strategy for both businesses,
AMP Limited and Collimate Capital, with a focus on simplification
and growth opportunities. We have strong and accomplished
leaders to take both businesses forward with the commencement
of Alexis as CEO of AMP Limited in August 2021, and Shawn
Johnson who commenced as CEO of AMP Capital in June 2021,
and will take forward the Collimate Capital business as it
demerges. Significant steps to simplify the business during 2021
established a clear perimeter for the demerger of Collimate
Capital. The divestment of the remaining stake in Resolution Life
Australasia marks AMP’s final exit from its former life insurance
and mature business, AMP Life. While this brings to a close AMP’s
long and proud involvement in life insurance in Australia, we
continue to support financial advisers and customers by providing
access to other life insurance products.
In addition, we announced the sale of both the Global Equities
and Fixed Income (GEFI) business and the Infrastructure Debt
platform, as well as the transfer of the Multi-Asset Group
business from AMP Capital to Australian Wealth Management.
Demerger progress
The announcement of the intention to demerge Collimate Capital
from AMP Limited in April 2021 followed a comprehensive review
of AMP’s business portfolio. The rationale was driven by the
fact that AMP is made up of two distinctly different businesses:
a domestic retail wealth manager and a global private markets
4
CHAIR
MESSAGE
The AMP board is
committed to meeting
the highest standards
of governance and
stewardship as the
company works through
its transformation.
I am pleased to present the AMP Limited Annual report for 2021.
It was a year of change and transformation for our business as
we welcomed Alexis George as our new CEO and made strong
progress on separating AMP Capital’s private markets business
(renamed Collimate Capital) from AMP Limited.
The impacts of COVID-19, including lockdowns, were a mainstay
of the year, but we continued to focus on supporting our
customers through that difficult and unsettling period.
I am proud of our people and their ability to meet those
challenges while also delivering major change programs and
a solid underlying profit result. This work sets up AMP for
a strong and sustainable future by further addressing legacy
matters and simplifying the business. We are committed
to continue this work to restore value and pride for AMP’s
shareholders, clients, people and the broader community.
Strategy and portfolio simplification
In November 2021 we outlined our strategy for both businesses,
AMP Limited and Collimate Capital, with a focus on simplification
and growth opportunities. We have strong and accomplished
leaders to take both businesses forward with the commencement
of Alexis as CEO of AMP Limited in August 2021, and Shawn
Johnson who commenced as CEO of AMP Capital in June 2021,
and will take forward the Collimate Capital business as it
demerges. Significant steps to simplify the business during 2021
established a clear perimeter for the demerger of Collimate
Capital. The divestment of the remaining stake in Resolution Life
Australasia marks AMP’s final exit from its former life insurance
and mature business, AMP Life. While this brings to a close AMP’s
long and proud involvement in life insurance in Australia, we
continue to support financial advisers and customers by providing
access to other life insurance products.
In addition, we announced the sale of both the Global Equities
and Fixed Income (GEFI) business and the Infrastructure Debt
platform, as well as the transfer of the Multi-Asset Group
business from AMP Capital to Australian Wealth Management.
Demerger progress
The announcement of the intention to demerge Collimate Capital
from AMP Limited in April 2021 followed a comprehensive review
of AMP’s business portfolio. The rationale was driven by the
fact that AMP is made up of two distinctly different businesses:
a domestic retail wealth manager and a global private markets
(infrastructure and real estate) business with institutional
clients. The demerger will accelerate growth strategies,
enhance customer focus, and deliver further value
to shareholders through improvements in efficiency.
Separating the two businesses is complex and extensive and
involves a number of steps, including shareholder approval
and legal processes (including court hearings to approve the
scheme of arrangement), after which Collimate Capital will
trade as a separate ASX-listed company. AMP shareholders
will be sent full details of the demerger, including details
regarding voting and upcoming shareholder meetings.
Share consolidation
AMP will propose a share consolidation at the 2022
Annual General Meeting (AGM) to be held on 20 May 2022.
If approved, the consolidation will reduce the number
of shares AMP has on issue by converting every eight AMP
shares held into one AMP share.
The consolidation is a simple mechanism through which
AMP’s trading share price can be brought to a level which
is comparable with peer companies. This process alone will
not reduce the value of the shares held by each shareholder,
or the company overall, and we can expect our share price
to adjust to reflect the reduced number of shares on issue.
Further information will be contained in the 2022 AGM
notice which will be sent to all shareholders from mid-April.
Board governance
The AMP board is committed to meeting the highest standards
of governance and stewardship as the company works
through its transformation. The board and its committees met
regularly throughout 2021, and I thank all directors and the
management team for their strong commitment. Moreover,
the board has been actively engaged in oversight of AMP’s
work to strengthen the corporate culture.
In 2021 AMP management, together with the employee
inclusion taskforce, implemented more than 95% of the
actions that were set for 2021 from the board-initiated
external Workplace Conduct Review in addition to their
continued work to create a more inclusive corporate
culture. AMP has also reached its 40-40-20 gender targets
at the board and middle management level and across the
workforce generally.
In July 2021, we welcomed Mike Hirst to the board. Mike
brings extensive experience in retail banking, treasury,
funds management and financial markets.
As previously announced, Non-executive director John
O’Sullivan has confirmed that he will not stand for
reelection to the board at the 2022 AGM. John has been
a valuable member of the board since June 2018 and has
taken the decision not to stand for reelection in order
to dedicate time to other external pursuits. I would like
to take this opportunity, on behalf of the board, to thank
John for his service and contribution to AMP.
Sustainability
At AMP we are committed to creating a sustainable and
equitable future for our stakeholders and the community,
and to openly reporting on our progress and impact.
We recognise that economic, social and environmental
issues can have a material impact on business performance
and society. AMP’s non-financial disclosures have evolved
significantly, and our 2021 Sustainability report reflects
the positive steps taken by AMP towards transparency
and best practice.
In the community, we recognise and support the growing
momentum for global action on climate change and
supporting vulnerable communities.
In 2021, we launched our Climate Position and Action Plan
which details how we manage our business and investment
activities in alignment with net zero emissions by 2050.
This builds on AMP’s long-standing commitment to action
on climate, having been carbon neutral across our global
operations since 2013.
I am also proud of the enduring support the AMP Foundation,
AMP’s philanthropic arm, provides to communities across
Australia. Since its inception in 1992 the AMP Foundation has
contributed more than $110 million to Australian communities
through direct donations, employee dollar matching, employee
fundraising and volunteering, with more than $3.2 million
provided in grants and donations in 2021 alone.
2021 financial performance
and capital position
In 2021, AMP delivered an improved financial performance
with a 53 per cent increase in underlying net profit of
$356 million. The performance was assisted by stronger
earnings in AMP Bank, New Zealand Wealth Management
and AMP Capital as well as strong investment income
from Group Office, including the contribution from our
strategic partnership with China Life Pension Company.
As we continued our transformation program in 2021,
we recognised certain impairments, mainly non-cash
write downs, to position AMP for the future. This resulted
in a reported statutory loss of $252 million, however
it should not be seen as a reflection of the underlying
business performance.
The board also continues to take a conservative approach
to capital management to support the delivery of the
demerger and AMP’s transformation and has resolved
not to pay a dividend for 2021. While we understand that
this is disappointing for shareholders, we believe that it is
the right approach when AMP is making such significant
change. We are committed to reviewing dividend payments
following the completion of the demerger later this year.
Looking forward
We have an exciting year ahead, with significant change
and opportunities. On behalf of the board, I sincerely thank
you for your support as we progressively transform AMP,
a purpose-led company building on its heritage to meet
the needs of today and the future.
DEBRA HAZELTON
Chair, AMP Limited
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6
CEO
MESSAGE
We are making
progress to rebuild
pride in AMP for
its shareholders,
employees, customers
and the community.
Since joining AMP in August 2021, I’ve taken time to listen to
shareholders, customers and employees of our iconic company.
I’ve looked at where we sit in the market, the challenges and
opportunities ahead and worked with the executive team
to develop a strategy that sets us on a path to a new AMP.
In November 2021, I outlined this strategy and the changes we’re
making to build a simpler, customer-focused and purpose-led AMP.
Purpose will be a bedrock for our strategy, guiding our decisions
and providing clarity for our employees on what we stand for.
We have engaged both our employees and customers in our work
to develop a new purpose, as we believe it will be key to restoring
trust in AMP.
We are also focused on simplifying our business and have made
progress on our planned separation and demerger of AMP
Capital’s Private Markets business – which we have recently
rebranded as Collimate Capital.
Demerger
The rationale for our demerger is simple – we have two very
different businesses that are operating in different markets,
with different customers and a different geographic focus.
In AMP Limited, we have a retail wealth management and
banking business operating in Australia and New Zealand
with about 1.5 million customers.
In Collimate Capital, we have a global manager of infrastructure
and real estate investments with a growing focus on
institutional clients.
The demerger, which is planned for the first half of 2022, will
enable Collimate Capital and AMP Limited to focus on their
respective markets and growth opportunities, as well as to
simplify and improve efficiencies to deliver value to shareholders.
We have made strong progress on the operational separation
of the two businesses in preparation for the demerger. A clear
perimeter has been set with the agreed sale of the Global
Equities and Fixed Income (GEFI) business, transfer of the
Multi-Asset Group (MAG) to Australian Wealth Management and
the divestment of the Infrastructure Debt (ID) platform which
completed in February 2022. The GEFI and ID sales, along with the
6
CEO
MESSAGE
We are making
progress to rebuild
pride in AMP for
its shareholders,
employees, customers
and the community.
Since joining AMP in August 2021, I’ve taken time to listen to
shareholders, customers and employees of our iconic company.
I’ve looked at where we sit in the market, the challenges and
opportunities ahead and worked with the executive team
to develop a strategy that sets us on a path to a new AMP.
In November 2021, I outlined this strategy and the changes we’re
making to build a simpler, customer-focused and purpose-led AMP.
Purpose will be a bedrock for our strategy, guiding our decisions
and providing clarity for our employees on what we stand for.
We have engaged both our employees and customers in our work
to develop a new purpose, as we believe it will be key to restoring
trust in AMP.
We are also focused on simplifying our business and have made
progress on our planned separation and demerger of AMP
Capital’s Private Markets business – which we have recently
rebranded as Collimate Capital.
Demerger
The rationale for our demerger is simple – we have two very
different businesses that are operating in different markets,
with different customers and a different geographic focus.
In AMP Limited, we have a retail wealth management and
banking business operating in Australia and New Zealand
with about 1.5 million customers.
In Collimate Capital, we have a global manager of infrastructure
and real estate investments with a growing focus on
institutional clients.
The demerger, which is planned for the first half of 2022, will
enable Collimate Capital and AMP Limited to focus on their
respective markets and growth opportunities, as well as to
simplify and improve efficiencies to deliver value to shareholders.
We have made strong progress on the operational separation
of the two businesses in preparation for the demerger. A clear
perimeter has been set with the agreed sale of the Global
Equities and Fixed Income (GEFI) business, transfer of the
Multi-Asset Group (MAG) to Australian Wealth Management and
the divestment of the Infrastructure Debt (ID) platform which
completed in February 2022. The GEFI and ID sales, along with the
divestment of our residual stake in Resolution Life Australasia
have strengthened our balance sheet, enabling both
businesses to have a solid platform to grow post demerger.
The demerger will be voted on by shareholders in the
coming months, and after further legal steps, Collimate
Capital will begin trading as a separately-listed company
on the ASX.
2021 financial performance
On 10 February we released our 2021 full-year financial
results, which showed a strong increase in our underlying
profit, as well as momentum we have built in simplifying
and reshaping our business.
We reported a statutory loss of $252 million which reflects
actions we took to write down the value of some assets
on our balance sheet, in addition to remediation and
transformation costs. While it has impacted our statutory
results for 2021, our actions help ensure AMP is set up
well for the future.
Our 2021 underlying net profit after tax of $356 million
increased 53 per cent on 2020. The increase was driven by AMP
Bank, AMP Capital and New Zealand Wealth Management
earnings as well as strong investment income from our joint
venture with China Life. The improved result is a testament
to the ongoing efforts and hard work of our teams.
We have also remained focused on costs – simplifying our
operating model and finding efficiencies to deliver on our
2019–2022 cost-out target of $300 million, with $260 million
delivered by the end of 2021.
As we communicated in February, we will not be paying
a full year dividend in 2021. We have committed to review
our approach to capital management including the payment
of dividends after our demerger is complete but as we focus
on delivering the demerger, continuing the transformation
of both businesses, and investing for growth, we must
be conservative with capital.
In AMP Bank we saw strong growth in our residential
mortgage book in an increasingly competitive market.
As we continue our work to grow the Bank, we’re also
maintaining our focus on good credit quality, with 30+ day
and 90+ day arrears decreasing in 2021.
In Australian Wealth Management, the business
transformation is well-progressed and we’re seeing
‘green shoots’ within each of the sub-businesses with our
Platforms business growing assets, including from external
financial advisers, our Master Trust business reducing
costs and the reshape of advice accelerating.
With New Zealand Wealth Management (NZWM)
we continued to improve our efficiency and value
to clients. During the year NZWM completed its transition
to a new index-based investment philosophy with a focus
on sustainable investing.
In AMP Capital, we had a significant year of change but
posted an 18 per cent increase in operating earnings
to $154 million, driven by strong performance fees from
the successful sale of assets held within our infrastructure
equity funds. Our Real Estate business saw the loss
of the AMP Capital Diversified Property Fund (ADPF) but
maintained focus on delivering key developments including
the expansion of Karrinyup and Marrickville Metro shopping
centres, delivering close to $1 billion in further value for our
real estate clients.
After a comprehensive process undertaken in 2021,
the Trustee of the AMP Capital Wholesale Office Fund
(AWOF) decided it was in the best interests of AWOF
investors that AMP Capital continue as manager of the fund.
Our real estate investment professionals continue to focus
on maintaining the strong performance of AWOF and
driving further value for clients.
2022 outlook
2021 was a year of significant change, and we’re
continuing that momentum into 2022 as we set AMP
up for a strong future.
As we work towards the demerger and listing of Collimate
Capital on the ASX, our teams are focused on achieving
the targets we’ve set as part of our new strategic
direction. These include opportunities that support the
momentum we’re seeing in our Bank and Platforms
business, maintaining a disciplined approach to costs, and
accelerating our simplification. In Collimate Capital, focus
is on completing the sale of GEFI ahead of demerger and
scaling its existing capabilities in infrastructure equity and
real estate investments for clients around the world.
The pandemic was a catalyst for all businesses to increase
focus on digital interactions to best support customers
and provide the services they need. Digital and data
innovation has always been important for businesses,
but it is now ‘table stakes’ to compete in the financial
services market. We will continue to build and invest
in digital capabilities including the use of data to enhance
the services and support we provide.
Reflecting on 2021, I want to thank all of you for your
continued support and investment in our company.
I joined AMP because I am passionate about our industry
and the important role we have in supporting Australians
and New Zealanders. We’ve made strong progress on
AMP’s transformation and we’re continuing to change the
business. We have the right strategy in place to rebuild
pride in AMP for its shareholders, employees, customers
and the community and your management team will
continue to work hard to ensure we deliver.
ALEXIS GEORGE
AMP Chief Executive Officer
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8
FOR THE
INVESTOR
IN ALL OF US
AMP has a long
history of helping
our customers manage
their investments and
achieve their financial
goals. Offering services
in financial advice
and superannuation,
retirement income,
banking and investment
products, we are
dedicated to supporting
‘the investor in all of us’.
AMP is committed to achieving
the best outcomes for our
customers and employees, which
in turn will drive long-term value
for our shareholders.
Our strategy to reposition
and simplify, while exploring
new growth opportunities,
will ensure AMP Limited
is well-positioned for
the future as a simpler,
customer-focused
and purpose-led business.
8
FOR THE
INVESTOR
IN ALL OF US
AMP has a long
history of helping
our customers manage
their investments and
achieve their financial
goals. Offering services
in financial advice
and superannuation,
retirement income,
banking and investment
products, we are
dedicated to supporting
‘the investor in all of us’.
AMP is committed to achieving
the best outcomes for our
customers and employees, which
in turn will drive long-term value
for our shareholders.
Our strategy to reposition
and simplify, while exploring
new growth opportunities,
will ensure AMP Limited
is well-positioned for
the future as a simpler,
customer-focused
and purpose-led business.
OUR
BUSINESS
AMP Limited
AMP Limited is a retail wealth
management and banking business
operating in Australia and New
Zealand, supporting approximately
1.5 million customers and
employing more than 4,100 people.
It comprises three business units:
AMP Bank
AMP Bank provides customers with
home loans, deposit and transaction
accounts in Australia. It provides
limited advice practice lending
and does not provide business
or corporate banking services
to industries.
In 2021, AMP Bank helped more
than 160,000 customers with their
banking needs and provided over
10,700 new home loans.
Australian
Wealth Management
AMP Capital/
Collimate Capital
Australian Wealth Management
(AWM) comprises three different
business lines.
Platforms offers superannuation,
retirement and investment products
including the flagship North
platform which continues to deliver
on its commitment of strengthening
and broadening investment choice
for customers.
Master Trust includes the largest
single retail superannuation
product set in Australia with
around 850,000 customers.
Advice provides professional
services to a network of aligned and
external financial advisers (EFAs),
supporting them to provide financial
advice and wealth solutions to
their clients.
New Zealand
Wealth Management
In New Zealand, AMP supports
customers with super, retirement,
financial advice and general
insurance, directly and through
one of the largest networks of
financial advisers in the country.
AMP Capital is a global investment
manager which services
institutional and direct clients
across public and private markets
capabilities. It has approximately
300 direct institutional clients
and 1,370 employees based in
continents including Australia,
Europe, Asia and North America.
The AMP Capital business is currently
undergoing change, exiting its
public markets capabilities to focus
on its private markets businesses
of Infrastructure Equity and Real
Estate. These businesses are
being separated from AMP Group
and will be listed on the ASX as
Collimate Capital.
To support the separation of
Collimate Capital, AMP announced
the sale of the GEFI business
and transfer of its multi-asset
investment capability to Australian
Wealth Management. Both are
expected to complete in the first
half of 2022.
The Collimate Capital Real Estate
business is one of Australia’s leading
real estate investment managers
with A$23 billion in invested
AUM across retail, office and
logistics premises. Infrastructure
Equity is focused on investments
in assets in a range of sectors
including transport, energy and
telecommunications around
the world.
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10
OUR
STRATEGY
AMP provided an update on its strategic growth plans for 2022–2024
on 30 November 2021. The strategy sets a clear path to a new AMP
by repositioning core capabilities in wealth management and banking,
simplifying the organisation and exploring opportunities for growth.
REPOSITION
Invest to grow AMP Bank
Grow the North platform building new relationships
with external financial advisers
Deliver stable earnings and optimal client outcomes
in Master Trust and New Zealand Wealth Management
Accelerate the transformation of Advice
AMP Bank’s growth will be driven through continued investment to deliver great service to customers, and mortgage
and deposit products which suit their needs. Recent investments in the bank’s core technology increased its ability to
originate mortgages, and continued investment in digital and data capability will speed up ‘time to yes’ for customers.
AMP’s flagship North platform has a strong growth opportunity, which we will target through ongoing enhancements
to products and functionality that meet the needs of aligned and external financial advisers and their customers.
A simplified Master Trust business will be better positioned to drive optimal customer outcomes, including member
fee reductions and improved investment performance in superannuation.
Our strategy in New Zealand is based on improving efficiency and delivering value to clients, with a strong focus
on sustainability investments and continuing to strengthen our distribution business.
The Advice business completed a significant transformation in 2021 including the exit of the employed advice channel and
conclusion of client register buy-back arrangements (known as BOLR facility). The acceleration of the business’ transformation
to a professional services provider will see significant simplification of the Advice model, delivering valued licensee services
at a competitive and sustainable price, and driving efficiency in our business operations.
Execute the demerger
Strong progress has been achieved on separation of the Collimate Capital business, setting it up for demerger.
SIMPLIFY
Redefine and right-size the operating model for agility and efficiency
AMP’s ongoing transformation will enable further reviews of the operating model of both businesses.
Continue to review portfolio of assets to ensure AMP is the right owner
We will continue to regularly review the assets held in AMP’s portfolio to ensure we optimise our business for the future.
Enhance shareholder value through disciplined capital management
AMP continues to progress commitments made on its cost base and capital management. We are on track to deliver
$300 million of annual run-rate cost savings by the end of 2022, with an additional $115 million of net cost-out
to be delivered by the end of 2024.
Establish direct-to-consumer solutions in selected areas
Direct-to-consumer opportunities will be a focus in AMP Bank as we enhance our digital capabilities.
EXPLORE
Develop leading position in retirement
Opportunities in the retirement sector are being driven by a large and growing market with limited products to serve
customer needs. AMP brings strong capabilities in annuities and is developing a new retirement offer to launch in 2022.
Explore adjacent new business models (organic and inorganic)
A simplified portfolio will enable AMP to consider new business models in the future.
KEY ENABLERS
10
OUR
STRATEGY
AMP provided an update on its strategic growth plans for 2022–2024
on 30 November 2021. The strategy sets a clear path to a new AMP
by repositioning core capabilities in wealth management and banking,
simplifying the organisation and exploring opportunities for growth.
REPOSITION
REPOSITION
Invest to grow AMP Bank
Invest to grow AMP Bank
Grow the North platform building new relationships
Grow the North platform building new relationships
with external financial advisers
with external financial advisers
Deliver stable earnings and optimal client outcomes
Deliver stable earnings and optimal client outcomes
in Master Trust and New Zealand Wealth Management
in Master Trust and New Zealand Wealth Management
Accelerate the transformation of Advice
Accelerate the transformation of Advice
SIMPLIFY
SIMPLIFY
Execute the demerger
Execute the demerger
COLLIMATE CAPITAL – STRATEGIC FOCUS
Collimate Capital has announced its strategy to leverage the significant opportunity to become
a global leader in private markets as a separate company. Its four core priorities comprise:
Operational
separation
Simplify
the business
Grow global
client base
Operate as an
autonomous subsidiary
from 31 December 2021
and ASX-listed in 2022.
Implement organisational
structure. Create
efficiencies and
remove duplication.
Build a global client
solutions team. Scale
existing fund series in
infrastructure equity.
Diversify
product offering
Create new product
opportunities alongside
current investment
strategies.
PATH TO NEW AMP
AMP Bank’s growth will be driven through continued investment to deliver great service to customers, and mortgage
AMP Bank’s growth will be driven through continued investment to deliver great service to customers, and mortgage
and deposit products which suit their needs. Recent investments in the bank’s core technology increased its ability to
and deposit products which suit their needs. Recent investments in the bank’s core technology increased its ability to
originate mortgages, and continued investment in digital and data capability will speed up ‘time to yes’ for customers.
originate mortgages, and continued investment in digital and data capability will speed up ‘time to yes’ for customers.
AMP’s flagship North platform has a strong growth opportunity, which we will target through ongoing enhancements
AMP’s flagship North platform has a strong growth opportunity, which we will target through ongoing enhancements
to products and functionality that meet the needs of aligned and external financial advisers and their customers.
to products and functionality that meet the needs of aligned and external financial advisers and their customers.
A simplified Master Trust business will be better positioned to drive optimal customer outcomes, including member
A simplified Master Trust business will be better positioned to drive optimal customer outcomes, including member
fee reductions and improved investment performance in superannuation.
fee reductions and improved investment performance in superannuation.
Our strategy in New Zealand is based on improving efficiency and delivering value to clients, with a strong focus
Our strategy in New Zealand is based on improving efficiency and delivering value to clients, with a strong focus
on sustainability investments and continuing to strengthen our distribution business.
on sustainability investments and continuing to strengthen our distribution business.
The Advice business completed a significant transformation in 2021 including the exit of the employed advice channel and
The Advice business completed a significant transformation in 2021 including the exit of the employed advice channel and
conclusion of client register buy-back arrangements (known as BOLR facility). The acceleration of the business’ transformation
conclusion of client register buy-back arrangements (known as BOLR facility). The acceleration of the business’ transformation
to a professional services provider will see significant simplification of the Advice model, delivering valued licensee services
to a professional services provider will see significant simplification of the Advice model, delivering valued licensee services
at a competitive and sustainable price, and driving efficiency in our business operations.
at a competitive and sustainable price, and driving efficiency in our business operations.
Strong progress has been achieved on separation of the Collimate Capital business, setting it up for demerger.
Strong progress has been achieved on separation of the Collimate Capital business, setting it up for demerger.
Redefine and right-size the operating model for agility and efficiency
Redefine and right-size the operating model for agility and efficiency
AMP’s ongoing transformation will enable further reviews of the operating model of both businesses.
AMP’s ongoing transformation will enable further reviews of the operating model of both businesses.
Continue to review portfolio of assets to ensure AMP is the right owner
Continue to review portfolio of assets to ensure AMP is the right owner
We will continue to regularly review the assets held in AMP’s portfolio to ensure we optimise our business for the future.
We will continue to regularly review the assets held in AMP’s portfolio to ensure we optimise our business for the future.
Enhance shareholder value through disciplined capital management
Enhance shareholder value through disciplined capital management
AMP continues to progress commitments made on its cost base and capital management. We are on track to deliver
AMP continues to progress commitments made on its cost base and capital management. We are on track to deliver
$300 million of annual run-rate cost savings by the end of 2022, with an additional $115 million of net cost-out
$300 million of annual run-rate cost savings by the end of 2022, with an additional $115 million of net cost-out
to be delivered by the end of 2024.
to be delivered by the end of 2024.
Establish direct-to-consumer solutions in selected areas
Establish direct-to-consumer solutions in selected areas
Direct-to-consumer opportunities will be a focus in AMP Bank as we enhance our digital capabilities.
Direct-to-consumer opportunities will be a focus in AMP Bank as we enhance our digital capabilities.
EXPLORE
EXPLORE
Develop leading position in retirement
Develop leading position in retirement
Opportunities in the retirement sector are being driven by a large and growing market with limited products to serve
Opportunities in the retirement sector are being driven by a large and growing market with limited products to serve
customer needs. AMP brings strong capabilities in annuities and is developing a new retirement offer to launch in 2022.
customer needs. AMP brings strong capabilities in annuities and is developing a new retirement offer to launch in 2022.
Explore adjacent new business models (organic and inorganic)
Explore adjacent new business models (organic and inorganic)
A simplified portfolio will enable AMP to consider new business models in the future.
A simplified portfolio will enable AMP to consider new business models in the future.
KEY ENABLERS
PURPOSE
AND CULTURE
BRAND, REPUTATION
AND ESG
DIGITAL AND DATA
CAPABILITY
RESPECT
RISK
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GROUP
FINANCIAL
PERFORMANCE
TOTAL REVENUE
$2,241m
GROSS PROFIT
$1,734m
CONTROLLABLE COSTS
2021 INVESTMENT INCOME
$775m
AMP’s controllable costs (excluding
AMP Capital) were
↓ 7%
on
2020
due to cost-out benefits which were partly
offset by structural cost increases, variable
remuneration and reinvestment spend.
$102m
(2020: $30m)
increase driven by improved returns on
the group’s cash investments, growth
in China Life Pension Company earnings,
and the contribution from a minority stake
in Resolution Life Australasia.
12
GROUP
FINANCIAL
PERFORMANCE
TOTAL REVENUE
$2,241m
GROSS PROFIT
$1,734m
CONTROLLABLE COSTS
2021 INVESTMENT INCOME
AMP’s controllable costs (excluding
$775m
AMP Capital) were
↓ 7%
on
2020
due to cost-out benefits which were partly
offset by structural cost increases, variable
remuneration and reinvestment spend.
$102m
(2020: $30m)
increase driven by improved returns on
the group’s cash investments, growth
in China Life Pension Company earnings,
and the contribution from a minority stake
in Resolution Life Australasia.
CAPITAL POSITION
AMP SHAREHOLDER EQUITY
$383m
↑ above target requirements
The board has resolved to not declare
a final 2021 dividend and continues
to maintain a conservative approach
to capital management to support the
transformation of the business. The capital
management strategy and payment
of dividends will be reviewed following
the completion of the demerger.
$3,874m
EARNING PER SHARE
(UNDERLYING)
10.7CPS
NPAT (UNDERLYING)
$356m
↑ 53%
$233m in 2020
from
NPAT (STATUTORY)
$(252)m
Impacted by items reported
below NPAT including:
$312m
This increase largely reflects stronger
AMP Bank, AMP Capital and New Zealand
Wealth Management earnings.
Impairment charges,
reflecting a comprehensive
review of the balance sheet
$133m
Transformation costs
$78m
Remediation and
related costs.
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GROUP FINANCIAL
PERFORMANCE
Profit and loss (A$m)
Revenue
AUM based revenue
Non-AUM based revenue
Performance and transaction fees
Net interest income
Other revenue
Total revenue
Variable costs
Investment management expense
Marketing and distribution
Brokerage and commissions
Loan impairment expense
Other variable costs
Total variable costs
Gross profit
Controllable costs
Employee costs
Technology
Regulatory, insurance and professional services
Project costs
Property costs
Other operating expenses
Total controllable costs
EBIT
Interest expense
Investment income
Tax expense
Minority interests MUTB (post-tax)
NPAT (underlying)
AMP Bank
Australian Wealth Management
New Zealand Wealth Management
AMP Capital
Group Office
NPAT (underlying) by business unit
Items reported below NPAT
NPAT (statutory)
FY 21
A$m
1,519
90
74
399
159
2H 21
A$m
1H 21
A$m
738
46
66
195
89
781
44
8
204
70
FY 20
A$m
1,586
96
51
391
207
2,241
1,134
1,107
2,331
(302)
(22)
(71)
26
(138)
(507)
1,734
(726)
(154)
(140)
(160)
(68)
(42)
(1,290)
444
(73)
102
(117)
–
356
153
48
39
154
(38)
356
(608)
(252)
(148)
(154)
(12)
(37)
13
(69)
(253)
881
(10)
(34)
13
(69)
(254)
853
(356)
(370)
(80)
(78)
(82)
(37)
(18)
(651)
230
(38)
45
(62)
–
175
69
21
20
94
(29)
175
(573)
(398)
(74)
(62)
(78)
(31)
(24)
(639)
214
(35)
57
(55)
–
181
84
27
19
60
(9)
181
(35)
146
(309)
(21)
(69)
(31)
(171)
(601)
1,730
(741)
(157)
(149)
(179)
(80)
(53)
(1,359)
371
(85)
30
(67)
(16)
233
111
64
35
131
(108)
233
(56)
177
%
FY
(4.2)
(6.3)
45.1
2.0
(23.2)
(3.9)
2.3
(4.8)
(2.9)
n/a
19.3
15.6
0.2
2.0
1.9
6.0
10.6
15.0
20.8
5.1
19.7
14.1
240.0
(74.6)
n/a
52.8
37.8
(25.0)
11.4
17.6
64.8
52.8
n/a
n/a
14
GROUP FINANCIAL
PERFORMANCE
Investment management expense
(148)
(154)
2,241
1,134
1,107
2,331
Regulatory, insurance and professional services
(356)
(370)
FY 21
A$m
1,519
90
74
399
159
(302)
(22)
(71)
26
(138)
(507)
1,734
(726)
(154)
(140)
(160)
(68)
(42)
444
(73)
102
(117)
–
356
153
48
39
154
(38)
356
(608)
(252)
2H 21
A$m
1H 21
A$m
FY 20
A$m
1,586
96
51
391
207
(309)
(21)
(69)
(31)
(171)
(601)
1,730
(741)
(157)
(149)
(179)
(80)
(53)
371
(85)
30
(67)
(16)
233
111
64
35
131
(108)
233
(56)
177
%
FY
(4.2)
(6.3)
45.1
2.0
(23.2)
(3.9)
2.3
(4.8)
(2.9)
n/a
19.3
15.6
0.2
2.0
1.9
6.0
10.6
15.0
20.8
5.1
19.7
14.1
240.0
(74.6)
n/a
52.8
37.8
(25.0)
11.4
17.6
64.8
52.8
n/a
n/a
781
44
8
204
70
(10)
(34)
13
(69)
(254)
853
(74)
(62)
(78)
(31)
(24)
(639)
214
(35)
57
(55)
–
181
84
27
19
60
(9)
181
(35)
146
738
46
66
195
89
(12)
(37)
13
(69)
(253)
881
(80)
(78)
(82)
(37)
(18)
(651)
230
(38)
45
(62)
–
175
69
21
20
94
(29)
175
(573)
(398)
Profit and loss (A$m)
Revenue
AUM based revenue
Non-AUM based revenue
Performance and transaction fees
Net interest income
Other revenue
Total revenue
Variable costs
Marketing and distribution
Brokerage and commissions
Loan impairment expense
Other variable costs
Total variable costs
Gross profit
Controllable costs
Employee costs
Technology
Project costs
Property costs
EBIT
Interest expense
Investment income
Tax expense
NPAT (underlying)
AMP Bank
Other operating expenses
Total controllable costs
Minority interests MUTB (post-tax)
Australian Wealth Management
New Zealand Wealth Management
AMP Capital
Group Office
NPAT (underlying) by business unit
Items reported below NPAT
NPAT (statutory)
Earnings
EPS – underlying (cps)
EPS – actual (cps)
RoE – underlying
RoE – actual
Dividend
Special dividend per share (cps)
Franking rate
Ordinary shares on issue (m)
Weighted average number of shares on issue (m) – basic
– fully diluted
– statutory
– low
– high
Share price for the period – closing (A$)
Market capitalisation – end period (A$m)
Capital and corporate debt
AMP shareholder equity (A$m)
Corporate debt (excluding AMP Bank debt) (A$m)
Corporate gearing
Interest cover – underlying (times)
Interest cover – actual (times)
Margins
FY 21
2H 21
1H 21
FY 20
10.7
(7.6)
8.4%
(6.0%)
–
–
3,266
3,337
3,384
3,335
0.91
1.62
3,299
3,874
1,431
22%
8.0
–
5.4
(12.2)
8.5%
(19.3%)
–
–
3,266
3,266
3,313
3,264
0.91
1.20
3,299
3,874
1,431
22%
8.0
–
5.3
4.3
8.3%
6.7%
–
–
3,266
3,411
3,460
3,409
1.07
1.62
3,674
4,202
2,130
26%
7.0
3.4
8.6
5.2
6.3%
3.8%
10.0
100%
3,437
3,437
3,493
3,428
1.11
2.08
5,361
4,212
2,130
26%
6.1
4.1
(1,290)
(1,359)
AMP Bank net interest margin (over average interest earning assets)
1.62%
1.53%
1.71%
1.59%
Australian Wealth Management AUM based revenue
to average AUM (bps)
AMP Capital management fees to average AUM (bps)
Cashflows and AUM
Australian Wealth management net cashflows (A$m)
Australian Wealth management AUM (A$b)
AMP Capital real asset net cashflows (A$m)
AMP Capital public markets net cashflows (A$m)
AMP Capital net cashflows (A$m)
AMP Capital AUM (A$b)
Non-AMP Capital managed AUM (A$b)
Total AUM and administration (A$b)
Controllable costs (pre-tax) and cost ratios
Total controllable costs (A$m)
Controllable costs – excluding AMP Capital (A$m)
Controllable costs – AMP Capital (A$m)
Cost to income ratio
Controllable costs to average AUM (bps)
66
34.5
(5,163)
134.0
(6,012)
(21,553)
(27,565)
177.8
70.4
248.2
1,290
775
515
71.3%
51
62
34.8
(2,461)
134.0
(2,209)
(15,925)
(18,134)
177.8
70.4
248.2
651
390
261
71.4%
52
71
34.4
(2,702)
131.2
(3,803)
(5,628)
(9,431)
187.6
68.5
256.1
639
385
254
71.2%
51
73
34.1
(7,776)
124.1
2,682
(14,512)
(11,830)
189.8
64.7
254.5
1,359
834
525
75.5%
52
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16
BUSINESS
REVIEW
AMP BANK
NPAT
$153m
↑ 38%
ON
2020
RESIDENTIAL
MORTGAGE BOOK
TO
GREW
↗$1.6b
$21.7b
FROM 2020
Full year 2021 highlights
In 2021, AMP Bank helped more than 160,000 customers with their banking needs
and provided over 10,700 new home loans to help more Australians own their own
home. The bank’s residential mortgage book grew at a faster pace than the industry
average (1.36x system) for the year. Total deposits increased $1.7 billion from 2020,
in line with the bank’s strategy to optimise its funding mix. Net interest margin (NIM)
of 1.62% in 2021 was higher than 2020, driven by lower funding and deposit costs
in the first half of the year. NIM compressed in the second half due to above system
growth in a highly competitive market and an increasing shift to fixed rate loans.
A continued focus on maintaining mortgage book quality has resulted in a reduction
in interest only lending (representing 14% of the total book in 2021) and improvement
in both 30+ and 90+ day arrears.
Operational highlights
In 2021 AMP Bank continued to focus on growth by modernising its core systems and
enhancing its service and price propositions. The benefit of investments in technology
to streamline the origination process have resulted in improved experience for both
customers and brokers. The Auto Credit Decisioning (ACD) rate improved by 75%, with
more than 60% of applications processed through ACD during the year, resulting in
faster and more consistent approvals. Paper applications for products have ceased with
straight-through processing functionality adopted and smart forms for complex entities
streamlining the application process. Strong progress has also been made on the digital
origination and establishment of deposit products, with more than 70% of retail deposit
accounts opened digitally. The Bank also ceased issuing cheques and deposit books in 2021.
OUR PEOPLE:
Working flexibly
Enabling inclusion and diversity comes in many forms
– recognising differences in the way we work is one of them.
AMP’s approach to flexible work gives leaders and employees
the autonomy to agree how, when and where work is done,
ensuring a better balance of their work and life goals. It also
ensures employees can bring their best selves to work every
day to deliver for our customers and shareholders.
Lauren Allen is part of the team that led the implementation
of AMP’s new flexible work policy, known as We-Flex, in 2021.
“Being home with my child for bath time is important to me.
I ensure my team knows my schedule, as well as me knowing
theirs, so we can deliver our work priorities without sacrificing
personal commitments. Having flexibility means I have the
option to work where, when, and how I like – giving me
autonomy and empowerment to deliver.“
“The trust built with your leader
and the conversations about your
life outside of work are helpful to
integrate commitments in a practical
way and get the best out of you
for your role. I’m so proud of the
We‑Flex program we’ve created.”
LAUREN ALLEN
Group Health, Safety and Wellbeing Manager
16
BUSINESS
REVIEW
AMP BANK
NPAT
$153m
↑ 38%
ON
2020
RESIDENTIAL
MORTGAGE BOOK
GREW
↗$1.6b
TO
$21.7b
FROM 2020
Full year 2021 highlights
In 2021, AMP Bank helped more than 160,000 customers with their banking needs
and provided over 10,700 new home loans to help more Australians own their own
home. The bank’s residential mortgage book grew at a faster pace than the industry
average (1.36x system) for the year. Total deposits increased $1.7 billion from 2020,
in line with the bank’s strategy to optimise its funding mix. Net interest margin (NIM)
of 1.62% in 2021 was higher than 2020, driven by lower funding and deposit costs
in the first half of the year. NIM compressed in the second half due to above system
growth in a highly competitive market and an increasing shift to fixed rate loans.
A continued focus on maintaining mortgage book quality has resulted in a reduction
in interest only lending (representing 14% of the total book in 2021) and improvement
in both 30+ and 90+ day arrears.
Operational highlights
In 2021 AMP Bank continued to focus on growth by modernising its core systems and
enhancing its service and price propositions. The benefit of investments in technology
to streamline the origination process have resulted in improved experience for both
customers and brokers. The Auto Credit Decisioning (ACD) rate improved by 75%, with
more than 60% of applications processed through ACD during the year, resulting in
faster and more consistent approvals. Paper applications for products have ceased with
straight-through processing functionality adopted and smart forms for complex entities
streamlining the application process. Strong progress has also been made on the digital
origination and establishment of deposit products, with more than 70% of retail deposit
accounts opened digitally. The Bank also ceased issuing cheques and deposit books in 2021.
OUR PEOPLE:
Working flexibly
Enabling inclusion and diversity comes in many forms
– recognising differences in the way we work is one of them.
AMP’s approach to flexible work gives leaders and employees
the autonomy to agree how, when and where work is done,
ensuring a better balance of their work and life goals. It also
ensures employees can bring their best selves to work every
day to deliver for our customers and shareholders.
Lauren Allen is part of the team that led the implementation
of AMP’s new flexible work policy, known as We-Flex, in 2021.
“Being home with my child for bath time is important to me.
I ensure my team knows my schedule, as well as me knowing
theirs, so we can deliver our work priorities without sacrificing
personal commitments. Having flexibility means I have the
option to work where, when, and how I like – giving me
“The trust built with your leader
and the conversations about your
life outside of work are helpful to
integrate commitments in a practical
way and get the best out of you
for your role. I’m so proud of the
We‑Flex program we’ve created.”
LAUREN ALLEN
Group Health, Safety and Wellbeing Manager
autonomy and empowerment to deliver.“
AUSTRALIAN WEALTH
MANAGEMENT
NPAT
$48m
↓ 64m
IN
2020
↑18%
INCREASE
IN INFLOWS
FROM EXTERNAL
FINANCIAL ADVISERS
TO NORTH PLATFORM
Full year 2021 highlights
Australian Wealth Management (AWM) comprises three business lines providing
advice, superannuation (Master Trust), and investment management platforms to
customers. NPAT in 2021 was largely affected by impairments to the carrying value
of Advice assets in 2021, lower revenue predominantly from repricing in Master Trust
and Platforms, and the impact of the cessation of grandfathered remuneration. AUM
increased 8% to $134 billion in 2021 driven by strong investment market returns. Net
cash outflows decreased from 2020 to $5.2 billion in 2021. This was largely attributable
to one-off impacts experienced in 2020, which included early release of super payments
to support customers during the pandemic. 2021 net cash outflows included $1.9 billion
of regular pension payments.
Operational highlights
Notable improvements were made during the year across AWM. For customers on the
North platform this involved the launch of 28 managed portfolios including 23 new equity
managed portfolios from 10 leading investment managers. This has supported strong
AUM growth in managed portfolios, more than doubling in the last 12 months.
The Master Trust business is on a transformational pathway to simplify super and improve
efficiency and member outcomes. Strong investment performance for members in the
12 months to June 2021 saw AMP’s MySuper Lifecycle funds returning an average
performance of 20%. In Advice, new commercial terms announced in July 2021 included
an uplifted service model, the release of institutional ownership and the conclusion
of buy-back (BOLR) arrangements which came into effect from 1 January 2022. The sale
of the employed advice business was also completed in December 2021.
OUR CUSTOMERS:
North Platform enhancements
In 2021 AMP significantly enhanced its platform and managed
portfolio offerings through its flagship platform, North. The
substantial increase in the range of managed portfolios available
to customers and financial advisers included the launch of
equity managed portfolios in November. This has supported
strong growth in managed portfolios with AUM having more
than doubled to $4.3 billion in 2021. AMP will continue to
broaden North’s overall investment menu to provide customers
and financial advisers with more investment choices.
As part of AMP’s commitment to delivering market leading
offers for its customers and their advisers, AMP reduced
administration fees by up to 22% on MyNorth, North and
Summit platforms, benefitting more than 210,000 customers
across these platforms. AMP also reduced minimum brokerage
fees for customers buying shares through the North platform.
17
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18
BUSINESS
REVIEW
NEW ZEALAND
WEALTH
MANAGEMENT
NPAT
$39m
11%
↑
ON
2020
39.6%
2021 COST TO
INCOME RATIO
↓
4.1%
ON
2020
Full year 2021 highlights
NZWM provides customers with a variety of wealth management solutions
including KiwiSaver, corporate superannuation, retail investments, an investment
management platform and general insurance. In 2021, AUM-based revenue
in the business increased by $1 million (1%) on 2020 primarily due to the rebound
in investment markets following the impact of the COVID-19 pandemic in the first
half of 2020. The business continues to simplify and transform its operating model
and saw a reduction in controllable costs to $36 million, down 5% on 2020. This
was due to lower employment and IT costs and lower property costs following
a reduction in office footprint.
Operational highlights
In 2021 NZWM completed its transition to a new index-based investment philosophy
with a focus on sustainable investing. This new approach has enabled NZWM
to reduce the carbon footprint of its funds while also reducing fees for clients.
Despite the loss of the KiwiSaver default status, AMP remains a substantial
participant in the overall KiwiSaver market with $5.8 billion in AUM, reflecting
growth of 14% on 2020 in the non-default KiwiSaver product.
OUR COMMUNITY:
Employees supporting their community
For 12 years the AMP Foundation has supported volunteer-led
charities through its Unsung Heroes program, which recognises
the contributions of AMP employees who donate their time and
expertise to the community. To date, the program has provided
close to $1.6 million to 200 non-profit organisations.
In 2021, the program celebrated 31 AMP Unsung Heroes for their
work over the past year. Each of the organisations they volunteer
for received a share of more than $93,000 provided by the
AMP Foundation.
AMP employee and 2021 Unsung Hero, Hemant Raval
volunteered more than 300 hours of his time to the NSW State
Emergency Service (SES) – the primary state agency for flood,
storm and tsunami events.
“I volunteer because I have a
strong desire to give back to the
community and serve those in need.
I am very proud of, and grateful for,
how the AMP Foundation supports
my SES unit through the Unsung
Heroes program.”
HEMANT RAVAL
National Development Manager
– Platforms, AMP Australian Wealth Management
18
BUSINESS
REVIEW
NEW ZEALAND
WEALTH
MANAGEMENT
AMP CAPITAL
NPAT
$39m
↑
11%
ON
2020
39.6%
2021 COST TO
INCOME RATIO
↓
4.1%
ON
2020
Full year 2021 highlights
NZWM provides customers with a variety of wealth management solutions
including KiwiSaver, corporate superannuation, retail investments, an investment
management platform and general insurance. In 2021, AUM-based revenue
in the business increased by $1 million (1%) on 2020 primarily due to the rebound
in investment markets following the impact of the COVID-19 pandemic in the first
half of 2020. The business continues to simplify and transform its operating model
and saw a reduction in controllable costs to $36 million, down 5% on 2020. This
was due to lower employment and IT costs and lower property costs following
a reduction in office footprint.
Operational highlights
In 2021 NZWM completed its transition to a new index-based investment philosophy
with a focus on sustainable investing. This new approach has enabled NZWM
to reduce the carbon footprint of its funds while also reducing fees for clients.
Despite the loss of the KiwiSaver default status, AMP remains a substantial
participant in the overall KiwiSaver market with $5.8 billion in AUM, reflecting
growth of 14% on 2020 in the non-default KiwiSaver product.
NPAT
$154m
↑from $131m
in 2020
↑45%
PERFORMANCE AND
TRANSACTION FEES
Full year 2021 highlights
AMP Capital’s 2021 NPAT was $154 million, up 18% from $131 million in 2020.
AUM-based earnings reduced 3% to $545 million, reflecting net cash outflows and fee
reductions including short-term fee concessions in Core Infrastructure and Real Estate,
partly offset by favourable market performance. Performance and transaction fees
of $74 million increased 45% on 2020, primarily due to the recognition of $58 million
of performance fees following favourable asset sales in closed-end infrastructure funds.
2021 seed and sponsor gains of $18 million were up on 2020 due to partial recovery
in COVID-19 devaluations of certain assets, including international airports.
Operational highlights
AMP Capital made significant progress on its separation from AMP Limited in 2021.
This included the sale of GEFI and the Infrastructure Debt platform and the transfer
of MAG funds to AWM. In 2021 AMP Capital also secured a record $2.2 billion
investment in AMP Capital Retail Trust from large institutional partners. The Real
Estate business saw the loss of the AMP Capital Diversified Property Fund (ADPF)
but maintained focus on delivering key developments, delivering close to $1 billion
in further value for real estate clients. The divestment of major stakes in ESVAGT
and Angel Trains also delivered strong returns for infrastructure equity clients.
19
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OUR COMMUNITY:
Employees supporting their community
For 12 years the AMP Foundation has supported volunteer-led
charities through its Unsung Heroes program, which recognises
the contributions of AMP employees who donate their time and
expertise to the community. To date, the program has provided
close to $1.6 million to 200 non-profit organisations.
In 2021, the program celebrated 31 AMP Unsung Heroes for their
work over the past year. Each of the organisations they volunteer
for received a share of more than $93,000 provided by the
AMP Foundation.
AMP employee and 2021 Unsung Hero, Hemant Raval
volunteered more than 300 hours of his time to the NSW State
Emergency Service (SES) – the primary state agency for flood,
“I volunteer because I have a
strong desire to give back to the
community and serve those in need.
I am very proud of, and grateful for,
how the AMP Foundation supports
Heroes program.”
HEMANT RAVAL
National Development Manager
– Platforms, AMP Australian Wealth Management
my SES unit through the Unsung
storm and tsunami events.
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OUR ENVIRONMENT:
Green Star Designs for our future
AMP’s new headquarters at Circular Quay, Quay Quarter
Tower (QQT) will open in early 2022. Awarded a 6 Star Green
Star – Office Design v3 rating from the Green Building Council
of Australia, the building will be known for its innovative
environmental features and vertical village design.
QQT will set new benchmarks for employee lifestyle and
operational efficiency through its focus on flexible spaces and
revolutionary environmental features.
AMP Capital Global Head of Real Estate Kylie O’Connor said:
“We are proud to manage this landmark development and
create a new workplace of the future that has a strong health
and wellbeing focus. We see this as an important step in the
revitalisation of Circular Quay and look forward to delivering
long-term, sustainable outcomes for investors, customers
and community”.
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20
SUSTAINABILITY
OVERVIEW
To AMP, sustainability is our ability to meet the needs
of the present without compromising future generations.
As custodians of our customers’ money and future,
we face complex economic, social and environmental
challenges which bring both risks and opportunities
to our customers, our people and partners and our
community and environment.
Customers
Serving customers well through
competitive, high-performing
services is critical to the sustainability
of financial services companies.
We are focused on providing a
positive experience when customers
choose AMP to help them achieve
their goals, across our range
of services from investment
management, superannuation,
banking and advice.
Our focus is continuing to build
a culture that has customers at the
forefront of our thinking and decision
making. We seek to understand our
customers’ needs, listen to their
feedback and empower our customer
facing teams to provide service
excellence. AMP is also committed
to supporting fair and equitable
outcomes for customers experiencing
vulnerability or when complaints
arise. AMP proactively supports
customers who face hardship or
have been impacted by economic
disruption caused by COVID-19.
This approach helps us build
positive, long-term relationships
with our customers.
HELPED MORE THAN
DELIVERED SOLUTIONS FOR
160,000+
359
customers with their banking
needs and provided over
institutional clients in Australia
and New Zealand and
10,700+
397
new home loans
internationally through AMP Capital
PROVIDED CONTINUED SUPPORT
to customers experiencing financial
hardship, including processing +3,300
SUPERANNUATION WITHDRAWALS
on hardship and compassionate
grounds valued at
$36m
A comprehensive overview of AMP’s annual sustainability performance can be found in our Sustainability report online
at corporate.amp.com.au/about-amp/corporate-sustainability
20
SUSTAINABILITY
People and partners
Community trust in financial
institutions is essential in maintaining
the confidence of our stakeholders
in the stability and equity of the
financial system. Conduct and
governance issues in recent years have
meant AMP, and the financial services
sector more broadly, receives a high
level of scrutiny on these matters
from customers, employees, investors
and regulators.
AMP is committed to building trust
by taking action across multiple
areas to improve our culture,
strengthen governance systems
and ensure executive management
and employees understand their
accountabilities and act in an ethical
and responsible manner. AMP’s
Code of Conduct is our commitment
to acting ethically and responsibly.
It outlines the minimum standards
of behaviour, decision making
processes and our expectations
for the treatment of employees,
customers, business partners
and shareholders.
Acknowledging the need to uplift our focus on culture, conduct and customer
remediation, AMP has continued to strengthen governance systems by:
ENHANCING
processes and disclosure of conduct-related issues through
internal and external avenues including ensuring appropriate
consequences are applied for substantiated misconduct
STRENGTHENING
the Risk Culture and Capability program, ensuring
employees are equipped to support effective risk
management through training and awareness
COMPLETING
having paid
90% of advice remediation payments to customers
as of 2021-year end
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Community and environment
AMP is committed to responsible
investment, taking a long-term view
of how our investments will balance
improved financial outcomes for our
customers, and foster a sustainable
and equitable future for everyone
in our community. Environmental,
Social and Governance (ESG) factors
are important considerations in our
investment decisions.
AMP also recognises it must
contribute to the global move to
net zero by 2050. As a diversified
financial services company, climate
change impacts and our ability
to drive action to address climate
change differs across our portfolio
of businesses. AMP has a strong
tradition of community investment
and for the past 30 years, this
support has been delivered by the
AMP Foundation, one of Australia’s
largest corporate foundations.
AMP continues to drive action on climate action in 2021 by:
MAINTAINING A-
LEADERSHIP RATING
on CDP benchmark (aligned to
Task Force on Climate-related
Financial Disclosure framework)
ACHIEVING CARBON
NEUTRALITY ACROSS OUR
GLOBAL OPERATIONS
for our 9th year and a 22% reduction
on scope 1 and 2 emissions from 2020
In 2021, the AMP Foundation, alongside other areas of the business, made
significant contributions to the communities in which we operate including:
FUNDING THREE NEW
PARTNERSHIPS WITH
NON-PROFITS
that support financial counselling
and financial capability programs
and services across Australia in
line with the Foundation’s strategic
focus on financial wellbeing
DONATING $1 MILLION
IN GRANTS
through the AMP Tomorrow Fund
to help 27 Australians working
in diverse fields – including the arts,
medical research, social enterprise,
education, disability support – to find
new solutions to community issues
OVERVIEW
To AMP, sustainability is our ability to meet the needs
of the present without compromising future generations.
As custodians of our customers’ money and future,
we face complex economic, social and environmental
challenges which bring both risks and opportunities
to our customers, our people and partners and our
community and environment.
Customers
Serving customers well through
competitive, high-performing
services is critical to the sustainability
of financial services companies.
We are focused on providing a
positive experience when customers
choose AMP to help them achieve
their goals, across our range
of services from investment
management, superannuation,
banking and advice.
Our focus is continuing to build
a culture that has customers at the
forefront of our thinking and decision
making. We seek to understand our
customers’ needs, listen to their
feedback and empower our customer
facing teams to provide service
excellence. AMP is also committed
to supporting fair and equitable
outcomes for customers experiencing
vulnerability or when complaints
arise. AMP proactively supports
customers who face hardship or
have been impacted by economic
disruption caused by COVID-19.
This approach helps us build
positive, long-term relationships
with our customers.
HELPED MORE THAN
DELIVERED SOLUTIONS FOR
160,000+
359
customers with their banking
needs and provided over
institutional clients in Australia
and New Zealand and
10,700+
397
new home loans
internationally through AMP Capital
PROVIDED CONTINUED SUPPORT
to customers experiencing financial
hardship, including processing +3,300
SUPERANNUATION WITHDRAWALS
on hardship and compassionate
grounds valued at
$36m
A comprehensive overview of AMP’s annual sustainability performance can be found in our Sustainability report online
at corporate.amp.com.au/about-amp/corporate-sustainability
22
BOARD OF DIRECTORS
DEBRA HAZELTON
CHAIR
BA (Hons), MCom, GAICD
ALEXIS GEORGE
CHIEF EXECUTIVE OFFICER
BCom, FCA
Alexis George was appointed Chief Executive Officer (CEO)
of AMP Limited in August 2021. She is responsible for leading
the AMP business.
In addition, Alexis was appointed to the AMP Limited Board and
AMP Bank Limited Board in August 2021.
EXPERIENCE
Alexis has more than 25 years’ experience in the financial services
industry in Australia and overseas. She spent seven years at ANZ,
most recently as the Deputy Chief Executive Officer, working to
drive group-wide strategic initiatives in addition to responsibility
for shared service centres and banking services.
As the Group Executive Wealth Australia, Alexis led ANZ’s
~$4 billion wealth divestment program, including the separation
and sale of its life insurance and superannuation businesses.
Prior to ANZ, Alexis spent 10 years with ING Group in a number
of senior roles including CEO Czech Republic and Slovakia
responsible for banking, insurance and funds management and
Regional Chief Operating Officer (COO) Asia responsible for
product, marketing, technology and operations.
Government and community involvement:
– Member, Institute of Chartered Accountants
– Graduate, Australian Institute of Company Directors
– Member, Chief Executive Women.
Debra was appointed to the AMP Limited Board as a non-executive
director in June 2019 and as the Chair in August 2020. She is also
the Chair of the Nomination Committee and is a member of the
Remuneration, Audit and Risk Committees.
Debra is the Chair of the AMP Bank Limited Board and is a member
of its Audit and Risk Committees.
In addition, Debra was appointed to the AMP Capital Holdings
Limited Board in June 2018.
EXPERIENCE
Debra brings significant experience from more than 30 years
in global financial services, including as the local Chief Executive
of Mizuho Bank in Australia and Commonwealth Bank (CBA)
in Japan. She has expertise across global corporate culture
transformation, institutional banking, risk management, treasury,
financial markets and human resource management.
Debra is also a non-executive director on the boards of
Treasury Corporation of Victoria and Persol Asia Pacific Pte Ltd
(Singapore) and Vice President of the Australia-Japan Business
Cooperation Committee. Her previous board experience includes
Australia-Japan Foundation, Australian Financial Markets
Association (AFMA), Asia Society and Women in Banking
and Finance. She has graduate and post-graduate degrees
in Japanese language, literature and philosophy as well as
economics and finance.
Directorships of other ASX listed companies: None
Government and community involvement:
– Director, Treasury Corporation of Victoria
(appointed August 2018)
–
Vice President, Australia-Japan Business Cooperation
Committee (AJBCC) (appointed October 2020)
– Member, Australian Chamber Orchestra – Japan Advisory
Committee (appointed May 2019)
–
Adviser, Japan Women’s Innovation Network
(appointed December 2020)
– Member, Chief Executive Women (CEW) Australia
(appointed January 2020)
22
BOARD OF DIRECTORS
DEBRA HAZELTON
CHAIR
BA (Hons), MCom, GAICD
ALEXIS GEORGE
CHIEF EXECUTIVE OFFICER
BCom, FCA
RAHOUL CHOWDRY
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BCom, FCA
MIKE HIRST
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BCom, SFF
Debra was appointed to the AMP Limited Board as a non-executive
Alexis George was appointed Chief Executive Officer (CEO)
director in June 2019 and as the Chair in August 2020. She is also
of AMP Limited in August 2021. She is responsible for leading
the Chair of the Nomination Committee and is a member of the
the AMP business.
Remuneration, Audit and Risk Committees.
In addition, Alexis was appointed to the AMP Limited Board and
Debra is the Chair of the AMP Bank Limited Board and is a member
AMP Bank Limited Board in August 2021.
of its Audit and Risk Committees.
In addition, Debra was appointed to the AMP Capital Holdings
EXPERIENCE
Limited Board in June 2018.
EXPERIENCE
Debra brings significant experience from more than 30 years
in global financial services, including as the local Chief Executive
Alexis has more than 25 years’ experience in the financial services
industry in Australia and overseas. She spent seven years at ANZ,
most recently as the Deputy Chief Executive Officer, working to
drive group-wide strategic initiatives in addition to responsibility
for shared service centres and banking services.
of Mizuho Bank in Australia and Commonwealth Bank (CBA)
As the Group Executive Wealth Australia, Alexis led ANZ’s
in Japan. She has expertise across global corporate culture
~$4 billion wealth divestment program, including the separation
transformation, institutional banking, risk management, treasury,
and sale of its life insurance and superannuation businesses.
financial markets and human resource management.
Prior to ANZ, Alexis spent 10 years with ING Group in a number
Debra is also a non-executive director on the boards of
of senior roles including CEO Czech Republic and Slovakia
Treasury Corporation of Victoria and Persol Asia Pacific Pte Ltd
responsible for banking, insurance and funds management and
(Singapore) and Vice President of the Australia-Japan Business
Regional Chief Operating Officer (COO) Asia responsible for
Cooperation Committee. Her previous board experience includes
product, marketing, technology and operations.
Government and community involvement:
– Member, Institute of Chartered Accountants
– Graduate, Australian Institute of Company Directors
– Member, Chief Executive Women.
Australia-Japan Foundation, Australian Financial Markets
Association (AFMA), Asia Society and Women in Banking
and Finance. She has graduate and post-graduate degrees
in Japanese language, literature and philosophy as well as
economics and finance.
Directorships of other ASX listed companies: None
Government and community involvement:
– Director, Treasury Corporation of Victoria
(appointed August 2018)
–
Vice President, Australia-Japan Business Cooperation
Committee (AJBCC) (appointed October 2020)
– Member, Australian Chamber Orchestra – Japan Advisory
Committee (appointed May 2019)
–
Adviser, Japan Women’s Innovation Network
(appointed December 2020)
– Member, Chief Executive Women (CEW) Australia
(appointed January 2020)
Rahoul was appointed to the AMP Limited Board as a non-executive
director in January 2020. He is a member of the Remuneration,
Nomination, Audit and Risk Committees and was appointed
as Chairman of the Risk Committee in May 2020. At the same time,
he was appointed to the AMP Bank Limited Board and is a member
of its Audit Committee and the Chairman of the Risk Committee.
EXPERIENCE
Rahoul has over 40 years’ experience in professional services,
advising complex multinational organisations in Australia
and overseas.
He is currently Partner and National Leader of Minter Ellison
Consulting’s financial services practice in Australia. Prior
to this, Rahoul was a Senior Partner at PwC for almost 30 years,
where he undertook a number of leadership roles, delivering
audit, assurance and risk consulting services to major financial
institutions in Australia, Canada and the United Kingdom.
Directorships of other ASX listed companies: None
Government and community involvement:
– Member, Reserve Bank of Australia, Audit Committee
(appointed February 2018)
Mike was appointed to the AMP Limited Board as a non-executive
director in July 2021 and is a member of the Audit, Nomination,
Risk and Remuneration Committees. At the same time, Mike was
appointed to the AMP Bank Limited Board and its Audit and
Risk Committees.
EXPERIENCE
Mike has more than 40 years of experience in board and senior
executive leadership roles within retail banking, treasury, funds
management and financial markets.
He was the Managing Director of Bendigo and Adelaide
Bank from 2009 to 2018 and prior to this worked in senior
executive and management positions with Colonial Limited,
Westpac Banking Corporation and Chase AMP Bank.
Mike served as Deputy Chairman of the Treasury Corporation
of Victoria and previously held non-executive directorships
with Austraclear Limited, Colonial First State, Rural Bank and
Barwon Health Limited.
He was a Commissioner on the Federal Government’s National
COVID-19 Commission Advisory Board, a member of the Federal
Government’s Financial Sector Advisory Council and was Deputy
Chairman of the Australian Banking Association.
Directorships of other ASX listed companies:
– Non-executive director of AMCIL Limited
(appointed January 2019)
– Non-executive director of Butn Limited
(appointed 14 September 2020)
Directorships of other companies:
– Non-executive director of GMHBA Limited
(appointed July 2018)
Government and community involvement:
– Deputy Chairman of Racing Victoria (appointed October 2016)
– Member of the Australian Institute of Company Directors
(appointed 15 April 2003)
–
Senior Fellow of FINSIA (appointed 4 September 2003)
– Honorary Member of the Business Council of Australia
(appointed July 2018)
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BOARD OF DIRECTORS
continued
KATE MCKENZIE
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BA, LLB, GAICD
JOHN O’SULLIVAN
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BA, LLB, LLM, FAICD
Kate was appointed to the AMP Limited Board as a non-executive
director in November 2020 and is a member of the Audit,
Nomination, Risk and Remuneration Committees. At the same
time, Kate was appointed to the AMP Bank Limited Board and
its Audit and Risk Committees.
John was appointed to the AMP Limited Board in June 2018.
He was appointed a member of the Audit, Nomination,
Risk and Remuneration Committees in January 2019.
In February 2019, John was appointed to the AMP Bank Limited
Board and as a member of its Audit and Risk Committees.
EXPERIENCE
Kate has more than 25 years of experience in other board and
senior executive leadership roles.
She was appointed as Chair of NBN Co. on 1 January 2022 and was
previously a non-executive director. Kate is also a non-executive
director of Healius Limited and Stockland Corporation Limited.
She has previously served on the boards of Allianz Australia,
Foxtel, Telstra Ventures, Sydney Water and Workcover. Kate
was the Chief Executive Officer of Chorus, the New Zealand
telecommunication group, listed on the ASX and NZX, from
February 2017 to December 2019, and held several executive
roles at Telstra, including as Chief Operating Officer, prior to this.
Kate has a track record for leading change and managing
diverse stakeholders across government, communities, investors
and employees.
Directorships of other ASX listed companies:
–
Stockland Corporation Limited (appointed December 2019)
– Healius Limited (appointed 25 February 2021)
Government and community involvement:
– Member, Chief Executive Women (CEW) Australia
(January 2006)
EXPERIENCE
John has over 40 years’ experience in the legal and
financial services sectors in Australia. He started his career
at Freehill Hollingdale & Page (Herbert Smith Freehills),
later becoming a partner at the firm where he was recognised
as one of Australia’s leading corporate and mergers and
acquisitions lawyers.
From 2003 to 2008, John was General Counsel of the Commonwealth
Bank of Australia before spending 10 years at Credit Suisse Australia
where he was Executive Chairman, Investment Banking and Capital
Markets, Australia until February 2018. John is a member of the
Takeovers Panel. He holds a Bachelor of Laws and Bachelor of Arts
from the University of Sydney and a Master of Laws from the
University of London.
Directorships of other ASX listed companies: None
Government and community involvement:
–
Ambassador of the Australian Indigenous Education
Foundation (appointed 2008)
– Director of Serendipity Capital Holding Limited
(appointed April 2020)
24
BOARD OF DIRECTORS
continued
KATE MCKENZIE
JOHN O’SULLIVAN
INDEPENDENT, NON-EXECUTIVE DIRECTOR
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BA, LLB, GAICD
BA, LLB, LLM, FAICD
MICHAEL SAMMELLS
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BBus, FCPA, GAICD
ANDREA SLATTERY
INDEPENDENT, NON-EXECUTIVE DIRECTOR
BAcc, MCom, FCPA, FCA, FSSA, FAICD, GCB.D
Kate was appointed to the AMP Limited Board as a non-executive
John was appointed to the AMP Limited Board in June 2018.
director in November 2020 and is a member of the Audit,
He was appointed a member of the Audit, Nomination,
Nomination, Risk and Remuneration Committees. At the same
Risk and Remuneration Committees in January 2019.
time, Kate was appointed to the AMP Bank Limited Board and
its Audit and Risk Committees.
In February 2019, John was appointed to the AMP Bank Limited
Board and as a member of its Audit and Risk Committees.
EXPERIENCE
EXPERIENCE
Kate has more than 25 years of experience in other board and
senior executive leadership roles.
John has over 40 years’ experience in the legal and
financial services sectors in Australia. He started his career
She was appointed as Chair of NBN Co. on 1 January 2022 and was
at Freehill Hollingdale & Page (Herbert Smith Freehills),
previously a non-executive director. Kate is also a non-executive
later becoming a partner at the firm where he was recognised
director of Healius Limited and Stockland Corporation Limited.
as one of Australia’s leading corporate and mergers and
She has previously served on the boards of Allianz Australia,
acquisitions lawyers.
Foxtel, Telstra Ventures, Sydney Water and Workcover. Kate
was the Chief Executive Officer of Chorus, the New Zealand
telecommunication group, listed on the ASX and NZX, from
February 2017 to December 2019, and held several executive
roles at Telstra, including as Chief Operating Officer, prior to this.
From 2003 to 2008, John was General Counsel of the Commonwealth
Bank of Australia before spending 10 years at Credit Suisse Australia
where he was Executive Chairman, Investment Banking and Capital
Markets, Australia until February 2018. John is a member of the
Takeovers Panel. He holds a Bachelor of Laws and Bachelor of Arts
Kate has a track record for leading change and managing
from the University of Sydney and a Master of Laws from the
diverse stakeholders across government, communities, investors
University of London.
and employees.
Directorships of other ASX listed companies:
–
Stockland Corporation Limited (appointed December 2019)
– Healius Limited (appointed 25 February 2021)
Directorships of other ASX listed companies: None
Government and community involvement:
–
Ambassador of the Australian Indigenous Education
Foundation (appointed 2008)
Government and community involvement:
– Director of Serendipity Capital Holding Limited
(appointed April 2020)
– Member, Chief Executive Women (CEW) Australia
(January 2006)
Michael was appointed to the AMP Limited Board as a non-executive
director in March 2020. He is the Chairman of the Remuneration
Committee and a member of the Audit, Nomination and Risk
Committees. In March 2020, Michael was also appointed to the
AMP Bank Limited Board and is a member of its Audit and
Risk Committees.
Andrea was appointed to the AMP Limited Board as a non-executive
director in February 2019 and is a member of the Audit, Nomination,
Risk and Remuneration Committees. At the same time, she was
appointed to the AMP Bank Limited Board and its Audit and Risk
Committees. She was appointed Chair of the AMP and AMP Bank
Audit Committees in May 2019.
Michael is also the Chairman of the AMP Capital Holdings
Limited Board.
EXPERIENCE
Michael has over 35 years of professional experience, with
significant experience in senior executive financial and commercial
roles. His experience as Chief Financial Officer spans over 20 years
from 1999 to 2019, where he held this role in government, private
and ASX-listed companies.
Michael is also a non-executive director of Sigma Healthcare
Limited and has served on numerous private boards for the
past 12 years.
Directorships of other ASX listed companies:
–
Sigma Healthcare Limited (appointed February 2020)
EXPERIENCE
Andrea has substantial experience as a non-executive director
and senior executive in financial services, retirement and
superannuation, government relations, clean energy and low
emissions technologies, infrastructure, professional services,
academia, investment and innovation, spanning more than
29 years.
Andrea was the managing director and CEO of the SMSF
Association for 14 years from 2003 to 2017, which she cofounded.
Prior to this, Andrea was a financial adviser, as well as founding
her own tax consulting and advisory business. Andrea attained
the Global Competent Boards ESG (GCB.D) in 2021.
Her previous Government Advisory Committee appointments
include the Federal Government’s Innovation Investment
Partnership, Stronger Super Peak Consultative Group,
Superannuation Advisory Group, the Future of Financial Advice,
the Shadow Ministry’s Infrastructure and Innovation and
Superannuation and Industry Partnerships.
Directorships of other ASX listed companies:
–
Argo Global Listed Infrastructure (appointed April 2015)
Government and community involvement:
– Director of Clean Energy Finance Corporation
(appointed February 2018)
– Deputy Chair of Woomera Prohibited Area Advisory Board
(appointed July 2019)
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26
MANAGEMENT TEAM
ALEXIS GEORGE
BCom, FCA
CHIEF EXECUTIVE OFFICER
Alexis George was appointed Chief Executive Officer (CEO) of AMP Limited in August 2021. She is responsible
for leading the AMP business. In addition, Alexis was appointed to the AMP Limited Board and AMP Bank
Limited Board in August 2021.
EXPERIENCE
Alexis has more than 25 years’ experience in the financial services industry in Australia and overseas.
She spent seven years at ANZ, most recently as the Deputy Chief Executive Officer, working to drive
group-wide strategic initiatives in addition to responsibility for shared service centres and banking services.
As the Group Executive Wealth Australia, Alexis led ANZ’s ~$4 billion wealth divestment program, including
the separation and sale of its life insurance and superannuation businesses. Prior to ANZ, Alexis spent
10 years with ING Group in a number of senior roles including CEO Czech Republic and Slovakia responsible
for banking, insurance and funds management and Regional COO Asia responsible for product, marketing,
technology and operations.
Alexis is a member of the Institute of Chartered Accountants and a graduate of the Australian Institute
of Company Directors. She is a member of Chief Executive Women.
JAMES GEORGESON
BAcc, MCom, CA
CHIEF FINANCIAL OFFICER
James was appointed Chief Financial Officer (CFO) in February 2020 after previously holding the position
of Acting CFO from August 2019. James’ portfolio is also responsible for strategic partnerships. Prior to this,
he was Deputy Chief Financial Officer of AMP, with responsibility for AMP’s group performance reporting,
strategic planning and forecasting, portfolio and capital management and AMP’s mergers and acquisitions
functions. James was appointed to the AMP Capital Holdings Limited Board in September 2020.
EXPERIENCE
Since joining AMP in 2001, James has held senior finance positions across the group including Chief Financial
Officer (AMP wealth management), Director of Group Finance, Chief Financial Officer (AMP New Zealand),
Chief Risk Officer and Director of Strategy (AMP New Zealand). James has 20 years’ experience in the
finance Industry.
James holds a Master of Commerce from Macquarie University, Bachelor of Accounting from University
of Technology Sydney, and is a Chartered Accountant with the Institute of Chartered Accountants
of Australia and New Zealand.
DAVID CULLEN
BCom, LLB, LLM
GROUP GENERAL COUNSEL
David joined AMP in September 2004 and was appointed Group General Counsel in May 2018.
David has group-wide responsibility for AMP’s legal and governance functions.
EXPERIENCE
David has over 25 years’ experience in the legal profession, with extensive experience in the areas
of M&A corporate law and corporate governance, having worked in law firms in Perth and Sydney and
with the ASX. Prior to his appointment as Group General Counsel, David was the Group Company Secretary
and General Counsel, Governance at AMP, which included acting as Company Secretary for AMP Limited.
David also worked full time on AMP’s merger with AXA APH.
David holds a Bachelor of Commerce and Bachelor of Laws from the University of WA and a Master of Laws
from the University of Sydney. He is a Fellow of the Governance Institute of Australia.
26
MANAGEMENT TEAM
Alexis George was appointed Chief Executive Officer (CEO) of AMP Limited in August 2021. She is responsible
for leading the AMP business. In addition, Alexis was appointed to the AMP Limited Board and AMP Bank
CHIEF EXECUTIVE OFFICER
ALEXIS GEORGE
BCom, FCA
Limited Board in August 2021.
EXPERIENCE
Alexis has more than 25 years’ experience in the financial services industry in Australia and overseas.
She spent seven years at ANZ, most recently as the Deputy Chief Executive Officer, working to drive
group-wide strategic initiatives in addition to responsibility for shared service centres and banking services.
As the Group Executive Wealth Australia, Alexis led ANZ’s ~$4 billion wealth divestment program, including
the separation and sale of its life insurance and superannuation businesses. Prior to ANZ, Alexis spent
10 years with ING Group in a number of senior roles including CEO Czech Republic and Slovakia responsible
for banking, insurance and funds management and Regional COO Asia responsible for product, marketing,
technology and operations.
Alexis is a member of the Institute of Chartered Accountants and a graduate of the Australian Institute
of Company Directors. She is a member of Chief Executive Women.
JAMES GEORGESON
BAcc, MCom, CA
CHIEF FINANCIAL OFFICER
James was appointed Chief Financial Officer (CFO) in February 2020 after previously holding the position
of Acting CFO from August 2019. James’ portfolio is also responsible for strategic partnerships. Prior to this,
he was Deputy Chief Financial Officer of AMP, with responsibility for AMP’s group performance reporting,
strategic planning and forecasting, portfolio and capital management and AMP’s mergers and acquisitions
functions. James was appointed to the AMP Capital Holdings Limited Board in September 2020.
EXPERIENCE
finance Industry.
Since joining AMP in 2001, James has held senior finance positions across the group including Chief Financial
Officer (AMP wealth management), Director of Group Finance, Chief Financial Officer (AMP New Zealand),
Chief Risk Officer and Director of Strategy (AMP New Zealand). James has 20 years’ experience in the
James holds a Master of Commerce from Macquarie University, Bachelor of Accounting from University
of Technology Sydney, and is a Chartered Accountant with the Institute of Chartered Accountants
of Australia and New Zealand.
DAVID CULLEN
BCom, LLB, LLM
EXPERIENCE
David joined AMP in September 2004 and was appointed Group General Counsel in May 2018.
David has group-wide responsibility for AMP’s legal and governance functions.
GROUP GENERAL COUNSEL
David has over 25 years’ experience in the legal profession, with extensive experience in the areas
of M&A corporate law and corporate governance, having worked in law firms in Perth and Sydney and
with the ASX. Prior to his appointment as Group General Counsel, David was the Group Company Secretary
and General Counsel, Governance at AMP, which included acting as Company Secretary for AMP Limited.
David also worked full time on AMP’s merger with AXA APH.
David holds a Bachelor of Commerce and Bachelor of Laws from the University of WA and a Master of Laws
from the University of Sydney. He is a Fellow of the Governance Institute of Australia.
SCOTT HARTLEY
BBA, CAICD
CHIEF EXECUTIVE, AUSTRALIAN WEALTH MANAGEMENT
Scott was appointed Chief Executive Officer (CEO) of Australian Wealth Management (previously known
as AMP Australia) in January 2021. As a retail-focused business, Australian Wealth Management supports
customers with financial advice, superannuation and investment management platforms.
EXPERIENCE
Scott Hartley has more than 25 years’ experience in executive management roles including 20 years
in the wealth management industry. Most recently, Scott was the CEO of Sunsuper. Under his leadership
from 2014 to 2019, Sunsuper grew to become the fourth largest by number of clients and the fastest
growing ‘Top 10’ superannuation and retirement business. Strong organic growth of the business was
also supplemented by two successful mergers with Kinetic Super (A$4 billion and 250,000 members)
and Austsafe Super (A$2.7 billion and 100,000 members). Prior to Sunsuper, Scott was the Executive
General Manager of Corporate and Institutional Wealth at NAB Wealth from 2009 to 2013, including
leading subsidiaries Plum Financial Services and Jana Investment Advisors.
Scott is also a Fellow of the Association of Super Funds in Australia and a Governor of the American
Chamber of Commerce in Australia.
SHAWN JOHNSON
BS, MSc, MBA
CHIEF EXECUTIVE, AMP CAPITAL
Shawn Johnson was appointed Chief Executive Officer (CEO) of AMP Capital in June 2021. As CEO, Shawn
leads AMP Capital globally, managing a range of asset classes including real estate, infrastructure equity,
infrastructure debt, equities and fixed income on behalf of retail and institutional clients.
EXPERIENCE
Shawn is an accomplished global asset management executive, serving as Senior Managing Director and
Chairman of the Investment Committee for State Street Global Advisors (SSGA) from 2003 to 2012, and prior
to that as Director of Global Fundamental Research. During his time with SSGA, assets under management
rose from US$390 billion to US$2.1 trillion. During his time at SSGA, Shawn served on the Board of Directors
for The Tuckerman Group – a real estate investment management business – and Global Alliance – a holding
company of boutique asset management companies around the world. He was also a member of SSGA’s
investment committees for real estate investments and private asset management.
Mr Johnson was appointed as Chairman of the Financial Services Sector Coordinating Council (FSSCC)
from 2008 to 2010 – a private sector organisation that coordinates US homeland security and critical
infrastructure projects with US federal financial regulators. He also served as Board Chair of the Association
of Institutional Investors. Shawn has extensive experience in technology, having worked as a senior
executive at MGA Software and TMT Software Company in the 1990s with large international institutional
clients across a range of industries. He began his career at General Electric’s Aerospace Business Group
and has also served as Lieutenant in the US Navy Reserve.
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MANAGEMENT TEAM
continued
REBECCA NASH
BBus, GAICD, GradCert
CHIEF PEOPLE OFFICER
Rebecca was appointed the Chief People Officer in November 2021, and is responsible for leading human
capital strategy, employee experience, talent and succession, leadership, performance, remuneration,
recruitment, diversity and inclusion, cultural transformation and employee development. Rebecca joined
AMP in April 2020 as Group Director People.
EXPERIENCE
Rebecca has more than 25 years of local and global multi-sector experience. Prior to joining AMP, she
spent seven years at Perpetual as the Group Executive, People & Culture where her portfolio included
sustainability and business transformation. During her time at Perpetual, Rebecca served as a Director
of Perpetual Trustee Company. Prior to Perpetual, Rebecca held senior roles with National Australia Bank
and Accenture.
SEAN O’MALLEY
MBA, BCom, FIML
GROUP EXECUTIVE, AMP BANK
Sean O’Malley was appointed the Group Executive of AMP Bank in September 2021. He is responsible
for the management and growth of AMP Bank.
EXPERIENCE
Sean joined AMP in May 2013 and has over 25 years of experience in delivering enhanced business results,
predominately in financial services industries. He has deep and broad leadership experience, having performed
multiple roles across the AMP business including as Director of AMP Contact Centres and Operations
Transformation with a focus on transforming the customer experience, and Director of AMP Direct, where he
designed the organisational structure and operating model of AMP’s direct-to-client advice model. Sean joined
the bank as Director of Technology and Operations in 2016, focused on leading capability and technology
enhancements, and the Future AMP Bank Core Program. In April 2021, Sean was appointed to Managing
Director AMP Bank. Sean is responsible for leading the bank, delivering its future growth strategy, uplifting
its digital capability and ensuring the ongoing delivery of high-quality products and services to customers.
NICOLA RIMMER-HOLLYMAN
BA (Hons), MSc
ACTING GROUP CHIEF RISK OFFICER
Nicola joined AMP in August 2019 as Head of Internal Audit and became Chief Audit Executive
in February 2020. She was appointed Acting 1 Group Chief Risk Officer in February 2022, leading AMP’s
Risk Management function across the group.
EXPERIENCE
Nicola has more than 25 years of experience in financial services, both domestically and internationally, during
which time she has built a deep understanding of regulation, risk, governance and control. Nicola has held
various roles in financial services organisations and regulators, including most recently with ANZ as General
Manager of Audit for the Wealth business, and at Barclays, HBOS and the Financial Services Authority in the
UK. Nicola is also a Past President of the Chartered Institute of Internal Audit in the UK and a former board
member of the Global Institute of Internal Audit.
Nicola holds a Bachelor of Arts (Honours) from Middlesex University and a Masters in Audit Management and
Consultancy from the University of Central England.
1 Nicola was appointed as Acting Group Chief Risk Officer following the decision of Phil Pakes to step down from the role in February 2022.
28
MANAGEMENT TEAM
continued
REBECCA NASH
BBus, GAICD, GradCert
CHIEF PEOPLE OFFICER
Rebecca was appointed the Chief People Officer in November 2021, and is responsible for leading human
capital strategy, employee experience, talent and succession, leadership, performance, remuneration,
recruitment, diversity and inclusion, cultural transformation and employee development. Rebecca joined
AMP in April 2020 as Group Director People.
EXPERIENCE
and Accenture.
Rebecca has more than 25 years of local and global multi-sector experience. Prior to joining AMP, she
spent seven years at Perpetual as the Group Executive, People & Culture where her portfolio included
sustainability and business transformation. During her time at Perpetual, Rebecca served as a Director
of Perpetual Trustee Company. Prior to Perpetual, Rebecca held senior roles with National Australia Bank
SEAN O’MALLEY
MBA, BCom, FIML
GROUP EXECUTIVE, AMP BANK
Sean O’Malley was appointed the Group Executive of AMP Bank in September 2021. He is responsible
for the management and growth of AMP Bank.
EXPERIENCE
Sean joined AMP in May 2013 and has over 25 years of experience in delivering enhanced business results,
predominately in financial services industries. He has deep and broad leadership experience, having performed
multiple roles across the AMP business including as Director of AMP Contact Centres and Operations
Transformation with a focus on transforming the customer experience, and Director of AMP Direct, where he
designed the organisational structure and operating model of AMP’s direct-to-client advice model. Sean joined
the bank as Director of Technology and Operations in 2016, focused on leading capability and technology
enhancements, and the Future AMP Bank Core Program. In April 2021, Sean was appointed to Managing
Director AMP Bank. Sean is responsible for leading the bank, delivering its future growth strategy, uplifting
its digital capability and ensuring the ongoing delivery of high-quality products and services to customers.
NICOLA RIMMER-HOLLYMAN
ACTING GROUP CHIEF RISK OFFICER
Nicola joined AMP in August 2019 as Head of Internal Audit and became Chief Audit Executive
in February 2020. She was appointed Acting 1 Group Chief Risk Officer in February 2022, leading AMP’s
Risk Management function across the group.
BA (Hons), MSc
EXPERIENCE
Nicola has more than 25 years of experience in financial services, both domestically and internationally, during
which time she has built a deep understanding of regulation, risk, governance and control. Nicola has held
various roles in financial services organisations and regulators, including most recently with ANZ as General
Manager of Audit for the Wealth business, and at Barclays, HBOS and the Financial Services Authority in the
UK. Nicola is also a Past President of the Chartered Institute of Internal Audit in the UK and a former board
member of the Global Institute of Internal Audit.
Nicola holds a Bachelor of Arts (Honours) from Middlesex University and a Masters in Audit Management and
Consultancy from the University of Central England.
1 Nicola was appointed as Acting Group Chief Risk Officer following the decision of Phil Pakes to step down from the role in February 2022.
FELICIA TREWIN
BEc, GradDipProjMgt
CHIEF TECHNOLOGY OFFICER
Felicia is a globally-experienced technologist and leader with over two decades of experience working across
an array of blue chip organisations. She was announced as AMP’s Chief Technology Officer in December 2021,
joining the business in March 2022.
EXPERIENCE
Felicia joined AMP from Australian Super where she led the Technology function for four years and was
a member of the Executive Committee. Between 2014 and 2018, Felicia worked at ANZ, starting as the
Global Head of Technology for Corporate and Commercial banking, where she was responsible for delivering
end-to-end technology services for over 450,000 business banking customers, and nearly 3,000 staff.
Prior to ANZ, Felicia was a Director in Deloitte UK’s Financial Services Technology Consulting practice where
she focused on large-scale outsourcing and commercial rerstructuring, and leading complex transformation
programs. Felicia’s early career included roles with Andersen Consulting in Australia and the US and at
Microsoft in the US and the UK, where she led global operational and call centre services.
BLAIR VERNON CHIEF EXECUTIVE, NEW ZEALAND WEALTH MANAGEMENT
Blair joined AMP in 2009 and became Chief Executive AMP Wealth Management, New Zealand in 2019.
EXPERIENCE
Blair was previously Managing Director from January 2017, and prior to this served as AMP’s Director Retail
Financial Services; Director of Advice & Sales and General Manager Marketing and Distribution. Blair has
over 25 years’ experience across the Financial Services sector in New Zealand and Australia.
From August 2020 to January 2021, Blair also served as Acting CEO for AMP Australia, where he was
responsible for AMP’s wealth management and banking divisions with a focus on strengthening
client-led outcomes.
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30
Directors’ report
for the year ended 31 December 2021
ABOUT THE DIRECTORS’ REPORT
This directors’ report provides information on the structure and progress of our business, our
2021 financial performance, our strategies and prospects for the future and the key risks we face.
It covers AMP Limited and the entities it controlled during the year ended 31 December 2021.
OPERATING AND FINANCIAL REVIEW
Principal activities
AMP is a leading wealth management company in Australia and New Zealand offering customers financial advice and superannuation,
retirement income, banking and investment products across a portfolio of businesses. We also provide corporate superannuation
products and services for workplace super and self-managed superannuation funds (SMSFs). In AMP Capital, we manage investments
across a number of major asset classes for domestic and international clients.
AMP holds several strategic partnerships including:
–
–
19.99% equity interest in China Life Pension Company (CLPC)
14.97% equity interest in China Life AMP Asset Management Company Ltd (CLAMP), a fund management company which offers retail
and institutional investors in China access to leading investment solutions
–
24.90% equity interest in US real estate investment manager, PCCP LLC
During the year AMP agreed to sell its 19.13% equity interest in Resolution Life Australasia for $524 million and this transaction is expected
to complete in 1H 2022 subject to regulatory approvals.
For the purposes of this report, our business is divided into four areas: AMP Bank, Australian Wealth Management,
New Zealand Wealth Management and AMP Capital.
Description of business units
AMP Bank offers residential mortgages, deposits and transactional banking. The Bank continues to focus on growth through investing
in technology to streamline the origination process, improving the experience for both customers and intermediaries. As at 31 December
2021, AMP Bank helped around 161,900 clients with their banking needs and provided over 10,700 new home loans.
Australian Wealth Management (AWM) comprises of three different business lines providing advice, superannuation, retirement income
and managed investments products:
–
Platforms includes superannuation, retirement and investment products through which managed funds, managed portfolios, listed
securities, term deposits and guarantee investment options can be accessed to build a personalised investment portfolio. The flagship
North platform is an award-winning online wrap platform which continues to deliver on its commitment of strengthening and
broadening investment choice for our clients and providing a contemporary platform for advisers to manage their clients’ funds.
– Master Trust offers the largest single retail superannuation product set in Australia (SignatureSuper) with around 850,000 customers.
The highly rated SignatureSuper offer consists of three products across super and pension. The open investment menu caters
to different risk profiles with exposure to a range of professional managers in order to meet the needs and goals of customers.
The Master Trust business delivers high quality member services, with strong administration, contact centre and digital capabilities.
It also has a proven pedigree in managing corporate super plans with complex and tailored benefit designs, including defined benefits.
– Advice provides professional services to a network of aligned and external financial advisers (EFAs). These advisers provide financial
advice and wealth solutions to their clients, including retirement planning, investments and financing. In addition to supporting
a network of professional advisers, the Advice business partners with a number of aligned advice businesses via equity ownership
to support the growth and development of these businesses.
New Zealand Wealth Management encompasses the wealth management, financial advice and distribution business in New Zealand.
It provides clients with a variety of wealth management solutions including KiwiSaver, corporate superannuation, retail investments,
a wrap investment management platform and distribution of general insurance.
30
Directors’ report
for the year ended 31 December 2021
ABOUT THE DIRECTORS’ REPORT
This directors’ report provides information on the structure and progress of our business, our
2021 financial performance, our strategies and prospects for the future and the key risks we face.
It covers AMP Limited and the entities it controlled during the year ended 31 December 2021.
OPERATING AND FINANCIAL REVIEW
Principal activities
AMP is a leading wealth management company in Australia and New Zealand offering customers financial advice and superannuation,
retirement income, banking and investment products across a portfolio of businesses. We also provide corporate superannuation
products and services for workplace super and self-managed superannuation funds (SMSFs). In AMP Capital, we manage investments
across a number of major asset classes for domestic and international clients.
AMP holds several strategic partnerships including:
19.99% equity interest in China Life Pension Company (CLPC)
–
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and institutional investors in China access to leading investment solutions
–
24.90% equity interest in US real estate investment manager, PCCP LLC
14.97% equity interest in China Life AMP Asset Management Company Ltd (CLAMP), a fund management company which offers retail
During the year AMP agreed to sell its 19.13% equity interest in Resolution Life Australasia for $524 million and this transaction is expected
to complete in 1H 2022 subject to regulatory approvals.
For the purposes of this report, our business is divided into four areas: AMP Bank, Australian Wealth Management,
New Zealand Wealth Management and AMP Capital.
Description of business units
AMP Bank offers residential mortgages, deposits and transactional banking. The Bank continues to focus on growth through investing
in technology to streamline the origination process, improving the experience for both customers and intermediaries. As at 31 December
2021, AMP Bank helped around 161,900 clients with their banking needs and provided over 10,700 new home loans.
Australian Wealth Management (AWM) comprises of three different business lines providing advice, superannuation, retirement income
and managed investments products:
–
Platforms includes superannuation, retirement and investment products through which managed funds, managed portfolios, listed
securities, term deposits and guarantee investment options can be accessed to build a personalised investment portfolio. The flagship
North platform is an award-winning online wrap platform which continues to deliver on its commitment of strengthening and
broadening investment choice for our clients and providing a contemporary platform for advisers to manage their clients’ funds.
– Master Trust offers the largest single retail superannuation product set in Australia (SignatureSuper) with around 850,000 customers.
The highly rated SignatureSuper offer consists of three products across super and pension. The open investment menu caters
to different risk profiles with exposure to a range of professional managers in order to meet the needs and goals of customers.
The Master Trust business delivers high quality member services, with strong administration, contact centre and digital capabilities.
It also has a proven pedigree in managing corporate super plans with complex and tailored benefit designs, including defined benefits.
– Advice provides professional services to a network of aligned and external financial advisers (EFAs). These advisers provide financial
advice and wealth solutions to their clients, including retirement planning, investments and financing. In addition to supporting
a network of professional advisers, the Advice business partners with a number of aligned advice businesses via equity ownership
to support the growth and development of these businesses.
New Zealand Wealth Management encompasses the wealth management, financial advice and distribution business in New Zealand.
It provides clients with a variety of wealth management solutions including KiwiSaver, corporate superannuation, retail investments,
a wrap investment management platform and distribution of general insurance.
AMP Capital is a diversified investment manager across major asset classes including infrastructure debt, infrastructure equity and real
estate which make up its Private Markets business, Global Equities and Fixed Income (GEFI), diversified, multi-manager and multi-asset
funds which make up its Public Markets business. AMP Capital’s aspiration is to build a leading global private markets platform, underpinned
by equity investments in infrastructure and real estate.
On 23 April 2021, following the conclusion of AMP’s portfolio review, AMP announced the intention to demerge AMP Capital’s Private
Markets business, consisting of infrastructure equity, infrastructure debt and real estate. Subsequently, on 24 December 2021, AMP
announced the further simplification of Private Markets with the sale of infrastructure debt, which is expected to complete in Q1 2022.
The demerger of the Private Markets business will create two focused businesses better equipped to pursue and allocate capital to distinct
growth opportunities and realise efficiencies.
As part of the demerger preparations, on 8 July 2021, AMP announced the sale of its Global Equities and Fixed Income business (GEFI),
which is expected to complete by Q1 2022.
The remaining AMP Capital Public Markets business, the Multi-Asset Group (MAG), which is responsible for asset allocation on behalf
of AMP’s superannuation clients, will complete its transition to Australian Wealth Management prior to demerger, creating an end-to-end
superannuation and investment platform business, with the transition of front office functions already complete.
Client remediation
AMP has completed all file reviews for its client remediation program. The total cost of the program will be $828 million, of which
approximately $588 million represents payments to customers. This total program cost is six per cent above original estimates made
three years ago. These costs are now fully provisioned.
To date $37.9 million has been paid to customers under the inappropriate advice program, with a further $1.9 million offered, but not yet
paid. Customers have so far received $489.7 million in fee for no service remediation, and all payments are targeted to complete by end
of Q1 2022.
Demerger update
On 23 April 2021, AMP announced its intention to demerge its Private Markets business by 1H 2022.
AMP continues to make strong progress on the operational separation of AMP Capital’s Private Markets business, in preparation for
demerger in 1H 2022. A clear perimeter has been set with the agreed sale of the GEFI business, the announcement of the sale of the
infrastructure debt business and the transfer of the MAG, and CLAMP to AMP Limited. In addition, the appointment of Shawn Johnson
as CEO, AMP Capital in June 2021 and the appointments of Patrick Snowball and Andrew Fay as Chairman designate and Deputy Chairman
designate further strengthen our readiness for demerger.
The demerger will be subject to final board approval, required regulatory approvals, applicable consents and approval from AMP’s
shareholders and is expected to occur in 1H 2022.
AMP announces new contemporary advice service model
On 26 July 2021, AMP announced the introduction of a new service model with its aligned advice network marking a new era for financial
advice at AMP.
The new model, developed in collaboration with AMP adviser associations, will be progressively introduced with AMP providing services
to advisers which support the delivery of quality advice, improve practice efficiency and help advisers grow their businesses.
Divestment of equity interest in Resolution Life Australasia
On 3 November 2021, AMP announced an agreement to divest its 19.13% equity interest in Resolution Life NOHC Pty Ltd (RLA) for
consideration of $524 million to Resolution Life Group, less the amount of any dividends, distributions or capital returns that are paid
from RLA to AMP. The sale is subject to regulatory approval and is expected to complete in 1H 2022.
Subsequent to the agreement to divest, AMP received dividends and capital returns from RLA of $15 million.
As part of the divestment agreement, AMP and RLA have also agreed to settle a number of post-completion adjustments and certain
claims between the parties, subject to various limitations and exclusions, which results in a payment of $141 million from AMP to RLA
at completion.
Divestment of Infrastructure Debt platform
On 24 December 2021, AMP announced an agreement to sell its Infrastructure Debt platform to Ares Holdings LP for consideration
of up to $428 million. The sale is subject to a number of conditions precedent and is expected to complete in the first quarter of 2022.
As the Infrastructure Debt platform has been controlled by AMP throughout the reporting period, the results of this business are included
in AMP’s 2021 results.
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32
Directors’ report
for the year ended 31 December 2021
Review of operations and results
The loss attributable to shareholders of AMP Limited for the year ended 31 December 2021 was $252 million (2020: $177 million profit).
Basic (loss)/ earnings per share for the year ended 31 December 2021 on a statutory basis was (7.6) cents per share (2020: 5.2 cents per share).
On an underlying basis, the earnings per share was 10.7 cents per share (2020: 8.6 cents per share).
Key performance measures were as follows:
–
–
–
–
–
–
–
2021 NPAT (underlying) 1 of $356 million increased 53% from $233 million in 2020. This increase largely reflects the impact of stronger
AMP Bank earnings (+38%), AMP Capital earnings (+18%), New Zealand Wealth Management earnings (+11%) and stronger investment
income from Group Office, including contributions from CLPC and Resolution Life Australasia, partly offset by lower Australian Wealth
Management earnings (-25%).
2021 NPAT (statutory) loss of $252 million was impacted by items reported below NPAT including $312 million of impairment charges,
reflecting a comprehensive review of the balance sheet, $133 million of transformation costs, $78 million of remediation and related
costs and other one-off items.
AMP’s total assets under management (AUM) and administration were $248.2 billion 2 at 31 December 2021 (2020: $255 billion).
Australian Wealth Management net cash outflows were $5.2 billion in 2021 compared to net cash outflows of $7.8 billion in 2020.
Net cash outflows in 2021 also included $1.9 billion of regular pension payments to members. The improvement in net cash outflows
was largely attributable to one-off impacts in 2020, including the $1.8 billion loss of corporate mandates and $1.8 billion of COVID-19
Early Release of Super (ERS) payments.
AMP Capital external net cash outflows were $12.8 billion, with $4.6 billion of net cash outflows across real estate largely attributable
to the exit of the AMP Capital Diversified Property Fund (ADPF) and $6.9 billion net cash outflows across public markets.
AMP Bank’s residential mortgage book increased to $21.7 billion driven by competitive pricing and offers, consistent service and
targeted growth in principal and interest loans across both owner-occupied and investment lending.
AMP’s controllable costs, excluding AMP Capital, of $775 million were 7% lower than 2020 due to cost out benefits partly offset
by structural cost increases, variable remuneration and reinvestment spend.
–
AMP’s cost to income ratio was 71.3% in 2021, down from 75.5% in 2020.
– Underlying return on equity was 8.4% in 2021, up from 6.3% in 2020.
–
2021 total eligible capital resources were $383 million above target requirements, down from $524 million at 31 December 2020.
Operating results by business area
The operating results of each business area 3 for 2021 were as follows:
AMP Bank – 2021 NPAT (underlying) of $153 million increased by $42 million (38%) from 2020 largely due to a $26 million release of credit
loss provisions as a result of the improved macro-economic outlook since the impact of COVID-19 in 2020.
Australian Wealth Management – NPAT (underlying) of $48 million in 2021 declined 25% from 2020 primarily due to impairments to the
carrying value of Advice assets, lower revenue predominantly from the impact of repricing in Master Trust and Platforms, and the cessation
of grandfathered remuneration, partly offset by lower variable and controllable costs from cost reduction initiatives.
New Zealand Wealth Management – 2021 NPAT (underlying) of $39 million increased by $4 million (11%) from 2020 primarily due to the
rebound in investment markets and improved cost performance.
AMP Capital – 2021 NPAT (underlying) of $154 million increased 18% from $131 million in 2020, reflecting higher performance and
transaction fees in 2021 and higher seed and sponsor investment returns due to a partial recovery of COVID-19 devaluations in certain
asset classes and strong performance in some individual assets.
Capital management and dividend
Equity and reserves of the AMP Group attributable to shareholders of AMP Limited was $4.0 billion at 31 December 2021 ($4.3 billion
at 31 December 2020).
AMP’s surplus capital above target requirements at 31 December 2021 is $383 million ($524 million at 31 December 2020).
The board has resolved not to declare a final 2021 dividend. The board continues to maintain a conservative approach to capital management
to support the transformation of the business. The capital management strategy and payment of dividends will be reviewed following the
completion of the demerger in 1H 2022.
1 NPAT (underlying) represents shareholder attributable net profit or loss after tax excluding market adjustments, accounting mismatches and non-recurring
revenue and expenses.
2 Includes SuperConcepts assets under administration.
3 Operating results have been re-presented to align to the FY 2021 Investor Report.
Review of operations and results
Strategy and prospects
The loss attributable to shareholders of AMP Limited for the year ended 31 December 2021 was $252 million (2020: $177 million profit).
Basic (loss)/ earnings per share for the year ended 31 December 2021 on a statutory basis was (7.6) cents per share (2020: 5.2 cents per share).
AMP provided an update on its planned demerger and strategic growth plans for the two post-demerger businesses AMP Limited and AMP
Capital’s Private Markets business on 30 November 2021.
On an underlying basis, the earnings per share was 10.7 cents per share (2020: 8.6 cents per share).
In AMP Limited, the strategy sets a clear path to create a new AMP by:
–
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Renewing AMP’s purpose and values to put the customer at the centre, and continuing to drive cultural transformation;
Repositioning core capabilities to drive growth in banking and wealth platforms;
– Delivering stable earnings in the Master Trust and New Zealand Wealth Management businesses, and accelerating the transformation
of Advice;
–
Simplifying the business to drive efficiency and agility, including delivering on the 2019 to 2022 $300 million cost reduction program
and committing to a further $115 million of cost reduction initiatives from 2022 through to 2024; and
–
Exploring new opportunities, including in retirement and in direct-to-consumer solutions, as well as in new business adjacencies.
In AMP Capital’s Private Markets business, the strategy will focus on leveraging the significant opportunity to become a global leader in the
fast-growing private markets industry through:
– Delivering autonomy through an effective separation and demerger from AMP;
–
Simplifying the business and organisation structure and achieving a run-rate cost base of $275–$280 million by 2023;
– Growing its client base, led by a newly established global client solutions team and scaling its existing infrastructure and real estate
investment strategies; and
– Diversifying its product offering to clients, including potential new investment strategies structured to meet client specific interests globally.
Invest to grow AMP Bank
The Bank continues to focus on growth by optimising its customer value proposition and being service experience led for both customers
and brokers. It remains on track to achieve double-digit growth in the mid-term in a highly competitive market. In particular, the Bank
is benefiting from, and continuing to invest in, technology to further digitise and automate its lending platform.
Transform Australian Wealth Management
The Australian Wealth Management business consists of the Platforms, Master Trust and Advice businesses which are transforming from
a vertically integrated wealth model to a competitive, contemporary wealth model.
GROW THE NORTH PLATFORM
Our Platform growth strategy is focused on attracting inflows through the external fund adviser market onto AMP’s flagship platform
North by delivering enhanced digital experiences and differentiating through innovative market leading retirement solutions.
OPTIMISE CLIENT OUTCOMES IN MASTER TRUST
The Master Trust strategy continues to focus on its asset management capability to deliver strong investment performance to our
customers and focusing on exploring partnership opportunities to drive scale and efficiencies.
ACCELERATE THE TRANSFORMATION IN ADVICE
Over the last year our Advice model has undergone significant transformation with the announcement of our exit of the employed advice
channel occurring on 3 December 2021. AMP’s Advice strategy is to be a professional services provider, delivering valued licensee services
at a competitive and sustainable price. Acceleration of the Advice business’ transformation will also see significant simplification of our
Advice model, with an ambition of breaking even by 2024.
Deliver stable client earnings in New Zealand Wealth Management
In 2H 2021 the business completed the transfer to a new investment approach with BlackRock along with the introduction of a new fee
structure resulting in improved customer outcomes. New Zealand’s wealth management strategy is focused on leveraging partnerships
and broadening its distribution footprint, whilst simplifying its cost base through automation and digitalisation.
32
Directors’ report
for the year ended 31 December 2021
Key performance measures were as follows:
–
2021 NPAT (underlying) 1 of $356 million increased 53% from $233 million in 2020. This increase largely reflects the impact of stronger
AMP Bank earnings (+38%), AMP Capital earnings (+18%), New Zealand Wealth Management earnings (+11%) and stronger investment
income from Group Office, including contributions from CLPC and Resolution Life Australasia, partly offset by lower Australian Wealth
–
2021 NPAT (statutory) loss of $252 million was impacted by items reported below NPAT including $312 million of impairment charges,
reflecting a comprehensive review of the balance sheet, $133 million of transformation costs, $78 million of remediation and related
Management earnings (-25%).
costs and other one-off items.
–
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AMP’s total assets under management (AUM) and administration were $248.2 billion 2 at 31 December 2021 (2020: $255 billion).
Australian Wealth Management net cash outflows were $5.2 billion in 2021 compared to net cash outflows of $7.8 billion in 2020.
Net cash outflows in 2021 also included $1.9 billion of regular pension payments to members. The improvement in net cash outflows
was largely attributable to one-off impacts in 2020, including the $1.8 billion loss of corporate mandates and $1.8 billion of COVID-19
Early Release of Super (ERS) payments.
–
AMP Capital external net cash outflows were $12.8 billion, with $4.6 billion of net cash outflows across real estate largely attributable
to the exit of the AMP Capital Diversified Property Fund (ADPF) and $6.9 billion net cash outflows across public markets.
–
AMP Bank’s residential mortgage book increased to $21.7 billion driven by competitive pricing and offers, consistent service and
targeted growth in principal and interest loans across both owner-occupied and investment lending.
–
AMP’s controllable costs, excluding AMP Capital, of $775 million were 7% lower than 2020 due to cost out benefits partly offset
by structural cost increases, variable remuneration and reinvestment spend.
–
AMP’s cost to income ratio was 71.3% in 2021, down from 75.5% in 2020.
– Underlying return on equity was 8.4% in 2021, up from 6.3% in 2020.
Operating results by business area
The operating results of each business area 3 for 2021 were as follows:
–
2021 total eligible capital resources were $383 million above target requirements, down from $524 million at 31 December 2020.
AMP Bank – 2021 NPAT (underlying) of $153 million increased by $42 million (38%) from 2020 largely due to a $26 million release of credit
loss provisions as a result of the improved macro-economic outlook since the impact of COVID-19 in 2020.
Australian Wealth Management – NPAT (underlying) of $48 million in 2021 declined 25% from 2020 primarily due to impairments to the
carrying value of Advice assets, lower revenue predominantly from the impact of repricing in Master Trust and Platforms, and the cessation
of grandfathered remuneration, partly offset by lower variable and controllable costs from cost reduction initiatives.
New Zealand Wealth Management – 2021 NPAT (underlying) of $39 million increased by $4 million (11%) from 2020 primarily due to the
rebound in investment markets and improved cost performance.
AMP Capital – 2021 NPAT (underlying) of $154 million increased 18% from $131 million in 2020, reflecting higher performance and
transaction fees in 2021 and higher seed and sponsor investment returns due to a partial recovery of COVID-19 devaluations in certain
asset classes and strong performance in some individual assets.
Capital management and dividend
Equity and reserves of the AMP Group attributable to shareholders of AMP Limited was $4.0 billion at 31 December 2021 ($4.3 billion
at 31 December 2020).
AMP’s surplus capital above target requirements at 31 December 2021 is $383 million ($524 million at 31 December 2020).
The board has resolved not to declare a final 2021 dividend. The board continues to maintain a conservative approach to capital management
to support the transformation of the business. The capital management strategy and payment of dividends will be reviewed following the
completion of the demerger in 1H 2022.
1 NPAT (underlying) represents shareholder attributable net profit or loss after tax excluding market adjustments, accounting mismatches and non-recurring
revenue and expenses.
2 Includes SuperConcepts assets under administration.
3 Operating results have been re-presented to align to the FY 2021 Investor Report.
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34
Directors’ report
for the year ended 31 December 2021
AMP Capital: Expand asset management footprint in private markets and explore partnership
opportunities for public markets
PRIVATE MARKETS
In 1H 2021, work commenced to demerge AMP Capital’s Private Markets business from AMP Limited. The business has continued to
deliver strong outcomes for clients with more than 90% of capital in the Global Infrastructure Fund II committed in infrastructure assets
around the world. The demerger and listing on the ASX are on track to complete in 1H 2022. Its strategy is to become a client led, globally
integrated investment manager offering a diversified suite of real estate and infrastructure capabilities across risk profiles and geographies.
As a standalone business, investors will be able to gain unique exposure to the investment management sector’s fastest growing asset class,
through a unique investment platform, a growing distribution footprint and a globally recognised team with a proven track record.
PUBLIC MARKETS
On 8 July 2021, AMP announced it entered into a binding agreement with Macquarie Asset Management to sell AMP Capital’s GEFI
business for a consideration of up to $185 million. This includes upfront cash consideration of up to $110 million and a cash earn-out of up
to $75 million payable after the second anniversary of completion. The aggregate consideration is subject to meeting certain conditions,
including revenue targets, with the upfront cash component now expected to be approximately $80 million. This transaction delivers on
the previously announced strategy for the AMP Capital Public Markets business to increase the scale of GEFI through partnerships or sale
and is an important step in preparing for the planned demerger. The deal is expected to complete in Q1 2022. AMP Capital is also in the
process of transferring the MAG business to AMP Australian Wealth Management to create an end-to-end superannuation and investment
platform business and this is on track for completion prior to the demerger.
Redefine and right size operating model for agility and efficiency
Building on the positive momentum achieved in 2021, the Company continues to progress commitments on its cost-base, capital
management and culture. Disciplined cost management has reduced controllable costs by $59 million (7%) to $775 million (excluding AMP
Capital) through the simplification of organisational structures, rationalising our property footprint and other efficiencies. $260 million
of cumulative gross cost-savings have been achieved since 2019. The on-market share buy-back was successfully completed during 1H 2021
and at 31 December 2021 AMP has a strong capital position of $383 million above target requirements.
The path to a new AMP is enabled by cultural transformation (improving inclusion, diversity, strengthening accountability and performance),
a purpose and values reset, and leadership engagement led by a new CEO. In 2021, we delivered the changes necessary in the transition
to a simpler, purpose-led AMP. This work included:
–
Improving inclusion and diversity to drive performance
•
•
•
•
•
Launched new Inclusion and Diversity Policy as a new foundation and standard for what inclusion means at AMP
Introduced an Inclusion Index to group and leader scorecards to measure how we are improving over time
Provided Inclusive Leadership training to Senior Leaders and extended Core Inclusion training to all employees
Implemented a new flexible work policy (WeFlex), to support an inclusive workplace
Implemented a new approach to gender diversity with 40:40:20 gender representation targets
• Met 40:40:20 target for gender diversity for the Board, middle management, and the workforce generally, with more to do at the
Executive management and Head of level
•
Launched new Parental Leave Policy removing parenting labels, increasing accessibility, and extending the period in which super
contributions are made during unpaid parental leave
–
Strengthening accountability across the company
•
Implemented a management action plan in response to a review of workplace conduct, with management delivering 55 actions
• Uplifted governance in support of prevention and taking a person-centred response to harassment and discrimination
• Uplifted the employee relations teams’ capabilities
•
•
Increased transparency of reporting and refined conduct and culture metrics
Improved the range of channels for employees to raise concerns or seek advice
• Continued to deliver strong compliance with Code of Conduct through training and support
–
Creating a high-performance culture
• Defined a culture change plan in support of business objectives and creating a simple, purpose-led AMP
• Conducted extensive workforce engagement program, with more than 30% of employees participating in culture workshops and
over 12,000 unique data points collected to inform our refreshed purpose and values
•
Implemented an improved performance framework strengthening link between performance and reward, including risk, leadership
and conduct
• Delivered quarterly culture dashboard to track culture change progress
•
•
•
Supported employee’s mental health and wellbeing through a new EAP program, resources, support and training
Launching LinkedIn learning to all employees to encourage our people to upskill, reskill and explore professional interests
Launched the Into-Great program, to give all employees access to personalised coaching and counselling services
34
Directors’ report
for the year ended 31 December 2021
AMP Capital: Expand asset management footprint in private markets and explore partnership
Key risks
opportunities for public markets
PRIVATE MARKETS
In 1H 2021, work commenced to demerge AMP Capital’s Private Markets business from AMP Limited. The business has continued to
deliver strong outcomes for clients with more than 90% of capital in the Global Infrastructure Fund II committed in infrastructure assets
around the world. The demerger and listing on the ASX are on track to complete in 1H 2022. Its strategy is to become a client led, globally
integrated investment manager offering a diversified suite of real estate and infrastructure capabilities across risk profiles and geographies.
As a standalone business, investors will be able to gain unique exposure to the investment management sector’s fastest growing asset class,
through a unique investment platform, a growing distribution footprint and a globally recognised team with a proven track record.
PUBLIC MARKETS
On 8 July 2021, AMP announced it entered into a binding agreement with Macquarie Asset Management to sell AMP Capital’s GEFI
business for a consideration of up to $185 million. This includes upfront cash consideration of up to $110 million and a cash earn-out of up
to $75 million payable after the second anniversary of completion. The aggregate consideration is subject to meeting certain conditions,
including revenue targets, with the upfront cash component now expected to be approximately $80 million. This transaction delivers on
the previously announced strategy for the AMP Capital Public Markets business to increase the scale of GEFI through partnerships or sale
and is an important step in preparing for the planned demerger. The deal is expected to complete in Q1 2022. AMP Capital is also in the
process of transferring the MAG business to AMP Australian Wealth Management to create an end-to-end superannuation and investment
platform business and this is on track for completion prior to the demerger.
Redefine and right size operating model for agility and efficiency
Building on the positive momentum achieved in 2021, the Company continues to progress commitments on its cost-base, capital
management and culture. Disciplined cost management has reduced controllable costs by $59 million (7%) to $775 million (excluding AMP
Capital) through the simplification of organisational structures, rationalising our property footprint and other efficiencies. $260 million
of cumulative gross cost-savings have been achieved since 2019. The on-market share buy-back was successfully completed during 1H 2021
and at 31 December 2021 AMP has a strong capital position of $383 million above target requirements.
The path to a new AMP is enabled by cultural transformation (improving inclusion, diversity, strengthening accountability and performance),
a purpose and values reset, and leadership engagement led by a new CEO. In 2021, we delivered the changes necessary in the transition
to a simpler, purpose-led AMP. This work included:
–
Improving inclusion and diversity to drive performance
Launched new Inclusion and Diversity Policy as a new foundation and standard for what inclusion means at AMP
Introduced an Inclusion Index to group and leader scorecards to measure how we are improving over time
Provided Inclusive Leadership training to Senior Leaders and extended Core Inclusion training to all employees
Implemented a new flexible work policy (WeFlex), to support an inclusive workplace
Implemented a new approach to gender diversity with 40:40:20 gender representation targets
• Met 40:40:20 target for gender diversity for the Board, middle management, and the workforce generally, with more to do at the
Executive management and Head of level
•
Launched new Parental Leave Policy removing parenting labels, increasing accessibility, and extending the period in which super
contributions are made during unpaid parental leave
–
Strengthening accountability across the company
•
Implemented a management action plan in response to a review of workplace conduct, with management delivering 55 actions
• Uplifted governance in support of prevention and taking a person-centred response to harassment and discrimination
• Uplifted the employee relations teams’ capabilities
Increased transparency of reporting and refined conduct and culture metrics
Improved the range of channels for employees to raise concerns or seek advice
• Continued to deliver strong compliance with Code of Conduct through training and support
–
Creating a high-performance culture
• Defined a culture change plan in support of business objectives and creating a simple, purpose-led AMP
• Conducted extensive workforce engagement program, with more than 30% of employees participating in culture workshops and
over 12,000 unique data points collected to inform our refreshed purpose and values
•
Implemented an improved performance framework strengthening link between performance and reward, including risk, leadership
and conduct
• Delivered quarterly culture dashboard to track culture change progress
Supported employee’s mental health and wellbeing through a new EAP program, resources, support and training
Launching LinkedIn learning to all employees to encourage our people to upskill, reskill and explore professional interests
Launched the Into-Great program, to give all employees access to personalised coaching and counselling services
•
•
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•
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•
•
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•
Risk is inherent to our business and AMP takes measured risks within our risk appetite to achieve our strategic objectives.
We have a clear strategic plan to drive our business forward and an Enterprise Risk Management framework to identify,
measure, control and report risks.
Enterprise Risk Management framework
The Enterprise Risk Management (ERM) framework provides the foundation for how risks are managed across AMP. There are six key
elements of the ERM framework including governance, risk strategy and risk appetite, risk culture and conduct risk, management information
systems, risk management process (encompassing how AMP identifies, measures, responds to and reports risk) and the risk ecosystem.
The guiding principles in the framework assist with effective risk management practices and enable AMP to meet its legislative and
regulatory requirements, codes and ethical standards, as well as internal policies and procedures.
AMP’s ERM framework includes a risk management strategy which establishes the principles, requirements, roles and responsibilities
for management of risk across AMP. It enables business leaders to make informed decisions and supports AMP in achieving its business
strategy. The integrated framework details how risks are to be managed to fulfil the obligations to key stakeholders, clients, shareholders,
policyholders and regulators to achieve financial and non-financial outcomes.
The Risk Appetite Statement articulates the nature and level of risk the board and management are willing to accept in the pursuit of
delivering their strategic objectives. Alignment between AMP’s corporate strategy and the risk appetite of the AMP Limited Board seeks
to ensure that decisions are consistent with the nature and level of risk the board and management are willing to accept.
Further information can be found in AMP’s Enterprise Risk Management Policy, available on our website at: amp.com.au/corporategovernance.
Key business challenges
Given the nature of the financial services industry, COVID-19 continues to have an adverse impact on the business but AMP remains focused
to deliver its transformational strategy. Significant business challenges (in alphabetical order) include but are not limited to the following:
BUSINESS, EMPLOYEE AND BUSINESS PARTNER CONDUCT
The conduct of financial institutions continues to be an area of significant focus for the financial services industry both globally and in
Australia and New Zealand. AMP devotes significant effort to ensure that our business practices, management, staff or business partner
behaviours adequately meet the expectations of regulators, customers and the broader community, and do not result in an adverse impact
on our reputation and value proposition to customers.
Our Code of Conduct outlines how AMP seeks to conduct its business and how it expects people to conduct themselves. The principles that
define the high standards outline the behaviour and decision-making practices, including how we treat our employees, customers, business
partners and shareholders. We are committed to ensuring the right culture is embedded in our everyday practices.
AMP embraces a safe and respectful work environment that encourages our people to report issues or concerns in the workplace.
Directors, employees (current and former), contractors, service providers or any relative or dependants of any of these people can utilise
the Whistleblowing program to report conduct or unethical behaviours.
CLIMATE CHANGE
AMP, its customers and its external suppliers may be adversely affected by physical and transition risks associated with climate change.
These effects may directly impact AMP and its customers on a range of physical, financial and legal risks to our business, the investments
we manage on behalf of our customers and the wider community.
Initiatives to mitigate or respond to adverse impacts of climate change may in turn impact market and asset prices, economic activity,
and customer behaviour, particularly in geographic locations and industry sectors adversely affected by these changes.
AMP’s approach to managing climate related risks and opportunities is outlined in AMP’s Climate Position and Action Plan, available on
the AMP website. It includes providing low carbon and green investment choices to customers, managing and disclosing investment risks,
leveraging our influence as an investor, reducing our own operational impacts and supporting customers and communities where possible.
AMP provides annual performance disclosures aligned to key pillars of the Task Force on Climate-related Financial Disclosures (TCFD)
framework, including through its Sustainability Report and through investor led disclosures such as the CDP (formerly Carbon Disclosure
Project). In 2021, AMP retained an A- rating (second highest rating available) in the annual CDP investor disclosure program, indicating
leadership in our management of climate related risks and opportunities. AMP has been carbon neutral across its operations since 2013
to address the direct impacts of our business activities.
COMPETITOR AND CUSTOMER ENVIRONMENT
The financial services industry continues to face challenges from the COVID-19 pandemic but AMP remains focused in supporting clients and
employees during these unprecedented times. We have supported clients with banking and early release of super initiatives during COVID-19.
Customer expectations are evolving which is intensifying competition within wealth management as COVID-19 causes market volatility,
affecting the performance of its assets under management across the industry. There is also strong competitive tension in asset management.
AMP continues to adapt its capabilities and operating model in order to remain competitive and relevant to customers but an on-going
pandemic may impact on new business and retention of existing business.
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36
Directors’ report
for the year ended 31 December 2021
In 2021, AMP continued to deliver its strategy to reposition AMP as a simpler, client-led, growth-oriented business. The strategy to reinvent
AMP as a contemporary wealth manager is to fund growth, reduce costs and fix legacy issues. The strategy builds on core strengths and
market positions with whole-of-wealth solutions.
At the end of 2021, AMP announced its updated strategy to manage core capabilities to drive growth in banking and wealth platforms,
delivering stable earnings in the Master Trust and New Zealand Wealth Management businesses, and accelerating the transformation
of Advice. The program will also simplify the business to drive efficiency and agility, as well as explore new opportunities including
in retirement and direct-to-consumer solutions, as well as in new business adjacencies.
CYBER SECURITY THREATS
Cyber risk continues to be a threat in a rapidly changing technological and regulatory environment as the magnitude of the costs of
cybercrime vary depending on the nature of the attack. We are committed to enhancing our cyber security capability and control posture
as we recognise the current environment of cybercrime activity has increased across the industry during the period.
AMP is investing in building a capability that is both sustainable and commensurate to the threats faced, including having recently
launched a new Cyber Defence Centre and having built an enduring team to further uplift its cyber defences to mitigate malicious threats
and cybercrime activities. Whilst AMP has demonstrated maturity uplifts against the National Institute of Standards and Technology Cyber
Security Framework and our adopted industry best-practice framework, cyber risk will retain its position as a key risk as AMP continues
to mature and evolve its cyber security operating model. This will assist in preventing, detecting and responding to cyber incidents, in order
to protect AMP’s assets and business operations.
OPERATIONAL RISK ENVIRONMENT
Operational risk exposures, relevant to the industry in which AMP operates, relate to losses resulting from inadequate or failed internal
processes, people and systems or from external events. These include, but are not limited to, information technology, human resources,
internal and external fraud, money laundering and counter-terrorism financing, bribery and corruption. High operational risks are driven
by a complex operating environment associated with legacy products, systems and, in some cases, manual controls. This environment will
be further stressed by the key business challenges included in this section.
Staff retention and key person risk are key operational risks for AMP, particularly in AMP Capital’s asset management business which
operates in a very competitive industry where competition for talent is high. AMP Capital remains subject to threats to its funds and its
people from time to time.
We are committed to containing operational risk by reducing operational complexity and strengthening risk management, internal controls
and governance. We have completed all file reviews for our client remediation program with some outstanding payments to be completed
by Q1 2022. We continue to reshape the Adviser network and simplify superannuation products and investment options.
The AMP operational risk profile reflects these exposures and the financial statements of AMP contain certain provisions and contingent
liability disclosures for these risks in accordance with applicable accounting standards.
ORGANISATIONAL CHANGE
In 2021, AMP concluded its portfolio review, announcing the planned demerger of the Private Markets business of infrastructure equity,
and real estate, the sale of the infrastructure debt platform to Ares Management Corporation, the sale of the Global Equities and Fixed
Income (GEFI) business to Macquarie Asset Management and the transfer of the Multi-Asset Group (MAG) to the Australian Wealth
Management. This coincided with additional changes to simplify the internal operating model.
There is a risk that business momentum is lost whilst organisational change is implemented. The increase in volume of change may have
an adverse impact to employees causing a strain to deliver on our strategy and transformation initiatives. These risks will be mitigated
by maintaining leadership and performance focus on the business.
AMP continues to invest in adopting new ways of working to drive efficiency and improve our practices to increase accountability and
build on core strengths. We recognise that failure to execute appropriately on the implementation of these changes can increase the risks
of disruption to AMP’s business operations.
REGULATORY ENVIRONMENT
AMP operates in multiple jurisdictions across the globe, including Australia and New Zealand, and each of these jurisdictions has its own
legislative and regulatory requirements. The financial services industry both globally and in Australia and New Zealand continues to face
further challenges as temporary regulatory changes were introduced causing disruption to the wealth industry.
AMP continues to respond and adjust its business processes for these changes, however, failure to adequately anticipate and respond to
future regulatory changes could have a material adverse impact on the performance of its businesses and achieving its strategic objectives.
AMP’s commitment to strengthen its risk management practices, its control environment and enhancing its compliance systems across
the businesses, will address these legislative and regulatory requirements. AMP’s internal policies, frameworks and procedures seek to
ensure any changes in our domestic and international regulatory obligations are complied with in each jurisdiction. Compliance, legal and
regulatory risk that results in breaches is reported to AMP management committees and regulators. This is managed in accordance with
internal policies.
Regulatory consultations and interactions are reported and monitored as part of AMP’s internal risk and compliance reporting process.
AMP actively participates in these interactions and co-operates with all regulators to resolve such matters.
More information about our approach to these challenges can be found on our website at: corporate.amp.com.au/about-amp/
corporate-sustainability.
36
Directors’ report
for the year ended 31 December 2021
In 2021, AMP continued to deliver its strategy to reposition AMP as a simpler, client-led, growth-oriented business. The strategy to reinvent
AMP as a contemporary wealth manager is to fund growth, reduce costs and fix legacy issues. The strategy builds on core strengths and
market positions with whole-of-wealth solutions.
At the end of 2021, AMP announced its updated strategy to manage core capabilities to drive growth in banking and wealth platforms,
delivering stable earnings in the Master Trust and New Zealand Wealth Management businesses, and accelerating the transformation
of Advice. The program will also simplify the business to drive efficiency and agility, as well as explore new opportunities including
in retirement and direct-to-consumer solutions, as well as in new business adjacencies.
CYBER SECURITY THREATS
Cyber risk continues to be a threat in a rapidly changing technological and regulatory environment as the magnitude of the costs of
cybercrime vary depending on the nature of the attack. We are committed to enhancing our cyber security capability and control posture
as we recognise the current environment of cybercrime activity has increased across the industry during the period.
AMP is investing in building a capability that is both sustainable and commensurate to the threats faced, including having recently
launched a new Cyber Defence Centre and having built an enduring team to further uplift its cyber defences to mitigate malicious threats
and cybercrime activities. Whilst AMP has demonstrated maturity uplifts against the National Institute of Standards and Technology Cyber
Security Framework and our adopted industry best-practice framework, cyber risk will retain its position as a key risk as AMP continues
to mature and evolve its cyber security operating model. This will assist in preventing, detecting and responding to cyber incidents, in order
to protect AMP’s assets and business operations.
OPERATIONAL RISK ENVIRONMENT
Operational risk exposures, relevant to the industry in which AMP operates, relate to losses resulting from inadequate or failed internal
processes, people and systems or from external events. These include, but are not limited to, information technology, human resources,
internal and external fraud, money laundering and counter-terrorism financing, bribery and corruption. High operational risks are driven
by a complex operating environment associated with legacy products, systems and, in some cases, manual controls. This environment will
be further stressed by the key business challenges included in this section.
Staff retention and key person risk are key operational risks for AMP, particularly in AMP Capital’s asset management business which
operates in a very competitive industry where competition for talent is high. AMP Capital remains subject to threats to its funds and its
people from time to time.
We are committed to containing operational risk by reducing operational complexity and strengthening risk management, internal controls
and governance. We have completed all file reviews for our client remediation program with some outstanding payments to be completed
by Q1 2022. We continue to reshape the Adviser network and simplify superannuation products and investment options.
The AMP operational risk profile reflects these exposures and the financial statements of AMP contain certain provisions and contingent
liability disclosures for these risks in accordance with applicable accounting standards.
ORGANISATIONAL CHANGE
In 2021, AMP concluded its portfolio review, announcing the planned demerger of the Private Markets business of infrastructure equity,
and real estate, the sale of the infrastructure debt platform to Ares Management Corporation, the sale of the Global Equities and Fixed
Income (GEFI) business to Macquarie Asset Management and the transfer of the Multi-Asset Group (MAG) to the Australian Wealth
Management. This coincided with additional changes to simplify the internal operating model.
There is a risk that business momentum is lost whilst organisational change is implemented. The increase in volume of change may have
an adverse impact to employees causing a strain to deliver on our strategy and transformation initiatives. These risks will be mitigated
by maintaining leadership and performance focus on the business.
AMP continues to invest in adopting new ways of working to drive efficiency and improve our practices to increase accountability and
build on core strengths. We recognise that failure to execute appropriately on the implementation of these changes can increase the risks
of disruption to AMP’s business operations.
REGULATORY ENVIRONMENT
AMP operates in multiple jurisdictions across the globe, including Australia and New Zealand, and each of these jurisdictions has its own
legislative and regulatory requirements. The financial services industry both globally and in Australia and New Zealand continues to face
further challenges as temporary regulatory changes were introduced causing disruption to the wealth industry.
AMP continues to respond and adjust its business processes for these changes, however, failure to adequately anticipate and respond to
future regulatory changes could have a material adverse impact on the performance of its businesses and achieving its strategic objectives.
AMP’s commitment to strengthen its risk management practices, its control environment and enhancing its compliance systems across
the businesses, will address these legislative and regulatory requirements. AMP’s internal policies, frameworks and procedures seek to
ensure any changes in our domestic and international regulatory obligations are complied with in each jurisdiction. Compliance, legal and
regulatory risk that results in breaches is reported to AMP management committees and regulators. This is managed in accordance with
internal policies.
Regulatory consultations and interactions are reported and monitored as part of AMP’s internal risk and compliance reporting process.
AMP actively participates in these interactions and co-operates with all regulators to resolve such matters.
More information about our approach to these challenges can be found on our website at: corporate.amp.com.au/about-amp/
corporate-sustainability.
THE ENVIRONMENT
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. You can find further information about AMP’s environmental policy and activities at
corporate.amp.com.au/about-amp/corporate-sustainability
SIGNIFICANT CHANGES TO THE STATE OF AFFAIRS
Apart from elsewhere disclosed in this report, there were no other significant changes in the state of affairs during the year.
EVENTS OCCURRING AFTER THE REPORTING DATE
As at the date of this report and except as otherwise disclosed, the directors are not aware of any other matters or circumstances that
have arisen since the reporting date that have significantly affected, or may significantly affect, the group’s operations; the results of those
operations; or the group’s state of affairs in future periods.
THE AMP LIMITED BOARD OF DIRECTORS
The directors of AMP Limited during the year ended 31 December 2021 and up to the date of this report are listed below. Directors were
in office for this entire period except where stated otherwise:
CURRENT NON-EXECUTIVE DIRECTORS:
– Debra Hazelton (Chair)
Rahoul Chowdry
–
Kate McKenzie
–
–
John O’Sullivan
– Michael Sammells
Andrea Slattery
–
– Mike Hirst (appointed 1 July 2021)
EXECUTIVE DIRECTOR:
–
Alexis George (Chief Executive Officer and Managing Director) (appointed as a director on 11 August 2021)
FORMER EXECUTIVE DIRECTOR:
–
Francesco De Ferrari (Chief Executive Officer and Managing Director) (resigned as a director on 30 June 2021)
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Debra Hazelton CHAIR
BA (Hons), MCom, GAICD
Debra was appointed to the AMP Limited Board as a non-executive director in June 2019 and as the Chair in August 2020. She is also the
Chair of the Nomination Committee and is a member of the Remuneration, Audit and Risk Committees.
Debra is the Chair of the AMP Bank Board and is a member of its Audit and Risk Committees.
EXPERIENCE
Debra brings significant experience from more than 30 years in global financial services, including as the local Chief Executive of Mizuho
Bank in Australia and Commonwealth Bank (CBA) in Japan. She has expertise across global corporate culture transformation, institutional
banking, risk management, treasury, financial markets and human resource management.
Debra is also a non-executive director on the boards of Treasury Corporation of Victoria and Persol Asia Pacific Pte Ltd (Singapore) and Vice
President of the Australia-Japan Business Cooperation Committee. Her previous board experience includes Australia-Japan Foundation,
Australian Financial Markets Association (AFMA), Asia Society and Women in Banking and Finance. She has graduate and post-graduate
degrees in Japanese language, literature and philosophy as well as economics and finance.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES: None
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GOVERNMENT AND COMMUNITY INVOLVEMENT
– Director, Treasury Corporation of Victoria (appointed August 2018)
–
– Member, Australian Chamber Orchestra - Japan Advisory Committee (appointed May 2019)
–
Adviser, Japan Women’s Innovation Network (appointed December 2020)
Vice President, Australia-Japan Business Cooperation Committee (AJBCC) (appointed October 2020)
– Member, Chief Executive Women (CEW) Australia (appointed January 2020)
Rahoul Chowdry INDEPENDENT NON-EXECUTIVE DIRECTOR
BCom, FCA
Rahoul was appointed to the AMP Limited Board as a non-executive director in January 2020. He is a member of the Remuneration, Nomination,
Audit and Risk Committees and was appointed as Chairman of the Risk Committee in May 2020. At the same time, he was appointed to the
AMP Bank Board and is a member of its Audit Committee and the Chairman of the Risk Committee.
38
Directors’ report
for the year ended 31 December 2021
EXPERIENCE
Rahoul has over 40 years’ experience in professional services, advising complex multinational organisations in Australia and overseas.
He is currently a Senior Advisor at Minter Ellison and is a member of the Audit and Risk Committee of the firm’s Partnership Board. Between
January 2018 and June 2021 he was Partner and National Leader of Minter Ellison’s financial services practice in Australia and leader of the
risk consulting practice. Prior to this, Rahoul was a Senior Partner at PwC for almost 30 years, where he undertook a number of leadership
roles, delivering audit, assurance, and risk consulting services to major financial institutions in Australia, Canada and the United Kingdom.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES: None
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Member, Reserve Bank of Australia, Audit Committee (appointed February 2018)
Mike Hirst INDEPENDENT NON-EXECUTIVE DIRECTOR
BCom, SFF
Mike was appointed to the AMP Limited Board as a non-executive director in July 2021 and is a member of the Audit, Nomination, Risk and
Remuneration Committees. At the same time, Mike was appointed to the AMP Bank Limited Board and its Audit and Risk Committees.
EXPERIENCE
Mike has more than 40 years of experience in board and senior executive leadership roles within retail banking, treasury, funds management
and financial markets.
He was the Managing Director of Bendigo and Adelaide Bank from 2009 to 2018 and prior to this worked in senior executive and management
positions with Colonial Limited, Westpac Banking Corporation and Chase AMP Bank.
Mike served as Deputy Chairman of the Treasury Corporation of Victoria and previously held non-executive directorships with Austraclear
Limited, Colonial First State, Rural Bank and Barwon Health Limited.
He was a Commissioner on the Federal Government’s National COVID-19 Commission Advisory Board, a member of the Federal Government’s
Financial Sector Advisory Council and was Deputy Chairman of the Australian Bankers Association.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES:
– Non-executive director of AMCIL Limited (appointed January 2019)
– Non-executive director of Butn Limited (appointed September 2020)
DIRECTORSHIPS OF OTHER COMPANIES:
– Non-executive director of GMHBA Limited (appointed July 2018)
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Deputy Chairman of Racing Victoria (appointed October 2016)
– Member of the Australian Institute of Company Directors (appointed April 2003)
–
Senior Fellow of FINSIA (appointed September 2003)
– Honorary Member of the Business Council of Australia (appointed July 2018)
Kate McKenzie INDEPENDENT NON-EXECUTIVE DIRECTOR
BA, LLB, GAICD
Kate was appointed to the AMP Limited Board as a non-executive director in November 2020 and is a member of the Audit, Nomination,
Risk and Remuneration Committees. At the same time, Kate was appointed to the AMP Bank Board and its Audit and Risk Committees.
EXPERIENCE
Kate has more than 25 years of experience in other board and senior executive leadership roles.
She is currently non-executive director of NBN Co., becoming the Chair of NBN Co. on 1 January 2022, and Stockland Corporation Limited
and has previously served on the boards of Allianz Australia, Foxtel, Telstra Ventures, Sydney Water and Workcover. Kate was the Chief
Executive Officer of Chorus, the New Zealand telecommunication group, listed on the ASX and NZX, from February 2017 to December 2019,
and held several executive roles at Telstra, including as Chief Operating Officer, prior to this.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES:
–
Stockland Corporation Limited (appointed December 2019)
– Healius Ltd (appointed February 2021)
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Member, Chief Executive Women (CEW) Australia (January 2006)
38
Directors’ report
for the year ended 31 December 2021
EXPERIENCE
Rahoul has over 40 years’ experience in professional services, advising complex multinational organisations in Australia and overseas.
He is currently a Senior Advisor at Minter Ellison and is a member of the Audit and Risk Committee of the firm’s Partnership Board. Between
January 2018 and June 2021 he was Partner and National Leader of Minter Ellison’s financial services practice in Australia and leader of the
risk consulting practice. Prior to this, Rahoul was a Senior Partner at PwC for almost 30 years, where he undertook a number of leadership
roles, delivering audit, assurance, and risk consulting services to major financial institutions in Australia, Canada and the United Kingdom.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES: None
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Member, Reserve Bank of Australia, Audit Committee (appointed February 2018)
Mike Hirst INDEPENDENT NON-EXECUTIVE DIRECTOR
BCom, SFF
Mike was appointed to the AMP Limited Board as a non-executive director in July 2021 and is a member of the Audit, Nomination, Risk and
Remuneration Committees. At the same time, Mike was appointed to the AMP Bank Limited Board and its Audit and Risk Committees.
EXPERIENCE
and financial markets.
Mike has more than 40 years of experience in board and senior executive leadership roles within retail banking, treasury, funds management
He was the Managing Director of Bendigo and Adelaide Bank from 2009 to 2018 and prior to this worked in senior executive and management
positions with Colonial Limited, Westpac Banking Corporation and Chase AMP Bank.
Mike served as Deputy Chairman of the Treasury Corporation of Victoria and previously held non-executive directorships with Austraclear
Limited, Colonial First State, Rural Bank and Barwon Health Limited.
He was a Commissioner on the Federal Government’s National COVID-19 Commission Advisory Board, a member of the Federal Government’s
Financial Sector Advisory Council and was Deputy Chairman of the Australian Bankers Association.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES:
– Non-executive director of AMCIL Limited (appointed January 2019)
– Non-executive director of Butn Limited (appointed September 2020)
DIRECTORSHIPS OF OTHER COMPANIES:
– Non-executive director of GMHBA Limited (appointed July 2018)
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Deputy Chairman of Racing Victoria (appointed October 2016)
– Member of the Australian Institute of Company Directors (appointed April 2003)
–
Senior Fellow of FINSIA (appointed September 2003)
– Honorary Member of the Business Council of Australia (appointed July 2018)
Kate McKenzie INDEPENDENT NON-EXECUTIVE DIRECTOR
BA, LLB, GAICD
EXPERIENCE
Kate was appointed to the AMP Limited Board as a non-executive director in November 2020 and is a member of the Audit, Nomination,
Risk and Remuneration Committees. At the same time, Kate was appointed to the AMP Bank Board and its Audit and Risk Committees.
Kate has more than 25 years of experience in other board and senior executive leadership roles.
She is currently non-executive director of NBN Co., becoming the Chair of NBN Co. on 1 January 2022, and Stockland Corporation Limited
and has previously served on the boards of Allianz Australia, Foxtel, Telstra Ventures, Sydney Water and Workcover. Kate was the Chief
Executive Officer of Chorus, the New Zealand telecommunication group, listed on the ASX and NZX, from February 2017 to December 2019,
and held several executive roles at Telstra, including as Chief Operating Officer, prior to this.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES:
–
Stockland Corporation Limited (appointed December 2019)
– Healius Ltd (appointed February 2021)
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Member, Chief Executive Women (CEW) Australia (January 2006)
John O’Sullivan INDEPENDENT NON-EXECUTIVE DIRECTOR
BA, LLB, LLM, FAICD
John was appointed to the AMP Limited Board in June 2018. He was appointed a member of the Audit, Nomination, Risk and Remuneration
Committees in January 2019.
In February 2019, John was appointed to the AMP Bank Board and as a member of its Audit and Risk Committees.
EXPERIENCE
John has over 40 years experience in the legal and financial services sectors in Australia. He started his career at Freehill Hollingdale & Page
(Herbert Smith Freehills), later becoming a partner at the firm where he was recognised as one of Australia’s leading corporate and mergers
and acquisitions lawyers.
From 2003 to 2008, John was General Counsel of the Commonwealth Bank of Australia before spending ten years at Credit Suisse Australia
where he was Executive Chairman, Investment Banking and Capital Markets, Australia until February 2018. John is a member of the
Takeovers Panel. He holds a Bachelor of Laws and Bachelor of Arts from the University of Sydney and a Master of Laws from the University
of London.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES: None
GOVERNMENT AND COMMUNITY INVOLVEMENT
–
Ambassador of the Australian Indigenous Education Foundation (appointed 2008)
– Director of Serendipity Capital Holdings Limited (appointed April 2020)
Michael Sammells INDEPENDENT NON-EXECUTIVE DIRECTOR
BBus, FCPA, GAICD
Michael was appointed to the AMP Limited Board as a non-executive director in March 2020. He is the Chairman of the Remuneration
Committee and a member of the Audit, Nomination and Risk Committees. In March 2020, Michael was also appointed to the AMP Bank
Board and is a member of its Audit and Risk Committees.
EXPERIENCE
Michael has over 35 years of professional experience, with significant experience in senior executive financial and commercial roles.
His experience as Chief Financial Officer spans over 20 years from 1999 to 2019, where he held this role in government, private and ASX
listed companies.
Michael is also a non-executive director of Sigma Healthcare Limited and has served on numerous private boards for the last 13 years.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES:
Sigma Healthcare Limited (appointed February 2020)
–
Andrea Slattery INDEPENDENT NON-EXECUTIVE DIRECTOR
BAcc, MCom, FCPA, FCA, FSSA, FAICD, GCB.D
Andrea was appointed to the AMP Limited Board as a non-executive director in February 2019 and is a member of the Audit, Nomination,
Risk and Remuneration Committees. At the same time, she was appointed to the AMP Bank Limited Board and its Audit and Risk Committees.
She was appointed Chair of the AMP Limited and AMP Bank Audit Committees in May 2019.
EXPERIENCE
Andrea has substantial experience as a non-executive director and senior executive in the financial services, retirement and superannuation,
government relations, clean energy & low emissions technologies, infrastructure and professional services sectors with expertise in strategic,
digital and corporate governance transformation and ESG, spanning more than 29 years.
Andrea was the managing director and CEO of the SMSF Association for 14 years from 2003 to 2017, which she co-founded. Prior to this,
Andrea was a financial adviser, as well as founding her own tax consulting and advisory business. Andrea attained the Global Competent
Boards ESG (GCB.D) in 2021.
Her previous Government Advisory Committee appointments include, the Federal Government’s Innovation Investment Partnership,
Stronger Super Peak Consultative Group, Superannuation Advisory Group, the Future of Financial Advice, the Shadow Ministry’s
Infrastructure and Innovation and Superannuation and Industry Partnerships.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES:
–
Argo Global Listed Infrastructure (appointed April 2015)
–
Centrepoint Alliance Limited (November 2018 – January 2019)
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Director of Clean Energy Finance Corporation (appointed February 2018)
– Deputy Chairman of Woomera Prohibited Area Advisory Board (appointed July 2019)
39
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40
Directors’ report
for the year ended 31 December 2021
Alexis George CHIEF EXECUTIVE OFFICER
BCom, FCA, GAICD
Alexis George was appointed Chief Executive Officer (CEO) of AMP Limited on 2 August 2021. She is responsible for leading the AMP business.
Alexis was appointed to the AMP Limited Board and AMP Bank Limited Board on 11 August 2021.
EXPERIENCE
Alexis has more than 25 years’ experience in the financial services industry in Australia and overseas. She spent seven years at ANZ, most
recently as the Deputy Chief Executive Officer, working to drive group-wide strategic initiatives in addition to responsibility for shared
service centres and banking services.
As the Group Executive Wealth Australia, Alexis led ANZ’s ~$4 billion wealth divestment program, including the separation and sale of its
life insurance and superannuation businesses.
Prior to ANZ, Alexis spent ten years with ING Group in a number of senior roles including CEO Czech Republic and Slovakia responsible for
banking, insurance and funds management and Regional COO Asia responsible for product, marketing, technology and operations.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES: None
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Member, Chief Executive Women (CEW) Australia (October 2016)
Attendance at board and committee meetings
The AMP Limited Board met 25 times during the year ended 31 December 2021. The Chair and directors also attended other meetings,
including board committee meetings, special purpose committees, strategy sessions and working groups. The Chair and directors also
frequently attended meetings of subsidiary boards and committees, special purpose committees, and working groups of which they were
not a director or member during the year.
The table below shows details of attendance by directors of AMP Limited at meetings of boards, committees and working groups of which
they were members during the year ended 31 December 2021. Any voluntary attendances by directors in the capacity as observers are not
included in the table below:
Board/committee
Held/attended
Debra Hazelton
Rahoul Chowdry
John O’Sullivan
Michael Sammells
Andrea Slattery
Kate McKenzie
Mike Hirst 4
Alexis George 5
Francesco De Ferrari 6
AMP Limited
Board
Meetings1
Audit
Committee
Risk
Committee
Nomination
Committee
Remuneration
Committee
Subsidiary
board and
committee
meetings2
Additional
Committees3
A
25
25
25
25
25
25
12
10
13
B
25
25
25
25
25
24
12
10
10
A
4
4
4
4
4
4
2
–
–
B
4
4
4
4
4
4
2
–
–
A
7
7
7
7
7
7
3
–
–
B
7
7
7
7
7
7
3
–
–
A
4
4
4
4
4
4
2
–
–
B
4
4
4
4
4
4
2
–
–
A
6
6
6
6
6
6
3
–
–
B
6
6
6
6
6
5
3
–
–
A
5
–
–
4
–
–
–
–
–
B
5
–
–
4
–
–
–
–
–
B
2
11
15
13
6
0
0
–
–
Column A – indicates the number of meetings held while the director was a member of the board/committee. Directors may, and frequently do, attend
meetings as observers if they are not a member of the board/committee.
Column B – indicates the number of those meetings attended.
1 Where board and committee meetings of AMP Limited and AMP Bank Limited were held concurrently, only one meeting has been recorded.
2 Subsidiary board and committee meetings refer to meetings of the following board and committee main-subsidiary: AMP Capital Holdings Limited.
3 Additional committees were convened during the year on matters including the portfolio review, due diligence, and financial results.
4 Mike Hirst was appointed as a director of AMP Limited effective 1 July 2021.
5 Alexis George was appointed Chief Executive Officer of AMP Limited effective 2 August 2021 and as Managing Director on 11 August 2021.
6 Francesco De Ferrari resigned as Managing Director of AMP Limited effective 30 June 2021.
40
Directors’ report
for the year ended 31 December 2021
Alexis George CHIEF EXECUTIVE OFFICER
BCom, FCA, GAICD
EXPERIENCE
service centres and banking services.
life insurance and superannuation businesses.
Alexis George was appointed Chief Executive Officer (CEO) of AMP Limited on 2 August 2021. She is responsible for leading the AMP business.
Alexis was appointed to the AMP Limited Board and AMP Bank Limited Board on 11 August 2021.
Alexis has more than 25 years’ experience in the financial services industry in Australia and overseas. She spent seven years at ANZ, most
recently as the Deputy Chief Executive Officer, working to drive group-wide strategic initiatives in addition to responsibility for shared
As the Group Executive Wealth Australia, Alexis led ANZ’s ~$4 billion wealth divestment program, including the separation and sale of its
Prior to ANZ, Alexis spent ten years with ING Group in a number of senior roles including CEO Czech Republic and Slovakia responsible for
banking, insurance and funds management and Regional COO Asia responsible for product, marketing, technology and operations.
DIRECTORSHIPS OF OTHER ASX LISTED COMPANIES: None
GOVERNMENT AND COMMUNITY INVOLVEMENT
– Member, Chief Executive Women (CEW) Australia (October 2016)
Attendance at board and committee meetings
The AMP Limited Board met 25 times during the year ended 31 December 2021. The Chair and directors also attended other meetings,
including board committee meetings, special purpose committees, strategy sessions and working groups. The Chair and directors also
frequently attended meetings of subsidiary boards and committees, special purpose committees, and working groups of which they were
not a director or member during the year.
The table below shows details of attendance by directors of AMP Limited at meetings of boards, committees and working groups of which
they were members during the year ended 31 December 2021. Any voluntary attendances by directors in the capacity as observers are not
included in the table below:
Audit
Risk
Nomination
Remuneration
committee
Committee
Committee
Committee
Committee
meetings2
Additional
Committees3
Board/committee
Held/attended
Debra Hazelton
Rahoul Chowdry
John O’Sullivan
Michael Sammells
Andrea Slattery
Kate McKenzie
Mike Hirst 4
Alexis George 5
Francesco De Ferrari 6
AMP Limited
Board
Meetings1
A
25
25
25
25
25
25
12
10
13
B
25
25
25
25
25
24
12
10
10
A
4
4
4
4
4
4
2
–
–
B
4
4
4
4
4
4
2
–
–
A
7
7
7
7
7
7
3
–
–
B
7
7
7
7
7
7
3
–
–
A
4
4
4
4
4
4
2
–
–
B
4
4
4
4
4
4
2
–
–
A
6
6
6
6
6
6
3
–
–
B
6
6
6
6
6
5
3
–
–
Subsidiary
board and
A
5
–
–
4
–
–
–
–
–
B
5
–
–
4
–
–
–
–
–
B
2
11
15
13
6
0
0
–
–
Column A – indicates the number of meetings held while the director was a member of the board/committee. Directors may, and frequently do, attend
meetings as observers if they are not a member of the board/committee.
Column B – indicates the number of those meetings attended.
1 Where board and committee meetings of AMP Limited and AMP Bank Limited were held concurrently, only one meeting has been recorded.
2 Subsidiary board and committee meetings refer to meetings of the following board and committee main-subsidiary: AMP Capital Holdings Limited.
3 Additional committees were convened during the year on matters including the portfolio review, due diligence, and financial results.
4 Mike Hirst was appointed as a director of AMP Limited effective 1 July 2021.
5 Alexis George was appointed Chief Executive Officer of AMP Limited effective 2 August 2021 and as Managing Director on 11 August 2021.
6 Francesco De Ferrari resigned as Managing Director of AMP Limited effective 30 June 2021.
COMPANY SECRETARY DETAILS
Details of the company secretary of AMP Limited as at the date of this report, including her qualifications and experience, are set out below.
Marissa Bendyk, General Counsel, Corporate Governance & Group Company Secretary
LLB (Hons), BCom (Accounting), GAICD
Marissa was appointed as the Company Secretary for AMP Limited on 6 May 2019 and is also secretary of several other AMP group
companies. Before joining AMP, Marissa worked at APA Group and King & Wood Mallesons focusing on corporate governance, mergers
and acquisitions, and corporate and commercial law.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
Under its constitution, the company indemnifies, to the extent permitted by law, all current and former officers of the company (including
the non-executive 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 AMP Limited Board.
During, and since the end of, the financial year ended 31 December 2021, the company maintained, and paid premiums for, directors’ and
officers’ and company reimbursement insurance for the benefit of all of the officers of the AMP group (including each director, secretary
and senior manager of the company) against certain liabilities as permitted by the Corporations Act 2001. The insurance policy prohibits
disclosure of the nature of the liabilities covered, the amount of the premium payable and the limit of liability.
In addition, the company and each of the current and former directors are parties to deeds of indemnity, insurance and access. Those deeds
provide that:
–
–
–
–
the directors will have access to board papers and specified records of the company (and of certain other companies) for their period
of office and for at least 10 (or, in some cases, seven) years after they cease to hold office (subject to certain conditions);
the company indemnifies the directors to the extent permitted by law, and to the extent and for the amount that the relevant director
is not otherwise entitled to be, and is not actually, indemnified by another person;
the indemnity covers liabilities (including legal costs) incurred by the relevant director in their capacity as a current or former director
of the company, or as a director of any AMP group company or an AMP representative to an external company; and
the company will maintain directors’ and officers’ insurance cover for the directors, to the extent permitted by law, for the period
of their office and for at least 10 years after they cease to hold office.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the company has agreed to indemnify its auditor, Ernst & Young, as part of the terms of its audit
engagement agreement, against claims by third parties arising from the audit, other than where the claim is determined to have resulted
from any negligent, wrongful or wilful act or omission by or of Ernst & Young. No payment has been made to indemnify Ernst & Young
during or since the financial year ended 31 December 2021.
REMUNERATION DISCLOSURES
The remuneration arrangements for AMP directors and senior executives are outlined in the remuneration report which forms part of the
directors’ report for the year ended 31 December 2021.
Directors’ and senior executives’ interests in AMP Limited shares, performance rights and options are also set out in the remuneration
report on the following pages.
41
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42
REMUNERATION
REPORT
Our Board and Executive KMP, as
leaders, are united in their recognition
of AMP’s historical significance, their
strong understanding of the business
challenges faced and their drive and
motivation to transform the business.
Dear fellow shareholder
In the 2021 financial year, enormous
efforts were made to drive far-reaching
and necessary changes within AMP. They
were made against an external backdrop
of another year heavily impacted by the
new variants of the global COVID-19
pandemic, with long periods punctuated
by lockdowns. There were also internal
pressures and complexities created by
the need to conduct the portfolio review,
which concluded in April 2021, a significant
shift in strategic direction and a change
in Chief Executive Officer (CEO) partway
through the group’s transformation.
New direction and stability
I am pleased, therefore, to report that new
levels of energy, stability and clear direction
have been brought to AMP under the
stewardship of its new CEO, Alexis George.
The promotion, hiring and retention of high-
calibre and respected senior executives,
who are outstanding leaders in their fields,
were successfully achieved. This includes
the appointment of Scott Hartley in January
as CEO Australian Wealth Management
and Shawn Johnson in June 2021 as CEO
AMP Capital and the recent appointment
of Felicia Trewin as Chief Technology Officer,
who will be joining us in March 2022.
Our Board and Executive KMP are united
in their recognition of AMP’s historical
significance, their strong understanding of
the business challenges faced and their drive
and motivation to transform the business.
Most importantly, like the Board, they are
focused on rebuilding value, trust and
confidence in the business, and are moving
at pace to make this happen.
Year in review
Despite some executive departures, the
overall performance of AMP tracked at
61.5% against the 2021 target scorecard.
This is a solid result, particularly
considering external factors (eg COVID
pandemic, unpredictability of market
and economic factors, consumer shifts)
and internal decisions (eg demerger,
Infrastructure Debt sale, impairments,
leadership changes) including uncertainty
from ongoing operating model change.
The most notable and significant
achievements during 2021 were:
–
–
–
–
The successful hiring and retention
of business leaders with proven track
records to the executive team
The laying of foundations and
delivering to date to the demerger
timetable to create two separate,
streamlined and agile businesses
– a new and reinvigorated AMP Limited
and Private Markets
The completion of the sale of the
remaining stake in Resolution Life
and the agreed divestments of other
non-core businesses – global equities,
fixed income and infrastructure debt
The core bank system was simplified
and modernised, and we more
strongly aligned our advice network,
invested in the North platform and
repriced the Master Trust and MySuper
products, the delivery of ~$130 million
in cost reductions and improvement
in culture.
The scorecard objectives, measures and
targets are set at the start of the year
and relate to weighted long-term goals
to improve financials, boost client care,
drive strategic priorities and significantly
lift both risk management and leadership.
Of the total scorecard targets set for 2021,
51% are financial and 49% non-financial
measurements, of which many are lead
indicators of sustainable future financial
performance such as strategy, culture,
leadership, reputation and risk.
REMUNERATION REPORT
CONTENTS
1 Remuneration snapshot
44
2 Detailed background on
the remuneration strategy
and framework
50
3 Performance and
reward outcomes
4 Remuneration
governance
5 Executive shareholdings
and contracts
6 Non-Executive Director
fees and shareholding
requirements
7 Statutory tables
53
58
60
62
63
W 42
REMUNERATION
REPORT
Our Board and Executive KMP, as
leaders, are united in their recognition
of AMP’s historical significance, their
strong understanding of the business
challenges faced and their drive and
motivation to transform the business.
Dear fellow shareholder
In the 2021 financial year, enormous
efforts were made to drive far-reaching
and necessary changes within AMP. They
were made against an external backdrop
of another year heavily impacted by the
new variants of the global COVID-19
pandemic, with long periods punctuated
by lockdowns. There were also internal
pressures and complexities created by
the need to conduct the portfolio review,
which concluded in April 2021, a significant
shift in strategic direction and a change
in Chief Executive Officer (CEO) partway
through the group’s transformation.
New direction and stability
I am pleased, therefore, to report that new
levels of energy, stability and clear direction
have been brought to AMP under the
stewardship of its new CEO, Alexis George.
The promotion, hiring and retention of high-
calibre and respected senior executives,
who are outstanding leaders in their fields,
were successfully achieved. This includes
the appointment of Scott Hartley in January
as CEO Australian Wealth Management
and Shawn Johnson in June 2021 as CEO
AMP Capital and the recent appointment
of Felicia Trewin as Chief Technology Officer,
who will be joining us in March 2022.
Our Board and Executive KMP are united
in their recognition of AMP’s historical
significance, their strong understanding of
the business challenges faced and their drive
and motivation to transform the business.
Most importantly, like the Board, they are
focused on rebuilding value, trust and
confidence in the business, and are moving
at pace to make this happen.
Year in review
Despite some executive departures, the
overall performance of AMP tracked at
61.5% against the 2021 target scorecard.
This is a solid result, particularly
considering external factors (eg COVID
pandemic, unpredictability of market
and economic factors, consumer shifts)
and internal decisions (eg demerger,
Infrastructure Debt sale, impairments,
leadership changes) including uncertainty
from ongoing operating model change.
The most notable and significant
achievements during 2021 were:
–
The successful hiring and retention
of business leaders with proven track
records to the executive team
–
The laying of foundations and
delivering to date to the demerger
timetable to create two separate,
streamlined and agile businesses
– a new and reinvigorated AMP Limited
and Private Markets
–
The completion of the sale of the
remaining stake in Resolution Life
and the agreed divestments of other
non-core businesses – global equities,
fixed income and infrastructure debt
–
The core bank system was simplified
and modernised, and we more
strongly aligned our advice network,
invested in the North platform and
repriced the Master Trust and MySuper
products, the delivery of ~$130 million
in cost reductions and improvement
in culture.
The scorecard objectives, measures and
targets are set at the start of the year
and relate to weighted long-term goals
to improve financials, boost client care,
drive strategic priorities and significantly
lift both risk management and leadership.
Of the total scorecard targets set for 2021,
51% are financial and 49% non-financial
measurements, of which many are lead
indicators of sustainable future financial
performance such as strategy, culture,
leadership, reputation and risk.
REMUNERATION REPORT
CONTENTS
1 Remuneration snapshot
44
2 Detailed background on
the remuneration strategy
and framework
3 Performance and
reward outcomes
4 Remuneration
governance
5 Executive shareholdings
and contracts
6 Non-Executive Director
fees and shareholding
requirements
7 Statutory tables
50
53
58
60
62
63
In addition, with AMP’s respectable
underlying full-year results, the total score
achieved was due to the strategically
significant work undertaken, in large part,
by our renewed and strengthened executive
team during 2H21.
2021 incentive outcomes
In determining the 2021 group incentive
pool, the Board was highly cognisant of the
shareholder experience and the impacts of
organisational instability during the first half
of 2021. This was caused by previous poor
customer experiences as well as reputation-
related events, the portfolio review and the
announcement of Francesco De Ferrari’s
departure. These factors clearly weighed
on AMP’s reputation and share price.
It is important to highlight the tremendous
work and dedication of AMP’s employees,
who were significantly stretched at many
times during the year, yet consistently strove
to provide improved care to customers.
I wish to personally thank them for their
significant contributions to the business
during this difficult and challenging period.
Therefore, considering a holistic view of
performance, the risk overlay and the risk
metrics included in the scorecard, the Board
determined to set an incentive pool of
70% of target (excluding AMP Capital). We
aimed to balance the need to reward, retain
and motivate employees, acknowledging
strategic outcomes delivered in 2021,
while also recognising and aligning to the
disappointing shareholder experience. As
AMP works its way through this strategically
important and challenging time, the
judgement between rewarding and retaining
high-quality executives and the shareholder
experience represents some challenges.
The incentive pool for Executive KMP is
50% of target, of which 40% will be paid
in cash in April 2022 and 60% delivered
in share rights, that vest over three
years for the CEO and over two years for
Executive KMP. Individual allocations vary
based on time in role and performance.
Furthermore, the Board determined that
the former CEO will not receive a STI
allocation for 2021.
There were no long term incentive (LTI)
plans due to be tested in 2021; therefore, no
LTI vested in 2021. Subject to shareholder
approval at the AGM in May 2022,
performance rights under the LTI program
will be granted.
Based on our continued commitment
to provide greater transparency and
disclosure, we provided details on the 2021
scorecard and STI outcomes in Sections 1.4,
1.5, 3.2 and 3.5 of this report.
Executive remuneration
framework
The shareholder vote against the 2019
Remuneration Report was taken very
seriously by the Board. As a result, we
consulted with shareholders, proxy advisers
and other shareholder representatives.
We listened carefully to concerns along the
way and acted on them.
As outlined in last year’s Remuneration
Report, a consistent and simplified
executive remuneration framework was
developed during 2020 and applied from
1 January 2021, outlined in Section 1.3.
The Chair’s fees were reduced from
$660,000 to $561,000 and NEDs’ base fees
were reduced from $240,000 to $204,000
per annum (inclusive of superannuation
contributions).
With the demerger underway, no
amendments are proposed to the
framework for 2022. Nevertheless, it is the
Board’s intention to review key aspects of
executive remuneration on a regular basis
to ensure the structure and methodology
remain aligned with our remuneration
principles while supporting the
reinvigoration and growth of the new AMP.
Post the demerger, we will review and
ensure compliance with the Financial
Accountability Regime and APRA’s
remuneration prudential standard
(CPS 511) for implementation in 2023.
One-off events outside the
2021 remuneration framework
CEO’s sign-on award
We are delighted Alexis George, one the
country’s most experienced and respected
leaders in wealth and banking, joined AMP
as CEO in August 2021. A competitive
remuneration package was developed to
recognise remuneration forgone in leaving
her roles as ANZ Banking Group’s Deputy
CEO and Group Executive of its wealth arm,
with a sign-on equity award with a face
value of $4.091 million, tranches of which
will vest over the next four years. Part of the
sign-on equity, to the value of $1.32 million,
vested during 2021 and Alexis George also
received $732,500 in cash in lieu of STI
forgone at her previous employer.
Full details of Alexis George’s sign-on awards
and Francesco De Ferrari’s exit arrangements
can also be found in Section 1.6.
Retention awards
In 2020, during the portfolio review, to provide
enhanced stability and continuity across
the business, the Board granted one-off
retention awards to critical Executive KMP.
This also recognised key executives’ additional
workloads as a result of the portfolio review.
When the concept was first considered,
extensive consultation with shareholders
and proxy advisors was undertaken. They
expressed their general dislike of such
payments, however, understood and
recognised the challenging and unique
situation facing AMP.
As detailed in the 2020 Remuneration
Report, the retention awards totalled
$3.89 million. On 31 October 2021, 60% of
the award was paid in cash. The remaining
40% was delivered in share rights that will
vest on 31 October 2024.
Non-Executive Director
remuneration
As previously announced, the Board
reviewed the Chair and Non-Executive
Director fees and determined there would
be a 15% reduction to all fees effective
1 August 2021 to reflect the sale of AMP Life.
Non-Executive Director fees will be reviewed
again following completion of the demerger.
People and culture strategy
As we continue our drive to improve
AMP’s culture, uplifting our performance
framework and practices across AMP are an
important part of the reset. The framework
places equal emphasis on results (“the
what”) and behaviours (“the how”), linking
strategy, goals, performance outcomes
and remuneration. We are launching
a new performance management approach
in 2022 in conjunction with the roll out
of a new system: PeopleCONNECT.
Other actions undertaken during 2021
included: completion of the Group’s 2021
action plan, following an in-depth review
of workplace conduct, which will continue
in 2022; launching a new inclusion and
diversity policy; and uplifting workplace
relations capability.
A set of non-negotiable actions were
implemented, they include: delivering
inclusive leadership training for all AMP
employees; ensuring a consistent approach
to workplace conduct management,
including taking a person-centred approach
to conduct matters and the application of
consequences; and establishing succession
and retention plans for critical roles.
During 2021, we commenced our journey
towards a simpler, purpose-led AMP.
Importantly, we are taking an inclusive and
participative approach with employees and
customers to develop our new purpose and
values. We expect to launch these in 1H22.
The approach has engaged more than 30%
of the workforce in face-to-face workshops,
giving our people the opportunity to share
in open conversations about the past,
current experiences and envisage a positive
future. Furthermore, frequent messages
from Alexis George have been well received
and the executive team is focused on
leading by example. Regular employee
surveys show evidence of this, with
improved trust in leadership, and renewed
confidence in the direction of the business.
We appreciate and welcome feedback
from our stakeholders and will continue
to engage with you as we transform and
grow post demerger.
On behalf of the Board, I would like
to thank you for your support as an AMP
shareholder and invite you to read the full
report in detail.
Michael Sammells
Chair, Remuneration Committee
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44
Remuneration report
This report details the remuneration framework and outcomes for Key Management Personnel (KMP) of AMP
Limited for the year ended 31 December 2021. It has been prepared and audited in accordance with the disclosure
requirements of the Corporations Act 2001.
1
SECTION
REMUNERATION SNAPSHOT
1.1
KEY MANAGEMENT PERSONNEL
Name
Executive KMP
Alexis George
David Cullen
Position
Chief Executive Officer
Group General Counsel
James Georgeson
Chief Financial Officer
Term as KMP
2 August 2021
Full year
Full year
Chief Executive Officer, Australian Wealth Management
11 January 2021
Scott Hartley
Shawn Johnson
Rebecca Nash
Sean O’Malley
Phil Pakes
Chief Executive Officer, AMP Capital
Chief People Officer
Group Executive, AMP Bank
Chief Risk Officer
Former Executive KMP
Francesco De Ferrari 1
Chief Executive Officer
Helen Livesey 2
Blair Vernon 3
Non-executive Directors
Debra Hazelton
Rahoul Chowdry
Michael Hirst
Group Executive, People and Corporate Affairs
Chief Executive Officer, AMP New Zealand
Chair
Non-Executive Director
Non-Executive Director
Kathryn McKenzie
Non-Executive Director
John O’Sullivan
Non-Executive Director
Michael Sammells
Non-Executive Director
Andrea Slattery
Non-Executive Director
28 June 2021
15 November 2021
15 November 2021
Full year
30 June 2021
15 November 2021
31 December 2020
Full year
Full year
1 July 2021
Full year
Full year
Full year
Full year
1 Francesco De Ferrari’s formal termination date was 25 December 2021. Termination payment details are included in Section 1.6 and table 7.1 of this report.
2 Helen Livesey’s formal termination date was 1 January 2022. Termination payment details are included in Section 1.6 and table 7.1 of this report.
3 Blair Vernon was included in the 2020 Remuneration Report while acting as Chief Executive Officer, AMP Australia (AMPA). AMP has determined that
the Chief Executive Officer, AMP New Zealand role is not KMP as the position does not have the authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly due to the New Zealand business not being of a size that is material to the overall results of AMP.
1.2
SHAREHOLDER FEEDBACK ON 2020 REMUNERATION REPORT
At the conclusion of the 2021 AGM, 76.18% of votes were in support of the remuneration report, with positive feedback received on
improvements in the structure, content and layout of the remuneration report providing greater clarity than previous versions. However,
some important points were raised.
Shareholder feedback
Board response
LTI design, including more
performance measures
Board discretion
The current LTI design aligns to standard market practice, the Board will consider the
a second performance measure to the LTI for 2023 subject to compliance with CPS 511.
The Board exercises discretion to apply remuneration consequences to executives
with overall accountability for matters arising in their business units with adverse risk,
customer and/or reputational impacts. Along with a range of measures, the Board
considers individual performance or conduct that has an in-year impact on STI awarded.
Transparency
The Board remains committed to providing greater clarity and detail in the disclosure
especially as it relates to the STI outcomes.
44
Remuneration report
This report details the remuneration framework and outcomes for Key Management Personnel (KMP) of AMP
Limited for the year ended 31 December 2021. It has been prepared and audited in accordance with the disclosure
requirements of the Corporations Act 2001.
1.3
2021 REMUNERATION FRAMEWORK
The following diagram illustrates the remuneration framework applied to AMP Limited Executive KMP during 2021 and announced
in the 2020 Remuneration Report. It is underpinned by the remuneration governance, risk management and consequence management
frameworks and is subject to overall AMP Board discretion. The rationale for the remuneration framework has been to strengthen
and simplify AMP’s overall approach to remuneration. In addition, it was developed to work effectively within the context of AMP’s
transformation. With the variable pay and extensive deferral included in the awards, emphasis is placed on the shareholder experience
and compliance with regulatory frameworks and guidelines, including BEAR.
OUR REMUNERATION PRINCIPLES
Market competitive
to attract the
right people
Reflect our values
behaviours and
expectations
Differentiate for
performance and
adjust for risk
Linked to strategy
and sustainable
value creation
Balance interests
of clients people
and shareholders
ELEMENT
PURPOSE
AWARD MIX
TARGET
TIME FRAME
OUR REMUNERATION FRAMEWORK
Fixed Remuneration
FR
Short Term Incentive
STI
Long Term Incentive
LTI
Market competitive to
attract and retain talent
Takes executive skill and
experience into account
Cash: Reward for
achieving key financial
and non-financial
priorities that progress
the strategy
Equity: Encourage
retention and monitor
latent risk related
to the performance
period
Align reward to
shareholder success
with upside for superior
performance relative
to market peers
Cash
40% cash
60% equity
Market median and
relevant peer group
Target is 100% of FR 1
Max is 200% of Target
n/a
Cash paid in relevant year
Equity deferred over two to three years
Equity rights
at face value
Up to 100% of FR in
performance rights
Three-year performance
period and additional
one-year restriction
Based on Total
Shareholder Return
(TSR) relative to ASX 100
Financial Organisations
ex AREITs over a three-
year performance
period with further
12-month restriction
At the conclusion of the 2021 AGM, 76.18% of votes were in support of the remuneration report, with positive feedback received on
improvements in the structure, content and layout of the remuneration report providing greater clarity than previous versions. However,
1 Chief Risk Officer (CRO) target is 70% of FR (max is 200% of target or 140% of FR).
VESTING
On award
CEO:
33.4% in year two, 33.3% in years three and four
Group Executive KMP:
50% in year two, 50% in year three
James Georgeson
Chief Financial Officer
Chief Executive Officer, Australian Wealth Management
11 January 2021
1
SECTION
Name
Executive KMP
Alexis George
David Cullen
Scott Hartley
Shawn Johnson
Rebecca Nash
Sean O’Malley
Phil Pakes
REMUNERATION SNAPSHOT
1.1
KEY MANAGEMENT PERSONNEL
Position
Chief Executive Officer
Group General Counsel
Chief Executive Officer, AMP Capital
Chief People Officer
Group Executive, AMP Bank
Chief Risk Officer
Francesco De Ferrari 1
Chief Executive Officer
Group Executive, People and Corporate Affairs
Chief Executive Officer, AMP New Zealand
Former Executive KMP
Helen Livesey 2
Blair Vernon 3
Non-executive Directors
Debra Hazelton
Rahoul Chowdry
Michael Hirst
Chair
Non-Executive Director
Non-Executive Director
Kathryn McKenzie
Non-Executive Director
John O’Sullivan
Non-Executive Director
Michael Sammells
Non-Executive Director
Andrea Slattery
Non-Executive Director
Term as KMP
2 August 2021
Full year
Full year
28 June 2021
15 November 2021
15 November 2021
Full year
30 June 2021
15 November 2021
31 December 2020
Full year
Full year
1 July 2021
Full year
Full year
Full year
Full year
1 Francesco De Ferrari’s formal termination date was 25 December 2021. Termination payment details are included in Section 1.6 and table 7.1 of this report.
2 Helen Livesey’s formal termination date was 1 January 2022. Termination payment details are included in Section 1.6 and table 7.1 of this report.
3 Blair Vernon was included in the 2020 Remuneration Report while acting as Chief Executive Officer, AMP Australia (AMPA). AMP has determined that
the Chief Executive Officer, AMP New Zealand role is not KMP as the position does not have the authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly due to the New Zealand business not being of a size that is material to the overall results of AMP.
1.2
SHAREHOLDER FEEDBACK ON 2020 REMUNERATION REPORT
some important points were raised.
Shareholder feedback
Board response
LTI design, including more
performance measures
Board discretion
The current LTI design aligns to standard market practice, the Board will consider the
a second performance measure to the LTI for 2023 subject to compliance with CPS 511.
The Board exercises discretion to apply remuneration consequences to executives
with overall accountability for matters arising in their business units with adverse risk,
customer and/or reputational impacts. Along with a range of measures, the Board
considers individual performance or conduct that has an in-year impact on STI awarded.
Transparency
The Board remains committed to providing greater clarity and detail in the disclosure
especially as it relates to the STI outcomes.
45
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Remuneration report
1.4
2021 SCORECARD AND OUTCOMES
PRIORITIES
Deliver
financials
Think client
first
Strategic
priorities
Manage
risk
Leadership
WHAT 60%
HOW 40%
2021
OBJECTIVES
Drive group P&L
performance
Drive client
outcomes
Effectively
manage return
profile
Drive client
engagement
Improve market
reputation
Drive net new
business
Client
remediation
program
Financially aligned objective
Maximise
shareholder
value – portfolio
review
Reinvent wealth
management in
Australia
Repivot asset
management to
private markets
Grow NZ
franchise
Create simpler,
leaner business
Operate within
risk appetite
Drive employee
engagement
Strengthen three
lines of defence
Improve risk
culture
Promote diverse
and inclusive
culture
Succession
planning and
strength of
executive team
WEIGHTING
30%
15%
15%
20%
20%
PERCENTAGE
OF
OBJECTIVES
ACHIEVED
SCORECARD
RESULT
STI
POOL
BOARD
DISCRETION
OVERLAY
0%
94%
90%
80%
90%
61.5%
AMP STI Pool 70%1 of Target 2
Executive KMP STI Pool 50% of Target
The Board considered a number of factors including the risk overlay and shareholder experience
and determined that funding the pool at this level is appropriate and equitably rewards the
contribution of employees
1 The STI incentive pool excludes AMP Capital which is delivered through a profit share arrangement.
2 Where target is the midpoint of the overall incentive opportunity.
1.4
2021 SCORECARD AND OUTCOMES
1.5
ACTUAL REMUNERATION REALISED IN 2021
Under AMP’s remuneration framework, executives are eligible to receive a mix of fixed remuneration, STI (delivered 40% in cash and 60%
deferred in share rights) and LTI.
The table below sets out the remuneration actually received by the CEO and Executive KMP as at 31 December 2021 and the value of any
equity awarded in prior years (either as deferred STI and/or LTI) vesting during 2021.
This information differs from the statutory remuneration table which presents remuneration in accordance with Australian Accounting
Standards. Statutory disclosures are included in Section 7.1.
Fixed 1
$
Cash STI 2
$
714,192
172,000
–
–
Short term benefits
Retention
Payments 3
$
Vested
equity 4
$
Sign-on
awards 5
$
Benefits 6
$
1,316,759
732,500
–
–
–
Executive KMP
Alexis George
David Cullen
James Georgeson
Scott Hartley
Shawn Johnson
Rebecca Nash7
Sean O'Malley7
Phil Pakes
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
750,000
180,000
450,000
182,223
739,481
–
–
203,892
750,000
186,000
450,000
745,792
–
875,342
206,000
–
–
486,712
274,000
–
–
634,658
114,400
–
–
556,438
111,600
–
700,000
520,219
–
tbd8
–
–
–
–
–
–
–
–
–
–
420,000
–
33,419
48,726
–
–
–
–
–
–
–
–
–
–
Total
Remuneration
received
$
2,935,451
–
1,569,641
943,373
1,420,419
796,018
1,185,870
–
804,493
–
749,404
–
669,677
–
1,132,339
520,219
–
–
7,418
–
1,000
1,800
104,528
–
43,781
–
346
–
1,639
–
12,339
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Fixed remuneration (FR) received reflects the time in role during 2021. For Rebecca Nash and Sean O’Malley, FR received also includes amounts received
prior to their appointments.
2 Cash STI paid during the relevant year is based on outcomes related to the applicable year’s performance and reflected for the relevant reporting period.
Cash STI represents 40% of the total STI awarded and the remaining 60% will be delivered in share rights in April 2022.
3 The cash component of the Portfolio Review retention awards granted in 2020 were paid on 31 October 2021 to Executive KMP at that time.
4 The value of vested equity awards was calculated based on the units which vested multiplied by the five-day volume weighted average price (VWAP)
up to and including the vesting date of each award. The table also includes the portion of Alexis George’s sign-on awards that vested during 2021.
5 The CEO Alexis George received sign-on cash to the value of $732,500 in December 2021. Full details of the sign-on awards are provided in Section 1.6.
6 Other benefits may include non-monetary benefits and any related FBT exempt benefits and FBT payable benefits, for example car related expenses,
insurances, professional memberships and subscriptions.
7 The FR for Rebecca Nash and Sean O’Malley reflects their pro rated FR in their current KMP and prior non-KMP roles.
8 The STI amount is to be determined but will be within the range of zero to a cap of 58% of his target STI opportunity of $490,000.
46
Remuneration report
PRIORITIES
Deliver
financials
Think client
first
Strategic
priorities
Manage
risk
Leadership
WHAT 60%
HOW 40%
Operate within
Drive employee
risk appetite
engagement
Strengthen three
Promote diverse
lines of defence
and inclusive
Improve risk
culture
culture
Succession
planning and
strength of
executive team
Drive group P&L
Drive client
performance
outcomes
Effectively
manage return
profile
Drive client
engagement
Improve market
reputation
Drive net new
business
Client
remediation
program
Maximise
shareholder
value – portfolio
review
Reinvent wealth
management in
Australia
Repivot asset
management to
private markets
Grow NZ
franchise
Create simpler,
leaner business
Financially aligned objective
WEIGHTING
30%
15%
15%
20%
20%
0%
94%
90%
80%
90%
61.5%
AMP STI Pool 70%1 of Target 2
Executive KMP STI Pool 50% of Target
The Board considered a number of factors including the risk overlay and shareholder experience
and determined that funding the pool at this level is appropriate and equitably rewards the
contribution of employees
1 The STI incentive pool excludes AMP Capital which is delivered through a profit share arrangement.
2 Where target is the midpoint of the overall incentive opportunity.
2021
OBJECTIVES
PERCENTAGE
OF
OBJECTIVES
ACHIEVED
SCORECARD
RESULT
STI
POOL
BOARD
DISCRETION
OVERLAY
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Remuneration report
1.6
KEY NON-FRAMEWORK RELATED EVENTS
Details
Alexis George, CEO
Alexis George was appointed as the new Chief Executive Officer and commenced on 2 August 2021. Remuneration included:
–
–
–
–
Salary (including superannuation) $1.715 million.
Sign-on equity award with a face value of $4.091 million delivered in AMP equity vesting over four years to replace existing incentive
arrangements that were foregone with previous employer. On 22 November 2021, the portion vested, see Sections 7.3 and 7.4.
% of
Total Award
Number Vested
Lapsed
Value at
vesting
$512,315
Performance
–
$191,938
Absolute TSR CAGR of more than 8%
–
–
122,010
$452,611
Relative TSR at 64.3 percentile
Share rights
Performance rights
Performance rights
13%
5%
15%
507,243
109,038
448,130
Performance period 2 August – 22 November 2021 with TSR of 8.49%
She received $732,500 in cash to replace STI foregone.
She will participate in the LTI grant for 2022 subject to the grant being approved by shareholders at the AGM in May 2022.
Francesco De Ferrari, Former CEO
AMP agreed a mutual separation with Francesco De Ferrari effective 30 June 2021. The final termination date was 25 December 2021.
He received the following payments:
–
–
–
Payment in lieu of six months notice.
Payment of $300,000 (less applicable tax) in respect of the additional work that was provided to the AMP Capital business throughout 2021.
Relocation allowance of $377,000 before tax.
– No STI outcome was awarded for 2021.
–
Eligible to retain a pro rata portion of the 2019 LTI award and Transformation Incentive award based on time elapsed from the grant
date to termination date. The awards will remain on foot in accordance with the original terms of offer and performance hurdles tested
on the vesting date. The remaining balance of both awards will lapse.
–
Eligible to retain all other unvested incentive awards, held on foot in accordance with the original terms of offer, see Sections 7.3 and 7.4.
The former CEO was not granted a LTI or a retention award in 2021.
Shawn Johnson, CEO AMP Capital
Shawn Johnson was appointed as AMPC CEO and commenced on 28 June 2021. Remuneration arrangements include:
–
–
Annual fixed remuneration of $950,000 including superannuation.
Eligible to participate in an annual incentive with the opportunity to receive a discretionary annual award of up to 1.2% of the AMP
Capital modified profit of which 60% will be deferred and vest over two years.
–
Eligible to participate in an equity plan in Private Markets after listing.
He did not receive any equity awards under the AMP Limited Equity Incentive Plans.
Helen Livesey, Group Executive People and Corporate Affairs
Helen Livesey ceased as KMP on 15 November 2021 with a termination date of 1 January 2022. Redundancy payments include:
–
–
–
–
–
Payment in lieu of balance of twelve months notice.
Provision of other benefits required by law.
A pro-rated portion of the unvested Transformation Incentive award will lapse, and the remaining balance is retained in accordance
with plan rules and subject to original terms.
Eligible to retain all other unvested incentive awards, held on foot in accordance with the original terms of offer, see Sections 7.3 and 7.4.
STI outcome for 2021 of $300,000 paid in cash. It represents 35% of the pro rated target STI opportunity, see Sections 3.5 and 7.1.
Retention awarded in 2020 and paid in 2021
As indicated in the 2020 Remuneration Report, the Board awarded selected retention awards to key individuals to maintain stability
through the portfolio review. The cash portion (60%) of these awards were paid on 31 October 2021 and the remaining (40%) delivered
as share rights that vest in October 2024, see Sections 1.5, 7.1 and 7.3.
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Remuneration report
1.6
KEY NON-FRAMEWORK RELATED EVENTS
1.7
LOOKING FORWARD 2022
Details
Alexis George, CEO
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Alexis George was appointed as the new Chief Executive Officer and commenced on 2 August 2021. Remuneration included:
Salary (including superannuation) $1.715 million.
Sign-on equity award with a face value of $4.091 million delivered in AMP equity vesting over four years to replace existing incentive
arrangements that were foregone with previous employer. On 22 November 2021, the portion vested, see Sections 7.3 and 7.4.
Share rights
Performance rights
Performance rights
Total Award
Number Vested
Lapsed
% of
13%
5%
15%
507,243
109,038
448,130
–
–
$191,938
Absolute TSR CAGR of more than 8%
122,010
$452,611
Relative TSR at 64.3 percentile
Performance
–
Value at
vesting
$512,315
Performance period 2 August – 22 November 2021 with TSR of 8.49%
She received $732,500 in cash to replace STI foregone.
She will participate in the LTI grant for 2022 subject to the grant being approved by shareholders at the AGM in May 2022.
AMP agreed a mutual separation with Francesco De Ferrari effective 30 June 2021. The final termination date was 25 December 2021.
Payment of $300,000 (less applicable tax) in respect of the additional work that was provided to the AMP Capital business throughout 2021.
Francesco De Ferrari, Former CEO
He received the following payments:
Payment in lieu of six months notice.
Relocation allowance of $377,000 before tax.
– No STI outcome was awarded for 2021.
–
Eligible to retain a pro rata portion of the 2019 LTI award and Transformation Incentive award based on time elapsed from the grant
date to termination date. The awards will remain on foot in accordance with the original terms of offer and performance hurdles tested
on the vesting date. The remaining balance of both awards will lapse.
–
Eligible to retain all other unvested incentive awards, held on foot in accordance with the original terms of offer, see Sections 7.3 and 7.4.
The former CEO was not granted a LTI or a retention award in 2021.
Shawn Johnson, CEO AMP Capital
Shawn Johnson was appointed as AMPC CEO and commenced on 28 June 2021. Remuneration arrangements include:
Annual fixed remuneration of $950,000 including superannuation.
Eligible to participate in an annual incentive with the opportunity to receive a discretionary annual award of up to 1.2% of the AMP
Capital modified profit of which 60% will be deferred and vest over two years.
–
Eligible to participate in an equity plan in Private Markets after listing.
He did not receive any equity awards under the AMP Limited Equity Incentive Plans.
Helen Livesey, Group Executive People and Corporate Affairs
Helen Livesey ceased as KMP on 15 November 2021 with a termination date of 1 January 2022. Redundancy payments include:
Payment in lieu of balance of twelve months notice.
Provision of other benefits required by law.
with plan rules and subject to original terms.
A pro-rated portion of the unvested Transformation Incentive award will lapse, and the remaining balance is retained in accordance
Eligible to retain all other unvested incentive awards, held on foot in accordance with the original terms of offer, see Sections 7.3 and 7.4.
STI outcome for 2021 of $300,000 paid in cash. It represents 35% of the pro rated target STI opportunity, see Sections 3.5 and 7.1.
Retention awarded in 2020 and paid in 2021
As indicated in the 2020 Remuneration Report, the Board awarded selected retention awards to key individuals to maintain stability
through the portfolio review. The cash portion (60%) of these awards were paid on 31 October 2021 and the remaining (40%) delivered
as share rights that vest in October 2024, see Sections 1.5, 7.1 and 7.3.
Remuneration framework
No changes to the remuneration framework are proposed for 2022.
The Board will continue to review its approach to executive remuneration on a regular basis and will consult with shareholders for
feedback. Any adjustments will seek to ensure the structure and methodology remain aligned with our remuneration principles
whilst supporting the growth of the business. We will also review for compliance with the Financial Accountability Regime and APRA’s
remuneration prudential standard CPS 511 during 2022 for implementation in 2023.
Treatment of unvested equity at the demerger
The Board has approved an approach for the treatment of the unvested shares and rights at the time of demerger. The treatment is based
on the principle that employees should be treated fairly and in line with shareholders at the point of the demerger. The performance
measures should continue to operate as intended. The treatment is also consistent with market practice and the approach used in other
recent demergers.
2022 scorecard
For 2022, we are making changes to the scorecard to ensure that the process is simpler, more transparent and drives an improved,
performance-oriented and aligned business. While the key result areas remain consistent, their labels, respective weightings, along with
the objectives and measures are changing. In addition, principles have been established to inform the development of the scorecard,
to improve clarity and alignment, and increase focus on the successful achievement of the critical objectives. 1
SCORECARD PRINCIPLES ARE:
–
–
–
–
Be clear on strategic priorities
–
Focus on fewer objectives and measures
Increase focus on customer and people
– Quantitative or meaningful qualitative measures
Provide a whole of AMP perspective
Balance shareholder and regulator requirements
–
–
Scorecard is easy to communicate to employees and externally
Cascade key result areas and objectives
Key result areas
Objectives
Metric
Customer
Improve our brand and reputation
Reputational score RepTrak
Deliver to our customers
Customer NPS
20%
People
20%
Strategy
20%
Finance
30%
Risk
10%
100%
Improve employee engagement
eSat progress target
Build an inclusive culture
Inclusion index progress target
Gender diversity tracking to target for senior executives
Grow the Bank
Grow the Platform business
Complete the demerger
Simplify the business
Manage return on equity
Improve profitability
Mortgage book growth
Net cashflow
Tracking to plan
Achieve target total cost base
Return on equity (RoE)
NPAT (statutory)
NPAT (underlying)
Operate within risk appetite
95–100% compliance within stated risk appetite, and
action plans where appropriate
Embed risk culture
Risk culture self-assessment
The overall AMP performance scorecard outcome is subject to Board discretion and a risk overlay
1 In early 2022, AMP will be introducing a new Performance Management approach through a new human resource information system: PeopleCONNECT.
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2
SECTION
DETAILED BACKGROUND ON THE
REMUNERATION STRATEGY AND FRAMEWORK
2.1
REMUNERATION STRATEGY
The goal of the AMP remuneration strategy is to align performance, ensure prudent risk management and reward outcomes. It is designed
to support the attraction, retention and reward of high-performing talent required to deliver strong client outcomes, sustained returns to
shareholders and foster an environment where our employees can thrive. At the beginning of each year the Board sets the scorecard for the
year to support the achievement of the business strategy. The scorecard consists of five key strategic priorities as outlined below and the
Board determines the appropriate objectives, metrics and targets. These are then cascaded to business units and achievement is assessed
on overall, business unit, team and individual performance. Outcomes awarded under our remuneration framework reflect both what our
strategy seeks to deliver and how it is delivered, as performance assessment explicitly considers not only the strategic priorities delivered,
but also relies on the visible demonstration of our desired culture, behaviours and conduct expectations. The remuneration principles
provide AMP with the flexibility to address the challenges in attracting and retaining talent, remaining competitive and differentiating for
performance. These principles are reviewed on a regular basis to ensure they remain fit for purpose and will be used by the Board in annual
assessments of the effectiveness of AMP’s remuneration strategy and framework.
OUR REMUNERATION PRINCIPLES
Market competitive
to attract the
right people
Reflect our values
behaviours and
expectations
Differentiate for
performance and
adjust for risk
Linked to strategy
and sustainable
value creation
Balance interests
of clients, people
and shareholders
1.
AMP PURPOSE
2.
AMP STRATEGY
3.
BUSINESS UNIT
STRATEGY
AWM
Bank
NZWM
AMPC
4.
STRATEGIC
PRIORITIES
5.
DELIVER
AND TRACK
6.
PERFORMANCE
ASSESSMENT
7.
REWARD
Deliver
financials
Think
client first
Strategic
priorities
Manage
risk
Plan
What
– Set AMP scorecard
AMP scorecard
for year ahead
– Set business area
scorecard aligned
to AMP scorecard
Track
– Track progress
quarterly
– Review and
overlay qualitative
risk assessment
quarterly
Business unit
scorecard
Individual
performance
assessment
How
Values and
behaviours
Personal risk
management
Leadership
Report
– Report progress
to Board quarterly
Enabling Functions
Operating rhythms to check in, assess, course correct, including setting
and tracking of stretch goals
8.
SHAREHOLDER
EXPERIENCE
Long term incentive through performance rights
Demonstrate desired conduct and risk behaviours
The Board
determines the
AMP incentive
pool based on a
holistic assessment
of company
performance
The CEO can
determine if any
adjustments
will be made for
business units
Individual outcomes
based on AMP
incentive pool
and individual
performance
assessment
Vested based on
relative TSR
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2
SECTION
DETAILED BACKGROUND ON THE
REMUNERATION STRATEGY AND FRAMEWORK
2.1
REMUNERATION STRATEGY
The goal of the AMP remuneration strategy is to align performance, ensure prudent risk management and reward outcomes. It is designed
to support the attraction, retention and reward of high-performing talent required to deliver strong client outcomes, sustained returns to
shareholders and foster an environment where our employees can thrive. At the beginning of each year the Board sets the scorecard for the
year to support the achievement of the business strategy. The scorecard consists of five key strategic priorities as outlined below and the
Board determines the appropriate objectives, metrics and targets. These are then cascaded to business units and achievement is assessed
on overall, business unit, team and individual performance. Outcomes awarded under our remuneration framework reflect both what our
strategy seeks to deliver and how it is delivered, as performance assessment explicitly considers not only the strategic priorities delivered,
but also relies on the visible demonstration of our desired culture, behaviours and conduct expectations. The remuneration principles
provide AMP with the flexibility to address the challenges in attracting and retaining talent, remaining competitive and differentiating for
performance. These principles are reviewed on a regular basis to ensure they remain fit for purpose and will be used by the Board in annual
assessments of the effectiveness of AMP’s remuneration strategy and framework.
OUR REMUNERATION PRINCIPLES
Market competitive
Reflect our values
to attract the
right people
behaviours and
expectations
Differentiate for
performance and
adjust for risk
Linked to strategy
and sustainable
value creation
Balance interests
of clients, people
and shareholders
AMP PURPOSE
1.
2.
3.
AMP STRATEGY
BUSINESS UNIT
STRATEGY
AWM
Bank
NZWM
AMPC
8.
SHAREHOLDER
EXPERIENCE
4.
STRATEGIC
PRIORITIES
5.
DELIVER
AND TRACK
6.
PERFORMANCE
ASSESSMENT
7.
REWARD
Deliver
financials
Think
client first
Strategic
priorities
Manage
risk
Plan
What
– Set AMP scorecard
AMP scorecard
for year ahead
– Set business area
scorecard aligned
to AMP scorecard
Track
– Track progress
quarterly
– Review and
overlay qualitative
risk assessment
quarterly
– Report progress
to Board quarterly
Business unit
scorecard
Individual
performance
assessment
How
Values and
behaviours
Personal risk
management
Leadership
Report
The Board
determines the
AMP incentive
pool based on a
holistic assessment
of company
performance
The CEO can
determine if any
adjustments
will be made for
business units
Individual outcomes
based on AMP
incentive pool
and individual
performance
assessment
Vested based on
relative TSR
Enabling Functions
and tracking of stretch goals
Operating rhythms to check in, assess, course correct, including setting
Long term incentive through performance rights
Demonstrate desired conduct and risk behaviours
2.2
REMUNERATION FRAMEWORK DETAILS
Based on shareholder feedback received in 2020, the Board reviewed the executive remuneration framework and introduced a new
simplified framework in 2021 to respond to the concerns previously raised via stakeholder feedback and to align better with market
practice. The framework is summarised in Section 1.2. More detail on the 2021 short and long term incentives is outlined below.
The Board also considers the shareholder experience, employee performance and applies a risk overlay in determining the reward outcome.
2021 SHORT TERM INCENTIVE
OVERVIEW
STI is the at-risk remuneration component designed to motivate and reward for performance during 2021.
AWARD
DETERMINATION
STIs are determined with reference to the performance of AMP relative to the scorecard, and Executive KMP
individual performance and behaviours. The final outcome and incentive pool is at the Board’s discretion based on:
–
A scorecard comprising financials, clients, strategic, risk management, and leadership priorities and objectives
that supports AMP’s risk management framework; and
–
Behaviour in line with AMP’s desired culture, conduct and risk appetite.
STI OPPORTUNITY
Target STI opportunity is 100% of fixed remuneration (FR) for the CEO and Executive KMP (70% of FR for the CRO).
Maximum STI opportunity is 200% target.
DELIVERY
40% of the STI award is delivered as cash and 60% is deferred into equity.
Deferred STI is delivered as conditional share rights that represents the right to receive a fully-paid ordinary AMP
share for nil consideration subject to continued employment at the time of vesting.
VESTING PERIOD
CEO
Executive KMP
2021
Performance
period
2022
Cash
2023
33.4%
50%
2024
33.3%
50%
2025
33.3%
–
FORFEITURE (MALUS)
The Board has the ability to adjust unvested equity (including downwards to zero) in a range of circumstances,
such as protecting financial soundness or responding to unexpected or unintended consequences that were
unforeseen (such as material risk management breaches, unexpected financial losses, reputational damage
or regulatory non-compliance).
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2.2
REMUNERATION FRAMEWORK DETAILS continued
2021 LONG TERM INCENTIVE
OVERVIEW
LTI awards are granted annually by the Board in the form of performance rights that vest subject to a relative
Total Shareholder Return (TSR) against a peer group.
LTI OPPORTUNITY
The allocation value of LTI awards that was granted during 2021 to Executive KMP:
–
–
100% of FR for Executive KMP.
70% of FR for the Chief Risk Officer.
ALLOCATION
METHODOLOGY
Face value with the number of performance rights granted based on the Volume Weighted Average Price (VWAP)
of shares during the ten-trading day period up to 1 January.
PERFORMANCE
PERIOD
PERFORMANCE
HURDLES
1 January 2021 to 31 January 2023 with a further one year restriction period subject to continued service.
Measure
The 2021 LTI award is subject to a relative TSR performance hurdle, where AMP’s TSR performance is ranked
relative to companies in a peer group. The peer group is defined as the S&P/ASX 100 financial companies
excluding A-REITs as at 1 January 2021.
Companies that are no longer part of the index at the end of the performance period (for instance, due
to acquisition or delisting) may be removed from the peer group.
Test
Percentile Rank Achieved
< 50th percentile
50th percentile
Proportion of Award Vesting
0%
50%
> 50th percentile and < 75th percentile
50% plus 2% for each additional percentile
(rounded to the nearest whole percentile)
≥ 75th percentile
100%
Vesting
Vesting of LTI is subject to an continued employment with AMP at the vesting date.
Unvested rights will lapse if an executive resigns before the performance hurdles are tested. Should an executive
cease employment for any other reason, any unvested rights will be retained and vest in the ordinary course
subject to the original performance conditions.
RETESTING
There are no opportunities to retest performance hurdles.
DIVIDEND
ENTITLEMENTS
No dividend is paid or payable on any unvested rights or vested and unexercised rights.
FORFEITURE (MALUS)
The Board retains the discretion to adjust downwards the unvested portion of any LTI award, including to zero.
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2.2
REMUNERATION FRAMEWORK DETAILS continued
2021 LONG TERM INCENTIVE
OVERVIEW
LTI awards are granted annually by the Board in the form of performance rights that vest subject to a relative
Total Shareholder Return (TSR) against a peer group.
LTI OPPORTUNITY
The allocation value of LTI awards that was granted during 2021 to Executive KMP:
–
–
100% of FR for Executive KMP.
70% of FR for the Chief Risk Officer.
Face value with the number of performance rights granted based on the Volume Weighted Average Price (VWAP)
of shares during the ten-trading day period up to 1 January.
1 January 2021 to 31 January 2023 with a further one year restriction period subject to continued service.
ALLOCATION
METHODOLOGY
PERFORMANCE
PERIOD
PERFORMANCE
HURDLES
Measure
The 2021 LTI award is subject to a relative TSR performance hurdle, where AMP’s TSR performance is ranked
relative to companies in a peer group. The peer group is defined as the S&P/ASX 100 financial companies
excluding A-REITs as at 1 January 2021.
Companies that are no longer part of the index at the end of the performance period (for instance, due
to acquisition or delisting) may be removed from the peer group.
Percentile Rank Achieved
Proportion of Award Vesting
Test
< 50th percentile
50th percentile
≥ 75th percentile
Vesting
> 50th percentile and < 75th percentile
50% plus 2% for each additional percentile
(rounded to the nearest whole percentile)
0%
50%
100%
Vesting of LTI is subject to an continued employment with AMP at the vesting date.
Unvested rights will lapse if an executive resigns before the performance hurdles are tested. Should an executive
cease employment for any other reason, any unvested rights will be retained and vest in the ordinary course
subject to the original performance conditions.
RETESTING
There are no opportunities to retest performance hurdles.
DIVIDEND
ENTITLEMENTS
No dividend is paid or payable on any unvested rights or vested and unexercised rights.
FORFEITURE (MALUS)
The Board retains the discretion to adjust downwards the unvested portion of any LTI award, including to zero.
3
SECTION
PERFORMANCE AND REWARD OUTCOMES
3.1
SUMMARY OF 2021 FINANCIAL PERFORMANCE
The table below illustrates AMP’s performance over the past five years and the remuneration outcomes.
Financial results
Profit (loss) after tax attributable to shareholders ($m)
Net profit after tax (underlying) ($m) 1
Cost to income ratio (%)
Shareholder outcomes
Total dividend (cents per share)
Share price at 31 December ($)
Remuneration outcomes
Relative TSR percentile 2
LTI vesting outcome (% of grant)
Average STI received by KMP (as % of maximum opportunity)
2017
2018
2019
2020
2021
848
1,040
46.2
29
5.19
27th
0
58
28
680
55.8
14
2.45
8th
0
0
(2,467)
439
66.0
0
1.91
0
0
23
177
233
75.7
10
1.56
0
0
0
(252)
356
71.3
0
1.01
n/a
n/a
19.5
1 NPAT (underlying) represents shareholder attributable net profit or loss after tax excluding market adjustments, accounting mismatches and non-recurring
revenue and expenses.
2 No LTI grants were tested during 2021.
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3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT
As part of the Board’s commitment to provide increased transparency regarding the financial and non-financial
objectives, detailed below are objectives and measures used to assess company and executive performance.
The strategy is underpinned by five key priorities, which have objectives, metrics and targets that were set at the
beginning of 2021. These form the overall scorecard and achievements against these objectives were used by the
Board as a key input to determine the incentive pool (excluding AMP Capital).
OUR 2021 PERFORMANCE SCORECARD
Deliver
financials
OBJECTIVE
METRIC
Drive Group P&L performance
NPAT (Statutory)
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
30%
0%
0%
Effectively manage return profile
Return on Equity
Financial performance for 2021 was
assessed on statutory NPAT (-$252m)
and RoE (-0.6%), both significantly below
target driven by several unplanned
events: impairments; cost of the APRA
enforceable undertaking and other remediations; and demerger costs. This was partly offset by the gain on Real Estate, NZ Precinct JV
and MoneyBrilliant.
ACHIEVEMENT
Significantly below
Exceeded
Achieved
Below
The underlying businesses performed well benefiting from strong performance fees in AMP Capital, higher general insurance profits
in NZWM, benefits due to Mastertrust price change delays, reversal of the COVID-19 credit loss provision and strong cost discipline.
Think
client first
OBJECTIVE
METRIC
Drive client outcomes
% FUM delivering
above benchmark
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
15%
94%
14%
AMP achieved targets in relation to NPS at
40, Reptrak at 55 (its strongest reputation
score since the Royal Commission) and
the client remediation review was 100%
complete ahead of time with the last
payments due early 2022.
FUM performance against benchmarks was
not achieved but remains a key focus and
improved later in 2021.
Overall, the Net New Business metrics were
not achieved:
– NZWM: Net Cash below target
following KiwiSaver outflows.
–
–
–
AWM: Net cashflows below target due
to outflows from Asgard, PPS and AMP
Flexible Super, partly offset by inflows
to North platform.
Bank: Mortgage volumes grew but
were slightly below target.
AMPC: Below target outcome due
to the exit of AMP Capital Diversified
Property Fund and fundraising delays.
Significantly below
Below
Achieved
Exceeded
Drive client engagement
ACHIEVEMENT
Client NPS
(operational)
Significantly below
Below
Achieved
Exceeded
Improve market reputation
Drive improvement
in RepTrak score
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Drive net new business
ACHIEVEMENT
Aus. WM NCF; AMP Bank Growth;
NZWM NCF; AMPC NRA
Significantly below
Below
Achieved
Exceeded
Client remediation program
% program
completed
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
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Remuneration report
3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT
As part of the Board’s commitment to provide increased transparency regarding the financial and non-financial
objectives, detailed below are objectives and measures used to assess company and executive performance.
The strategy is underpinned by five key priorities, which have objectives, metrics and targets that were set at the
beginning of 2021. These form the overall scorecard and achievements against these objectives were used by the
Board as a key input to determine the incentive pool (excluding AMP Capital).
OUR 2021 PERFORMANCE SCORECARD
Deliver
financials
OBJECTIVE
METRIC
Drive Group P&L performance
NPAT (Statutory)
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Effectively manage return profile
Return on Equity
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
enforceable undertaking and other remediations; and demerger costs. This was partly offset by the gain on Real Estate, NZ Precinct JV
The underlying businesses performed well benefiting from strong performance fees in AMP Capital, higher general insurance profits
in NZWM, benefits due to Mastertrust price change delays, reversal of the COVID-19 credit loss provision and strong cost discipline.
30%
0%
0%
Financial performance for 2021 was
assessed on statutory NPAT (-$252m)
and RoE (-0.6%), both significantly below
target driven by several unplanned
events: impairments; cost of the APRA
and MoneyBrilliant.
Think
client first
WEIGHTING
%
15%
ACHIEVED
94%
WEIGHTED
OUTCOME
14%
AMP achieved targets in relation to NPS at
40, Reptrak at 55 (its strongest reputation
score since the Royal Commission) and
the client remediation review was 100%
complete ahead of time with the last
payments due early 2022.
FUM performance against benchmarks was
not achieved but remains a key focus and
improved later in 2021.
Overall, the Net New Business metrics were
not achieved:
– NZWM: Net Cash below target
following KiwiSaver outflows.
–
AWM: Net cashflows below target due
to outflows from Asgard, PPS and AMP
Flexible Super, partly offset by inflows
to North platform.
–
Bank: Mortgage volumes grew but
were slightly below target.
–
AMPC: Below target outcome due
to the exit of AMP Capital Diversified
Property Fund and fundraising delays.
OBJECTIVE
METRIC
Drive client outcomes
ACHIEVEMENT
% FUM delivering
above benchmark
Significantly below
Below
Achieved
Exceeded
Drive client engagement
ACHIEVEMENT
Client NPS
(operational)
Significantly below
Below
Achieved
Exceeded
Improve market reputation
Drive improvement
in RepTrak score
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Drive net new business
ACHIEVEMENT
Aus. WM NCF; AMP Bank Growth;
NZWM NCF; AMPC NRA
Significantly below
Below
Achieved
Exceeded
Client remediation program
% program
completed
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Strategic
priorities
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
15%
90% 13.5%
OBJECTIVE
METRIC
Maximise shareholder value
through Portfolio Review
Completion of Portfolio Review
to maximise shareholder value
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Most of the strategic priority targets were
achieved except for fundraising in the
infra debt platform and net new business
numbers in WMNZ.
Reinvent Wth Mgmt.
in Australia
ACHIEVEMENT
Accelerate North FUM
growth
Portfolio review
Completed in early 2021 and the Board
determined to demerge AMP Capital.
Operational Separation was achieved in
Dec 2021, with legal separation targeted
for June 2022 once we receive support
from the regulators.
Reinvent wealth management
Reshape advice is on target and
completed.
AMP Bank mortgages grew strongly
driven by the Broker channel
performing well.
AMP organisation model simplification
continued through project Hudson
and Operational Separation and
is focused on a simpler, purpose-led
AMP after demerger.
Repivot asset management
AMP Capital announced the sale of GEFI,
the transfer of MAG to AWM, developed
growth strategy for Infrastructure and
Real Estate, and plan to deliver the target
cost base.
Fundraising in the infrastructure debt
platform is below target and slower than
anticipated due to the need to respond
to market challenges and uncertainty
surrounding demerger announcement.
Create a simpler leaner business
AMP made considerable progress
implementing the target number of
actions in response to the Conduct review
findings and building foundations for an
inclusive, high-performing culture.
The Cost Out Program exceeded the
target in year controllable cost reduction
(~$130m).
Significantly below
Below
Achieved
Exceeded
Reshape Advice: % practice exits completed
(pipeline as at March**)
ACHIEVEMENT
ACHIEVEMENT
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Accelerate mortgage growth in AMP Bank
– mortgage settlements
Significantly below
Below
Achieved
Exceeded
AMP org model defined; leadership identified
Significantly below
Below
Achieved
Exceeded
Repivot Asset Mgmt.
to private markets
ACHIEVEMENT
Continue development
of AMPC Strategy
Significantly below
Below
Achieved
Exceeded
IDF V Fundraise –
since inception
Significantly below
Below
Achieved
Exceeded
Grow New Zealand franchise
Growth in Net
New Business
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Create a simpler,
leaner business
ACHIEVEMENT
Conduct review findings
implementation
Significantly below
Below
Achieved
Exceeded
Cost-out target – cost out
delivered in-year
Significantly below
Below
Achieved
Exceeded
ACHIEVEMENT
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3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT continued
Manage
risk
OBJECTIVE
METRIC
Operate within risk appetite
100% breaches with risk
acceptance / action plans
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
20%
80%
16%
Overall risk scorecard performance improved,
with progress made in relation to risk culture.
This included strong mandatory training
completion rates, a decrease in the percentage
of complaints, and a low volume of overdue
regulatory commitments. Scorecard metrics
show improved issue/incident management
across support functions. Three lines of
defence is below target, largely because of
the percentage of overdue issues/incidents.
Risk appetite was on-track.
Strengthen three lines of defence
Green status across 3LOD measures
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Improve risk culture
Green risk culture score
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Leadership
OBJECTIVE
METRIC
Drive employee engagement
eSat score
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
20%
90%
18%
eSAT increased to 71 (just below target)
despite employees facing into the uncertainty
of a portfolio review, separation of Private
Markets, and operating model change.
Gender diversity improved with additional
female talent appointed to the executive
team. The Board approved the 40:40:20
approach in 2020 and talent, recruitment and
organisational design principles were updated.
The Inclusion Index improved with a more
contemporary inclusion policy and framework,
We-Flex policy to help make work more
accessible, and core inclusion training.
Talent reviews completed across senior
employee population and succession plans
are in place for the executive team and
direct reports.
Significantly below
Below
Achieved
Exceeded
Promote diverse and
inclusive culture
ACHIEVEMENT
Gender diversity (L6+)
Significantly below
Below
Achieved
Exceeded
Inclusion index
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Succession planning & strength
of executive teams
ACHIEVEMENT
Succession plan; skills matrix
Significantly below
Below
Achieved
Exceeded
BOARD DISCRETION AND INCENTIVE POOL DETERMINATION
The overall scorecard outcome is 61.5%. This is a solid result, particularly considering external factors (eg COVID
pandemic, unpredictability of market and economic factors, consumer shifts) and internal factors (eg demerger,
Infrastructure Debt sale, impairments, leadership changes) and uncertainty from ongoing operating model change.
Considering the commitment and contributions of employees facing into these challenges the Board exercised
discretion and determined an incentive pool of 70% (excluding AMP Capital). The incentive pool for Executive KMP
is 50%. This reflects the need to balance the reward, retention and motivation of employees whilst recognising and
aligning to shareholder experience. The Board especially considered progress on:
– Managing changing priorities and the move to demerge a new and
– Improving risk management and customer
invigorated AMP and Private Markets with continued delivery of BAU
– Divesting non-core businesses – remaining stake in Resolution
Life, global equities, fixed income and infrastructure debt
– Simplifying and modernising the core bank, aligning advice
network, investing in the North Platform, and repricing the
Master Trust and MySuper products while delivering ~$130
million in cost reductions
satisfaction, notwithstanding the substantial
number of projects
– Improving employee engagement to the highest
year-end level in four years
– Improving reputation to a pre-Royal Commission level.
SCORECARD
RESULT
61.5%
EMPLOYEES
70%
EXECUTIVE
KMP
50%
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3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT continued
3.3
ADJUSTMENT PRINCIPLES
Manage
risk
OBJECTIVE
METRIC
Operate within risk appetite
100% breaches with risk
acceptance / action plans
Significantly below
Below
Achieved
Exceeded
WEIGHTING
%
ACHIEVEMENT
20%
ACHIEVED
80%
WEIGHTED
OUTCOME
16%
Overall risk scorecard performance improved,
with progress made in relation to risk culture.
This included strong mandatory training
completion rates, a decrease in the percentage
of complaints, and a low volume of overdue
regulatory commitments. Scorecard metrics
show improved issue/incident management
across support functions. Three lines of
defence is below target, largely because of
the percentage of overdue issues/incidents.
Risk appetite was on-track.
ACHIEVEMENT
ACHIEVEMENT
Strengthen three lines of defence
Green status across 3LOD measures
Significantly below
Below
Achieved
Exceeded
Improve risk culture
Green risk culture score
Significantly below
Below
Achieved
Exceeded
Leadership
OBJECTIVE
METRIC
Drive employee engagement
eSat score
WEIGHTING
%
ACHIEVEMENT
20%
ACHIEVED
90%
WEIGHTED
OUTCOME
18%
eSAT increased to 71 (just below target)
despite employees facing into the uncertainty
of a portfolio review, separation of Private
Markets, and operating model change.
Gender diversity improved with additional
female talent appointed to the executive
team. The Board approved the 40:40:20
approach in 2020 and talent, recruitment and
organisational design principles were updated.
The Inclusion Index improved with a more
contemporary inclusion policy and framework,
We-Flex policy to help make work more
accessible, and core inclusion training.
Talent reviews completed across senior
employee population and succession plans
are in place for the executive team and
direct reports.
inclusive culture
ACHIEVEMENT
ACHIEVEMENT
of executive teams
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Promote diverse and
Gender diversity (L6+)
Significantly below
Below
Achieved
Exceeded
Inclusion index
Significantly below
Below
Achieved
Exceeded
Succession planning & strength
Succession plan; skills matrix
Significantly below
Below
Achieved
Exceeded
BOARD DISCRETION AND INCENTIVE POOL DETERMINATION
The overall scorecard outcome is 61.5%. This is a solid result, particularly considering external factors (eg COVID
pandemic, unpredictability of market and economic factors, consumer shifts) and internal factors (eg demerger,
Infrastructure Debt sale, impairments, leadership changes) and uncertainty from ongoing operating model change.
Considering the commitment and contributions of employees facing into these challenges the Board exercised
discretion and determined an incentive pool of 70% (excluding AMP Capital). The incentive pool for Executive KMP
is 50%. This reflects the need to balance the reward, retention and motivation of employees whilst recognising and
aligning to shareholder experience. The Board especially considered progress on:
– Managing changing priorities and the move to demerge a new and
– Improving risk management and customer
invigorated AMP and Private Markets with continued delivery of BAU
satisfaction, notwithstanding the substantial
– Divesting non-core businesses – remaining stake in Resolution
number of projects
Life, global equities, fixed income and infrastructure debt
– Improving employee engagement to the highest
– Simplifying and modernising the core bank, aligning advice
network, investing in the North Platform, and repricing the
Master Trust and MySuper products while delivering ~$130
million in cost reductions
year-end level in four years
– Improving reputation to a pre-Royal Commission level.
SCORECARD
RESULT
61.5%
EMPLOYEES
70%
EXECUTIVE
KMP
50%
The Board may, in its absolute discretion, adjust outcomes where an event occurs that means the targets of the relevant scorecard are
no longer appropriate. Situations where this discretion can be applied include:
– Material change to the strategic business plan
– Material regulatory or legislative change
– Material changes in external market or natural disasters
–
Significant out of plan business development such as acquisitions and divestments.
Adjustments should reflect the holistic contribution of employees/Executive KMP and exclude significant cost or gains that were unforeseen,
were not in the ordinary course of business or were not the direct result of Executive KMP efforts. During 2021, a number of adjustments
to the NPAT (statutory) measure was considered but did not change the outcome for that component, which remained at zero.
3.4
EXECUTIVE AND EMPLOYEE PERFORMANCE AND CONTRIBUTION
For Executive KMP, contribution is aligned to the scorecard outcomes through the cascade of the company’s overall objectives to respective
portfolios of accountability. In this way, an executive’s performance is aligned to both company and their individual business unit
performance. Their individual performance, conduct and behaviour is also considered when determining the individual STI outcome.
For all other employees, their performance assessment reflects achievement against agreed objectives combined with consideration
of risk management, behaviour and conduct in line with the performance management process. Individual incentive opportunities and
performance ratings determine the portion of the incentive pool allocated to an individual.
3.5
SHORT TERM INCENTIVES AWARDED
The following table shows the STI awarded to current and former Executive KMP for the 2021 performance year. It differs from the statutory
table in Section 7.1 which is prepared according to Australian Accounting Standards.
Fixed
remuneration
(FR)
$
Pro rated
target STI
opportunity1
$
STI outcome
awarded2
$
Cash portion
(40%)3
$
Executive KMP
Alexis George
David Cullen
James Georgeson
Scott Hartley
Shawn Johnson 5
Rebecca Nash 6
Sean O'Malley 6
Phil Pakes 7
1,715,000
750,000
750,000
900,000
950,000
700,000
600,000
700,000
714,192
750,000
750,000
875,342
n/a
442,021
420,247
n/a
430,000
450,000
465,000
515,000
685,000
286,000
279,000
tbd
Former Executive KMP
Francesco De Ferrari 8
2,200,000
2,163,836
–
172,000
180,000
186,000
206,000
274,000
114,400
111,600
–
–
Helen Livesey 9
850,000
850,000
300,000
300,000
Total STI awarded 10
6,965,638
2,725,000
Deferred
portion
(60%)3
$
258,000
270,000
279,000
309,000
411.000
171,600
167,400
–
–
–
STI awarded
as % of
pro rated
target STI
opportunity4
%
STI awarded
as % of pro
rated max STI
opportunity4
%
60%
60%
62%
59%
n/a
65%
66%
–
0%
35%
39%
30%
30%
31%
29%
n/a
32%
33%
–
0%
18%
19.5%
1 The pro rated STI opportunity reflects the time in role during 2021.
2 The STI outcome awarded reflects an STI based on performance during 2021.
3 Of the STI awarded, 40% is delivered in cash and paid in April 2022. The remaining 60% is delivered in share rights that will be granted in April 2022.
4 Represents the STI award as a percentage of the pro rated target and max STI opportunity (which is 200% of target).
5 Shawn Johnson is eligible for 1.2% of AMP Capital modified profit pro rated for time in role and does not represent a percentage of a STI opportunity.
It is not included in the STI outcome awarded total. The deferred portion will be delivered in share rights in Private Markets after listing.
6 The pro rated STI opportunity for Rebecca Nash and Sean O’Malley reflects their pro rated FR and incentive opportunities in their current KMP and prior non-KMP roles.
7 The STI amount is to be determined but will be within the range of zero to a cap of 58% of his target STI opportunity of $490,000.
8 The former CEO, Francesco De Ferrari did not receive a STI award for 2021.
9 The STI awarded to former Executive KMP, Helen Livesey, is paid in cash.
10 The STI outcome awarded as a percentage of the pro rated STI opportunity, excluding Shawn Johnson and Phil Pakes, is 39% and less than the pool funding
at 50%.
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4
SECTION
REMUNERATION GOVERNANCE
4.1
GOVERNANCE FRAMEWORK
There are a number of remuneration governance and oversight processes in place at AMP, primarily exercised through the AMP Limited
Board, subsidiary boards and the Remuneration Committee. The Remuneration Committee assists the various boards to fulfil their
remuneration obligations by developing, monitoring and assessing remuneration strategy, policies and practices across AMP.
Members of the Remuneration Committee are independent non-executive directors. More information on the role of the Remuneration
Committee can be found in the corporate governance section of AMP’s website. The Board believes that, to make prudent remuneration
decisions, it needs both a robust framework and the ability to exercise judgement. Therefore, the Board retains discretion to determine
the appropriate remuneration outcomes.
From time to time the Remuneration Committee may seek external guidance from independent remuneration advisors. Any advice
provided by external advisors is used as a guide and is not a substitute for consideration of all the issues by each Non-Executive Director
of the Remuneration Committee.
During the 2021 year, the Remuneration Committee engaged PwC as independent remuneration advisors to provide guidance on remuneration
for executives. No remuneration recommendations, as defined in the Corporations Act, were made by PwC.
The following diagram outlines AMP’s remuneration governance framework.
REMUNERATION GOVERNANCE FRAMEWORK
AMP LIMITED BOARD
AMP SUBSIDIARY BOARDS
Risk Committee
Remuneration Committee
Assists the Board with oversight of the
implementation and operation of AMP’s
risk management framework.
Makes recommendations to the Remuneration
Committee on:
–
–
risk-related adjustments for the incentive pool; and
risk-related matters that may require the
application of malus or clawback or in-year
reduction to incentives.
Advises the AMP Board and the boards of
AMP subsidiaries in setting and overseeing
AMP’s remuneration policy and practices. Key
responsibilities include:
–
–
–
–
–
–
reviewing AMP’s remuneration policy including
effectiveness and compliance with regulatory
requirements;
reviewing the remuneration arrangements, performance
objectives, measures and outcomes for executives and
senior management;
reviewing the remuneration arrangements for
non-executive directors;
reviewing AMP’s remuneration disclosures;
overseeing all incentive plans; and
reviewing and making recommendations in relation
to equity awards, including malus and clawback.
Management
Independent remuneration advisors
The CEO makes recommendations to the Remuneration
Committee on the performance and remuneration
outcomes for her direct reports.
Management advises the Remuneration Committee and provides
information on remuneration related matters.
The Remuneration Committee
engages remuneration advisors
when it needs additional information
to assist the AMP Board in making
remuneration decisions.
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4
SECTION
REMUNERATION GOVERNANCE
4.1
GOVERNANCE FRAMEWORK
There are a number of remuneration governance and oversight processes in place at AMP, primarily exercised through the AMP Limited
Board, subsidiary boards and the Remuneration Committee. The Remuneration Committee assists the various boards to fulfil their
remuneration obligations by developing, monitoring and assessing remuneration strategy, policies and practices across AMP.
Members of the Remuneration Committee are independent non-executive directors. More information on the role of the Remuneration
Committee can be found in the corporate governance section of AMP’s website. The Board believes that, to make prudent remuneration
decisions, it needs both a robust framework and the ability to exercise judgement. Therefore, the Board retains discretion to determine
the appropriate remuneration outcomes.
From time to time the Remuneration Committee may seek external guidance from independent remuneration advisors. Any advice
provided by external advisors is used as a guide and is not a substitute for consideration of all the issues by each Non-Executive Director
of the Remuneration Committee.
During the 2021 year, the Remuneration Committee engaged PwC as independent remuneration advisors to provide guidance on remuneration
for executives. No remuneration recommendations, as defined in the Corporations Act, were made by PwC.
The following diagram outlines AMP’s remuneration governance framework.
REMUNERATION GOVERNANCE FRAMEWORK
AMP LIMITED BOARD
AMP SUBSIDIARY BOARDS
Risk Committee
Remuneration Committee
Assists the Board with oversight of the
implementation and operation of AMP’s
risk management framework.
Makes recommendations to the Remuneration
Committee on:
risk-related adjustments for the incentive pool; and
risk-related matters that may require the
application of malus or clawback or in-year
reduction to incentives.
–
–
Advises the AMP Board and the boards of
AMP subsidiaries in setting and overseeing
AMP’s remuneration policy and practices. Key
responsibilities include:
–
reviewing AMP’s remuneration policy including
effectiveness and compliance with regulatory
requirements;
–
reviewing the remuneration arrangements, performance
objectives, measures and outcomes for executives and
senior management;
–
reviewing the remuneration arrangements for
non-executive directors;
reviewing AMP’s remuneration disclosures;
overseeing all incentive plans; and
reviewing and making recommendations in relation
to equity awards, including malus and clawback.
–
–
–
Management
Independent remuneration advisors
The CEO makes recommendations to the Remuneration
Committee on the performance and remuneration
outcomes for her direct reports.
Management advises the Remuneration Committee and provides
information on remuneration related matters.
The Remuneration Committee
engages remuneration advisors
when it needs additional information
to assist the AMP Board in making
remuneration decisions.
4.2
RISK MANAGEMENT IN REMUNERATION
The Board has a range of mechanisms available to adjust remuneration and incentive outcomes to reflect behavioural, risk or compliance
outcomes. The table below summarises the range of mechanisms available and their intended operation.
Risk assessment
Risk and conduct outcomes
Malus and clawback provisions
Board discretion
Enterprise and business unit levels
All employees
All incentive plans
The Chief Risk Officer reports
the overall assessment of
risk management as an input
to the determination of the
incentive pool.
Employees’ risk management
behaviour and conduct is
specifically considered as
part of their performance
assessment and in
the determination of
remuneration outcomes.
The consequence
management framework
ensures that behaviour which
does not meet expectations
is actively and consistently
managed, including
adjustments to remuneration.
Allows the Board to adjust or
lapse (malus) unvested equity
awards or reclaim (clawback)
vested incentives in certain
circumstances.
All deferred incentives are
subject to a conduct and risk
review before vesting.
This applies to current and
former employees.
The Board may
apply its discretion
to adjust vesting
outcomes, subject to
the equity incentive
plan rules governing
the plan and in
compliance with the
relevant policies.
The Board exercises discretion to apply remuneration consequences to executives with overall accountability for matters arising in their
business units with adverse risk, client and/or reputational impacts. There is a standing agenda item at the Remuneration Committee
meetings in July, November and January for the CRO to present any risk related information the Committee should consider when making
remuneration decisions. The Committee considers both the achievement of the risk metrics as well as a risk overlay when determining
the incentive pool. Before every equity vesting event management provides a report to the Committee to highlight if there is any reason
including risk considerations, why the Committee should exercise its discretion to lapse the unvested equity award.
AMP’s consequence management framework was further strengthened in 2021. During the year there were a number of conduct matters
that were substantiated and resulted in the application of formal consequences. At the time of this report, the annual remuneration review
process is about to commence for employees (not including the Executive KMP) where conduct performance will be factored into any
remuneration decisions.
While 2021 presented many challenges from a people perspective, conduct cases involving interpersonal behavioural issues have remained
relatively low. This is a positive outcome, with the work environment risks mitigated by a significant range of mental health and other
support services provided to employees during the year.
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5
SECTION
EXECUTIVE SHAREHOLDINGS AND CONTRACTS
5.1
EXECUTIVE SHAREHOLDING REQUIREMENTS
The relevant amount of AMP equity required to be held under minimum shareholding policy and the time to comply is as follows:
Category
Fixed pay
Timeframe
Securities included to meet requirement
CEO
200%
Executive KMP
100%
Executives are expected to achieve the
minimum shareholding requirement
within a five-year period from
commencement in their role
AMP Limited shares: ordinary AMP Limited
shares registered in the Executive KMP’s name
or a related party
AMP share rights: granted to executives through
AMP’s employee share plans
Share rights allocated to Executive KMP are included to meet their minimum holding requirement only where future vesting is not subject
to any further performance condition (other than a continued service condition). AMP Limited shares and/or share rights cannot be hedged.
Executive KMP are not expected to purchase shares to meet the requirement. Rather, it is expected that they would not sell any shares
held (other than to cover arising tax liabilities) and that they will retain vested shares and share rights until the minimum requirement
is reached.
5.2
MINIMUM SHAREHOLDING
We assess compliance with our minimum shareholding requirement each year. The table below summaries the position of each executive
against the requirement on 31 December 2021.
Executive KMP
Alexis George
David Cullen
James Georgeson
Scott Hartley
Rebecca Nash
Sean O’Malley
Phil Pakes
Fixed pay 1
$
1,715,000
750,000
750,000
900,000
700,000
600,000
700,000
Unit balance
#
1,657,232
Value of holding 2
$
1,673,804
562,437
456,808
5,180
115,740
285,188
183,685
568,061
461,376
5,232
116,897
288,040
185,522
Target date to meet
requirement
1 August 2026
23 May 2023
1 February 2025
10 January 2026
14 November 2026
14 November 2026
2 April 2025
1 Fixed pay includes cash salary plus superannuation and has been captured as an annualised amount in Australian dollars on 31 December 2021 to calculate
the shareholding value.
2 The total value of each holding was calculated on 31 December 2021 using a closing price of $1.01.
Shawn Johnson is not included in the table above. He does not participate in AMP Limited incentive schemes and holds no equity awards
in AMP’s Equity Incentive Plan (EIP). He is eligible to participate in an equity plan in Private Markets after listing.
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5
SECTION
EXECUTIVE SHAREHOLDINGS AND CONTRACTS
5.1
EXECUTIVE SHAREHOLDING REQUIREMENTS
The relevant amount of AMP equity required to be held under minimum shareholding policy and the time to comply is as follows:
Category
Fixed pay
Timeframe
Securities included to meet requirement
CEO
200%
Executives are expected to achieve the
AMP Limited shares: ordinary AMP Limited
minimum shareholding requirement
shares registered in the Executive KMP’s name
Executive KMP
100%
within a five-year period from
commencement in their role
or a related party
AMP share rights: granted to executives through
AMP’s employee share plans
Share rights allocated to Executive KMP are included to meet their minimum holding requirement only where future vesting is not subject
to any further performance condition (other than a continued service condition). AMP Limited shares and/or share rights cannot be hedged.
Executive KMP are not expected to purchase shares to meet the requirement. Rather, it is expected that they would not sell any shares
held (other than to cover arising tax liabilities) and that they will retain vested shares and share rights until the minimum requirement
is reached.
5.2
MINIMUM SHAREHOLDING
We assess compliance with our minimum shareholding requirement each year. The table below summaries the position of each executive
against the requirement on 31 December 2021.
Executive KMP
Alexis George
David Cullen
James Georgeson
Scott Hartley
Rebecca Nash
Sean O’Malley
Phil Pakes
Fixed pay 1
$
1,715,000
750,000
750,000
900,000
700,000
600,000
700,000
Unit balance
Value of holding 2
Target date to meet
requirement
#
1,657,232
562,437
456,808
5,180
115,740
285,188
183,685
$
1,673,804
568,061
461,376
5,232
116,897
288,040
185,522
1 August 2026
23 May 2023
1 February 2025
10 January 2026
14 November 2026
14 November 2026
2 April 2025
1 Fixed pay includes cash salary plus superannuation and has been captured as an annualised amount in Australian dollars on 31 December 2021 to calculate
the shareholding value.
2 The total value of each holding was calculated on 31 December 2021 using a closing price of $1.01.
Shawn Johnson is not included in the table above. He does not participate in AMP Limited incentive schemes and holds no equity awards
in AMP’s Equity Incentive Plan (EIP). He is eligible to participate in an equity plan in Private Markets after listing.
5.3
EXECUTIVE EMPLOYMENT CONTRACTS
Contract term
CEO
Length of contract
Open-ended
Executive KMP
Open-ended
Notice period
6 months by AMP or by Alexis George
6 months by AMP or the executive
Entitlements on termination
–
–
Accrued fixed pay, superannuation and other statutory requirements.
Executives eligible for incentives may be awarded on a pro rata basis for the current period
in the case of death, disablement, redundancy, retirement or notice without cause, subject
to the original performance periods and hurdle.
– Unvested rights will lapse if an executive resigns or is summarily dismissed before the vesting
date. Should an executive cease employment for any other reason, any unvested rights will
be retained and vest in the ordinary course subject to the original terms and performance
conditions, if applicable.
–
–
Vested rights will be retained but are subject to clawback for example in the case of
serious misconduct.
In the case of redundancy, the AMP Redundancy, Redeployment and Retrenchment Policy in
place at the time will be applied. This is the same policy that applies to all employees at AMP.
Restrictions on termination benefits
AMP will not make payments on termination that require shareholder approval or breach the
Corporations Act.
Post-employment restraint
6-month restraint on entering employment with a competitor and 12-month restraint on
solicitation of AMP clients and employees.
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6
SECTION
NON-EXECUTIVE DIRECTOR FEES AND
SHAREHOLDING REQUIREMENTS
6.1
NON-EXECUTIVE DIRECTOR FEES
The Remuneration Committee is responsible for reviewing NED fees for AMP Limited and its main subsidiaries. In reviewing these fees,
the Remuneration Committee has regard to a range of factors, including: the complexity of AMP’s operations and those of its main
subsidiaries; fees paid to board members of other Australian corporations of a similar size and complexity; and the responsibilities and
workload requirements of each board and committee.
The Remuneration Committee obtains market data and recommends any proposed fee changes to the AMP Limited Board for approval.
The total amount of NED fees paid is capped at a maximum aggregate fee pool approved by shareholders. The current fee pool is $4,620,000,
which was approved by shareholders at the 2015 Annual General Meeting (AGM).
In 2021, the Board reviewed the Chair and NED fees and determined that there would be a 15% reduction to all fees effective 1 August 2021
given the reduction in size of AMP Limited due to the sale of AMP Life. Despite the heavy workload and the number of meetings increasing
as a result of the demerger and transformation work in 2021, the Chair fees were reduced from $660,000 to $561,000 and NEDs’ base
fees were reduced from $240,000 to $204,000 per annum (inclusive of superannuation contributions). Non-Executive Director fees will be
reviewed again following the completion of the demerger.
The total remuneration paid to AMP Limited NEDs during 2021 was $2,607,253, which represents 56% of the annual fee pool compared with
74% paid in 2020. This represents an overall 23.7% cost reduction in aggregate NED fee spend year on year.
The following table shows the annual NED fees for the Board and permanent committees of AMP Limited and its main subsidiaries for 2021.
AMP Limited
Board
Audit Committee
Risk Committee
Remuneration Committee
Nomination Committee
Demerger Due Diligence Committee
AMP Bank
Board
Audit Committee
Risk Committee
AMP Capital Holdings
Board
Chair base fee 1
Member base fee 2
1 Jan 2021
$
1 Aug 2021 3
$
1 Jan 2021
$
1 Aug 2021 3
$
660,000
561,000
240,000
204,000
55,000
55,000
55,000
nil
nil
nil
nil
nil
46,750
46,750
46,750
nil
475/hr
nil
nil
nil
124,000
124,000
25,400
25,400
25,400
nil
nil
nil
nil
nil
nil
21,590
21,590
21,590
nil
337.50/hr
nil
nil
nil
nil
1 The Chair of AMP Limited does not receive separate committee fees.
2 No additional fees are paid to NEDs for their membership or for chairing the AMP Bank Limited Board.
3 The NED fee structure was revised 1 August 2021 with a 15% reduction to all fees and will continue to apply for 2022.
6.2
NON-EXECUTIVE DIRECTOR MINIMUM SHAREHOLDING
The minimum shareholding requirement (MSR) for NEDs is set out in AMP’s minimum shareholding policy. Under this policy NEDs are
required to accumulate and hold a minimum value of AMP shares to ensure their interests are closely aligned with the long term interests
of AMP shareholders. As at the date of this report, these minimum values are:
– AMP Limited Chair: $561,000 – the equivalent of the AMP Limited Chair base fee
– Other AMP Limited NEDs: $204,000 – the equivalent of the AMP Limited NED base fee.
NEDs are ordinarily expected to achieve these levels within four years of their appointment, see Section 7.6. The policy expects NEDs
to apply at least 25% of their base fee each year to acquire AMP shares until the MSR has been met. NEDs are also encouraged to increase
their ownership over their tenure. Any such acquisition of AMP shares may only occur when permitted to do so in accordance with AMP’s
Trading Policy.
62
Remuneration report
6
SECTION
NON-EXECUTIVE DIRECTOR FEES AND
SHAREHOLDING REQUIREMENTS
6.1
NON-EXECUTIVE DIRECTOR FEES
The Remuneration Committee is responsible for reviewing NED fees for AMP Limited and its main subsidiaries. In reviewing these fees,
the Remuneration Committee has regard to a range of factors, including: the complexity of AMP’s operations and those of its main
subsidiaries; fees paid to board members of other Australian corporations of a similar size and complexity; and the responsibilities and
workload requirements of each board and committee.
The Remuneration Committee obtains market data and recommends any proposed fee changes to the AMP Limited Board for approval.
The total amount of NED fees paid is capped at a maximum aggregate fee pool approved by shareholders. The current fee pool is $4,620,000,
which was approved by shareholders at the 2015 Annual General Meeting (AGM).
In 2021, the Board reviewed the Chair and NED fees and determined that there would be a 15% reduction to all fees effective 1 August 2021
given the reduction in size of AMP Limited due to the sale of AMP Life. Despite the heavy workload and the number of meetings increasing
as a result of the demerger and transformation work in 2021, the Chair fees were reduced from $660,000 to $561,000 and NEDs’ base
fees were reduced from $240,000 to $204,000 per annum (inclusive of superannuation contributions). Non-Executive Director fees will be
reviewed again following the completion of the demerger.
The total remuneration paid to AMP Limited NEDs during 2021 was $2,607,253, which represents 56% of the annual fee pool compared with
74% paid in 2020. This represents an overall 23.7% cost reduction in aggregate NED fee spend year on year.
The following table shows the annual NED fees for the Board and permanent committees of AMP Limited and its main subsidiaries for 2021.
AMP Limited
Board
Audit Committee
Risk Committee
Remuneration Committee
Nomination Committee
Demerger Due Diligence Committee
AMP Bank
Board
Audit Committee
Risk Committee
AMP Capital Holdings
Board
Chair base fee 1
Member base fee 2
1 Jan 2021
1 Aug 2021 3
1 Jan 2021
1 Aug 2021 3
$
$
$
$
660,000
561,000
240,000
204,000
55,000
55,000
55,000
nil
nil
nil
nil
nil
46,750
46,750
46,750
nil
475/hr
nil
nil
nil
124,000
124,000
25,400
25,400
25,400
nil
nil
nil
nil
nil
nil
21,590
21,590
21,590
nil
337.50/hr
nil
nil
nil
nil
1 The Chair of AMP Limited does not receive separate committee fees.
2 No additional fees are paid to NEDs for their membership or for chairing the AMP Bank Limited Board.
3 The NED fee structure was revised 1 August 2021 with a 15% reduction to all fees and will continue to apply for 2022.
6.2
NON-EXECUTIVE DIRECTOR MINIMUM SHAREHOLDING
The minimum shareholding requirement (MSR) for NEDs is set out in AMP’s minimum shareholding policy. Under this policy NEDs are
required to accumulate and hold a minimum value of AMP shares to ensure their interests are closely aligned with the long term interests
of AMP shareholders. As at the date of this report, these minimum values are:
– AMP Limited Chair: $561,000 – the equivalent of the AMP Limited Chair base fee
– Other AMP Limited NEDs: $204,000 – the equivalent of the AMP Limited NED base fee.
NEDs are ordinarily expected to achieve these levels within four years of their appointment, see Section 7.6. The policy expects NEDs
to apply at least 25% of their base fee each year to acquire AMP shares until the MSR has been met. NEDs are also encouraged to increase
their ownership over their tenure. Any such acquisition of AMP shares may only occur when permitted to do so in accordance with AMP’s
Trading Policy.
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7
SECTION
STATUTORY TABLES
The following disclosures provide additional information and/or are required under the Corporations Act. This includes the 2021 Executive
KMP remuneration that is prepared according to Australian Accounting Standards.
7.1
STATUTORY REMUNERATION DISCLOSURE
Statutory remuneration represents the accounting expense of remuneration in the financial year. It includes fixed remuneration, cash STI,
the fair value amortisation expense of equity awards granted, long service leave entitlements and insurance.
Short term employee benefits
Post-
employment
benefits
Share-based
payments 5
Long term
benefits
Cash
salary 1
$'000
Year
Cash STI 2 , 3
$'000
Other
short term
benefits 4
$'000
Super-
annuation
benefits
$'000
Rights
and
options
$'000
Restricted
shares
$'000
Other 6
$'000
Termination
payments 7
$'000
Total 8
$'000
Executive KMP
Alexis
George
David
Cullen
James
Georgeson
Scott
Hartley
Shawn
Johnson
Rebecca
Nash
Sean
O'Malley
Phil
Pakes
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
711
–
717
705
725
720
836
–
472
–
87
–
73
–
663
483
Former Executive KMP
Francesco
De Ferrari
Helen
Livesey
Total
2021
2020
2021
2020
2021
2020
1,082
2,177
723
827
6,089
4,912
172
–
180
–
186
–
206
–
274
–
15
–
14
–
tbd 9
–
–
–
300
–
1,347
–
799
–
410
53
403
59
115
–
69
–
14
–
(31)
–
426
59
84
17
490
93
13
–
25
25
25
25
54
–
16
–
3
–
3
–
25
18
12
23
22
23
1,277
–
1,156
846
1,040
609
271
–
286
–
39
–
54
–
784
323
3,936
3,613
2,408
1,072
2,779
281
198
114
11,251
6,463
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
696
910
–
–
696
910
2
–
19
80
134
174
2
–
–
–
–
–
2
–
4
2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(15)
1,810
2,974
–
2,507
1,709
2,513
1,587
1,484
–
1,117
–
158
–
115
–
1,902
885
7,605
6,749
9
69
22
217
287
–
967
4,979
–
2,037
2,777
25,354
–
12,967
64
Remuneration report
7.1
STATUTORY REMUNERATION DISCLOSURE continued
1 Cash salary is inclusive of base salary and short term compensated absences.
2 Cash STI for 2021 reflects 40% of STI award outcome for the performance year for Executive KMP.
3 Cash STI for 2021 reflects 100% of STI award outcome for the performance year for Helen Livesey, see Sections 1.6 and 3.5.
4 Other short term benefits include cash sign-on awards, non-monetary benefits and any related FBT, for example, short term allowances, insurances and
the net change in annual leave accrued. In addition, it reflects the pro rata expense in relation to cash retention awards.
5 The values in the table reflect the current year expense for all Restricted Shares, Share Rights and Performance Rights outstanding at any point during
the year. The fair value of each award takes into consideration a number of factors, including the likelihood of achieving market-based vesting conditions
such as total shareholder return (market conditions). The cost of the award is amortised over the vesting period and updated at each reporting period for
changes in the number of instruments that are expected to vest.
6 Other long term benefits represent the net change in long service leave accrued.
7 The termination payment for Francesco De Ferrari includes payment for additional work performed for AMP Capital during the year, relocation, tax and
legal costs and six months notice in lieu; the termination payment for Helen Livesey includes balance of twelve months notice in lieu and redundancy
payment; see Section 1.6.
8 The total in the table for 2020 of $12.967 million is different to the total for 2020 in the 2020 Remuneration Report as it does not include $650,000 for Blair
Vernon (former Acting Chief Executive, AMP Australia), $1.085 million for Megan Beer (former Chief Executive, AMP Life), $1.675 million for Jenny Fagg
(former Chief Risk Officer), $376,000 for Boe Pahari (former Chief Executive, AMP Capital), $3.016 million for Craig Ryman (former Chief Operating Officer),
$3.088 million for Adam Tindall (former Chief Executive, AMP Capital) and $533,000 for Alex Wade (former Chief Executive, AMP Australia), reported in the
2020 Remuneration Report.
9 The STI amount is to be determined but will be within the range of zero to a cap of 58% of his target STI opportunity of $490,000.
7.2
LOANS AND OTHER TRANSACTIONS
AMP provides home loans to Australians to help them buy, build or renovate properties. The table below includes loans offered to executives
in the ordinary course of business. These loans are on equivalent terms to those offered to other employees and shareholders.
The following table shows loan balances that exceed $100,000 held by current and former Executive KMP during the reporting year.
No Executive KMP held a loan balance of less than $100,000.
Balance on
1 Jan 2021
$’000
Written off
$’000
Net advances
(repayments)
$’000
Balance on
31 Dec 2021
$’000
Interest
charged
$’000
not charged
$’000
Highest
indebtedness
during year
$’000
KMP
Executive KMP
James Georgeson
Scott Hartley
Sean O’Malley
Former Executive KMP
Helen Livesey
Total (incl.
related parties) 1
953
–
1,078
1,720
3,751
–
–
–
–
–
(37)
1,067
544
916
1,067
1,622
(100)
1,620
1,474
5,225
14
4
35
16
69
–
–
–
–
–
953
1,474
1,630
1,720
5,777
1 Four Executive KMP hold loans.
Other transactions
Executive KMP and their related parties may have access to AMP products and these products are provided to executives within normal
employee terms and conditions. The products may include:
–
–
–
personal banking with AMP Bank
the purchase of AMP insurance and investment products
financial investment services.
64
Remuneration report
1 Cash salary is inclusive of base salary and short term compensated absences.
2 Cash STI for 2021 reflects 40% of STI award outcome for the performance year for Executive KMP.
3 Cash STI for 2021 reflects 100% of STI award outcome for the performance year for Helen Livesey, see Sections 1.6 and 3.5.
4 Other short term benefits include cash sign-on awards, non-monetary benefits and any related FBT, for example, short term allowances, insurances and
the net change in annual leave accrued. In addition, it reflects the pro rata expense in relation to cash retention awards.
5 The values in the table reflect the current year expense for all Restricted Shares, Share Rights and Performance Rights outstanding at any point during
the year. The fair value of each award takes into consideration a number of factors, including the likelihood of achieving market-based vesting conditions
such as total shareholder return (market conditions). The cost of the award is amortised over the vesting period and updated at each reporting period for
changes in the number of instruments that are expected to vest.
6 Other long term benefits represent the net change in long service leave accrued.
7 The termination payment for Francesco De Ferrari includes payment for additional work performed for AMP Capital during the year, relocation, tax and
legal costs and six months notice in lieu; the termination payment for Helen Livesey includes balance of twelve months notice in lieu and redundancy
payment; see Section 1.6.
8 The total in the table for 2020 of $12.967 million is different to the total for 2020 in the 2020 Remuneration Report as it does not include $650,000 for Blair
Vernon (former Acting Chief Executive, AMP Australia), $1.085 million for Megan Beer (former Chief Executive, AMP Life), $1.675 million for Jenny Fagg
(former Chief Risk Officer), $376,000 for Boe Pahari (former Chief Executive, AMP Capital), $3.016 million for Craig Ryman (former Chief Operating Officer),
$3.088 million for Adam Tindall (former Chief Executive, AMP Capital) and $533,000 for Alex Wade (former Chief Executive, AMP Australia), reported in the
2020 Remuneration Report.
9 The STI amount is to be determined but will be within the range of zero to a cap of 58% of his target STI opportunity of $490,000.
7.2
LOANS AND OTHER TRANSACTIONS
AMP provides home loans to Australians to help them buy, build or renovate properties. The table below includes loans offered to executives
in the ordinary course of business. These loans are on equivalent terms to those offered to other employees and shareholders.
No Executive KMP held a loan balance of less than $100,000.
Balance on
1 Jan 2021
$’000
Written off
$’000
Net advances
(repayments)
Balance on
31 Dec 2021
$’000
$’000
Interest
charged
$’000
not charged
$’000
Highest
indebtedness
during year
$’000
–
–
–
–
–
(37)
1,067
544
916
1,067
1,622
(100)
1,620
1,474
5,225
14
4
35
16
69
–
–
–
–
–
953
1,474
1,630
1,720
5,777
KMP
Executive KMP
James Georgeson
Scott Hartley
Sean O’Malley
Former Executive KMP
Helen Livesey
Total (incl.
related parties) 1
953
–
1,078
1,720
3,751
1 Four Executive KMP hold loans.
Other transactions
Executive KMP and their related parties may have access to AMP products and these products are provided to executives within normal
employee terms and conditions. The products may include:
personal banking with AMP Bank
the purchase of AMP insurance and investment products
financial investment services.
–
–
–
7.1
STATUTORY REMUNERATION DISCLOSURE continued
7.3
EXECUTIVE SHARES AND SHARE RIGHTS HOLDING
The following table shows the number of shares and share rights held by Executive KMP or their related parties during 2021. A related party
is typically a family member of the executive and/or is an entity in which the executive has direct or indirect control. The definition of units
includes AMP Limited shares and share rights which are not subject to performance conditions.
Name
Type 1
Executive KMP
Balance at
1 Jan 2021
Granted
Exercised/
Released
Forfeited/
lapsed
Other
transactions 2
Balance on
31 Dec 2021
Alexis George 3
Shares
3,258
–
507,243
Share Rights
–
1,015,806
(507,243)
The following table shows loan balances that exceed $100,000 held by current and former Executive KMP during the reporting year.
Phil Pakes
Shares
Share Rights
Former Executive KMP5
David Cullen
Shares
Share Rights
James Georgeson
Shares
Share Rights
Scott Hartley
Shares
Share Rights
Rebecca Nash 4
Shares
Share Rights
Sean O'Malley 4
Shares
Share Rights
205,520
356,917
202,754
254,054
–
–
–
115,740
88,573
195,664
3,864
173,650
Francesco De Ferrari
Shares
1,836,736
Share Rights
1,284,408
Helen Livesey 6
Shares
Share Rights
233,648
359,644
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
130,863
(130,863)
24,000
(24,000)
–
–
–
–
–
–
–
–
612,244
(612,244)
106,383
(106,383)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
510,501
508,563
336,383
226,054
226,754
230,054
5,180
5,180
–
–
–
951
–
6,171
–
–
–
(279,036)
–
–
115,740
89,524
195,664
10,035
173,650
2,448,980
672,164
60,995
–
253,261
1 Unless otherwise stated, share rights which vested and were exercised during 2021 relate to awards granted to executives in prior years.
2 Other market transactions are a result of executives or their related parties trading AMP Limited shares on the open market or may include shares
awarded as part of the executive’s participation in the AMP Share Purchase Plan (SPP) allotment at a market value of $1.45.
3 Share rights were granted to the CEO Alexis George as part of her sign-on award on 2 August 2021. Tranche 1 of the award vested and was exercised
to AMP Limited shares on 22 November 2021 at a market price of $1.15 per share.
4 The opening balances shown for Rebecca Nash and Sean O’Malley are reflective of their holdings on the respective dates they became KMP.
5 Former executives’ opening and closing balances are reflective of their respective holdings for the time they were KMP.
6 Helen Livesey sold shares on 25 May 2021 at a market price of $1.11 per share.
Shawn Johnson is not included in the table above. Shawn does not participate in AMP Limited incentive schemes and holds no equity
awards in AMP’s Equity Incentive Plan (EIP). He is eligible to participate in an equity plan in Private Markets after listing.
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7.4
EXECUTIVE PERFORMANCE RIGHTS HOLDINGS
The following table shows the performance rights which were granted, exercised or lapsed during 2021.
Grant date
Performance
measure
Fair Value
per right
Holding at
1 Jan 2021
Granted
Vested
Lapsed/
cancelled
Held on
31 Dec 2021
Rights
exercised
to AMP
Limited
shares
Executive KMP
Alexis George 1
09-Aug-21
09-Aug-21
Total
aTSR
rTSR
0.62
0.61
–
–
–
701,740
(190,038)
–
511,702
190,038
2,105,298
(448,130)
(122,010)
1,535,158
448,130
2,807,038
(638,168)
(122,010)
2,046,860
638,168
Total
James
Georgeson
Total
David Cullen
12-Sep-19
CAGR of TSR
1.21
1,933,701
–
01-Jan-21
TSR
0.81
–
454,821
1,933,701
454,821
12-Sep-19
CAGR of TSR
1.21
1,657,458
–
01-Jan-21
TSR
0.81
–
454,821
Scott Hartley 2
01-Jan-21
TSR
0.81
Total
1,657,458
454,821
–
–
545,785
545,785
Rebecca Nash 2
12-Sep-19
CAGR of TSR
1.21
690,607
Total
690,607
Sean O'Malley 2
12-Sep-19
CAGR of TSR
1.21
552,486
Total
552,486
Phil Pakes
12-Sep-19
CAGR of TSR
1.21
1,381,215
–
–
–
–
–
01-Jan-21
TSR
0.81
–
424,499
Total
Former Executive KMP
1,381,215
424,499
Francesco
De Ferrari 3
12-Sep-19
Share Price
Target
0.62
2,500,000
12-Sep-19
CAGR of TSR
1.21
3,867,402
Total
6,367,402
Helen Livesey 4
12-Sep-19
CAGR of TSR
1.21
2,348,066
–
–
–
–
01-Jan-21
TSR
0.81
–
515,463
Total
2,348,066
515,463
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,933,701
454,821
2,388,522
1,657,458
454,821
2,112,279
545,785
545,785
690,607
690,607
552,486
552,486
1,381,215
424,499
1,805,714
–
2,500,000
(1,245,334)
2,622,068
–
(1,245,334)
5,122,068
–
–
–
–
–
–
2,348,066
515,463
2,863,529
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Performance rights were granted to the CEO Alexis George as part of her sign-on award on 2 August 2021. Tranche 1 of the absolute TSR hurdle award
vested in full and tranche 1 of the relative TSR hurdle award partially vested and the balance was lapsed. The performance rights were exercised to AMP
Limited shares on 14 December 2021.
2 The balances shown for Scott Hartley, Rebecca Nash and Sean O’Malley in the Holding at 1 January 2021 column reflect their respective holdings on the
date they were appointed to KMP. Scott Hartley was appointed to KMP on 11 January and Rebecca Nash and Sean O’Malley were both appointed to KMP
on 15 November 2021.
3 Performance rights granted to Francesco De Ferrari as part of the 2019 Contracted LTI and 2019 Transformation Incentive awards were partially lapsed
upon cessation of his employment and the remaining balance will be held on foot until the vesting date is reached, and performance hurdle tested.
4 Performance rights granted to Helen Livesey as part of the 2019 Transformation Incentive award will partially lapse in the amount of 743,403 units
upon cessation of employment and the remaining balance in the amount of 1,604,663 units will be held on foot until the vesting date is reached,
and performance hurdle tested.
Shawn Johnson is not included in the table above. He does not participate in AMP Limited incentive schemes and holds no equity awards
in AMP’s Equity Incentive Plan (EIP). He is eligible to participate in an equity plan in Private Markets after listing.
66
Remuneration report
7.4
EXECUTIVE PERFORMANCE RIGHTS HOLDINGS
7.5
NON-EXECUTIVE DIRECTOR REMUNERATION
The following table shows the performance rights which were granted, exercised or lapsed during 2021.
The following table shows the remuneration earned by AMP Limited NEDs for 2021.
2,807,038
(638,168)
(122,010)
2,046,860
638,168
Rahoul Chowdry
NED
Debra Hazelton
Mike Hirst
Kathryn McKenzie
John O’Sullivan
Michael Sammells
Andrea Slattery
Total
Short term benefits
Post-employment
benefits
AMP Limited
Board and
committee fees
$’000
Fees for other
group boards
$’000
Additional
board duties 1
$’000
Superannuation 2
$’000
Total
$’000
596
420
302
312
136
–
274
33
274
294
298
254
300
325
2,180
1,638
–
43
–
–
–
–
–
–
–
–
124
68
13
33
137
144
–
–
14
14
–
–
–
–
98
43
21
14
6
–
139
71
23
18
22
24
2
–
22
5
22
22
26
20
24
21
619
481
338
350
138
–
296
38
394
359
469
356
343
379
141
110
2,597
1,963
Year
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
1 Additional work for special committees and projects including per diem fees on actual time spent for the Demerger Due Diligence Committee.
2 Superannuation contributions have been disclosed separately in this table but are included in the base NED fees disclosed elsewhere in this report.
Total
Total
James
Total
Total
Total
Total
Total
Total
Total
Grant date
measure
per right
Granted
Vested
cancelled
31 Dec 2021
Performance
Fair Value
Holding at
1 Jan 2021
Lapsed/
Held on
Executive KMP
Alexis George 1
09-Aug-21
09-Aug-21
aTSR
rTSR
0.62
0.61
701,740
(190,038)
–
511,702
190,038
2,105,298
(448,130)
(122,010)
1,535,158
448,130
–
–
–
Rights
exercised
to AMP
Limited
shares
David Cullen
12-Sep-19
CAGR of TSR
1.21
1,933,701
–
01-Jan-21
TSR
0.81
–
454,821
1,933,701
454,821
Georgeson
12-Sep-19
CAGR of TSR
1.21
1,657,458
–
01-Jan-21
TSR
0.81
–
454,821
Scott Hartley 2
01-Jan-21
TSR
0.81
Rebecca Nash 2
12-Sep-19
CAGR of TSR
1.21
690,607
Sean O'Malley 2
12-Sep-19
CAGR of TSR
1.21
552,486
1,657,458
454,821
–
–
545,785
545,785
690,607
552,486
Phil Pakes
12-Sep-19
CAGR of TSR
1.21
1,381,215
01-Jan-21
TSR
0.81
–
424,499
1,381,215
424,499
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,933,701
454,821
2,388,522
1,657,458
454,821
2,112,279
545,785
545,785
690,607
690,607
552,486
552,486
1,381,215
424,499
1,805,714
Former Executive KMP
Francesco
De Ferrari 3
12-Sep-19
Share Price
Target
12-Sep-19
CAGR of TSR
1.21
3,867,402
(1,245,334)
2,622,068
0.62
2,500,000
–
2,500,000
6,367,402
–
(1,245,334)
5,122,068
Helen Livesey 4
12-Sep-19
CAGR of TSR
1.21
2,348,066
01-Jan-21
TSR
0.81
–
515,463
2,348,066
515,463
–
–
–
2,348,066
515,463
2,863,529
1 Performance rights were granted to the CEO Alexis George as part of her sign-on award on 2 August 2021. Tranche 1 of the absolute TSR hurdle award
vested in full and tranche 1 of the relative TSR hurdle award partially vested and the balance was lapsed. The performance rights were exercised to AMP
2 The balances shown for Scott Hartley, Rebecca Nash and Sean O’Malley in the Holding at 1 January 2021 column reflect their respective holdings on the
date they were appointed to KMP. Scott Hartley was appointed to KMP on 11 January and Rebecca Nash and Sean O’Malley were both appointed to KMP
Limited shares on 14 December 2021.
on 15 November 2021.
3 Performance rights granted to Francesco De Ferrari as part of the 2019 Contracted LTI and 2019 Transformation Incentive awards were partially lapsed
upon cessation of his employment and the remaining balance will be held on foot until the vesting date is reached, and performance hurdle tested.
4 Performance rights granted to Helen Livesey as part of the 2019 Transformation Incentive award will partially lapse in the amount of 743,403 units
upon cessation of employment and the remaining balance in the amount of 1,604,663 units will be held on foot until the vesting date is reached,
and performance hurdle tested.
Shawn Johnson is not included in the table above. He does not participate in AMP Limited incentive schemes and holds no equity awards
in AMP’s Equity Incentive Plan (EIP). He is eligible to participate in an equity plan in Private Markets after listing.
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
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68
Remuneration report
7.6
SECURITIES HELD BY NON-EXECUTIVE DIRECTORS
The following table details the shareholdings and movements in those shareholdings in AMP Limited held directly, indirectly or beneficially
by NEDs or their related parties during the year and as at 31 December 2021. For this purpose, a NED’s related parties are their close family
members (as defined in the applicable accounting standard) and any entities over which the NED (or a close family member) has control,
joint control or significant influence (whether direct or indirect).
NED
Debra Hazelton 3
Rahoul Chowdry
Michael Hirst
Kathryn McKenzie 4
John O'Sullivan
Michael Sammells 5
Andrea Slattery 6
Balance on
1 Jan 2021
#
Shares acquired
during the year
#
Shares disposed
during the year
#
Balance on
31 Dec 2021 1
#
Value on
31 Dec 2021 2
$
Progress
against MSR
130,977
100,000
–
–
88,194
30,000
85,475
143,585
–
–
120,000
–
40,000
54,500
–
–
–
–
–
–
–
274,562
100,000
–
120,000
88,194
70,000
139,975
277,308
14 June 2023
101,000
31 December 2023
–
30 June 2025
121,200
17 November 2024
89,076
70,700
19 June 2022
29 February 2024
141,375
14 February 2023
1 As at the date of this report, each of the current NEDs held a ‘relevant interest’ (as defined in the Corporations Act 2001) in the number of AMP shares
disclosed above for that NED. Mike Hirst holds no shares in AMP.
2 The total value of each holding was calculated as at 31 December 2021 using a closing price of $1.01.
3 Debra Hazelton purchased 89,286 AMP Limited shares on 1 June 2021 at a market price of $1.20 per share and 54,299 shares on 31 August 2021 at a market
price of $1.105 per share.
4 Kathryn McKenzie purchased 60,000 AMP Limited shares on 7 May 2021 at a market price of $1.08 per share and 60,000 shares on 18 August 2021 at a market
price of $1.07 per share.
5 Michael Sammells purchased 40,000 AMP Limited shares on 25 August 2021 at a market price of $1.103 per share.
6 Andrea Slattery purchased 27,000 AMP Limited shares on 10 May 2021 at a market value of $1.095 per share and 27,500 shares on 24 August 2021 at a market
value of $1.083 per share.
Signed in accordance with a resolution of the directors.
68
Remuneration report
7.6
SECURITIES HELD BY NON-EXECUTIVE DIRECTORS
The following table details the shareholdings and movements in those shareholdings in AMP Limited held directly, indirectly or beneficially
by NEDs or their related parties during the year and as at 31 December 2021. For this purpose, a NED’s related parties are their close family
members (as defined in the applicable accounting standard) and any entities over which the NED (or a close family member) has control,
joint control or significant influence (whether direct or indirect).
NED
Balance on
Shares acquired
Shares disposed
Balance on
Value on
1 Jan 2021
during the year
during the year
31 Dec 2021 1
31 Dec 2021 2
Progress
against MSR
Debra Hazelton 3
Rahoul Chowdry
Michael Hirst
Kathryn McKenzie 4
John O'Sullivan
Michael Sammells 5
Andrea Slattery 6
130,977
100,000
#
–
–
88,194
30,000
85,475
#
–
–
–
143,585
120,000
40,000
54,500
#
–
–
–
–
–
–
–
274,562
100,000
#
–
120,000
88,194
70,000
139,975
$
–
277,308
14 June 2023
101,000
31 December 2023
30 June 2025
121,200
17 November 2024
89,076
70,700
19 June 2022
29 February 2024
141,375
14 February 2023
1 As at the date of this report, each of the current NEDs held a ‘relevant interest’ (as defined in the Corporations Act 2001) in the number of AMP shares
disclosed above for that NED. Mike Hirst holds no shares in AMP.
2 The total value of each holding was calculated as at 31 December 2021 using a closing price of $1.01.
3 Debra Hazelton purchased 89,286 AMP Limited shares on 1 June 2021 at a market price of $1.20 per share and 54,299 shares on 31 August 2021 at a market
4 Kathryn McKenzie purchased 60,000 AMP Limited shares on 7 May 2021 at a market price of $1.08 per share and 60,000 shares on 18 August 2021 at a market
5 Michael Sammells purchased 40,000 AMP Limited shares on 25 August 2021 at a market price of $1.103 per share.
6 Andrea Slattery purchased 27,000 AMP Limited shares on 10 May 2021 at a market value of $1.095 per share and 27,500 shares on 24 August 2021 at a market
price of $1.105 per share.
price of $1.07 per share.
value of $1.083 per share.
Signed in accordance with a resolution of the directors.
Directors’ report
for the year ended 31 December 2021
ROUNDING
In accordance with the Australian Securities and Investments Commission Corporations Instrument 2016/191, amounts in this directors’
report and the accompanying financial report have been rounded off to the nearest million Australian dollars, unless stated otherwise.
NON-AUDIT SERVICES
The Audit Committee has reviewed details of the amounts paid or payable to the auditor for non-audit services provided to the AMP group
during the year ended 31 December 2021, by the company’s auditors, EY.
The directors are satisfied that the provision of those non-audit services by the auditor is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001 and did not compromise the auditor independence requirements of the
Corporations Act 2001 for the following reasons:
–
–
–
all non-audit assignments were approved by the CFO, or his nominated delegate, or the Chair of the Audit Committee;
no non-audit assignments were carried out which were specifically excluded by the AMP Charter of Audit Independence; and
the proportion of non-audit fees to audit fees paid to EY of 21% (2020: 7%), as disclosed in note 6.5 to the financial report is not
considered significant enough to compromise EY’s independence or cause a perception of compromise.
Signed in accordance with a resolution of the directors.
Debra Hazelton
Chair
Sydney, 10 February 2022
Alexis George
Chief Executive Officer and Managing Director
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70
Auditor’s independence declaration
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Auditor’s independence declaration to the directors of AMP Limited
As lead auditor for the audit of the financial report of AMP Limited for the financial year ended 31 December 2021, I declare to the best
of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AMP Limited and the entities it controlled during the financial year.
Ernst & Young
Andrew Price
Partner
10 February 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
70
Auditor’s independence declaration
Financial report
for the year ended 31 December 2021
Ernst & Young
200 George Street
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Sydney NSW 2000 Australia
ey.com/au
GPO Box 2646 Sydney NSW 2001
Auditor’s independence declaration to the directors of AMP Limited
As lead auditor for the audit of the financial report of AMP Limited for the financial year ended 31 December 2021, I declare to the best
of my knowledge and belief, there have been:
a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit;
b. No contraventions of any applicable code of professional conduct in relation to the audit; and
c. No non-audit services provided that contravene any applicable code of professional conduct in relation to the audit.
This declaration is in respect of AMP Limited and the entities it controlled during the financial year.
Ernst & Young
Andrew Price
Partner
10 February 2022
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
TABLE OF CONTENTS
Main statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
About this report
Understanding the AMP financial report
SECTION 1:
Results for the year
Basis of consolidation
Significant accounting policies
Critical judgements and estimates
1.1 Segment performance
1.2 Other operating expenses
1.3 Earnings per share
1.4 Taxes
1.5 Dividends
SECTION 2:
2.1 Loans and advances
Loans and advances,
investments, intangibles and
working capital
2.2
Investments in other financial assets and liabilities
2.3
Intangibles
2.4 Other assets
2.5 Receivables
2.6 Payables
2.7 Fair value information
SECTION 3:
Capital structure and
financial risk management
3.1 Contributed equity
3.2
Interest-bearing liabilities
3.3 Financial risk management
3.4 Derivatives and hedge accounting
3.5 Capital management
SECTION 4:
Employee disclosures
4.1 Defined benefit plans
4.2 Share-based payments
SECTION 5:
Group entities
SECTION 6:
Other disclosures
Directors’ declaration
Independent auditor’s report
5.1 Controlled entities
5.2
Investments in associates
5.3 Parent entity information
5.4 Related party disclosures
6.1 Notes to Consolidated statement of cash flows
6.2 Commitments
6.3 Right of use assets and lease liabilities
6.4 Provisions and contingent liabilities
6.5 Auditors’ remuneration
6.6 New accounting standards
6.7 Events occurring after reporting date
72
73
74
75
77
78
79
79
80
81
86
87
88
91
92
96
98
102
102
103
104
109
110
112
119
122
124
129
140
141
142
144
146
147
147
149
153
154
154
155
156
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72
Consolidated income statement
for the year ended 31 December 2021
Fee revenue
Interest income using the effective interest method
Other investment gains
Share of profit or loss from associates
Movement in guarantee liabilities
Other income
Total revenue
Fee and commission expenses
Staff and related expenses
Finance costs
Other operating expenses
Total expenses
(Loss)/Profit before tax
Income tax credit
(Loss)/Profit after tax from continuing operations
Profit from discontinued operations
(Loss)/Profit for the year
(Loss)/Profit attributable to:
Shareholders of AMP Limited 1
Non-controlling interests
(Loss)/Profit for the year
(Loss)/Earnings per share
Basic
Diluted
(Loss)/Earnings per share from continuing operations
Basic
Diluted
Note
1.1(b)
5.2
1.2
1.4
1.3
1.3
1.3
1.3
2021
$m
2,208
608
45
150
66
220
2020
$m
2,407
721
32
81
(30)
186
3,297
3,397
(769)
(1,215)
(347)
(1,292)
(3,623)
(326)
72
(254)
–
(254)
(252)
(2)
(254)
cents
(7.6)
(7.6)
(7.6)
(7.6)
(851)
(1,211)
(424)
(860)
(3,346)
51
19
70
124
194
177
17
194
cents
5.2
5.1
1.6
1.5
1 (Loss)/Profit attributable to shareholders of AMP Limited is comprised of $252m Loss (FY 20: $53m Profit) from continuing operations and $nil (FY 20: $124m
Profit) from discontinued operations.
72
Consolidated income statement
for the year ended 31 December 2021
Consolidated statement of comprehensive income
for the year ended 31 December 2021
(Loss)/Profit for the year from continuing operations
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value reserve
– net (loss)/gain on fair value asset reserve
3,297
3,397
– tax effect on fair value asset reserve gain/(loss)
– net amount transferred to profit or loss for the year
– tax effect on amount transferred to profit or loss for the year
Cash flow hedges
– net gain/(loss) on cash flow hedges
– tax effect on cash flow hedge (loss)/gain
– net amount transferred to profit or loss for the year
– tax effect on amount transferred to profit or loss for the year
Fee revenue
Interest income using the effective interest method
Other investment gains
Share of profit or loss from associates
Movement in guarantee liabilities
(Loss)/Profit after tax from continuing operations
Profit from discontinued operations
(Loss)/Profit for the year
Other income
Total revenue
Fee and commission expenses
Staff and related expenses
Finance costs
Other operating expenses
Total expenses
(Loss)/Profit before tax
Income tax credit
(Loss)/Profit attributable to:
Shareholders of AMP Limited 1
Non-controlling interests
(Loss)/Profit for the year
(Loss)/Earnings per share
Basic
Diluted
Basic
Diluted
Note
1.1(b)
5.2
1.2
1.4
1.3
1.3
1.3
1.3
2021
$m
2,208
608
45
150
66
220
(769)
(1,215)
(347)
(1,292)
(3,623)
(326)
72
(254)
–
(254)
(252)
(2)
(254)
cents
(7.6)
(7.6)
(7.6)
(7.6)
2020
$m
2,407
721
32
81
(30)
186
(851)
(1,211)
(424)
(860)
(3,346)
51
19
70
124
194
177
17
194
cents
5.2
5.1
1.6
1.5
Translation of foreign operations and revaluation of hedge of net investments
Items that will not be reclassified subsequently to profit or loss
Fair value reserve
Defined benefit plans
– actuarial gains
– tax effect on actuarial gains
Other comprehensive income/(loss) for the year from continuing operations
4.1
(Loss)/Earnings per share from continuing operations
Total comprehensive (loss)/income for the year from continuing operations
1 (Loss)/Profit attributable to shareholders of AMP Limited is comprised of $252m Loss (FY 20: $53m Profit) from continuing operations and $nil (FY 20: $124m
Profit) from discontinued operations.
Profit for the year from discontinued operations
Other comprehensive loss for the year from discontinued operations
Total comprehensive (loss)/income for the year
Total comprehensive (loss)/income attributable to shareholders of AMP Limited
Total comprehensive (loss)/income attributable to non-controlling interests
Total comprehensive (loss)/income for the year
Note
2021
$m
(254)
2020
$m
70
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(70)
21
(4)
1
(52)
81
(24)
36
(11)
82
36
36
(1)
(1)
101
(30)
71
136
(118)
–
–
(118)
(116)
(2)
(118)
40
(12)
–
–
28
(40)
13
24
(7)
(10)
(44)
(44)
(1)
(1)
5
(1)
4
(23)
47
124
(96)
75
58
17
75
74
Consolidated statement of financial position
as at 31 December 2021
Assets
Cash and cash equivalents
Receivables
Investments in other financial assets
Current tax assets
Assets held for sale 2
Loans and advances
Investments in associates
Right of use assets
Deferred tax assets
Intangibles
Other assets
Defined benefit plan asset
Total assets
Liabilities
Payables
Current tax liabilities
Employee benefits
Other financial liabilities
Liabilities held for sale 2
Provisions
Interest-bearing liabilities
Lease liabilities
Deferred tax liabilities
Guarantee liabilities
Defined benefit plan liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity of shareholders of AMP Limited
Non-controlling interests
Total equity of shareholders of AMP Limited and non-controlling interests
Note
2.5
2.2
2.1
5.2
6.3
1.4
2.3
2.4
4.1
2.6
2.2
6.4
3.2
6.3
1.4
4.1
3.1
2021
$m
2,916
572
3,684
221
575
22,047
1,090
96
655
330
150
3
2020 1
$m
2,428
702
5,087
160
–
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1 Due to a change in accounting policy, comparative information has been restated. Refer to note 2.3.
2 Assets and liabilities held for sale includes balances relating to AMP Capital's Global Equities and Fixed Income (GEFI) and Infrastructure Debt businesses
as well as AMP's interest in Resolution Life NOHC.
74
Consolidated statement of financial position
as at 31 December 2021
Consolidated statement of changes in equity
for the year ended 31 December 2021
Investments in other financial assets
Assets
Receivables
Cash and cash equivalents
Current tax assets
Assets held for sale 2
Loans and advances
Investments in associates
Right of use assets
Deferred tax assets
Defined benefit plan asset
Intangibles
Other assets
Total assets
Liabilities
Payables
Current tax liabilities
Employee benefits
Other financial liabilities
Liabilities held for sale 2
Provisions
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Deferred tax liabilities
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Defined benefit plan liabilities
Total liabilities
Net assets
Equity
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Note
2.5
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Note
Cash flows from operating activities 1
Cash receipts in the course of operations
Interest received
Dividends and distributions received 2
Cash payments in the course of operations
Net movement in deposits from customers
Finance costs
Income tax received/(paid)
Net cash provided by/(used in) operating activities
6.1
Cash flows from investing activities 1
Net proceeds from sale of (payments to acquire):
– investments in financial assets 3
– operating and intangible assets
– operating controlled entities and investments in associates accounted for using
the equity method
– AMP Capital minority interest
Proceeds from sale of the WP and mature businesses
Net cash (used in)/provided by investing activities
Cash flows from financing activities
Proceeds from borrowings – non-banking operations 1
Repayment of borrowings – non-banking operations 1
Net movement in borrowings – banking operations
Payments for buy-back of shares
Repayment of subordinated debt
Lease payments
Dividends paid 4
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents prior to the deconsolidation of WP and mature businesses
Cash and cash equivalents deconsolidated 1
Cash and cash equivalents at the end of the year
6.1
2021
$m
2,564
690
130
(3,171)
1,662
(302)
116
1,689
(503)
(49)
(13)
–
–
(565)
–
(398)
188
(196)
(267)
(60)
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2020 1
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1,892
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1,496
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(89)
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2,341
3,214
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(63)
(360)
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(1,516)
8,069
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6,549
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2,653
1 Cash flows for the year ended 31 December 2020 include amounts attributable to shareholders' interests, policyholders' interests in the WP and mature
business' statutory funds and controlled entities of those statutory funds. The sale of the WP and mature businesses was completed on 30 June 2020,
resulting in the deconsolidation of cash and cash equivalents held by these businesses as at 30 June 2020.
2 Dividends and distributions received in the year ended 31 December 2020 are amounts of cash received mainly from investments held by AMP life insurance
entities' statutory funds and controlled entities of the statutory funds. Dividends and distributions reinvested have been treated as non-cash items.
3 Net proceeds from sale of (payments to acquire) investments in financial assets also includes loans and advances made (net of payments) and purchases
of financial assets (net of maturities) during the period by AMP Bank.
4 Dividends paid includes dividends paid to minority interest holders and is presented net of dividends on treasury shares.
77
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78
Notes to the financial statements
for the year ended 31 December 2021
ABOUT THIS REPORT
This section outlines the structure of the AMP group, information useful to understanding the
AMP group’s financial report and the basis on which the financial report has been prepared.
(a) Understanding the AMP financial report
The AMP group (AMP) is comprised of AMP Limited (the parent), a holding company incorporated and domiciled in Australia, and the
entities it controls (subsidiaries or controlled entities). The consolidated financial statements of AMP Limited include the financial
information of its controlled entities.
The consolidated financial report:
–
–
–
–
–
–
is a general purpose financial report;
has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards including
Australian Accounting Interpretations adopted by the Australian Accounting Standards Board (AASB) and International Financial
Reporting Standards (IFRSs) as issued by the International Accounting Standards Board;
is presented in Australian dollars with all values rounded to the nearest million dollars ($m), unless otherwise stated;
has been prepared on a going concern basis generally using a historical cost basis; however where permitted under accounting
standards a different basis may be used, including the fair value basis;
presents assets and liabilities on the face of the Consolidated statement of financial position in decreasing order of liquidity and
therefore does not distinguish between current and non-current items;
presents reclassified comparative information where required for consistency with the current year’s presentation within the
annual report; and
–
includes restated comparative information to reflect the impact of a change in accounting policy as detailed in note 2.3.
AMP Limited is a for-profit entity and is limited by shares.
The financial statements for the year ended 31 December 2021 were authorised for issue on 10 February 2022 in accordance with
a resolution of the directors.
Assets and liabilities held for sale
SALE OF AMP CAPITAL’S GLOBAL EQUITIES AND FIXED INCOME BUSINESS
On 8 July 2021, AMP announced an agreement to sell AMP Capital’s Global Equities and Fixed Income (GEFI) business to Macquarie Asset
Management for up to $185m. The sale is subject to customary closing conditions and is expected to complete in the first quarter of 2022.
Consideration at completion will comprise an upfront cash payment of up to $110m and deferred consideration of up to $75m.
The aggregate consideration is subject to meeting certain conditions, including revenue targets, with the upfront cash component
expected to be approximately $80m. The deferred consideration will be fair valued by AMP at completion and, together with the cash
proceeds, will be treated as the accounting purchase price.
GEFI was controlled by AMP throughout the reporting period and as a result, the income and expenses, assets and liabilities and cash flows
of this business are consolidated within the financial report. In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued
Operations (AASB 5), the assets and liabilities of this business have been separately classified as held for sale in the Consolidated statement
of financial position.
DIVESTMENT OF EQUITY INTEREST IN RESOLUTION LIFE AUSTRALASIA
On 3 November 2021, AMP announced an agreement to divest its 19.13% equity interest in Resolution Life NOHC Pty Ltd (RLA) for consideration
of $524m to Resolution Life Group, less the amount of any dividends, distributions or capital returns that are paid from RLA to AMP. The sale
is subject to Regulatory approval and is expected to complete in the first half of 2022.
Subsequent to the agreement to divest, AMP received dividends and capital returns from RLA of $15m, reducing the consideration payable
at completion to $509m. In accordance with AASB 5, the carrying value of AMP’s equity interest in RLA has been adjusted to $509m as at
31 December 2021 and has been separately classified as held for sale in the Consolidated statement of financial position.
As part of the divestment agreement, AMP and RLA have also agreed to settle a number of post-completion adjustments and certain claims
between the parties, subject to various limitations and exclusions, which results in a payment of $141m from AMP to RLA at completion.
This balance has been separately classified as held for sale in the Consolidated statement of financial position.
DIVESTMENT OF INFRASTRUCTURE DEBT PLATFORM
On 24 December 2021, AMP announced an agreement to sell its Infrastructure Debt platform to Ares Holdings LP for consideration of up to
$428m. The sale is subject to a number of conditions precedent and is expected to complete in the first quarter of 2022. AMP’s Infrastructure
Debt platform was controlled by AMP throughout the reporting period and as a result, the income and expenses, assets and liabilities and
cash flows of the platform are consolidated within the financial report. As at 31 December 2021, the assets and liabilities of this business
have been separately classified as held for sale in the Consolidated statement of financial position.
COVID-19 impacts
The COVID-19 pandemic has resulted in significant disruptions to the global economy during the year ended 31 December 2021 and there
remains substantial uncertainty over the ultimate duration and extent of the pandemic as well as the corresponding economic impacts.
These uncertainties have been incorporated into the judgements and estimates used by management in the preparation of this report,
including the carrying values of the assets and liabilities.
(b) Basis of consolidation
Entities are fully consolidated from the date of acquisition, being the date on which the AMP group obtains control, and continue to be
consolidated until the date that control ceases. Control exists where the AMP group is exposed, or has rights, to variable returns from its
involvement with the entity and has the ability to affect those returns through its power over the entity.
Income, expenses, assets, liabilities and cash flows of controlled entities are consolidated into the AMP group financial statements, along
with those attributable to the shareholders of the parent entity. All inter-company transactions are eliminated in full, including unrealised
profits arising from intra-group transactions.
The share of the net assets of controlled entities attributable to non-controlling interests is disclosed as a separate line item on the
Consolidated statement of financial position.
Materiality
Information has only been included in the financial report to the extent that it has been considered material and relevant to the
understanding of the financial statements. A disclosure is considered material and relevant if, for example:
–
–
–
–
the amount in question is significant because of its size or nature;
it is important for understanding the results of the AMP group;
it helps explain the impact of significant changes in the AMP group; and/or
it relates to an aspect of the AMP group’s operations that is important to its future performance.
(c) Significant accounting policies
The significant accounting policies adopted in the preparation of the financial report are contained in the notes to the financial statements
to which they relate. All accounting policies have been consistently applied to the current year and comparative period, unless otherwise
stated. Where an accounting policy relates to more than one note or where no note is provided, the accounting policies are set out below.
79
A
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P
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The financial statements for the year ended 31 December 2021 were authorised for issue on 10 February 2022 in accordance with
Interest, dividends and distributions income
Interest income measured at amortised cost is recognised in the Consolidated income statement using the effective interest method.
Revenue from dividends and distributions is recognised when the AMP group’s right to receive payment is established.
SALE OF AMP CAPITAL’S GLOBAL EQUITIES AND FIXED INCOME BUSINESS
Foreign currency transactions
On 8 July 2021, AMP announced an agreement to sell AMP Capital’s Global Equities and Fixed Income (GEFI) business to Macquarie Asset
Management for up to $185m. The sale is subject to customary closing conditions and is expected to complete in the first quarter of 2022.
Transactions, assets and liabilities denominated in foreign currencies are translated into Australian dollars (the functional currency) using
the following applicable exchange rates:
Foreign currency amount
Transactions
Monetary assets and liabilities
Applicable exchange rate
Date of transaction
Reporting date
Non-monetary assets and liabilities carried at fair value
Date fair value is determined
Foreign exchange gains and losses resulting from translation of foreign exchange transactions are recognised in the Consolidated income
statement, except for qualifying cash flow hedges, which are deferred to equity.
On consolidation the assets, liabilities, income and expenses of foreign operations are translated into Australian dollars using the following
applicable exchange rates:
Foreign currency amount
Income and expenses
Assets and liabilities
Equity
Reserves
Applicable exchange rate
Average exchange rate
Reporting date
Historical date
Reporting date
Foreign exchange differences resulting from translation of foreign operations are initially recognised in the foreign currency translation
reserve and subsequently transferred to the Consolidated income statement on disposal of the foreign operation.
i
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78
Notes to the financial statements
for the year ended 31 December 2021
ABOUT THIS REPORT
This section outlines the structure of the AMP group, information useful to understanding the
AMP group’s financial report and the basis on which the financial report has been prepared.
(a) Understanding the AMP financial report
The AMP group (AMP) is comprised of AMP Limited (the parent), a holding company incorporated and domiciled in Australia, and the
entities it controls (subsidiaries or controlled entities). The consolidated financial statements of AMP Limited include the financial
information of its controlled entities.
The consolidated financial report:
is a general purpose financial report;
–
–
–
–
has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards including
Australian Accounting Interpretations adopted by the Australian Accounting Standards Board (AASB) and International Financial
Reporting Standards (IFRSs) as issued by the International Accounting Standards Board;
is presented in Australian dollars with all values rounded to the nearest million dollars ($m), unless otherwise stated;
has been prepared on a going concern basis generally using a historical cost basis; however where permitted under accounting
standards a different basis may be used, including the fair value basis;
–
presents assets and liabilities on the face of the Consolidated statement of financial position in decreasing order of liquidity and
therefore does not distinguish between current and non-current items;
–
presents reclassified comparative information where required for consistency with the current year’s presentation within the
annual report; and
–
includes restated comparative information to reflect the impact of a change in accounting policy as detailed in note 2.3.
AMP Limited is a for-profit entity and is limited by shares.
a resolution of the directors.
Assets and liabilities held for sale
Consideration at completion will comprise an upfront cash payment of up to $110m and deferred consideration of up to $75m.
The aggregate consideration is subject to meeting certain conditions, including revenue targets, with the upfront cash component
expected to be approximately $80m. The deferred consideration will be fair valued by AMP at completion and, together with the cash
proceeds, will be treated as the accounting purchase price.
GEFI was controlled by AMP throughout the reporting period and as a result, the income and expenses, assets and liabilities and cash flows
of this business are consolidated within the financial report. In accordance with AASB 5 Non-current Assets Held for Sale and Discontinued
Operations (AASB 5), the assets and liabilities of this business have been separately classified as held for sale in the Consolidated statement
of financial position.
DIVESTMENT OF EQUITY INTEREST IN RESOLUTION LIFE AUSTRALASIA
On 3 November 2021, AMP announced an agreement to divest its 19.13% equity interest in Resolution Life NOHC Pty Ltd (RLA) for consideration
of $524m to Resolution Life Group, less the amount of any dividends, distributions or capital returns that are paid from RLA to AMP. The sale
is subject to Regulatory approval and is expected to complete in the first half of 2022.
Subsequent to the agreement to divest, AMP received dividends and capital returns from RLA of $15m, reducing the consideration payable
at completion to $509m. In accordance with AASB 5, the carrying value of AMP’s equity interest in RLA has been adjusted to $509m as at
31 December 2021 and has been separately classified as held for sale in the Consolidated statement of financial position.
As part of the divestment agreement, AMP and RLA have also agreed to settle a number of post-completion adjustments and certain claims
between the parties, subject to various limitations and exclusions, which results in a payment of $141m from AMP to RLA at completion.
This balance has been separately classified as held for sale in the Consolidated statement of financial position.
DIVESTMENT OF INFRASTRUCTURE DEBT PLATFORM
On 24 December 2021, AMP announced an agreement to sell its Infrastructure Debt platform to Ares Holdings LP for consideration of up to
$428m. The sale is subject to a number of conditions precedent and is expected to complete in the first quarter of 2022. AMP’s Infrastructure
Debt platform was controlled by AMP throughout the reporting period and as a result, the income and expenses, assets and liabilities and
cash flows of the platform are consolidated within the financial report. As at 31 December 2021, the assets and liabilities of this business
have been separately classified as held for sale in the Consolidated statement of financial position.
80
Notes to the financial statements
for the year ended 31 December 2021
(d) Critical judgements and estimates
Preparation of the financial statements requires management to make judgements, estimates and assumptions about future events.
Information on critical judgements and estimates considered when applying the accounting policies can be found above and in the
following notes:
Accounting estimates and judgements
Note
Tax
Impairment of financial assets
Fair value of financial assets
Goodwill and acquired intangible assets
Defined benefit plan
Right of use assets and lease liabilities
Provisions and contingent liabilities
1.4
2.1
2.2
2.3
4.1
6.3
6.4
Taxes
Expected credit losses (ECLs)
Investments in other financial assets and liabilities
Intangibles
Defined benefit asset/liability
Right of use asset and lease liabilities
Provisions and contingent liabilities
Page
90
95
97
101
128
148
150
80
Notes to the financial statements
for the year ended 31 December 2021
(d) Critical judgements and estimates
Preparation of the financial statements requires management to make judgements, estimates and assumptions about future events.
Information on critical judgements and estimates considered when applying the accounting policies can be found above and in the
Accounting estimates and judgements
Note
following notes:
Tax
Impairment of financial assets
Fair value of financial assets
Taxes
Expected credit losses (ECLs)
Investments in other financial assets and liabilities
Goodwill and acquired intangible assets
Intangibles
Defined benefit plan
Right of use assets and lease liabilities
Provisions and contingent liabilities
Defined benefit asset/liability
Right of use asset and lease liabilities
Provisions and contingent liabilities
1.4
2.1
2.2
2.3
4.1
6.3
6.4
Page
90
95
97
101
128
148
150
1
SECTION
RESULTS FOR THE YEAR
This section provides insights into how the AMP group has performed in the current year and provides additional
information about those individual line items in the financial statements that the directors consider most
relevant in the context of the operations of the AMP group.
Statutory measures of performance disclosed in this report are:
–
–
Statutory earnings per share (EPS) – basic and diluted
Profit (loss) after tax attributable to the shareholders of AMP
NPAT (underlying) is AMP’s key measure of business performance. This performance measure is disclosed for each
AMP operating segment within Segment performance.
1.1
Segment performance
1.2 Other operating expenses
1.3
1.4
Earnings per share
Taxes
1.5 Dividends
1.1
SEGMENT PERFORMANCE
The AMP group identifies its operating segments based on separate financial information that is regularly reviewed by the Chief Executive
Officer and his executive team in assessing performance and determining the allocation of resources. The operating segments are identified
according to the nature of profit generated and services provided, and their performance is evaluated based on a post-tax operating
earnings basis.
Reportable segment
Segment description
Australian wealth
management (AWM)
AWM comprises of three different business components providing advice, retirement income and managed
investments products through:
–
Platforms provides a Wrap Platform which includes superannuation, retirement and investment solutions.
– Master Trust provides a whole of wealth solutions for members both retail and corporate.
–
Advice provides financial advice services and equity investments in practices.
AMP Bank
AMP Bank offers residential mortgages, deposits and transaction banking. The Bank continues to focus on
growth through investing in technology to streamline the origination process, improving the experience for
both customers and intermediaries.
AMP Capital
AMP Capital is a diversified investment manager across major asset classes including infrastructure, real
estate, equities, fixed interest, diversified and multi-manager and multi-asset funds.
On 23 April 2021, AMP announced the intention to demerge AMP Capital’s Private Markets business,
consisting of infrastructure equity, infrastructure debt and real estate. Subsequently, on 24 December 2021,
AMP announced the further simplification of Private Markets with the sale of infrastructure debt, expected
to complete in the first quarter of 2022.
As part of the demerger preparations, on 8 July 2021, AMP announced the sale of its global equities and
fixed income business (GEFI), which is expected to complete by 30 June 2022. The remaining AMP Capital
public market business, the Multi-Asset Group, which is responsible for asset allocation on behalf of AMP’s
superannuation clients, will complete its transition over to Australian wealth management prior to demerger,
creating an end-to-end superannuation and investment platform business.
New Zealand wealth
management
(NZ WM)
Encompasses the wealth management and financial advice and distribution business in New Zealand.
It provides clients with a variety of wealth management solutions including KiwiSaver, corporate
superannuation, retail investments and a wrap investment management platform.
Segment information is not reported for activities of the AMP group office companies as it is not the function of these departments to earn
revenue and any revenues earned are incidental to the activities of the AMP group.
81
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f
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a
t
i
o
n
82
Notes to the financial statements
for the year ended 31 December 2021
1.1
SEGMENT PERFORMANCE CONTINUED
(a) Segment profit
2021
Segment profit after income tax
External customer revenue
Intersegment revenue 2
Segment revenue
Other segment information
Income tax expense
Depreciation and amortisation
2020
Segment profit after income tax 3
External customer revenue
Intersegment revenue 2
Segment revenue
Other segment information
Income tax expense
Depreciation and amortisation
AMP
Bank
$m
153
413
–
413
66
16
111
401
–
401
48
7
WM
$m
48
948
3
951
20
28
64
1,055
7
1,062
25
38
NZ WM
$m
AMP
Capital 1
$m
39
150
–
150
16
4
35
151
–
151
14
5
154
511
216
727
49
25
131
510
207
717
35
33
Total
$m
394
2,022
219
2,241
151
73
341
2,117
214
2,331
122
83
1 AMP Capital segment revenue is reported net of external investment manager fees.
2 Intersegment revenue represents operating revenue between segments priced on a market related basis and is eliminated on consolidation.
3 FY 20 segment profit after income tax has been restated to reflect additional Group Office allocations to business units from FY 21 and show investment
income on an actual basis with the removal of the market adjustment methodology.
82
Notes to the financial statements
for the year ended 31 December 2021
(a) Segment profit
2021
Segment profit after income tax
External customer revenue
Intersegment revenue 2
Segment revenue
Other segment information
Income tax expense
Depreciation and amortisation
2020
Segment profit after income tax 3
External customer revenue
Intersegment revenue 2
Segment revenue
Other segment information
Income tax expense
Depreciation and amortisation
AMP
Bank
$m
153
413
–
413
66
16
111
401
–
401
48
7
WM
$m
48
948
3
951
20
28
64
1,055
7
1,062
25
38
NZ WM
AMP
Capital 1
$m
39
150
–
150
16
4
35
151
–
151
14
5
$m
154
511
216
727
49
25
131
510
207
717
35
33
Total
$m
394
2,022
219
2,241
151
73
341
2,117
214
2,331
122
83
1 AMP Capital segment revenue is reported net of external investment manager fees.
2 Intersegment revenue represents operating revenue between segments priced on a market related basis and is eliminated on consolidation.
3 FY 20 segment profit after income tax has been restated to reflect additional Group Office allocations to business units from FY 21 and show investment
income on an actual basis with the removal of the market adjustment methodology.
1.1
SEGMENT PERFORMANCE CONTINUED
1.1
SEGMENT PERFORMANCE CONTINUED
(b) The following table allocates the disaggregated segment revenue from contracts with
customers to the group’s operating segments (see note 1.1(a)):
2021
Investment related
Management fees
Performance and transaction fees
Net interest income
Other revenue
Total segment revenue per segment note
Presentation adjustments 1
Total statutory revenue from contracts with customers
2020
Investment related
Management fees
Performance and transaction fees
Net interest income
Other revenue
Total segment revenue per segment note
Presentation adjustments 1
Total statutory revenue from contracts with customers
Statutory revenue from contracts with customers
Fee revenue
– Investment management and related fees
– Financial advisory fees 2
Other revenue
Total statutory revenue from contracts with customers
AMP
Bank
$m
–
–
–
399
14
413
–
–
–
391
10
401
WM
$m
858
–
–
–
93
951
NZ WM
$m
116
–
–
–
34
150
AMP
Capital
$m
545
90
74
–
18
727
Total
$m
1,519
90
74
399
159
2,241
187
2,428
907
115
564
1,586
–
–
–
155
1,062
–
–
–
36
151
96
51
–
6
717
2021
$m
1,597
611
2,208
220
2,428
96
51
391
207
2,331
254
2,585
2020
$m
1,696
711
2,407
178
2,585
1 Presentation adjustments primarily reflect the difference between total segment revenue and statutory revenue from contracts with customers,
as required by AASB 15 Revenue from Contracts with Customers. These adjustments include revenue from sources other than contracts with customers
and expense items which are presented net in the segment results, but presented gross in the Consolidated income statement.
2 A substantial majority of the financial advisory fees received are paid to advisers. For statutory reporting, financial advisory fees are presented gross of the
related cost which is presented in Fee and commission expenses in the Consolidated income statement.
83
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2
0
2
1
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n
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a
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p
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s
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w
i
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a
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i
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f
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m
a
t
i
o
n
84
Notes to the financial statements
for the year ended 31 December 2021
1.1
SEGMENT PERFORMANCE CONTINUED
(c) Reconciliations
Segment profit after income tax differs from profit (loss) attributable to shareholders of AMP Limited due to the exclusion of the
following items:
Segment profit after income tax 1
Net group office
Total operating earnings
NPAT (underlying) 2
Gain on sale of AMP Life
AMP Life separation costs
Client remediation and related costs
Risk management, governance and controls
Transformation cost out
Impairments
Demerger costs
Other items 3
Amortisation of acquired intangible assets
NPAT
AMP Life earnings 4
(Loss)/Profit attributable to shareholders of AMP Limited
(Loss)/Profit attributable to non-controlling interests
(Loss)/Profit for the year
2021
$m
394
(38)
356
356
–
–
(78)
–
(133)
(312)
(75)
11
(21)
(252)
–
(252)
(2)
(254)
2020
$m
341
(108)
233
233
299
(208)
(73)
(29)
(51)
(32)
–
(33)
(58)
48
129
177
17
194
1 FY 20 segment profit after income tax has been re-presented to reflect actual investment income following the removal of 'market adjustment' which
normalised investment income to 2.5%, this has previously been disclosed outside of Segment profit after income tax.
2 NPAT (underlying), represents shareholder attributable net profit or loss after tax excluding accounting mismatches and non- recurring revenue and expenses.
3 Other items largely comprise the net of one-off and non-recurring revenues and costs, including the cost of implementing significant regulatory changes.
4 Includes AMP Life earnings through to 30 June 2020.
84
Notes to the financial statements
for the year ended 31 December 2021
(c) Reconciliations
following items:
Segment profit after income tax 1
Net group office
Total operating earnings
NPAT (underlying) 2
Gain on sale of AMP Life
AMP Life separation costs
Client remediation and related costs
Risk management, governance and controls
Transformation cost out
Impairments
Demerger costs
Other items 3
NPAT
AMP Life earnings 4
Amortisation of acquired intangible assets
(Loss)/Profit attributable to shareholders of AMP Limited
(Loss)/Profit attributable to non-controlling interests
(Loss)/Profit for the year
1 FY 20 segment profit after income tax has been re-presented to reflect actual investment income following the removal of 'market adjustment' which
normalised investment income to 2.5%, this has previously been disclosed outside of Segment profit after income tax.
2 NPAT (underlying), represents shareholder attributable net profit or loss after tax excluding accounting mismatches and non- recurring revenue and expenses.
3 Other items largely comprise the net of one-off and non-recurring revenues and costs, including the cost of implementing significant regulatory changes.
4 Includes AMP Life earnings through to 30 June 2020.
1.1
SEGMENT PERFORMANCE CONTINUED
1.1
SEGMENT PERFORMANCE CONTINUED
Segment profit after income tax differs from profit (loss) attributable to shareholders of AMP Limited due to the exclusion of the
Total segment revenue differs from Total revenue as follows:
(c) Reconciliations continued
2021
$m
394
(38)
356
356
–
–
(78)
–
(133)
(312)
(75)
11
(21)
(252)
–
(252)
(2)
(254)
2020
$m
341
(108)
233
233
299
(208)
(73)
(29)
(51)
(32)
–
(33)
(58)
48
129
177
17
194
Total segment revenue
Add revenue excluded from segment revenue
– Investment gains and losses (excluding AMP Bank interest revenue)
– Other revenue
Add back expenses netted against segment revenue
– Interest expense related to AMP Bank
– External investment manager and adviser fees paid in respect of certain assets under management
Movement in guarantee liabilities
Remove intersegment revenue
Total revenue
(d) Segment assets
2021
$m
2,241
45
220
276
668
66
(219)
3,297
2020
$m
2,331
32
186
377
715
(30)
(214)
3,397
Segment asset information has not been disclosed because the balances are not used by the Chief Executive Officer or the executive team
for evaluating segment performance, or in allocating resources to segments.
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Revenue from contracts with customers
For AMP, revenue from contracts with customers arises primarily from the provision of investment management and financial advisory
services. Revenue is recognised when control of services is transferred to the customer at an amount that reflects the consideration which
AMP is entitled to in exchange for the services provided. As the customer simultaneously receives and consumes the benefits as the service
is provided, control is transferred over time. Accordingly, revenue is recognised over time.
Fee rebates provided to customers are recognised as a reduction in fee revenue.
Investment management and related fees
Fees are charged to customers in connection with the provision of investment management and other related services. These performance
obligations are satisfied on an ongoing basis, usually daily, and revenue is recognised as the service is provided.
Financial advisory fees
Financial advisory fees consist of fee-for-service revenue and commission income which are earned for providing customers with financial
advice and performing related advisory services. These performance obligations are satisfied over time. Accordingly, revenue is recognised
over time.
A substantial majority of the financial advisory fees received are paid to advisers. Financial advisory fees are presented gross of the related
cost which is presented in Fees and commission expenses in the Consolidated income statement.
85
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2
0
2
1
A
n
n
u
a
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p
o
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s
s
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w
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a
l
i
n
f
o
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m
a
t
i
o
n
86
Notes to the financial statements
for the year ended 31 December 2021
1.2 OTHER OPERATING EXPENSES
Impairment of intangibles
Movement in expected credit losses
Information technology and communication
Onerous lease contracts
Professional and consulting fees
Amortisation of intangibles
Depreciation of property, plant and equipment
Other expenses
Total other operating expenses
2021
$m
(25)
(25)
(227)
(118)
(247)
(202)
(62)
(386)
(1,292)
2020
$m
(5)
(7)
(243)
–
(288)
(122)
(74)
(121)
(860)
86
Notes to the financial statements
for the year ended 31 December 2021
Impairment of intangibles
Movement in expected credit losses
Information technology and communication
Onerous lease contracts
Professional and consulting fees
Amortisation of intangibles
Depreciation of property, plant and equipment
Other expenses
Total other operating expenses
2021
$m
(25)
(25)
(227)
(118)
(247)
(202)
(62)
(386)
(1,292)
2020
$m
(5)
(7)
(243)
–
(288)
(122)
(74)
(121)
(860)
1.2 OTHER OPERATING EXPENSES
1.3
EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share is calculated based on profit attributable to shareholders of AMP and the weighted average number of ordinary
shares outstanding.
Diluted earnings per share
Diluted earnings per share is based on profit attributable to shareholders of AMP and the weighted average number of ordinary shares
outstanding after adjustments for the effects of all dilutive potential ordinary shares, such as options and performance rights.
(Loss)/Profit attributable to shareholders of AMP
Continuing operations
Discontinued operations
(Loss)/Profit attributable to shareholders of AMP
Weighted average number of ordinary shares for basic EPS 1
Add: potential ordinary shares considered dilutive 2
Weighted average number of ordinary shares used in the calculation of dilutive (loss)/earnings per share
(Loss)/Earnings per share
Basic
Diluted
(Loss)/Earnings per share for continuing operations
Basic
Diluted
2021
$m
(252)
–
(252)
2021
$m
3,335
–
3,335
2021
cents
(7.6)
(7.6)
(7.6)
(7.6)
2020
$m
53
124
177
2020
$m
3,428
56
3,484
2020
cents
5.2
5.1
1.6
1.5
1 The weighted average number of ordinary shares outstanding is calculated after deducting the weighted average number of treasury shares held during
the period.
2 Weighted average number of shares used in the basic and diluted Earnings Per Share calculation is the same for the year ended 31 December 2021 as the effect
of share rights expected to vest are anti-dilutive and excluded from the calculation (2020: Performance rights have been determined to be dilutive, however,
if these instruments vest and are exercised, it is AMP’s policy to buy AMP shares on market so there will be no dilutive effect on the value of AMP shares).
Earnings per share for discontinuing operations
Basic
Diluted
n/a
n/a
3.6
3.6
87
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2
0
2
1
A
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p
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p
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a
l
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n
f
o
r
m
a
t
i
o
n
88
Notes to the financial statements
for the year ended 31 December 2021
1.4
TAXES
OUR TAXES
This sub-section outlines the impact of income taxes on the results and financial position of AMP. In particular:
–
–
–
the impact of tax on the reported result;
amounts owed to/receivable from the tax authorities; and
deferred tax balances that arise due to differences in the tax and accounting treatment of balances recorded in the
financial report.
These financial statements include the disclosures relating to tax required under accounting standards. Further information
on AMP’s tax matters can be found in the AMP Tax Report at amp.com.au/shares.
(a) Income tax credit
The following table provides a reconciliation of differences between prima facie tax calculated as 30% of the profit or loss before income
tax for the year and the income tax expense or credit recognised in the Consolidated income statement for the year.
(Loss)/Profit before income tax
Tax at the Australian tax rate of 30% (2020: 30%)
Tax concessions including research and development and offshore banking unit
Non-deductible expenses
Non-taxable income
Other items
Over provided in previous years
Differences in overseas tax rates
Income tax credit per Consolidated income statement
(b) Analysis of income tax credit
Current tax credit/(expense)
(Decrease)/Increase in deferred tax assets
Decrease/(Increase) in deferred tax liabilities
Income tax credit
2021
$m
(326)
98
1
(160)
61
(30)
95
7
72
109
(130)
93
72
2020
$m
51
(15)
1
(25)
14
25
3
16
19
(7)
57
(31)
19
88
Notes to the financial statements
for the year ended 31 December 2021
1.4
TAXES
OUR TAXES
This sub-section outlines the impact of income taxes on the results and financial position of AMP. In particular:
the impact of tax on the reported result;
amounts owed to/receivable from the tax authorities; and
–
–
–
financial report.
deferred tax balances that arise due to differences in the tax and accounting treatment of balances recorded in the
These financial statements include the disclosures relating to tax required under accounting standards. Further information
on AMP’s tax matters can be found in the AMP Tax Report at amp.com.au/shares.
The following table provides a reconciliation of differences between prima facie tax calculated as 30% of the profit or loss before income
tax for the year and the income tax expense or credit recognised in the Consolidated income statement for the year.
Tax at the Australian tax rate of 30% (2020: 30%)
Tax concessions including research and development and offshore banking unit
(a) Income tax credit
(Loss)/Profit before income tax
Non-deductible expenses
Non-taxable income
Other items
Over provided in previous years
Differences in overseas tax rates
Income tax credit per Consolidated income statement
(b) Analysis of income tax credit
Current tax credit/(expense)
(Decrease)/Increase in deferred tax assets
Decrease/(Increase) in deferred tax liabilities
Income tax credit
2021
$m
(326)
98
1
(160)
61
(30)
95
7
72
109
(130)
93
72
2020
$m
51
(15)
1
(25)
14
25
3
16
19
(7)
57
(31)
19
1.4
TAXES CONTINUED
(c) Analysis of deferred tax balances
Analysis of deferred tax assets
Expenses deductible in the future years
Unrealised movements on borrowings and derivatives
Unrealised investment losses
Losses available for offset against future taxable income
Lease Liability
Capitalised software expenses
Transferred to assets held for sale
Other
Total deferred tax assets
Analysis of deferred tax liabilities
Unrealised investment gains
Right of use assets
Intangible asset
Unearned revenue
Other
Total deferred tax liabilities
(d) Amounts recognised directly in equity
Deferred income tax expense related to items taken directly to equity during the year
(e) Unused tax losses and deductible temporary differences not recognised
Revenue losses
Deductible temporary differences
Capital losses
2021
$m
2020
$m
277
32
11
177
29
131
(6)
4
655
30
20
35
28
23
136
2021
$m
(43)
2021
$m
155
57
1,053
499
54
43
43
50
129
–
10
828
43
41
115
–
27
226
2020
$m
(7)
2020
$m
112
–
741
89
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2
0
2
1
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A
d
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i
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n
a
l
i
n
f
o
r
m
a
t
i
o
n
90
Notes to the financial statements
for the year ended 31 December 2021
1.4
TAXES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Income tax expense
Income tax expense is the tax payable on taxable income for the current period based on the income tax rate for each jurisdiction
and adjusted for changes in deferred tax assets and liabilities. These changes are attributable to:
–
–
–
temporary differences between the tax bases of assets and liabilities and their Consolidated statement of financial position
carrying amounts;
unused tax losses; and
the impact of changes in the amounts of deferred tax assets and liabilities arising from changes in tax rates or in the manner
in which these balances are expected to be realised.
Adjustments to income tax expense are also made for any differences between the amounts paid, or expected to be paid, in relation
to prior periods and the amounts provided for these periods at the start of the current period.
Any tax impact on income and expense items that are recognised directly in equity is also recognised directly in equity.
Deferred tax
Deferred tax assets and liabilities are recognised for temporary differences and are measured at the tax rates which are expected to apply
when the assets are recovered or liabilities are settled, based on tax rates that have been enacted or substantively enacted for each jurisdiction
at the reporting date. Deferred tax assets and liabilities are not discounted to present value.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Tax consolidation
AMP Limited and its wholly owned Australian controlled entities are part of a tax-consolidated group, with AMP Limited being the head
entity (the company). A tax funding agreement has been entered into by the head entity and the controlled entities in the tax-consolidated
group and requires entities to fully compensate the company for current tax liabilities and to be fully compensated by the company for any
current or deferred tax assets in respect of tax losses arising from external transactions occurring after 30 June 2003, the implementation
date of the tax-consolidated group.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The AMP group is subject to taxes in Australia and other jurisdictions where it has operations. The application of tax law to
the specific circumstances and transactions of the AMP group requires the exercise of judgement by management. The tax
treatments adopted by management in preparing the financial statements may be impacted by changes in legislation and
interpretations or be subject to challenge by tax authorities.
Judgement is also applied by management in determining the extent to which the recovery of carried forward tax losses
and deductible temporary differences are probable for the purpose of meeting the criteria for recognition as deferred
tax assets.
90
Notes to the financial statements
for the year ended 31 December 2021
1.4
TAXES CONTINUED
1.5
DIVIDENDS
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Dividends paid and proposed during the year are shown in the table below:
Dividend per share (cents)
Franking percentage
Dividend amount ($m)
Payment date
Dividends paid
Previous year final dividend on ordinary shares
Special dividend on ordinary shares
Total dividends paid 1
1 Total dividends paid includes dividends paid on Treasury shares $nil (2020: $nil).
2021
Final
–
–
–
–
2021
Interim
2020
Final
2020
Special dividend
–
–
–
–
–
–
–
–
2021
$m
–
–
–
10.0
100%
343
1 October 2020
2020
$m
–
343
343
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Dividend franking credits
Franking credits available to shareholders are $67m (2020: $76m), based on a tax rate of 30%. This amount is calculated from the balance
of the franking account as at the end of the reporting period, adjusted for franking credits that will arise from the settlement, after the end
of the reporting date, of liabilities for income tax and receivables for dividends.
The company’s ability to utilise the franking account credits depends on meeting Corporations Act 2001 (Cth) requirements to declare dividends.
Franked dividends are franked at a tax rate of 30%.
Income tax expense is the tax payable on taxable income for the current period based on the income tax rate for each jurisdiction
and adjusted for changes in deferred tax assets and liabilities. These changes are attributable to:
–
temporary differences between the tax bases of assets and liabilities and their Consolidated statement of financial position
the impact of changes in the amounts of deferred tax assets and liabilities arising from changes in tax rates or in the manner
in which these balances are expected to be realised.
Adjustments to income tax expense are also made for any differences between the amounts paid, or expected to be paid, in relation
to prior periods and the amounts provided for these periods at the start of the current period.
Any tax impact on income and expense items that are recognised directly in equity is also recognised directly in equity.
Deferred tax assets and liabilities are recognised for temporary differences and are measured at the tax rates which are expected to apply
when the assets are recovered or liabilities are settled, based on tax rates that have been enacted or substantively enacted for each jurisdiction
at the reporting date. Deferred tax assets and liabilities are not discounted to present value.
Income tax expense
carrying amounts;
unused tax losses; and
–
–
Deferred tax
Tax consolidation
AMP Limited and its wholly owned Australian controlled entities are part of a tax-consolidated group, with AMP Limited being the head
entity (the company). A tax funding agreement has been entered into by the head entity and the controlled entities in the tax-consolidated
group and requires entities to fully compensate the company for current tax liabilities and to be fully compensated by the company for any
current or deferred tax assets in respect of tax losses arising from external transactions occurring after 30 June 2003, the implementation
date of the tax-consolidated group.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The AMP group is subject to taxes in Australia and other jurisdictions where it has operations. The application of tax law to
the specific circumstances and transactions of the AMP group requires the exercise of judgement by management. The tax
treatments adopted by management in preparing the financial statements may be impacted by changes in legislation and
interpretations or be subject to challenge by tax authorities.
Judgement is also applied by management in determining the extent to which the recovery of carried forward tax losses
and deductible temporary differences are probable for the purpose of meeting the criteria for recognition as deferred
tax assets.
91
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92
Notes to the financial statements
for the year ended 31 December 2021
2
SECTION
LOANS AND ADVANCES, INVESTMENTS, INTANGIBLES
AND WORKING CAPITAL
This section highlights the AMP group’s assets and working capital used to support the AMP group’s activities.
2.1
2.2
2.3
Loans and advances
Investments in other financial assets and liabilities
Intangibles
2.4 Other assets
2.5 Receivables
2.6
2.7
Payables
Fair value information
2.1
LOANS AND ADVANCES
(a) Loans and advances
Housing loans 1
Practice finance loans
Total loans and advances 2
Less: Provisions for impairment
Individual provisions
– Housing loans
– Practice finance loans
Collective provisions
Total provisions for impairment
Total net loans and advances
Movement in provisions:
Individual provision
Balance at the beginning of the year
Increase in provision – housing loans
Increase in provision – practice finance loans
Bad debts written off
Provision released
Balance at the end of the year
Collective provision
Balance at the beginning of the year
(Decrease)/increase in provision
Balance at the end of the year
2021
$m
21,847
316
22,163
(7)
(83)
(26)
(116)
22,047
107
1
–
(3)
(15)
90
47
(21)
26
2020
$m
20,289
391
20,680
(13)
(94)
(47)
(154)
20,526
112
4
1
(3)
(7)
107
20
27
47
1 Total housing loans include net capitalised costs of $87m (2020: $76m).
2 Total loans and advances $16,600m (2020: $16,317m) is expected to be received more than 12 months after the reporting date.
2
SECTION
LOANS AND ADVANCES, INVESTMENTS, INTANGIBLES
AND WORKING CAPITAL
This section highlights the AMP group’s assets and working capital used to support the AMP group’s activities.
2.1
LOANS AND ADVANCES CONTINUED
(b) Expected credit losses
The following table provides the changes to expected credit losses (ECLs) relating to loans and advances during the year. The movements
in provisions during the period are inclusive of adjustments to macro-economic factors (including unemployment, property prices, ASX index
and cash rate) that reflect the impacts in the economy as a result of the COVID-19 pandemic.
Stage 1
collective
$m
Stage 2
collective
$m
Stage 3
$m
2021
Balance at the beginning of the year
Transferred to Stage 1 (12-months ECL – collective provision)
Transferred to Stage 2 (lifetime ECL credit impaired – collective provision)
Transferred to Stage 3 (lifetime ECL credit impaired – specific provision)
(Released)/increased provisions during the period (net of collective
provision released)
Bad debt write-offs
Provision for practice finance loans
Balance at the end of the year
2020
Balance at the beginning of the year
Transferred to Stage 1 (12-months ECL – collective provision)
Transferred to Stage 2 (lifetime ECL credit impaired – collective provision)
Transferred to Stage 3 (lifetime ECL credit impaired – specific provision)
Increased provisions during the year (net of collective provision released)
Bad debt write-offs
Provision for practice finance loans
Balance at the end of the year
31
15
–
(1)
(27)
–
–
18
16
(8)
2
(1)
(1)
–
–
8
Stage 1
collective
$m
Stage 2
collective
$m
11
7
–
(1)
14
–
–
31
9
(2)
1
(1)
9
–
–
16
107
(7)
(2)
2
1
(3)
(8)
90
Stage 3
$m
112
(5)
(1)
2
6
(3)
(4)
Total
$m
154
–
–
–
(27)
(3)
(8)
116
Total
$m
132
–
–
–
29
(3)
(4)
107
154
92
Notes to the financial statements
for the year ended 31 December 2021
Investments in other financial assets and liabilities
Loans and advances
2.1
2.2
2.3
2.6
2.7
Intangibles
2.4 Other assets
2.5 Receivables
Payables
Fair value information
2.1
LOANS AND ADVANCES
(a) Loans and advances
Housing loans 1
Practice finance loans
Total loans and advances 2
Less: Provisions for impairment
Individual provisions
– Housing loans
– Practice finance loans
Collective provisions
Total provisions for impairment
Total net loans and advances
Movement in provisions:
Individual provision
Balance at the beginning of the year
Increase in provision – housing loans
Increase in provision – practice finance loans
Bad debts written off
Provision released
Balance at the end of the year
Collective provision
Balance at the beginning of the year
(Decrease)/increase in provision
Balance at the end of the year
1 Total housing loans include net capitalised costs of $87m (2020: $76m).
2 Total loans and advances $16,600m (2020: $16,317m) is expected to be received more than 12 months after the reporting date.
2021
$m
21,847
316
22,163
(7)
(83)
(26)
(116)
22,047
107
1
–
(3)
(15)
90
47
(21)
26
2020
$m
20,289
391
20,680
(13)
(94)
(47)
(154)
20,526
112
4
1
(3)
(7)
107
20
27
47
93
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94
Notes to the financial statements
for the year ended 31 December 2021
2.1
LOANS AND ADVANCES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Financial assets measured at amortised cost – loans and advances and debt securities
Loans and advances and debt securities are measured at amortised cost when both of the following conditions are met:
–
–
the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Financial assets measured at amortised cost are initially recognised at fair value plus transaction costs that are directly attributable to the
acquisition or issue of the financial asset. These assets are subsequently recognised at amortised cost using the effective interest rate method.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Loans and advances are financial assets with fixed or determinable payments that are not quoted in an active market. They arise when AMP
Bank provides money directly to a customer, including loans and advances to advisers, and with no intention of trading the financial asset.
Loans and advances are initially recognised at fair value including direct and incremental transaction costs relating to loan origination.
They are subsequently measured at amortised cost using the effective interest method, less any provision for impairment.
In 2020, as a resultant impact of COVID-19 AMP Bank introduced loan repayment deferral arrangements to mortgage customers.
The repayment deferrals are considered a continuation of customers’ existing loans and recognised as non-substantial loan modifications
as they continue to accrue interest on deferred repayments. A request for repayment deferrals is not automatically treated as, but may
result in, a significant increase in credit risk, subject to management assessment.
IMPAIRMENT OF FINANCIAL ASSETS
An allowance for expected credit losses (ECLs) is recognised for financial assets not held at fair value through profit or loss. ECLs are
probability weighted estimates of credit losses and are measured as the present value of all cash shortfalls discounted at the effective
interest rate of the financial instrument. The key elements in the measurement of ECLs are as follows:
–
–
–
PD – the probability of default is an estimate of the likelihood of default over a given time horizon.
EAD – the exposure at default is an estimate of the exposure at a future default date, taking into account expected changes in the
exposure after the reporting date.
LGD – loss given default is an estimate of the loss arising in the case where default occurs at a given time. It is based on the difference
between cash flows due to the group in accordance with the contract and the cash flows that the group expects to receive, including
from the realisation of any collateral.
The group estimates these elements using appropriate credit risk models taking into consideration a number of factors including the
internal and external credit ratings of the assets, nature and value of collateral and forward-looking macro-economic scenarios.
Other than ECL on trade receivables, where a simplified approach is taken, the group applies a three-stage approach to measure the ECLs
as follows:
STAGE 1 (12-MONTH ECL)
The group collectively assesses and recognises a provision at an amount equal to 12-month ECL when financial assets are current and/or
have had a good performance history and are of low credit risk. It includes financial assets where the credit risk has improved, and the
financial assets have been reclassified from Stage 2 or even Stage 3 based on improved performance observed over a predefined period
of time. A financial asset is considered to have low credit risk when its credit risk rating is equivalent to the globally understood definition
of ‘investment grade’.
STAGE 2 (LIFETIME ECL – NOT CREDIT IMPAIRED)
The group collectively assesses and recognises a provision at an amount equal to lifetime ECL on financial assets where there has been
a significant increase in credit risk since initial recognition but the financial assets are not credit impaired.
The quantitative criteria used to determine a significant increase in credit risk is a series of relative and absolute thresholds. Financial
assets that were 30 days past due at least once over the last six months are deemed to have significant increase in credit risk since
initial recognition. For loans and advances, other risk factors like hardship, loan to value ratio (LVR) and loan to income ratio (LTI) are
also considered in order to determine a significant increase in credit risk.
STAGE 3 (LIFETIME ECL – CREDIT IMPAIRED)
The group measures loss allowances at an amount equal to lifetime ECL on financial assets that are determined to be credit impaired
based on objective evidence of impairment. Financial assets are classified as impaired when payment is 90 days past due or when there
is no longer reasonable assurance that principal or interest will be collected in their entirety on a timely basis.
2.1
LOANS AND ADVANCES CONTINUED
2.1
LOANS AND ADVANCES CONTINUED
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Impairment
The impairment provisions (individual and collective) are outputs of ECL models with a number of underlying assumptions
regarding the choice of variable inputs and their interdependencies. Elements of the ECL models that are considered
accounting estimates and judgements include:
–
–
–
–
–
the AMP group’s internal grading which assigns PDs to the individual grades;
the AMP group’s estimates of LGDs arising in the event of default;
the AMP group’s criteria for assessing if there has been a significant increase in credit risk;
development of ECL models, including the various formulas, choice of inputs and assumptions; and
determination of associations between macroeconomic scenarios and their probability weightings, to derive the
economic inputs into the ECL models.
Future outcomes and macro-economic conditions which differ from management’s assumptions and estimates could
result in changes to the timing and amount of credit losses to be recognised.
94
Notes to the financial statements
for the year ended 31 December 2021
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
–
–
–
–
Financial assets measured at amortised cost – loans and advances and debt securities
Loans and advances and debt securities are measured at amortised cost when both of the following conditions are met:
the financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Financial assets measured at amortised cost are initially recognised at fair value plus transaction costs that are directly attributable to the
acquisition or issue of the financial asset. These assets are subsequently recognised at amortised cost using the effective interest rate method.
Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.
Loans and advances are financial assets with fixed or determinable payments that are not quoted in an active market. They arise when AMP
Bank provides money directly to a customer, including loans and advances to advisers, and with no intention of trading the financial asset.
Loans and advances are initially recognised at fair value including direct and incremental transaction costs relating to loan origination.
They are subsequently measured at amortised cost using the effective interest method, less any provision for impairment.
In 2020, as a resultant impact of COVID-19 AMP Bank introduced loan repayment deferral arrangements to mortgage customers.
The repayment deferrals are considered a continuation of customers’ existing loans and recognised as non-substantial loan modifications
as they continue to accrue interest on deferred repayments. A request for repayment deferrals is not automatically treated as, but may
result in, a significant increase in credit risk, subject to management assessment.
IMPAIRMENT OF FINANCIAL ASSETS
An allowance for expected credit losses (ECLs) is recognised for financial assets not held at fair value through profit or loss. ECLs are
probability weighted estimates of credit losses and are measured as the present value of all cash shortfalls discounted at the effective
interest rate of the financial instrument. The key elements in the measurement of ECLs are as follows:
PD – the probability of default is an estimate of the likelihood of default over a given time horizon.
EAD – the exposure at default is an estimate of the exposure at a future default date, taking into account expected changes in the
–
LGD – loss given default is an estimate of the loss arising in the case where default occurs at a given time. It is based on the difference
between cash flows due to the group in accordance with the contract and the cash flows that the group expects to receive, including
exposure after the reporting date.
from the realisation of any collateral.
The group estimates these elements using appropriate credit risk models taking into consideration a number of factors including the
internal and external credit ratings of the assets, nature and value of collateral and forward-looking macro-economic scenarios.
Other than ECL on trade receivables, where a simplified approach is taken, the group applies a three-stage approach to measure the ECLs
as follows:
STAGE 1 (12-MONTH ECL)
The group collectively assesses and recognises a provision at an amount equal to 12-month ECL when financial assets are current and/or
have had a good performance history and are of low credit risk. It includes financial assets where the credit risk has improved, and the
financial assets have been reclassified from Stage 2 or even Stage 3 based on improved performance observed over a predefined period
of time. A financial asset is considered to have low credit risk when its credit risk rating is equivalent to the globally understood definition
of ‘investment grade’.
STAGE 2 (LIFETIME ECL – NOT CREDIT IMPAIRED)
The group collectively assesses and recognises a provision at an amount equal to lifetime ECL on financial assets where there has been
a significant increase in credit risk since initial recognition but the financial assets are not credit impaired.
The quantitative criteria used to determine a significant increase in credit risk is a series of relative and absolute thresholds. Financial
assets that were 30 days past due at least once over the last six months are deemed to have significant increase in credit risk since
initial recognition. For loans and advances, other risk factors like hardship, loan to value ratio (LVR) and loan to income ratio (LTI) are
also considered in order to determine a significant increase in credit risk.
STAGE 3 (LIFETIME ECL – CREDIT IMPAIRED)
The group measures loss allowances at an amount equal to lifetime ECL on financial assets that are determined to be credit impaired
based on objective evidence of impairment. Financial assets are classified as impaired when payment is 90 days past due or when there
is no longer reasonable assurance that principal or interest will be collected in their entirety on a timely basis.
95
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2
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2
1
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96
Notes to the financial statements
for the year ended 31 December 2021
2.2
INVESTMENTS IN OTHER FINANCIAL ASSETS AND LIABILITIES
Financial assets measured at fair value through profit or loss
Equity securities and listed managed investment schemes
Debt securities
Unlisted managed investment schemes 1
Derivative financial assets
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Debt securities 2
Equity securities 1
Total financial assets measured at fair value through other comprehensive income
Other financial assets measured at amortised cost
Debt securities
Total other financial assets measured at amortised cost
Total other financial assets
Other financial liabilities
Derivative financial liabilities
Collateral deposits held
Total other financial liabilities
2021
$m
13
751
314
334
1,412
2,184
–
2,184
88
88
2020
$m
28
1,132
149
369
1,678
2,768
59
2,827
582
582
3,684
5,087
185
108
293
376
127
503
1 $70m of Unlisted managed investment schemes (FY 20 $59m of equity securities) are held by AMP Foundation for charitable purposes in accordance with
the AMP Foundation Trust Deed.
2 Debt securities measured at fair value through other comprehensive income are assets of AMP Bank.
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Recognition and derecognition of financial assets and liabilities
Financial assets and financial liabilities are recognised at the date the AMP group becomes a party to the contractual provisions of the
instrument. At initial recognition, financial assets are classified as subsequently measured at fair value through profit or loss, fair value
through other comprehensive income (OCI), and amortised cost. The classification of financial assets at initial recognition depends
on the financial asset’s contractual cash flow characteristics and the group’s business model for managing them.
Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or are transferred.
A transfer occurs when substantially all the risks and rewards of ownership of the financial asset are passed to an unrelated third party.
Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.
Financial assets measured at fair value through profit or loss
Financial assets measured on initial recognition as financial assets measured at fair value through profit or loss are initially recognised
at fair value, determined as the purchase cost of the asset, exclusive of any transaction costs. Transaction costs are expensed as incurred
in profit or loss. Any realised and unrealised gains or losses arising from subsequent measurement at fair value are recognised in profit
or loss in the period in which they arise.
96
Notes to the financial statements
for the year ended 31 December 2021
2.2
INVESTMENTS IN OTHER FINANCIAL ASSETS AND LIABILITIES
2.2
INVESTMENTS IN OTHER FINANCIAL ASSETS AND LIABILITIES CONTINUED
Financial assets measured at fair value through profit or loss
Equity securities and listed managed investment schemes
Debt securities
Unlisted managed investment schemes 1
Derivative financial assets
Total financial assets measured at fair value through profit or loss
Financial assets measured at fair value through other comprehensive income
Debt securities 2
Equity securities 1
Total financial assets measured at fair value through other comprehensive income
Other financial assets measured at amortised cost
Debt securities
Total other financial assets measured at amortised cost
Total other financial assets
Other financial liabilities
Derivative financial liabilities
Collateral deposits held
Total other financial liabilities
2021
$m
13
751
314
334
1,412
2,184
–
2,184
88
88
185
108
293
2020
$m
28
1,132
149
369
1,678
2,768
59
2,827
582
582
376
127
503
1 $70m of Unlisted managed investment schemes (FY 20 $59m of equity securities) are held by AMP Foundation for charitable purposes in accordance with
the AMP Foundation Trust Deed.
2 Debt securities measured at fair value through other comprehensive income are assets of AMP Bank.
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Recognition and derecognition of financial assets and liabilities
Financial assets and financial liabilities are recognised at the date the AMP group becomes a party to the contractual provisions of the
instrument. At initial recognition, financial assets are classified as subsequently measured at fair value through profit or loss, fair value
through other comprehensive income (OCI), and amortised cost. The classification of financial assets at initial recognition depends
on the financial asset’s contractual cash flow characteristics and the group’s business model for managing them.
Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire or are transferred.
A transfer occurs when substantially all the risks and rewards of ownership of the financial asset are passed to an unrelated third party.
Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.
Financial assets measured at fair value through profit or loss
Financial assets measured on initial recognition as financial assets measured at fair value through profit or loss are initially recognised
at fair value, determined as the purchase cost of the asset, exclusive of any transaction costs. Transaction costs are expensed as incurred
in profit or loss. Any realised and unrealised gains or losses arising from subsequent measurement at fair value are recognised in profit
or loss in the period in which they arise.
Financial assets measured at fair value through profit or loss – debt securities
Debt securities can be irrevocably designated, at initial recognition, as measured at fair value through profit or loss where doing so would
eliminate or significantly reduce a measurement or recognition inconsistency or otherwise results in more relevant information. Fair value
on initial recognition is determined as the purchase cost of the asset, exclusive of any transaction costs. Transactions costs are expensed
as incurred in profit or loss. Subsequent measurement is determined with reference to the bid price at the reporting date. Any realised and
unrealised gains or losses arising from subsequent measurement at fair value are recognised in the Consolidated income statement in the
period in which they arise.
Financial assets measured at fair value through OCI – debt securities
Debt securities are measured at fair value through OCI when both of the following conditions are met:
–
–
the instrument is held within a business model, the objective of which is achieved by both collecting contractual cash flows and selling
financial assets; and
the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest
on the principal amount outstanding.
Fair value through OCI instruments are subsequently measured at fair value with gains and losses arising due to changes in fair value
recognised in OCI. Interest income and foreign exchange gains and losses and impairment losses or reversals are recognised in profit
or loss in the same manner as for financial assets measured at amortised cost. The remaining fair value changes are recognised in OCI.
The accumulated gains or losses recognised in OCI are recycled to profit and loss upon derecognition of the assets.
The group classifies debt securities held by AMP Bank under this category.
3,684
5,087
Financial assets measured at fair value through OCI – equity securities
Upon initial recognition, the group can elect to classify irrevocably its equity investments as equity instruments designated at fair value
through OCI when they meet the definition of equity under AASB 132 Financial Instruments: Presentation and are not held for trading.
The classification is determined on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss. Dividends are recognised as other income in the statement
of profit or loss when the right of payment has been established. Equity instruments designated at fair value through OCI are not subject
to impairment assessment.
Financial assets measured at amortised cost – debt securities
Refer to note 2.1 for details.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Financial assets measured at fair value
Where available, quoted market prices for the same or similar instruments are used to determine fair value. Where there
is no market price available for an instrument, a valuation technique is used. Management applies judgement in selecting
valuation techniques and setting valuation assumptions and inputs. Further detail on the determination of fair value
of financial instruments is set out in note 2.7.
97
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2
1
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o
n
98
Notes to the financial statements
for the year ended 31 December 2021
2.3
INTANGIBLES
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
networks
$m
Other
intangibles
$m
2021
Balance at the beginning of the year
157
Additions through separate acquisitions
Additions through internal development
Reductions through disposal
Transferred from inventories
Amortisation expense
Impairment loss
Transferred to assets held for sale
–
–
–
–
–
–
(8)
Balance at the end of the year
149
228
–
51
(40)
–
(93)
(19)
–
127
114
–
–
(24)
–
(90)
–
–
–
119
49
–
(96)
2
(18)
(6)
–
50
11
–
–
–
–
(1)
–
(6)
4
2020
Balance as at 1 January 2020
Impact of changes in accounting
policies 1
Restated balance at the beginning
of the year
Additions through acquisitions
of controlled entities
Additions through separate acquisitions
Additions through internal development
Reductions through disposal
Transferred to inventories
Amortisation expense 2
Impairment loss
Balance at the end of the year
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
networks
$m
Other
intangibles
$m
172
–
172
–
–
–
(15)
–
–
–
157
223
(11)
212
–
–
93
(12)
–
(64)
(1)
228
341
127
–
–
341
127
–
–
–
(177)
–
(50)
–
114
8
83
–
(66)
(3)
(26)
(4)
119
14
–
14
–
–
–
–
–
(3)
–
11
1 Relates to the change of the accounting policy of Software as a Service (SaaS) arrangements.
2 Amortisation expense includes amortization related to the WP and mature businesses of $nil (2020: $17m).
Total
$m
629
49
51
(160)
2
(202)
(25)
(14)
330
Total
$m
877
(11)
866
8
83
93
(270)
(3)
(143)
(5)
629
98
Notes to the financial statements
for the year ended 31 December 2021
2.3
INTANGIBLES
2021
Balance at the beginning of the year
157
Additions through separate acquisitions
Additions through internal development
Reductions through disposal
Transferred from inventories
Amortisation expense
Impairment loss
Transferred to assets held for sale
Balance at the end of the year
149
2020
policies 1
of the year
Balance as at 1 January 2020
Impact of changes in accounting
Restated balance at the beginning
Additions through acquisitions
of controlled entities
Additions through separate acquisitions
Additions through internal development
Reductions through disposal
Transferred to inventories
Amortisation expense 2
Impairment loss
Balance at the end of the year
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
Other
networks
intangibles
–
–
–
–
–
–
(8)
172
–
172
(15)
–
–
–
–
–
–
157
228
–
51
(40)
–
(93)
(19)
–
127
223
(11)
212
–
–
93
(12)
–
(64)
(1)
228
114
–
–
(24)
–
(90)
–
–
–
–
–
–
(177)
–
(50)
–
114
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
Other
networks
intangibles
$m
$m
341
127
–
–
341
127
$m
119
49
–
(96)
2
(18)
(6)
–
50
8
83
–
(66)
(3)
(26)
(4)
119
$m
11
–
–
–
–
(1)
–
(6)
4
14
–
14
–
–
–
–
–
(3)
–
11
Total
$m
629
49
51
(160)
2
(202)
(25)
(14)
330
Total
$m
877
(11)
866
8
83
93
(270)
(3)
(143)
(5)
629
1 Relates to the change of the accounting policy of Software as a Service (SaaS) arrangements.
2 Amortisation expense includes amortization related to the WP and mature businesses of $nil (2020: $17m).
2.3
INTANGIBLES CONTINUED
CHANGE IN ACCOUNTING POLICIES
Software as a Service (SaaS) arrangements
Up until the IFRIC decision published in April 2021, generally accepted accounting practice was to capitalise costs associated with
establishing a SaaS platform, such as configuration and customisation costs, on the basis that the benefits associated with such costs
would be realised over multiple future financial periods. Pursuant to the IFRIC decision, the group’s accounting policy for SaaS Cloud
Platform costs is to expense costs related to configuration and customisation of SaaS Cloud platforms in the period in which such
services are received unless identifiable and distinct intangible assets controlled by the group are created.
The change in policy has been applied retrospectively through opening retained earnings and comparatives have been restated.
The impact on the group’s financial statements to reflect the write-off of previously capitalised costs is shown in the table below.
A positive number indicates an increase in the relevant balance and a negative amount signifies a reduction.
$m
Statement of financial position
1 January 2020
Retained earnings
31 December 2020
Intangible assets
Total assets
Deferred tax liabilities
Total liabilities
Net assets
Retained earnings
Statement of comprehensive income
For the year ended 31 December 2020
Information technology and communication expenses
Amortisation of intangibles
Profit before tax, continuing operations
Income tax credit
Profit after tax, continuing operations
Previously
reported
Impact of
change
Revised
amount
(3,509)
(8)
(3,517)
640
32,164
229
27,882
4,282
(3,671)
239
126
51
19
70
(11)
(11)
(3)
(3)
(8)
(8)
4
(4)
–
–
–
629
32,153
226
27,879
4,274
(3,679)
243
122
51
19
70
99
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P
2
0
2
1
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d
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f
o
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a
t
i
o
n
100
Notes to the financial statements
for the year ended 31 December 2021
2.3
INTANGIBLES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Goodwill
Goodwill acquired in a business combination is recognised at cost and subsequently measured at cost less any accumulated impairment
losses. The cost represents the excess of the cost of a business combination over the fair value of the identifiable assets acquired and
liabilities assumed.
Capitalised costs
Costs are capitalised when the costs relate to the creation of an asset with expected future economic benefits which are capable of reliable
measurement. Capitalised costs are amortised on a straight-line basis over the estimated useful life of the asset, commencing at the time
the asset is first put into use or held ready for use, whichever is the earlier.
Value of in-force business
The value of in-force business represents the fair value of future business arising from existing contractual arrangements of a business
acquired as part of a business combination. The value of in-force business is initially measured at fair value and is subsequently measured
at fair value less amortisation and any accumulated impairment losses.
Distribution networks
Distribution networks such as customer lists, financial planner client servicing rights or other distribution-related rights, either acquired
separately or through a business combination, are initially measured at fair value and subsequently measured at cost less amortisation
and any accumulated impairment losses.
Amortisation
Intangible assets with finite useful lives are amortised on a straight-line basis over the useful life of the intangible asset. The estimated
useful lives are generally:
Item
Capitalised costs
Distribution networks
Useful life
Up to 10 years
2 to 15 years
The useful life of each intangible asset is reviewed at the end of the period and, where necessary, adjusted to reflect current assessments.
Impairment testing
Goodwill and intangible assets that have indefinite useful lives are tested at least annually for impairment. Other intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units or CGUs). An impairment loss is recognised when the CGU’s carrying amount exceeds the CGU’s recoverable
amount. When applicable, an impairment loss is first allocated to goodwill and any remainder is then allocated to the other assets
on a pro-rata basis.
100
Notes to the financial statements
for the year ended 31 December 2021
2.3
INTANGIBLES CONTINUED
2.3
INTANGIBLES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Composition of goodwill
Goodwill acquired in a business combination is recognised at cost and subsequently measured at cost less any accumulated impairment
losses. The cost represents the excess of the cost of a business combination over the fair value of the identifiable assets acquired and
Costs are capitalised when the costs relate to the creation of an asset with expected future economic benefits which are capable of reliable
measurement. Capitalised costs are amortised on a straight-line basis over the estimated useful life of the asset, commencing at the time
the asset is first put into use or held ready for use, whichever is the earlier.
Value of in-force business
The value of in-force business represents the fair value of future business arising from existing contractual arrangements of a business
acquired as part of a business combination. The value of in-force business is initially measured at fair value and is subsequently measured
at fair value less amortisation and any accumulated impairment losses.
Distribution networks such as customer lists, financial planner client servicing rights or other distribution-related rights, either acquired
separately or through a business combination, are initially measured at fair value and subsequently measured at cost less amortisation
and any accumulated impairment losses.
Intangible assets with finite useful lives are amortised on a straight-line basis over the useful life of the intangible asset. The estimated
Goodwill
liabilities assumed.
Capitalised costs
Distribution networks
Amortisation
useful lives are generally:
Item
Capitalised costs
Distribution networks
Impairment testing
The useful life of each intangible asset is reviewed at the end of the period and, where necessary, adjusted to reflect current assessments.
Goodwill and intangible assets that have indefinite useful lives are tested at least annually for impairment. Other intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows
(cash-generating units or CGUs). An impairment loss is recognised when the CGU’s carrying amount exceeds the CGU’s recoverable
amount. When applicable, an impairment loss is first allocated to goodwill and any remainder is then allocated to the other assets
on a pro-rata basis.
Useful life
Up to 10 years
2 to 15 years
The goodwill of $149m (2020: $157m) arose from historical acquisitions where the AMP group was the acquirer. Goodwill attributable
to the relevant CGUs is presented in the table below.
New Zealand wealth management (NZ WM)
AMP Capital
2021
$m
70
79
149
2020
$m
70
87
157
The annual impairment assessment for both NZ WM and AMP Capital resulted in significant headroom in both the CGUs. There was no
reasonably possible change to a key assumption used in the impairment assessment that would result in an impairment at 31 December 2021.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Management applies judgement in selecting valuation techniques and setting valuation assumptions to determine the:
–
–
–
acquisition date fair value and estimated useful life of acquired intangible assets;
allocation of goodwill to CGUs and determining the recoverable amount of the CGUs; and
assessment of whether there are any impairment indicators for acquired intangibles and internally generated
intangibles, where required, in determining the recoverable amount.
101
A
M
P
2
0
2
1
A
n
n
u
a
l
r
e
p
o
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t
O
v
e
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v
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i
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s
s
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i
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F
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d
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f
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m
a
t
i
o
n
102
Notes to the financial statements
for the year ended 31 December 2021
2.4 OTHER ASSETS
Planner registers held for sale
Prepayments
Property, plant and equipment
Total other assets
Current
Non-current
2.5
RECEIVABLES
Investment related receivables
Client register receivables
Collateral receivables
Trade debtors and other receivables
Total receivables 1
Current
Non-current
2021
$m
2020
$m
11
66
73
150
71
79
2021
$m
13
41
47
471
572
571
1
28
59
90
177
73
104
2020
$m
3
62
203
434
702
651
51
1 Receivables are presented net of ECL of $34m (2020: $11m).
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Receivables
Trade debtors, client register, collateral and other receivables are measured at amortised cost, less an allowance for ECLs. Investment
related receivables are financial assets measured at fair value through profit or loss.
The group applies a simplified approach in calculating ECLs for receivables. Therefore, the group does not track changes in credit risk,
but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The group has established a provision matrix that
is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
102
Notes to the financial statements
for the year ended 31 December 2021
2.4 OTHER ASSETS
2.6
PAYABLES
Accrued expenses
Trade creditors and other payables
Total payables
Current
Non-current
2021
$m
177
172
349
349
–
2020
$m
158
133
291
288
3
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Payables
Payables are measured at the nominal amount payable. Given the short-term nature of most payables, the nominal amount payable
approximates fair value.
Planner registers held for sale
Prepayments
Property, plant and equipment
Total other assets
Current
Non-current
2.5
RECEIVABLES
Investment related receivables
Client register receivables
Collateral receivables
Trade debtors and other receivables
Total receivables 1
Current
Non-current
2021
$m
2020
$m
11
66
73
150
71
79
2021
$m
13
41
47
471
572
571
1
28
59
90
177
73
104
2020
$m
3
62
203
434
702
651
51
1 Receivables are presented net of ECL of $34m (2020: $11m).
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Receivables
Trade debtors, client register, collateral and other receivables are measured at amortised cost, less an allowance for ECLs. Investment
related receivables are financial assets measured at fair value through profit or loss.
The group applies a simplified approach in calculating ECLs for receivables. Therefore, the group does not track changes in credit risk,
but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The group has established a provision matrix that
is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment.
103
A
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2
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2
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f
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m
a
t
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n
104
Notes to the financial statements
for the year ended 31 December 2021
2.7
FAIR VALUE INFORMATION
The following table shows the carrying amount and estimated fair values of financial instruments including their levels in the fair
value hierarchy.
2021
Financial assets measured at fair value
Equity securities and listed managed investment schemes
Debt securities
Unlisted managed investment schemes
Derivative financial assets
Carrying
amount
$m
Level 1
$m
Level 2
$m
Level 3
$m
Total fair
value
$m
13
–
2,935
2,184
314
334
27
–
–
751
236
334
13
–
51
–
64
13
2,935
314
334
3,596
Total financial assets measured at fair value
3,596
2,211
1,321
Financial assets not measured at fair value
Loans and advances
Debt securities
Total financial assets not measured at fair value
Financial liabilities measured at fair value
Derivative financial liabilities
Collateral deposits held
Guarantee liabilities
Total financial liabilities measured at fair value
Financial liabilities not measured at fair value
AMP Bank
– Deposits
– Other
Corporate borrowings
Total financial liabilities not measured at fair value
22,047
88
22,135
185
108
85
378
17,791
6,631
1,695
26,117
–
–
–
–
–
–
–
–
–
–
–
–
22,227
22,227
88
88
–
88
22,227
22,315
185
108
–
293
17,808
6,663
1,716
26,187
–
–
85
85
–
–
–
–
185
108
85
378
17,808
6,663
1,716
26,187
104
Notes to the financial statements
for the year ended 31 December 2021
The following table shows the carrying amount and estimated fair values of financial instruments including their levels in the fair
value hierarchy.
2021
Financial assets measured at fair value
Equity securities and listed managed investment schemes
Debt securities
Unlisted managed investment schemes
Derivative financial assets
2,935
2,184
13
314
334
–
27
–
–
751
236
334
Total financial assets measured at fair value
3,596
2,211
1,321
Carrying
amount
Level 1
Level 2
Level 3
$m
$m
$m
$m
Total fair
value
$m
–
22,227
22,227
88
88
–
88
22,227
22,315
13
–
51
–
64
–
–
85
85
–
–
–
–
13
2,935
314
334
3,596
185
108
85
378
17,808
6,663
1,716
26,187
22,047
88
22,135
185
108
85
378
17,791
6,631
1,695
26,117
–
–
–
–
–
–
–
–
–
–
–
185
108
–
293
17,808
6,663
1,716
26,187
Financial assets not measured at fair value
Loans and advances
Debt securities
Total financial assets not measured at fair value
Financial liabilities measured at fair value
Derivative financial liabilities
Collateral deposits held
Guarantee liabilities
Total financial liabilities measured at fair value
Financial liabilities not measured at fair value
AMP Bank
– Deposits
– Other
Corporate borrowings
Total financial liabilities not measured at fair value
2.7
FAIR VALUE INFORMATION
2.7
FAIR VALUE INFORMATION CONTINUED
2020
Financial assets measured at fair value
Carrying
amount
$m
Level 1
$m
Level 2
$m
Level 3
$m
Total fair
value
$m
Equity securities and listed managed investment schemes
87
80
–
Debt securities
Unlisted managed investment schemes
Derivative financial assets
Total financial assets measured at fair value
Financial assets not measured at fair value
Loans and advances
Debt securities
Total financial assets not measured at fair value
Financial liabilities measured at fair value
Derivative financial liabilities
Collateral deposits held
Guarantee liabilities
Total financial liabilities measured at fair value
Financial liabilities not measured at fair value
AMP Bank
– Deposits
– Other
Corporate borrowings
Total financial liabilities not measured at fair value
3,900
2,413
1,487
149
369
–
–
108
369
4,505
2,493
1,964
7
–
41
–
48
87
3,900
149
369
4,505
20,526
582
21,108
376
127
151
654
16,129
6,443
2,344
24,916
–
–
–
–
–
–
–
–
–
–
–
–
20,649
20,649
582
582
–
582
20,649
21,231
376
127
–
503
–
–
151
151
376
127
151
654
16,129
6,503
2,344
24,976
–
–
–
–
16,129
6,503
2,344
24,976
105
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P
2
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2
1
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f
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m
a
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o
n
106
Notes to the financial statements
for the year ended 31 December 2021
2.7
FAIR VALUE INFORMATION CONTINUED
AMP’s methodology and assumptions used to estimate the fair value of financial instruments are described below:
Equity securities and listed
managed investment
schemes
The fair value of listed equity securities traded in an active market and listed managed investment
schemes reflects the quoted bid price at the reporting date. In the case of equity securities where
there is no active market, fair value is established using valuation techniques including the use
of recent arm’s length transactions, references to other instruments that are substantially the same,
discounted cash flow analysis and option pricing models.
Debt securities
The fair value of listed debt securities reflects the bid price at the reporting date. Listed debt securities
that are not frequently traded are valued by discounting estimated recoverable amounts.
Loans
The fair value of unlisted debt securities is estimated using interest rate yields obtainable on
comparable listed investments. For debt securities with a maturity of less than 12 months, par value
is considered a reasonable approximation of fair value.
The estimated fair value of loans represents the discounted amount of estimated future cash
flows expected to be received, based on the maturity profile of the loans. As the loans are unlisted,
the discount rates applied are based on the yield curve appropriate to the remaining term of the
loans. The loans may, from time to time, be measured at an amount in excess of fair value due
to fluctuations on fixed rate loans. In these situations, as the fluctuations in fair value would not
represent a permanent diminution and the carrying amounts of the loans are recorded at recoverable
amounts after assessing impairment, it would not be appropriate to restate their carrying amount.
Unlisted managed
investment schemes
The fair value of investments in unlisted managed investment schemes is determined on the basis
of published redemption prices of those managed investment schemes at the reporting date.
Derivative financial assets
and liabilities
Corporate borrowings
The fair value of financial instruments traded in active markets (such as publicly traded derivatives)
is based on quoted market prices (current bid price or current offer price) at the reporting date.
The fair value of financial instruments not traded in an active market (eg over-the-counter derivatives)
is determined using valuation techniques. Valuation techniques include net present value techniques,
option pricing models, discounted cash flow methods and comparison to quoted market prices or
dealer quotes for similar instruments. The models use a number of inputs, including the credit quality
of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies,
currency basis spreads between the respective currencies, interest rate curves and forward rate curves
of the underlying instruments. Some derivatives contracts are significantly cash collateralised, thereby
minimising both counterparty risk and the group’s own non-performance risk.
Borrowings comprise commercial paper, drawn liquidity facilities, various floating-rate and medium-
term notes and subordinated debt. The estimated fair value of borrowings is determined with
reference to quoted market prices. For borrowings where quoted market prices are not available,
a discounted cash flow model is used, based on a current yield curve appropriate for the remaining
term to maturity. For short-term borrowings, the par value is considered a reasonable approximation
of the fair value.
AMP Bank deposits and
other borrowings
The estimated fair value of deposits and other borrowings represents the discounted amount
of estimated future cash flows expected to be paid based on the residual maturity of these liabilities.
The discount rate applied is based on a current yield curve appropriate for similar types of deposits
and borrowings at the reporting date.
Guarantee
liabilities
The fair value of the guarantee liabilities is determined as the net present value of future cash flows
discounted using market rates. The future cash flows are determined using risk neutral stochastic
projections based on assumptions such as mortality rate, lapse rate and asset class allocation/correlation.
The future cash flows comprise expected guarantee claims and hedging expenses net of expected
fee revenue.
106
Notes to the financial statements
for the year ended 31 December 2021
AMP’s methodology and assumptions used to estimate the fair value of financial instruments are described below:
Equity securities and listed
The fair value of listed equity securities traded in an active market and listed managed investment
managed investment
schemes reflects the quoted bid price at the reporting date. In the case of equity securities where
schemes
there is no active market, fair value is established using valuation techniques including the use
of recent arm’s length transactions, references to other instruments that are substantially the same,
discounted cash flow analysis and option pricing models.
Debt securities
The fair value of listed debt securities reflects the bid price at the reporting date. Listed debt securities
that are not frequently traded are valued by discounting estimated recoverable amounts.
The fair value of unlisted debt securities is estimated using interest rate yields obtainable on
comparable listed investments. For debt securities with a maturity of less than 12 months, par value
is considered a reasonable approximation of fair value.
flows expected to be received, based on the maturity profile of the loans. As the loans are unlisted,
the discount rates applied are based on the yield curve appropriate to the remaining term of the
loans. The loans may, from time to time, be measured at an amount in excess of fair value due
to fluctuations on fixed rate loans. In these situations, as the fluctuations in fair value would not
represent a permanent diminution and the carrying amounts of the loans are recorded at recoverable
amounts after assessing impairment, it would not be appropriate to restate their carrying amount.
Unlisted managed
investment schemes
The fair value of investments in unlisted managed investment schemes is determined on the basis
of published redemption prices of those managed investment schemes at the reporting date.
Derivative financial assets
The fair value of financial instruments traded in active markets (such as publicly traded derivatives)
and liabilities
is based on quoted market prices (current bid price or current offer price) at the reporting date.
The fair value of financial instruments not traded in an active market (eg over-the-counter derivatives)
is determined using valuation techniques. Valuation techniques include net present value techniques,
option pricing models, discounted cash flow methods and comparison to quoted market prices or
dealer quotes for similar instruments. The models use a number of inputs, including the credit quality
of counterparties, foreign exchange spot and forward rates, yield curves of the respective currencies,
currency basis spreads between the respective currencies, interest rate curves and forward rate curves
of the underlying instruments. Some derivatives contracts are significantly cash collateralised, thereby
minimising both counterparty risk and the group’s own non-performance risk.
term notes and subordinated debt. The estimated fair value of borrowings is determined with
reference to quoted market prices. For borrowings where quoted market prices are not available,
a discounted cash flow model is used, based on a current yield curve appropriate for the remaining
term to maturity. For short-term borrowings, the par value is considered a reasonable approximation
of the fair value.
AMP Bank deposits and
The estimated fair value of deposits and other borrowings represents the discounted amount
other borrowings
of estimated future cash flows expected to be paid based on the residual maturity of these liabilities.
The discount rate applied is based on a current yield curve appropriate for similar types of deposits
and borrowings at the reporting date.
Guarantee
liabilities
The fair value of the guarantee liabilities is determined as the net present value of future cash flows
discounted using market rates. The future cash flows are determined using risk neutral stochastic
projections based on assumptions such as mortality rate, lapse rate and asset class allocation/correlation.
The future cash flows comprise expected guarantee claims and hedging expenses net of expected
fee revenue.
2.7
FAIR VALUE INFORMATION CONTINUED
2.7
FAIR VALUE INFORMATION CONTINUED
Loans
The estimated fair value of loans represents the discounted amount of estimated future cash
Level 3 fair values
The financial assets and liabilities measured at fair value are categorised using the fair value hierarchy which reflects the significance
of inputs into the determination of fair value as follows:
–
–
Level 1: the fair value is valued by reference to quoted prices and active markets for identical assets or liabilities;
Level 2: the fair value is estimated using inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly (as prices) or indirectly (derived from prices); and
–
Level 3: the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
For assets and liabilities that are recognised in the financial statements at fair value on a recurring basis, the group determines whether
transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant
to the fair value measurement as a whole) at the end of each reporting period.
There have been no significant transfers between Level 1 and Level 2 during the 2021 financial year. Transfers to and from Level 3 are
shown in the Reconciliation of Level 3 values table later in this note.
For financial assets measured at fair value on a recurring basis and categorised within Level 3 of the fair value hierarchy, the valuation
processes applied in valuing such assets was governed by valuation policies adopted by the AMP group including the AMP Capital valuation
policy. These policies outline the asset valuation methodologies and processes applied to measure non-exchange traded assets which
have no regular market price, including investment property, infrastructure, private equity, alternative assets, and illiquid debt securities.
All significant Level 3 assets were referred to the appropriate valuation committee who met at least every six months, or more frequently
if required.
The following table shows the valuation techniques used in measuring Level 3 fair values of financial assets measured at fair value
on a recurring basis, as well as the significant unobservable inputs used.
Type
Valuation technique
Significant unobservable inputs
Equity securities and listed managed
investment schemes
Discounted cash flow approach utilising
cost of equity as the discount rate
Discount rate
Terminal value growth rate
Cash flow forecasts
Unlisted managed investment schemes
Published redemption prices
Judgement made in determining unit prices
Guarantee liabilities
Discounted cash flow approach
Discount rate
Hedging costs
Corporate borrowings
Borrowings comprise commercial paper, drawn liquidity facilities, various floating-rate and medium-
Sensitivity
The following table illustrates the impacts to profit before tax and equity resulting from reasonably possible changes in key assumptions.
Financial assets 1
Equity securities and listed managed investment schemes
Unlisted managed investment schemes
Financial liabilities 2
Guarantee liabilities
2021
(+)
$m
1
5
(2)
(-)
$m
(1)
(5)
(3)
2020
(+)
$m
1
4
1
(-)
$m
(1)
(4)
(3)
1 Reasonably possible changes in price movements of 10% (2020: 10%) have been applied in determining the impact on profit after tax and equity.
2 Reasonably possible changes in equity market movements of 20% (2020: 20%) and bond yield movements of 50bps (2020: 50bps) have been applied
in determining the impact on profit after tax and equity.
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108
Notes to the financial statements
for the year ended 31 December 2021
2.7
FAIR VALUE INFORMATION CONTINUED
Reconciliation of Level 3 values
The following table shows movements in the fair values of financial instruments measured at fair value on a recurring basis and categorised
as Level 3 in the fair value hierarchy:
Balance
at the
beginning
of the year
$m
FX gains
or losses
$m
Total
gains/
losses
$m
Purchases/
deposits
$m
Sales/
withdrawals
$m
Net
transfers
in/(out)
$m
Balance at
the end of
the year
$m
Total
gains and
losses on
assets and
liabilities
held at
reporting
date
$m
2021
Assets classified as Level 3
Equity securities and listed
managed investment schemes
Unlisted managed investment
schemes
Liabilities classified as Level 3
Guarantee liabilities
2020
Assets classified as Level 3
Equity securities and listed
managed investment schemes
Debt securities
Unlisted managed investment
schemes
Investment properties
7
41
151
2,515
127
2,671
161
Liabilities classified as Level 3
Guarantee liabilities
121
Investment contract liabilities
70,066
–
1
–
–
–
–
–
–
(7)
(1)
3
(33)
(11)
–
2
3
8
7
–
63
–
158
–
(1)
–
(33)
(2,567)
(127)
(2,831)
(164)
35
4
(9)
(6,201)
2,008
(65,866)
–
–
–
7
–
41
–
–
–
13
51
–
3
85
(33)
7
–
41
–
151
–
–
–
4
–
35
–
108
Notes to the financial statements
for the year ended 31 December 2021
2.7
FAIR VALUE INFORMATION CONTINUED
Reconciliation of Level 3 values
as Level 3 in the fair value hierarchy:
The following table shows movements in the fair values of financial instruments measured at fair value on a recurring basis and categorised
3
SECTION
CAPITAL STRUCTURE AND FINANCIAL RISK MANAGEMENT
This section provides information relating to:
–
the AMP group’s capital management and equity and debt structure; and
–
exposure to financial risks – how the risks affect financial position and performance and how the risks are
managed, including the use of derivative financial instruments
The capital structure of the AMP group consists of equity and debt. AMP determines the appropriate capital
structure in order to finance the current and future activities of the AMP group and satisfy the requirements
of the regulator. The directors review the group’s capital structure and dividend policy regularly and do so in the
context of the group’s ability to satisfy minimum and target capital requirements.
3.1 Contributed equity
3.2
3.3
Interest-bearing liabilities
Financial risk management
3.4 Derivatives and hedge accounting
3.5 Capital management
85
(33)
3.1
CONTRIBUTED EQUITY
Issued capital
3,266,105,853 (2020: 3,436,599,241) ordinary shares fully paid
10,159
10,355
2021
$m
2020
$m
Treasury shares 1
2,126,387 (2020: 2,126,387) treasury shares
Total contributed equity
(6)
(6)
3,263,979,466 (2020: 3,434,472,854 ) ordinary shares fully paid
10,153
10,349
Issued capital
Balance at the beginning of the year
170,493,388 (2020: nil) shares purchased on-market
Deconsolidation of discontinued operations
Balance at the end of the year
Treasury shares
Balance at the beginning of the year
Decrease due to deconsolidation of discontinued operations
Balance at the end of the year
1 Held by AMP Foundation.
10,355
10,402
(196)
–
–
(47)
10,159
10,355
(6)
–
(6)
(103)
97
(6)
Holders of ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the company, to participate
in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Fully paid ordinary
shares carry the right to one vote per share. Ordinary shares have no par value.
Balance
at the
beginning
of the year
FX gains
or losses
$m
$m
Total
gains/
losses
$m
Purchases/
Sales/
deposits
withdrawals
Net
transfers
in/(out)
Balance at
the end of
the year
$m
$m
$m
$m
2021
Assets classified as Level 3
Equity securities and listed
managed investment schemes
Unlisted managed investment
schemes
Liabilities classified as Level 3
Guarantee liabilities
2020
Assets classified as Level 3
Equity securities and listed
managed investment schemes
Debt securities
Unlisted managed investment
schemes
Investment properties
Liabilities classified as Level 3
7
41
151
2,515
127
2,671
161
(1)
3
(33)
(11)
–
2
3
8
7
–
63
–
158
–
(1)
–
(33)
(2,567)
(127)
(2,831)
(164)
–
1
–
–
–
–
–
–
(7)
Guarantee liabilities
121
35
4
(9)
Investment contract liabilities
70,066
(6,201)
2,008
(65,866)
Total
gains and
losses on
assets and
liabilities
held at
reporting
date
$m
–
3
–
–
4
–
35
–
–
–
–
7
–
41
–
–
–
13
51
7
–
41
–
151
–
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110
Notes to the financial statements
for the year ended 31 December 2021
3.1
CONTRIBUTED EQUITY CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Issued capital
Issued capital in respect of ordinary shares is recognised as the fair value of consideration received by the AMP Limited entity. Incremental
costs directly attributable to the issue of certain new shares are recognised in equity as a deduction, net of tax, from the proceeds.
Treasury shares
The AMP group is not permitted to recognise Treasury shares in the Consolidated statement of financial position. These shares, plus any
corresponding Consolidated income statement fair value movement on the shares and dividend income, are eliminated on consolidation.
AMP Foundation also holds AMP Limited shares. These shares, plus any corresponding Consolidated income statement fair value movement
on the shares and any dividend income, are eliminated on consolidation.
3.2
INTEREST-BEARING LIABILITIES
(a) Interest-bearing liabilities
Interest-bearing liabilities
AMP Bank
– Deposits 1
– Other
Corporate entity borrowings 2
– 6.875% GBP Subordinated Guaranteed Bonds
(maturity 2022)
– AMP Notes 3 (first call 2023, maturity 2028) 3
– AMP Subordinated Notes 3
– AMP Capital Notes
– AMP Capital Notes 2 4
– USD Medium Term Notes
– CHF Medium Term Notes 5
2021
Non-
current
$m
Current
$m
Total
$m
Current
$m
2020
Non-
current
$m
Total
$m
17,656
135
17,791
15,990
139
16,129
3,200
3,431
6,631
3,976
2,467
6,443
60
–
250
–
–
–
238
–
250
–
–
272
–
625
60
250
250
–
272
–
863
–
–
–
266
–
398
–
63
250
250
–
271
–
846
63
250
250
266
271
398
846
Total interest-bearing liabilities
21,404
4,713
26,117
20,630
4,286
24,916
1 Deposits comprise at call customer deposits and customer term deposits at variable interest rates with the AMP Bank.
2 The current/non-current classification of corporate entity borrowings is based on the maturity of the underlying debt instrument and related principal
repayment obligations. The carrying value of corporate entity borrowings includes interest payable of $5m (2020: $10m) which is expected to be settled
within the next 12 months.
3 AMP Note 3 and AMP Subordinated Notes are floating rate subordinated unsecured notes. These were issued 15 November 2018 and 1 September 2017
respectively, and mature 15 November 2028 and 1 December 2027 respectively. Subject to APRA approval, AMP has the right but not the obligation,
to redeem all or some of the Notes 15 November 2023 and 1 December 2022 respectively, or, subject to certain conditions, at a later date. In certain
circumstances, AMP may be required to convert some or all of the Notes into AMP ordinary shares.
4 AMP Capital Notes 2 (ASX:AMPPB) were issued 23 December 2019. Subject to APRA approval, AMP has the right, but not the obligation, to redeem all
or some of the notes 16 December 2025, or, subject to certain conditions, at a later date. They are perpetual notes with no maturity date. In certain
circumstances, AMP may be required to convert some or all of the Notes into AMP ordinary shares.
5 CHF 110m Senior Unsecured Fixed Rate Bond was issued 19 June 2018 and matures 19 December 2022. This Bond was subsequently increased by CHF
50m on 19 September 2018. CHF 140m Senior Unsecured Fixed Rate Bond was issued 18 April 2019 and matures 18 July 2023. This Bond was subsequently
increased by CHF 100m on 3 December 2019. CHF 175m Senior Unsecured Fixed Rate Bond was issued 3 March 2020 and matures 3 June 2024.
110
Notes to the financial statements
for the year ended 31 December 2021
Issued capital
Treasury shares
3.2
INTEREST-BEARING LIABILITIES
(a) Interest-bearing liabilities
Interest-bearing liabilities
AMP Bank
– Deposits 1
– Other
Corporate entity borrowings 2
– 6.875% GBP Subordinated Guaranteed Bonds
(maturity 2022)
– AMP Notes 3 (first call 2023, maturity 2028) 3
– AMP Subordinated Notes 3
– AMP Capital Notes
– AMP Capital Notes 2 4
– USD Medium Term Notes
– CHF Medium Term Notes 5
2021
Non-
current
$m
2020
Non-
current
$m
Current
$m
Total
$m
Current
$m
Total
$m
17,656
135
17,791
15,990
139
16,129
3,200
3,431
6,631
3,976
2,467
6,443
60
–
250
–
–
–
238
–
250
–
–
272
–
625
60
250
250
–
272
–
863
–
–
–
266
–
398
–
63
250
250
–
271
–
846
63
250
250
266
271
398
846
1 Deposits comprise at call customer deposits and customer term deposits at variable interest rates with the AMP Bank.
2 The current/non-current classification of corporate entity borrowings is based on the maturity of the underlying debt instrument and related principal
repayment obligations. The carrying value of corporate entity borrowings includes interest payable of $5m (2020: $10m) which is expected to be settled
within the next 12 months.
3 AMP Note 3 and AMP Subordinated Notes are floating rate subordinated unsecured notes. These were issued 15 November 2018 and 1 September 2017
respectively, and mature 15 November 2028 and 1 December 2027 respectively. Subject to APRA approval, AMP has the right but not the obligation,
to redeem all or some of the Notes 15 November 2023 and 1 December 2022 respectively, or, subject to certain conditions, at a later date. In certain
circumstances, AMP may be required to convert some or all of the Notes into AMP ordinary shares.
4 AMP Capital Notes 2 (ASX:AMPPB) were issued 23 December 2019. Subject to APRA approval, AMP has the right, but not the obligation, to redeem all
or some of the notes 16 December 2025, or, subject to certain conditions, at a later date. They are perpetual notes with no maturity date. In certain
circumstances, AMP may be required to convert some or all of the Notes into AMP ordinary shares.
5 CHF 110m Senior Unsecured Fixed Rate Bond was issued 19 June 2018 and matures 19 December 2022. This Bond was subsequently increased by CHF
50m on 19 September 2018. CHF 140m Senior Unsecured Fixed Rate Bond was issued 18 April 2019 and matures 18 July 2023. This Bond was subsequently
increased by CHF 100m on 3 December 2019. CHF 175m Senior Unsecured Fixed Rate Bond was issued 3 March 2020 and matures 3 June 2024.
3.1
CONTRIBUTED EQUITY CONTINUED
3.2
INTEREST-BEARING LIABILITIES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
(b) Financing arrangements
Loan facilities and note programs
Issued capital in respect of ordinary shares is recognised as the fair value of consideration received by the AMP Limited entity. Incremental
costs directly attributable to the issue of certain new shares are recognised in equity as a deduction, net of tax, from the proceeds.
Loan facilities and note programs comprise facilities arranged through bond and note issues, as well as financing facilities provided through
bank loans under normal commercial terms and conditions.
The AMP group is not permitted to recognise Treasury shares in the Consolidated statement of financial position. These shares, plus any
corresponding Consolidated income statement fair value movement on the shares and dividend income, are eliminated on consolidation.
AMP Foundation also holds AMP Limited shares. These shares, plus any corresponding Consolidated income statement fair value movement
on the shares and any dividend income, are eliminated on consolidation.
Available loan facilities 1
Note program capacity
Used
Unused facilities and note programs at the end of the year
1
Available loan facilities include bilateral facilities of $450m which mature on 30 April 2022.
(c) Changes in liabilities arising from operating and financing activities
1 January
Cash flows
Deconsolidation of WP and mature businesses
Other
31 December
2021
$m
1,950
15,677
(1,824)
15,803
2021
$m
24,916
1,185
–
16
2020
$m
1,450
14,087
(3,034)
12,503
2020
$m
22,852
327
1,795
(58)
26,117
24,916
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Interest-bearing liabilities are initially recognised at fair value, net of transaction costs. They are subsequently measured at amortised cost
using the effective interest rate method.
It is AMP’s policy to hedge currency and interest rate risk arising on issued bonds and subordinated debt. When fair value hedge accounting
is applied, the carrying amounts of borrowings and subordinated debt are adjusted for changes in fair value related to the hedged risk for
the period that the hedge relationship remains effective. Any changes in fair value for the period are recognised in the Consolidated income
statement. In cash flow hedge relationships the borrowings are not revalued.
Finance costs include:
(i) borrowing costs:
–
–
interest on bank overdrafts, borrowings and subordinated debt;
amortisation of discounts or premiums related to borrowings;
Total interest-bearing liabilities
21,404
4,713
26,117
20,630
4,286
24,916
(ii) exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest
costs; and
(iii) changes in the fair value of derivative hedges together with any change in the fair value of the hedged assets or liabilities that
are designated and qualify as fair value hedges, foreign exchange gains and losses and other financing-related amounts. Changes
in the fair value of derivatives in effective cash flow hedges are recognised in the cash flow hedge reserve. The accounting policy for
derivatives is set out in note 3.4.
Finance costs are recognised as expenses when incurred.
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112
Notes to the financial statements
for the year ended 31 December 2021
3.3
FINANCIAL RISK MANAGEMENT
The AMP Limited Board has overall responsibility for the risk management framework including the approval of AMP’s strategic plan,
risk management strategy and risk appetite. Specifically, financial risk arises from the holding of financial instruments and financial risk
management (FRM) is an integral part of the AMP group’s enterprise risk management framework.
This note discloses financial risk in accordance with the categories in AASB 7 Financial Instruments: Disclosures:
– market risk;
–
–
liquidity and refinancing risk; and
credit risk.
These risks are managed in accordance with the board-approved risk appetite statement and the individual policies for each risk category and
business approved by the Chief Financial Officer (CFO) under delegation from the AMP Group Asset and Liability Committee (Group ALCO).
(a) Market risk
Market risk is the risk that the fair value of assets and liabilities, or future cash flows of a financial instrument, will fluctuate due
to movements in the financial markets including interest rates, foreign exchange rates, equity prices, property prices, credit spreads,
commodity prices, market volatilities and other financial market variables.
The following table provides information on significant market risk exposures for the AMP group, which could lead to an impact on the
AMP group’s profit after tax and equity, and the management of those exposures.
Market risk
Interest rate risk
The risk of an impact on the AMP group’s
profit after tax and equity arising from
fluctuations in the fair value or future
cash flows of financial instruments due
to changes in market interest rates.
Interest rate movements could result
from changes in the absolute levels of
interest rates, the shape of the yield curve,
the margin between yield curves and the
volatility of interest rates.
Currency risk
The risk of an impact on the AMP group’s
profit after tax and equity arising from
fluctuations of the fair value of a financial
asset, liability or commitment due
to changes in foreign exchange rates.
Exposures
The AMP group’s long-term borrowings
and subordinated debt.
AMP Bank interest rate risk from
mismatches in the repricing terms
of assets and liabilities (term risk) and
variable rate short-term repricing bases
(basis risk).
Foreign currency denominated assets
and liabilities.
Foreign equity accounted associates and
capital invested in overseas operations.
Foreign exchange rate movements
on specific cash flow transactions.
Equity price risk
The risk of an impact on the AMP group’s
profit after tax and equity arising from
fluctuations in the fair value or future
cash flows of a financial instrument due
to changes in equity prices.
Exposure for shareholders includes listed
and unlisted shares, guarantee liabilities
and participation in equity unit trusts.
Management of exposures and use
of derivatives
Interest rate risk is managed by entering
into interest rate swaps, which have the
effect of converting borrowings from
floating rate to fixed rate.
AMP Bank uses natural offsets, interest
rate swaps and basis swaps to hedge the
mismatches within exposure limits. Group
Treasury manages the exposure in AMP
Bank by maintaining a net interest rate
risk position within the limits delegated
and approved by the AMP Bank Board.
The AMP group uses swaps to hedge the
interest rate risk and foreign currency
risk on foreign currency denominated
borrowings but does not hedge the
capital invested in overseas operations.
The AMP group hedges material foreign
currency risk originated by receipts and
payments once the value and timing
of the expected cash flow is known.
In addition, the AMP group will at times
pre-hedge any future (but not expected)
foreign currency receipts and payments,
subject to market conditions.
Group Treasury may, with Group ALCO
approval, use equity exposures or
equity futures or options to hedge other
enterprise-wide equity exposures.
3.3
FINANCIAL RISK MANAGEMENT
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(a) Market risk continued
Sensitivity analysis
The table below includes sensitivity analysis showing how the profit after tax and equity would have been impacted by changes in market
risk variables. The analysis:
–
–
–
shows the direct impact of a reasonably possible change in market rates and is not intended to illustrate a remote, worst case stress
test scenario;
assumes that all underlying exposures and related hedges are included and the change in variable occurs at the reporting date; and
does not include the impact of any mitigating management actions over the period to the subsequent reporting date.
The categories of risks faced and methods used for deriving sensitivity information did not change from previous periods.
Sensitivity analysis
Interest rate risk
Change in variables
Impact of a 100 basis point (bp)
change in Australian and international
interest rates.
- 100bp
+100bp
2021
2020
Impact on
profit after
tax Increase
(decrease)
$m
Impact on
equity 1
Increase
(decrease)
$m
Impact on
profit after
tax Increase
(decrease)
$m
Impact on
equity 1
Increase
(decrease)
$m
2.7
(4.0)
10.4
(10.9)
(0.4)
(0.5)
2.9
(3.7)
Currency risk
Impact of a 10% movement of exchange
rates against the Australian dollar
on currency sensitive monetary assets
and liabilities.
Equity price risk
Impact of a 10% movement in Australian
and international equities. Any potential
impact on fees from the AMP group’s
investment-linked business in is
not included.
10% depreciation of AUD
0.1
99.1
0.2
86.7
10% appreciation of AUD
(0.5)
(81.5)
(0.5)
(71.3)
10% increase in:
Australian equities
International equities
10% decrease in:
Australian equities
International equities
0.1
–
(0.7)
(0.9)
0.1
–
(0.7)
(0.9)
0.6
0.2
(0.4)
(0.9)
0.6
0.2
(0.4)
(0.9)
1 Included in the impact on equity is both the impact on profit after tax as well as the impact of amounts that would be taken directly to equity in respect
of the portion of changes in the fair value of derivatives that qualify as cash flow hedges for hedge accounting.
112
Notes to the financial statements
for the year ended 31 December 2021
The AMP Limited Board has overall responsibility for the risk management framework including the approval of AMP’s strategic plan,
risk management strategy and risk appetite. Specifically, financial risk arises from the holding of financial instruments and financial risk
management (FRM) is an integral part of the AMP group’s enterprise risk management framework.
This note discloses financial risk in accordance with the categories in AASB 7 Financial Instruments: Disclosures:
– market risk;
–
–
credit risk.
liquidity and refinancing risk; and
(a) Market risk
These risks are managed in accordance with the board-approved risk appetite statement and the individual policies for each risk category and
business approved by the Chief Financial Officer (CFO) under delegation from the AMP Group Asset and Liability Committee (Group ALCO).
Market risk is the risk that the fair value of assets and liabilities, or future cash flows of a financial instrument, will fluctuate due
to movements in the financial markets including interest rates, foreign exchange rates, equity prices, property prices, credit spreads,
commodity prices, market volatilities and other financial market variables.
The following table provides information on significant market risk exposures for the AMP group, which could lead to an impact on the
AMP group’s profit after tax and equity, and the management of those exposures.
Market risk
Interest rate risk
The risk of an impact on the AMP group’s
profit after tax and equity arising from
fluctuations in the fair value or future
cash flows of financial instruments due
to changes in market interest rates.
Interest rate movements could result
from changes in the absolute levels of
interest rates, the shape of the yield curve,
the margin between yield curves and the
volatility of interest rates.
Exposures
and subordinated debt.
The AMP group’s long-term borrowings
Interest rate risk is managed by entering
Management of exposures and use
of derivatives
into interest rate swaps, which have the
effect of converting borrowings from
floating rate to fixed rate.
AMP Bank interest rate risk from
mismatches in the repricing terms
AMP Bank uses natural offsets, interest
rate swaps and basis swaps to hedge the
of assets and liabilities (term risk) and
mismatches within exposure limits. Group
variable rate short-term repricing bases
Treasury manages the exposure in AMP
(basis risk).
Bank by maintaining a net interest rate
risk position within the limits delegated
and approved by the AMP Bank Board.
Currency risk
Foreign currency denominated assets
The AMP group uses swaps to hedge the
The risk of an impact on the AMP group’s
and liabilities.
profit after tax and equity arising from
Foreign equity accounted associates and
fluctuations of the fair value of a financial
capital invested in overseas operations.
asset, liability or commitment due
to changes in foreign exchange rates.
Foreign exchange rate movements
on specific cash flow transactions.
interest rate risk and foreign currency
risk on foreign currency denominated
borrowings but does not hedge the
capital invested in overseas operations.
The AMP group hedges material foreign
currency risk originated by receipts and
payments once the value and timing
of the expected cash flow is known.
In addition, the AMP group will at times
pre-hedge any future (but not expected)
foreign currency receipts and payments,
subject to market conditions.
Equity price risk
The risk of an impact on the AMP group’s
profit after tax and equity arising from
fluctuations in the fair value or future
cash flows of a financial instrument due
to changes in equity prices.
Exposure for shareholders includes listed
Group Treasury may, with Group ALCO
and unlisted shares, guarantee liabilities
approval, use equity exposures or
and participation in equity unit trusts.
equity futures or options to hedge other
enterprise-wide equity exposures.
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114
Notes to the financial statements
for the year ended 31 December 2021
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(b) Liquidity and refinancing risk
Exposures
Management of exposures
The AMP group corporate debt portfolio,
AMP Bank and AMP Capital through
various investment funds, entities or
mandates that AMP manages or controls
within the AMP group.
Group Treasury maintains a defined
surplus of cash to mitigate refinancing
risk, satisfy regulatory requirements
and protect against liquidity shocks
in accordance with the liquidity risk
management policy approved by the
Group ALCO.
Risk
Liquidity risk
The risk that the AMP group is not able
to meet its obligations as they fall due
because of an inability to liquidate
assets or obtain adequate funding
when required.
Refinancing risk
The risk that the AMP group is not able to
refinance the full quantum of its ongoing
debt requirements on appropriate terms
and pricing.
Maturity analysis
Below is a summary of the maturity profiles of AMP’s undiscounted financial liabilities and off-balance sheet items at the reporting date,
based on contractual undiscounted repayment obligations. Repayments that are subject to notice are treated as if notice were to be
given immediately.
2021
Non-derivative financial liabilities
Payables
Borrowings 1
Lease liabilities
Subordinated debt
Guarantee liabilities
Derivative financial instruments
Up to 1
year
$m
349
20,079
33
89
–
1 to 5
years
$m
–
5,129
86
96
–
Over 5
years
$m
Not
specified
$m
–
312
41
807
–
Interest rate and cross-currency swaps
125
102
29
Off-balance sheet items
Credit-related commitments – AMP Bank 2
Lease commitments
Investment commitments
3,702
37
–
–
214
–
–
483
–
Total undiscounted financial liabilities and off-balance
sheet items
24,414
5,627
1,672
Total
$m
349
25,520
160
992
85
256
3,702
734
452
32,250
–
–
–
–
85
–
–
–
452
537
1 Borrowings include AMP Bank deposits.
2 Credit-related loan commitments are off-balance sheet as they relate to unexercised commitments to lend to customers of AMP Bank.
114
Notes to the financial statements
for the year ended 31 December 2021
Exposures
Management of exposures
The AMP group corporate debt portfolio,
Group Treasury maintains a defined
AMP Bank and AMP Capital through
surplus of cash to mitigate refinancing
various investment funds, entities or
risk, satisfy regulatory requirements
mandates that AMP manages or controls
and protect against liquidity shocks
within the AMP group.
in accordance with the liquidity risk
management policy approved by the
Group ALCO.
(b) Liquidity and refinancing risk
Risk
Liquidity risk
The risk that the AMP group is not able
to meet its obligations as they fall due
because of an inability to liquidate
assets or obtain adequate funding
when required.
Refinancing risk
The risk that the AMP group is not able to
refinance the full quantum of its ongoing
debt requirements on appropriate terms
and pricing.
Maturity analysis
given immediately.
2021
Non-derivative financial liabilities
Payables
Borrowings 1
Lease liabilities
Subordinated debt
Guarantee liabilities
Derivative financial instruments
Below is a summary of the maturity profiles of AMP’s undiscounted financial liabilities and off-balance sheet items at the reporting date,
based on contractual undiscounted repayment obligations. Repayments that are subject to notice are treated as if notice were to be
Up to 1
year
$m
349
20,079
33
89
–
1 to 5
years
$m
–
5,129
86
96
–
Over 5
years
$m
Not
specified
$m
–
312
41
807
–
483
–
–
Total
$m
349
25,520
160
992
85
256
3,702
734
452
32,250
–
–
–
–
85
–
–
–
452
537
Interest rate and cross-currency swaps
125
102
29
Off-balance sheet items
Credit-related commitments – AMP Bank 2
Lease commitments
Investment commitments
3,702
37
–
214
–
–
Total undiscounted financial liabilities and off-balance
sheet items
24,414
5,627
1,672
1 Borrowings include AMP Bank deposits.
2 Credit-related loan commitments are off-balance sheet as they relate to unexercised commitments to lend to customers of AMP Bank.
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(b) Liquidity and refinancing risk continued
2020
Non-derivative financial liabilities
Payables
Borrowings 1
Lease liabilities
Subordinated debt
Guarantee liabilities
Derivative financial instruments
Interest rate and cross-currency swaps
Off-balance sheet items
Credit-related commitments – AMP Bank 2
Lease commitments
Buy-back arrangement commitments
Investment commitments
Up to 1
year
$m
288
19,854
58
42
–
50
3,398
–
89
–
Over 5
years
$m
Not
specified
$m
1 to 5
years
$m
3
3,360
127
217
–
–
796
58
1,095
–
84
21
–
208
–
–
–
527
–
–
Total
$m
291
24,010
243
1,354
151
155
3,398
735
89
217
–
–
–
–
151
–
–
–
–
217
Total undiscounted financial liabilities and off-balance
sheet items
23,779
3,999
2,497
368
30,643
1 Borrowings include AMP Bank deposits.
2 Credit-related loan commitments are off-balance sheet as they relate to unexercised commitments to lend to customers of AMP Bank.
(c) Credit risk
Credit risk management is decentralised in business units within AMP, with the exception of credit risk directly and indirectly impacting
shareholder capital, which is measured and managed on an aggregate basis by Group Treasury at the AMP group level and reported
to Group ALCO.
Exposures
Wholesale credit risk, including portfolio
construction, in the fixed income
portfolios managed by AMP Capital.
Credit risk arising in AMP Bank as part
of lending activities and management
of liquidity.
Risk
Credit risk
Credit default risk is the risk of financial
or reputational loss due to a counterparty
failing to meet their contractual
commitments in full and on time.
Concentration of credit risk arises when
a number of financial instruments
or contracts are entered into with the
same counterparty or where a number
of counterparties are engaged in similar
business activities that would cause their
ability to meet contractual obligations
to be similarly affected by changes
in economic or other conditions.
Management of exposures and use
of derivatives
Managed by individual investment teams.
There is also a dedicated credit research
team and a specific credit investment
committee. The investment risk and
performance team provides reports to the
AMP Capital Investment Committee.
Managed as prescribed by AMP Bank’s
Risk Appetite Statement and reported
to the AMP Bank Credit Risk Committee
(lending activities) and the AMP Bank
ALCO (management of liquidity).
Specific detail relating to credit risk
management of the AMP Bank loan
portfolio is outlined below.
The AMP Concentration and Credit Default Risk Policy sets out the assessment and determination of what constitutes credit concentration
risk. The policy sets exposure limits based on each counterparty’s credit rating (unless special considerations are defined). Additional
limits are set for the distribution of the total portfolio by credit rating bands. Compliance with this policy is monitored and exposures
and breaches are reported to portfolio managers, senior management and the AMP Board Risk Committee through periodic financial risk
management reports.
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116
Notes to the financial statements
for the year ended 31 December 2021
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(c) Credit risk continued
Group Treasury also might enter into credit default swaps to hedge the concentration risk exposure against a specific issuer, or aggregated
at the parent entity, when material exposures are over the authorised limit.
The exposures on interest-bearing securities and cash equivalents which impact AMP’s capital position are managed by Group Treasury
within limits set by the AMP Concentration and Credit Default Risk Policy.
Impairment assessment
DEFINITION OF DEFAULT
AMP Bank considers a financial asset defaulted and hence Stage 3 impaired when payment is 90 days past due or when there is no longer
reasonable assurance that principal or interest will be collected in their entirety on a timely basis.
AMP BANK’S INTERNAL RISK GRADING AND PD ESTIMATION PROCESS
AMP Bank’s credit risk management department runs expected credit loss models for the residential mortgage book as well as the practice
finance loans.
–
–
The Bank’s residential mortgage book is a portfolio with a low number of defaults. In recent times, the Bank’s residential mortgage
book has grown significantly, and a larger history of default data has been captured.
This has enabled the Bank to successfully develop its internal behavioural scorecards which have been used to replace the benchmark
PDs in an endeavour to better risk rank order the portfolio by credit risk worthiness.
Internal risk grades for the residential mortgage book are as follows:
Internal credit rating grade
Internal credit rating grade description
Performing
Not in arrears in the past six months
Past due but not impaired
Accounts in arrears but have not been past 90 days in the last six months
Impaired
90 days past due over the last six months
–
For practice finance loans a Probability of Default risk grade model is applied that includes weighted risk factors such as Interest
Coverage Ratio, revenue growth, licence compliance rating, experience in business and arrears levels. Practices on watch-list are also
downgraded. Credit judgement may be applied to arrive at the final risk grade.
Internal risk grades for practice finance book are as follows:
Internal risk grade
Internal risk Grade description
Broadly corresponds with Standard & Poor ratings of
A to H
I
Sub-investment Grade
Impaired
BB+ to CCC
D
The Bank’s interbank and financial institutions exposures as well as exposures to interest-bearing securities are based on external credit
rating of the counterparties as follows:
Internal risk grade description
Broadly corresponds with Standard & Poor ratings of
Senior Investment Grade
Investment Grade
Sub-investment Grade
AAA to A-
BBB+ to BBB-
BB+ up to but not including defaulted or impaired
EXPOSURE AT DEFAULT (EAD)
EAD is modelled by applying assumptions in relation to the amortisation of the loans based on scheduled principal and interest repayments
except for Stage 3 loans.
LOSS GIVEN DEFAULT (LGD)
For the residential mortgage portfolio the key driver for the LGD calculation is the value of the underlying property, as in a foreclosure
scenario the proceeds from the sale of a property are secured by the Bank to repay the loan. The value of the underlying residential property
is captured via the LVR which factors both changes in loan balance and estimated value of the collateral using market data and indices.
Both floor and haircuts are applied to provide for model risk.
For practice finance loans, the LGD is calculated via assumptions to the reduction in valuations of practices (being a multiple of their recurring
cash flows) in the event of default, such as client run-off or deterioration in valuation due to compliance issues. In addition, haircuts are applied
to cater for the volatility observed in the register values in the event of default but also general volatility in valuations over time.
116
Notes to the financial statements
for the year ended 31 December 2021
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(c) Credit risk continued
(c) Credit risk continued
Group Treasury also might enter into credit default swaps to hedge the concentration risk exposure against a specific issuer, or aggregated
at the parent entity, when material exposures are over the authorised limit.
GROUPING OF FINANCIAL ASSETS FOR EXPECTED CREDIT LOSSES (ECL) CALCULATION
Asset classes where the bank calculates ECL on an individual basis include all Stage 3 assets, and interbank and debt securities at FVOCI.
The exposures on interest-bearing securities and cash equivalents which impact AMP’s capital position are managed by Group Treasury
within limits set by the AMP Concentration and Credit Default Risk Policy.
For all other asset classes ECL is calculated on a collective basis taking into account risk factors for each loan and arriving at the ECL
estimate and then aggregating the number for the relevant portfolio.
Impairment assessment
DEFINITION OF DEFAULT
AMP Bank considers a financial asset defaulted and hence Stage 3 impaired when payment is 90 days past due or when there is no longer
reasonable assurance that principal or interest will be collected in their entirety on a timely basis.
AMP BANK’S INTERNAL RISK GRADING AND PD ESTIMATION PROCESS
AMP Bank’s credit risk management department runs expected credit loss models for the residential mortgage book as well as the practice
–
The Bank’s residential mortgage book is a portfolio with a low number of defaults. In recent times, the Bank’s residential mortgage
book has grown significantly, and a larger history of default data has been captured.
–
This has enabled the Bank to successfully develop its internal behavioural scorecards which have been used to replace the benchmark
PDs in an endeavour to better risk rank order the portfolio by credit risk worthiness.
Internal risk grades for the residential mortgage book are as follows:
Internal credit rating grade
Internal credit rating grade description
Past due but not impaired
Accounts in arrears but have not been past 90 days in the last six months
Not in arrears in the past six months
90 days past due over the last six months
finance loans.
Performing
Impaired
–
For practice finance loans a Probability of Default risk grade model is applied that includes weighted risk factors such as Interest
Coverage Ratio, revenue growth, licence compliance rating, experience in business and arrears levels. Practices on watch-list are also
downgraded. Credit judgement may be applied to arrive at the final risk grade.
Internal risk grades for practice finance book are as follows:
Internal risk grade
Internal risk Grade description
Broadly corresponds with Standard & Poor ratings of
A to H
I
Sub-investment Grade
Impaired
BB+ to CCC
D
The Bank’s interbank and financial institutions exposures as well as exposures to interest-bearing securities are based on external credit
rating of the counterparties as follows:
Internal risk grade description
Broadly corresponds with Standard & Poor ratings of
AAA to A-
BBB+ to BBB-
BB+ up to but not including defaulted or impaired
EAD is modelled by applying assumptions in relation to the amortisation of the loans based on scheduled principal and interest repayments
Senior Investment Grade
Investment Grade
Sub-investment Grade
EXPOSURE AT DEFAULT (EAD)
except for Stage 3 loans.
LOSS GIVEN DEFAULT (LGD)
For the residential mortgage portfolio the key driver for the LGD calculation is the value of the underlying property, as in a foreclosure
scenario the proceeds from the sale of a property are secured by the Bank to repay the loan. The value of the underlying residential property
is captured via the LVR which factors both changes in loan balance and estimated value of the collateral using market data and indices.
Both floor and haircuts are applied to provide for model risk.
For practice finance loans, the LGD is calculated via assumptions to the reduction in valuations of practices (being a multiple of their recurring
cash flows) in the event of default, such as client run-off or deterioration in valuation due to compliance issues. In addition, haircuts are applied
to cater for the volatility observed in the register values in the event of default but also general volatility in valuations over time.
FORWARD-LOOKING INFORMATION
The Bank’s ECL model incorporates a number of forward-looking macroeconomic factors (MEF) that are reviewed on a quarterly basis and
approved by the Credit Risk Committee (CRC). The MEF include unemployment, property prices, ASX Index and Cash Rate.
At least three different scenarios with fixed weightings are used in the model. The weightings are reviewed on an annual basis.
The ECL is calculated as the probability weighted average of the provision calculated for each economic scenario.
MANAGEMENT OVERLAY
Management overlay is required to mitigate model risk and any systemic risk that is not recognised by the model.
The management overlays are reviewed on an annual basis or more frequently if required and presented to the CRC and Board Audit
Committee (BAC) for sign off.
WRITE-OFFS
Financial assets are written off either partially or in their entirety only when there is no reasonable expectation of recovery. Recovery actions
can cease if they are determined as being no longer cost effective or in some situations where the customers have filed for bankruptcy.
CREDIT RISK OF THE LOAN PORTFOLIO IN AMP BANK (THE BANK)
The Bank is predominantly a lender for residential properties – both owner occupied and for investment. In every case the Bank completes
a credit assessment, which includes cost of living allowance and requires valuation of the proposed security property.
The Bank’s CRC and Board Risk Committee (BRC) oversee trends in lending exposures and compliance with the Risk Appetite Statement.
The Bank secures its housing loans with mortgages over relevant properties and as a result manages credit risk on its loans with conservative
lending policies and particular focus on the LVR. The LVR is calculated by dividing the total loan amount outstanding by the lower of the Bank’s
approved valuation amount or the purchase price. Loans with LVR greater than 80% are fully mortgage insured. Mortgage insurance is provided
by Genworth Mortgage Insurance Australia Ltd and QBE Lenders Mortgage Insurance Ltd who are both regulated by APRA. The Bank has strong
relationships with both insurers and experienced minimal levels of historic claim rejections and reductions.
The average LVR at origination of AMP Bank’s loan portfolio for existing and new business is set out in the following table:
LVR %
0 – 50
51 – 60
61 – 70
71 – 80
81 – 90
91 – 95
> 95
Existing
business
2021
%
New
business
2021
%
Existing
business
2020
%
New
business
2020
%
17
12
19
36
13
2
1
8
8
15
51
12
6
–
17
11
18
36
14
3
1
6
7
13
50
16
8
–
RENEGOTIATED LOANS
Where possible, the Bank seeks to restructure loans for borrowers seeking hardship relief rather than take possession of collateral. This may
involve capitalising interest repayments for a period and increasing the repayment arrangement for the remaining term of the loan. Once
the terms has been renegotiated, the loan is no longer considered past due or an impaired asset unless it was greater than 90 days in arrears
in the previous six months or a specific provision has been raised for the loan. The Bank assisted customers by renegotiating $239m
(2020: $2,391m) of loans during the year, of which $150m (2020: $2,263m) relates to hardship granted due to COVID-19, that otherwise
would be past due or impaired. Hardship assistance granted due to COVID-19 includes assistance in the form of repayment deferrals.
As at 31 December 2021, $128m of the total $150m hardship loans have exited the repayment deferral program and are considered to be
performing loans. The impact to the Consolidated income statement of loan modifications is not considered to be material.
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118
Notes to the financial statements
for the year ended 31 December 2021
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(c) Credit risk continued
COLLATERAL AND MASTER NETTING OR SIMILAR AGREEMENTS
The AMP group obtains collateral and utilises netting agreements to mitigate credit risk exposures from certain counterparties.
(i) Derivative financial assets and liabilities
The credit risk of derivatives is managed in the context of the AMP group’s overall credit risk policies and includes the use of Credit Support
Annexes to derivative agreements which facilitate the bilateral posting of collateral as well as the clearing of derivative positions on the
London Clearing House.
Certain derivative assets and liabilities are subject to legally enforceable master netting arrangements, such as an International Swaps
and Derivatives Association (ISDA) master netting agreement. In certain circumstances, for example when a credit event such as a default
occurs, all outstanding transactions under an ISDA agreement are terminated, the termination value is assessed and only a single net
amount is payable in settlement of all transactions.
An ISDA agreement does not automatically meet the criteria for offsetting in the Consolidated statement of financial position. This is because
the AMP group, in most cases, does not have any current legally enforceable right to offset recognised amounts.
If these netting arrangements were applied to the derivative portfolio, the derivative assets of $334m would be reduced by $143m to the
net amount of $191m and derivative liabilities of $185m would be reduced by $143m to the net amount of $42m (2020: derivative assets
of $369m would be reduced by $160m to the net amount of $209m and derivative liabilities of $376m would be reduced by $160m to the
net amount of $216m).
(ii) Other collateral
The AMP group has collateral arrangements in place with some counterparties in addition to collateral deposits held with respect to repurchase
agreements. The amount and type of collateral required by AMP Bank on housing loans depends on an assessment of the credit risk of the
counterparty. Guidelines are in place covering the acceptability and valuation of each type of collateral.
AMP Bank holds collateral against its loans and advances primarily in the form of mortgage interests over property, other registered
securities over assets and guarantees.
Management monitors the market value of collateral and will request additional collateral in accordance with the underlying agreement.
In the event of customer default, AMP Bank can enforce any security held as collateral against the outstanding claim. Any loan security
is usually held as mortgagee in possession while AMP Bank seeks to realise its value through the sale of property. Therefore, AMP Bank
does not hold any real estate or other assets acquired through the repossession of collateral.
Collateral generally consists of 11am loans and deposits and is exchanged between the counterparties to reduce the exposure from the
net fair value of derivative assets and liabilities between the counterparties. As at 31 December 2021 there was $108m (2020: $127m)
of collateral deposits (due to other counterparties) and $47m (2020: $203m) of collateral loans (due from other counterparties) relating
to derivative assets and liabilities.
118
Notes to the financial statements
for the year ended 31 December 2021
(c) Credit risk continued
COLLATERAL AND MASTER NETTING OR SIMILAR AGREEMENTS
The AMP group obtains collateral and utilises netting agreements to mitigate credit risk exposures from certain counterparties.
(i) Derivative financial assets and liabilities
The credit risk of derivatives is managed in the context of the AMP group’s overall credit risk policies and includes the use of Credit Support
Annexes to derivative agreements which facilitate the bilateral posting of collateral as well as the clearing of derivative positions on the
London Clearing House.
Certain derivative assets and liabilities are subject to legally enforceable master netting arrangements, such as an International Swaps
and Derivatives Association (ISDA) master netting agreement. In certain circumstances, for example when a credit event such as a default
occurs, all outstanding transactions under an ISDA agreement are terminated, the termination value is assessed and only a single net
amount is payable in settlement of all transactions.
An ISDA agreement does not automatically meet the criteria for offsetting in the Consolidated statement of financial position. This is because
the AMP group, in most cases, does not have any current legally enforceable right to offset recognised amounts.
If these netting arrangements were applied to the derivative portfolio, the derivative assets of $334m would be reduced by $143m to the
net amount of $191m and derivative liabilities of $185m would be reduced by $143m to the net amount of $42m (2020: derivative assets
of $369m would be reduced by $160m to the net amount of $209m and derivative liabilities of $376m would be reduced by $160m to the
net amount of $216m).
(ii) Other collateral
The AMP group has collateral arrangements in place with some counterparties in addition to collateral deposits held with respect to repurchase
agreements. The amount and type of collateral required by AMP Bank on housing loans depends on an assessment of the credit risk of the
counterparty. Guidelines are in place covering the acceptability and valuation of each type of collateral.
AMP Bank holds collateral against its loans and advances primarily in the form of mortgage interests over property, other registered
securities over assets and guarantees.
Management monitors the market value of collateral and will request additional collateral in accordance with the underlying agreement.
In the event of customer default, AMP Bank can enforce any security held as collateral against the outstanding claim. Any loan security
is usually held as mortgagee in possession while AMP Bank seeks to realise its value through the sale of property. Therefore, AMP Bank
does not hold any real estate or other assets acquired through the repossession of collateral.
Collateral generally consists of 11am loans and deposits and is exchanged between the counterparties to reduce the exposure from the
net fair value of derivative assets and liabilities between the counterparties. As at 31 December 2021 there was $108m (2020: $127m)
of collateral deposits (due to other counterparties) and $47m (2020: $203m) of collateral loans (due from other counterparties) relating
to derivative assets and liabilities.
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
3.4 DERIVATIVES AND HEDGE ACCOUNTING
The group is exposed to certain risks relating to its ongoing business operations. To mitigate the risks the group uses derivative financial
instruments such as cross-currency swaps and interest rate swaps. When the group designates certain derivatives to be part of a hedging
relationship, and they meet the criteria for hedge accounting, the hedges are classified as:
–
–
–
cash flow hedges;
fair value hedges; or
net investment hedges.
Derivative financial instruments are held for risk and asset management purposes only and not for the purpose of speculation. Not all
derivatives held are designated as hedging instruments. The group’s risk management strategy and how it is applied to manage risk
is explained further in note 3.3.
(a) Hedging Instruments
The following table sets out the notional amount of derivative instruments designated in a hedge relationship by relationship type as well
as the related carrying amounts.
2021
Hedge type
Cash flow
Fair value
Fair value
Hedging instrument
Interest rate swaps
Cross-currency swaps
Interest rate swaps
Fair value and cash flow
Cross-currency interest rate swaps
Net investment
Total
2020
Hedge type
Cash flow
Fair value
Fair value
Foreign currency forward contract
Hedging instrument
Interest rate swaps
Cross-currency swaps
Interest rate swaps
Fair value and cash flow
Cross-currency interest rate swaps
Net investment
Total
Foreign currency forward contract
Notional
amount
$m
Fair value
Assets
$m
Fair value
Liabilities
$m
13,123
78
62
828
–
80
–
–
36
–
14,091
116
55
16
1
–
–
72
Notional
amount
$m
Fair value
Assets
$m
Fair value
Liabilities
$m
9,568
83
63
1,254
390
11,358
32
–
6
–
23
61
122
22
–
20
1
165
119
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120
Notes to the financial statements
for the year ended 31 December 2021
3.4 DERIVATIVES AND HEDGE ACCOUNTING CONTINUED
(b) Hedged items
The following table sets out the carrying amount of hedged items in fair value hedge relationships, and the accumulated amount of fair
value hedge adjustments in these carrying amounts. The group does not hedge its entire exposure to a class of financial instruments,
therefore the carrying amounts below do not equal the total carrying amounts disclosed in other notes.
2021
6.875% GBP Subordinated Guaranteed Bonds
(maturity 2022)
Medium Term Notes
2020
6.875% GBP Subordinated Guaranteed Bonds
(maturity 2022)
Medium Term Notes
Carrying amount of hedged
items
Accumulated amount of fair
value adjustments on the
hedged items
Assets
$m
Liabilities
$m
Assets
$m
Liabilities
$m
–
–
60
787
17
–
–
34
Carrying amount of hedged
items
Accumulated amount of fair
value adjustments on the
hedged items
Assets
$m
Liabilities
$m
Assets
$m
Liabilities
$m
–
–
63
1,172
16
16
–
–
2020
$m
(62)
56
(6)
Fair value hedge relationships resulted in the following changes in the values used to recognise hedge ineffectiveness for the year:
Gain/(loss) on hedging instrument
(Loss)/gain on hedged items attributable to the hedged risk
Gain/(loss) after ineffectiveness
2021
$m
53
(48)
5
Derivative instruments accounted for as cash flow hedges
The group is exposed to variability in future interest cash flows on non-trading assets and liabilities which bear interest at fixed and variable
rates. The group uses interest rate swaps to manage interest rate risks and many of the swaps are cash flow hedges for accounting purposes.
Methods used to test hedge effectiveness and establish the hedge ratio include regression analysis and for some portfolio hedge
relationships, a comparison to ensure the expected interest cash flows from the portfolio exceed those of the hedging instruments.
The main potential source of hedge ineffectiveness from cash flow hedges is mismatches in the terms of hedged items and hedging
instruments, for example the frequency and timing of when interest rates are reset.
During the year the AMP group recognised $nil (2020: $nil) due to ineffectiveness on derivative instruments designated as cash flow hedges.
Derivative instruments accounted for as fair value hedges
Fair value hedges are used to protect against changes in the fair value of financial assets and financial liabilities due to movements in exchange
rates and interest rates.
Hedge effectiveness is assessed by comparing the overall changes in the fair value of the hedging instrument against the changes in the
fair value of the hedged items attributable to the hedged risks. The main potential source of ineffectiveness on fair value hedges is currency
basis spread, which is included in the valuation of the hedging instrument, but excluded from the value of the hedged item.
Hedges of net investments in foreign operations
The group hedges its exposure to changes in exchange rates on the value of its foreign currency denominated seed pool investments.
Hedge effectiveness is assessed based on the overall changes in the fair value of the forward contract, primarily using the cumulative dollar
offset method.
The AMP group recognised $nil (2020: $nil) due to the ineffective portion of hedges relating to investments in seed pool foreign operations.
120
Notes to the financial statements
for the year ended 31 December 2021
The following table sets out the carrying amount of hedged items in fair value hedge relationships, and the accumulated amount of fair
value hedge adjustments in these carrying amounts. The group does not hedge its entire exposure to a class of financial instruments,
therefore the carrying amounts below do not equal the total carrying amounts disclosed in other notes.
6.875% GBP Subordinated Guaranteed Bonds
2021
(maturity 2022)
Medium Term Notes
6.875% GBP Subordinated Guaranteed Bonds
2020
(maturity 2022)
Medium Term Notes
Gain/(loss) on hedging instrument
(Loss)/gain on hedged items attributable to the hedged risk
Gain/(loss) after ineffectiveness
Carrying amount of hedged
value adjustments on the
items
hedged items
Accumulated amount of fair
Assets
$m
Liabilities
$m
Assets
$m
Liabilities
60
787
17
–
Carrying amount of hedged
value adjustments on the
items
hedged items
Accumulated amount of fair
Assets
$m
Liabilities
$m
Assets
$m
Liabilities
$m
–
–
–
–
63
1,172
16
16
2021
$m
53
(48)
5
$m
–
34
–
–
2020
$m
(62)
56
(6)
Fair value hedge relationships resulted in the following changes in the values used to recognise hedge ineffectiveness for the year:
Derivative instruments accounted for as cash flow hedges
The group is exposed to variability in future interest cash flows on non-trading assets and liabilities which bear interest at fixed and variable
rates. The group uses interest rate swaps to manage interest rate risks and many of the swaps are cash flow hedges for accounting purposes.
Methods used to test hedge effectiveness and establish the hedge ratio include regression analysis and for some portfolio hedge
relationships, a comparison to ensure the expected interest cash flows from the portfolio exceed those of the hedging instruments.
The main potential source of hedge ineffectiveness from cash flow hedges is mismatches in the terms of hedged items and hedging
instruments, for example the frequency and timing of when interest rates are reset.
During the year the AMP group recognised $nil (2020: $nil) due to ineffectiveness on derivative instruments designated as cash flow hedges.
Derivative instruments accounted for as fair value hedges
Fair value hedges are used to protect against changes in the fair value of financial assets and financial liabilities due to movements in exchange
rates and interest rates.
Hedge effectiveness is assessed by comparing the overall changes in the fair value of the hedging instrument against the changes in the
fair value of the hedged items attributable to the hedged risks. The main potential source of ineffectiveness on fair value hedges is currency
basis spread, which is included in the valuation of the hedging instrument, but excluded from the value of the hedged item.
Hedges of net investments in foreign operations
The group hedges its exposure to changes in exchange rates on the value of its foreign currency denominated seed pool investments.
Hedge effectiveness is assessed based on the overall changes in the fair value of the forward contract, primarily using the cumulative dollar
offset method.
The AMP group recognised $nil (2020: $nil) due to the ineffective portion of hedges relating to investments in seed pool foreign operations.
3.4 DERIVATIVES AND HEDGE ACCOUNTING CONTINUED
3.4 DERIVATIVES AND HEDGE ACCOUNTING CONTINUED
(b) Hedged items
The following table sets out the maturity profile of derivative instruments in a hedge relationship.
2021
Interest rate swaps
Cross-currency swaps
Cross-currency interest rate swaps
2020
Interest rate swaps
Cross-currency swaps
Cross-currency interest rate swaps
Foreign currency forward contract
0 to 3
months
$m
1,096
–
–
0 to 3
months
$m
1,569
–
–
390
3 to 12
months
$m
4,010
–
218
3 to 12
months
$m
3,814
–
426
–
1 to 5
years
$m
7,473
78
610
1 to 5
years
$m
3,686
83
828
–
Over 5
years
$m
605
–
–
Over 5
years
$m
562
–
–
–
Total
$m
13,184
78
828
Total
$m
9,631
83
1,254
390
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Derivative financial instruments
Derivative financial instruments are initially recognised at fair value exclusive of any transaction costs on the date a derivative contract
is entered into and are subsequently remeasured to their fair value at each reporting date. All derivatives are recognised as assets when
their fair value is positive and as liabilities when their fair value is negative. Any gains or losses arising from the change in fair value
of derivatives, except those that qualify as effective cash flow hedges, are immediately recognised in the Consolidated income statement.
Hedge accounting
AMP continues to apply the hedge accounting requirements under AASB 139 Financial instruments: Recognition and Measurement.
Cash flow hedges
The effective portion of changes in the fair value of cash flow hedges is recognised (including related tax impacts) in Other comprehensive
income. The ineffective portion is recognised immediately in the Consolidated income statement. The balance of the cash flow hedge reserve
in relation to each particular hedge is transferred to the Consolidated income statement in the period when the hedged item affects profit
or loss. Hedge accounting is discontinued when a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the
criteria for hedge accounting. The cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the Consolidated income statement. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was reported in equity is immediately transferred to the Consolidated income statement.
Fair value hedges
Changes in the fair value of fair value hedges are recognised in the Consolidated income statement, together with any changes in the fair
value of the hedged asset or liability that are attributable to the hedged risk. If a hedge no longer meets the criteria for hedge accounting,
the cumulative gains and losses recognised on the hedged item will be amortised over the remaining life of the hedged item.
Net investment hedges
The effective portion of changes in the fair value of net investment hedges is recognised (including related tax impacts) in Other comprehensive
income. Any ineffective portion is recognised immediately in the Consolidated income statement. The cumulative gain or loss existing in equity
remains in equity until the foreign investment is disposed of.
121
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122
Notes to the financial statements
for the year ended 31 December 2021
3.5 CAPITAL MANAGEMENT
AMP holds capital to protect customers, creditors and shareholders against unexpected losses. There are a number of ways AMP assesses
the adequacy of its capital position. Primarily, AMP aims to:
– maintain a sufficient surplus above minimum regulatory capital requirements (MRR) to reduce the risk of breaching MRR; and
– maintain the AMP group’s credit rating.
These factors are balanced when forming AMP’s risk appetite as approved by the AMP Limited Board.
Calculation of capital resources
The AMP group’s eligible capital resources include ordinary equity and certain hybrid capital instruments. Adjustments to these amounts
are made for intangibles, associate equity investments and other assets required to be removed by regulation.
The table below shows the AMP group’s capital resources at reporting date:
AMP statutory equity attributable to shareholders of AMP Limited
Accounting mismatch and other adjustments 1
AMP shareholder equity
Goodwill and other intangibles 2
Equity investments 3
Other regulatory adjustments 4
Subordinated bonds eligible as Level 3 capital
Level 3 eligible capital
Eligible hybrid capital resources 5
Total eligible capital resources
Minimum regulatory requirements (MRR)
Target capital requirements
Total capital requirements
Surplus capital above target requirements
2021
$m
3,980
(106)
3,874
(344)
(1,607)
(6)
16
1,933
579
2,512
1,316
813
2,129
383
2020
$m
4,266
(54)
4,212
(629)
(1,442)
16
33
2,190
316
2,506
1,244
738
1,982
524
1 Accounting mismatches and other adjustments relate to the net assets of the AMP Foundation and surplus' recognised on any defined benefit plans.
2 Includes $14m of intangibles classified as Assets held for sale on the Consolidated statement of financial position (2020: nil).
3 Equity investments relate to holdings of associate equity investment where AMP holds a minority interest. As at 31 December 2021, Resolution Life NOHC
($509m) and AMP Capital Infrastructure Debt Fund V USD LP ($8m) are reclassified from an associate equity investment to assets held for sale.
4 Other regulatory adjustments relate to securitisation, deferred tax assets and other provisions for AMP Bank, deferred tax assets for Australian wealth
management and include an adjustment for eligible seed and sponsor investment classified as equity investments in AMP Capital.
5 Eligible hybrid capital instruments are subordinated debt which is able to be included as eligible capital for the purpose of meeting minimum
regulatory requirements.
3.5 CAPITAL MANAGEMENT
3.5 CAPITAL MANAGEMENT CONTINUED
AMP holds capital to protect customers, creditors and shareholders against unexpected losses. There are a number of ways AMP assesses
Capital requirements
A number of the operating entities within the AMP group of companies are regulated and are required to meet minimum regulatory capital
requirements (MRR). In certain circumstances, APRA or other regulators may require AMP and other entities of the AMP group to hold
a greater level of capital to support its business and/or restrict the amount of dividends that can be paid by them. Any such adjustments
would be incorporated into the minimum regulatory requirements and monitored as part of the capital management policy.
The main minimum regulatory capital requirements for AMP’s businesses are:
Operating entity
AMP Bank Limited (AMP Bank)
N. M. Superannuation Proprietary Limited
Minimum regulatory capital requirement
Capital requirements as specified under the APRA ADI
Prudential Standards
Operational Risk Financial Requirements as specified under
the APRA Superannuation Prudential Standards
AMP Capital Investors Limited and other ASIC regulated businesses
Capital requirements under AFSL requirements
The AMP group maintains capital targets reflecting their material risks (including financial risk, product risk and operational risk) and
AMP’s risk appetite. The target capital requirement is a management guide to the level of excess capital that the AMP group seeks to carry
to reduce the risk of breaching MRR.
AMP Limited and AMP Bank have Board-approved minimum capital levels above APRA requirements, with additional capital targets held
above these amounts. Capital targets are also set for AMP Capital to cover risk associated with seed and sponsor capital investments and
operational risk. Other components of AMP group’s capital targets include amounts relating to Group Office investments, defined benefit
funds and other operational risks.
All of the AMP group regulated entities have at all times during the current and prior financial year complied with the externally imposed
capital requirements to which they are subject.
122
Notes to the financial statements
for the year ended 31 December 2021
the adequacy of its capital position. Primarily, AMP aims to:
– maintain a sufficient surplus above minimum regulatory capital requirements (MRR) to reduce the risk of breaching MRR; and
These factors are balanced when forming AMP’s risk appetite as approved by the AMP Limited Board.
– maintain the AMP group’s credit rating.
Calculation of capital resources
The AMP group’s eligible capital resources include ordinary equity and certain hybrid capital instruments. Adjustments to these amounts
are made for intangibles, associate equity investments and other assets required to be removed by regulation.
The table below shows the AMP group’s capital resources at reporting date:
AMP statutory equity attributable to shareholders of AMP Limited
Accounting mismatch and other adjustments 1
AMP shareholder equity
Goodwill and other intangibles 2
Equity investments 3
Other regulatory adjustments 4
Subordinated bonds eligible as Level 3 capital
Level 3 eligible capital
Eligible hybrid capital resources 5
Total eligible capital resources
Minimum regulatory requirements (MRR)
Target capital requirements
Total capital requirements
Surplus capital above target requirements
2021
$m
3,980
(106)
3,874
(344)
(1,607)
(6)
16
1,933
579
2,512
1,316
813
2,129
383
2020
$m
4,266
(54)
4,212
(629)
(1,442)
16
33
2,190
316
2,506
1,244
738
1,982
524
1 Accounting mismatches and other adjustments relate to the net assets of the AMP Foundation and surplus' recognised on any defined benefit plans.
2 Includes $14m of intangibles classified as Assets held for sale on the Consolidated statement of financial position (2020: nil).
3 Equity investments relate to holdings of associate equity investment where AMP holds a minority interest. As at 31 December 2021, Resolution Life NOHC
($509m) and AMP Capital Infrastructure Debt Fund V USD LP ($8m) are reclassified from an associate equity investment to assets held for sale.
4 Other regulatory adjustments relate to securitisation, deferred tax assets and other provisions for AMP Bank, deferred tax assets for Australian wealth
management and include an adjustment for eligible seed and sponsor investment classified as equity investments in AMP Capital.
5 Eligible hybrid capital instruments are subordinated debt which is able to be included as eligible capital for the purpose of meeting minimum
regulatory requirements.
123
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124
Notes to the financial statements
for the year ended 31 December 2021
4
SECTION
EMPLOYEE DISCLOSURES
This section provides details on the various programs the AMP group uses to reward and recognise employees,
including key management personnel.
4.1 Defined benefit plans
4.2
Share-based payments
4.1 DEFINED BENEFIT PLANS
AMP contributes to defined benefit plans which provide benefits to employees, and their dependants, on resignation, retirement, disability
or death of the employee. The benefits are based on years of service and an average salary calculation. All defined benefit plans are now
closed to new members.
The characteristics and risks associated with each of the defined benefit plans are described below:
Plan details
Plan names
Australia
New Zealand
AMP Australia Plan I and AMP Australia Plan II.
Entitlements of active
members
A lump sum or pension on retirement. Pensions
provided are lifetime indexed pensions with
a reversionary spouse pension.
Governance of the plans
The plans’ trustees – this includes
administration of the plan, management
and investment of the plan assets, and
compliance with superannuation laws and
other applicable regulations.
AMP New Zealand Plan I and AMP New Zealand
Plan II.
Accumulation benefits and a lump sum payment
on retirement.
The plans’ trustees – this includes administration
of the plan, management and investment of
the plan assets, and looking after the interests
of all beneficiaries.
Valuations required
Every year.
Every three years.
Key risks
The risk of actual outcomes being different to the actuarial assumptions used to estimate the defined
benefit obligation, investment risk and legislative risk.
Date of valuation
31 March 2021.
31 December 2020.
Additional recommended
contributions
10% to 15% of members’ salaries plus plan
expenses.
No additional contributions are required until 31
December 2023, at which point the requirement
will be reassessed.
124
Notes to the financial statements
for the year ended 31 December 2021
This section provides details on the various programs the AMP group uses to reward and recognise employees,
4
SECTION
EMPLOYEE DISCLOSURES
including key management personnel.
4.1 Defined benefit plans
4.2
Share-based payments
4.1 DEFINED BENEFIT PLANS
AMP contributes to defined benefit plans which provide benefits to employees, and their dependants, on resignation, retirement, disability
or death of the employee. The benefits are based on years of service and an average salary calculation. All defined benefit plans are now
closed to new members.
The characteristics and risks associated with each of the defined benefit plans are described below:
Plan details
Plan names
Australia
New Zealand
Plan II.
Entitlements of active
A lump sum or pension on retirement. Pensions
Accumulation benefits and a lump sum payment
members
provided are lifetime indexed pensions with
on retirement.
a reversionary spouse pension.
Governance of the plans
The plans’ trustees – this includes
The plans’ trustees – this includes administration
administration of the plan, management
of the plan, management and investment of
and investment of the plan assets, and
the plan assets, and looking after the interests
compliance with superannuation laws and
of all beneficiaries.
other applicable regulations.
Valuations required
Every year.
Every three years.
Key risks
The risk of actual outcomes being different to the actuarial assumptions used to estimate the defined
benefit obligation, investment risk and legislative risk.
Date of valuation
31 March 2021.
31 December 2020.
Additional recommended
10% to 15% of members’ salaries plus plan
No additional contributions are required until 31
contributions
expenses.
December 2023, at which point the requirement
will be reassessed.
4.1 DEFINED BENEFIT PLANS CONTINUED
(a) Defined benefit asset/(liability)
Present value of wholly-funded defined benefit obligations
Less: Fair value of plan assets
Defined benefit asset/(liability) recognised in the Consolidated statement of financial position
Movement in defined benefit asset/(liability)
Deficit at the beginning of the year
Plus: Total (expenses)/income recognised in the Consolidated income statement
Plus: Employer contributions
Plus: Foreign currency exchange rate changes
Plus: Actuarial gains recognised in Other comprehensive income 1
Defined benefit asset/(liability) recognised at the end of the year
2021
$m
(782)
785
3
(98)
(2)
1
1
101
3
2020
$m
(882)
784
(98)
(101)
1
1
(4)
5
(98)
AMP Australia Plan I and AMP Australia Plan II.
AMP New Zealand Plan I and AMP New Zealand
1 The cumulative net actuarial gains and losses recognised in the Statement of comprehensive income is a $199m gain (2020: $98m gain).
(b) Reconciliation of the movement in the defined benefit asset/(liability)
Balance at the beginning of the year
Current service cost
Past service cost/curtailments
Interest (cost)/income
Net actuarial gains/(losses)
Employer contributions
Contributions by plan participants
Foreign currency exchange rate changes
Benefits paid
Balance at the end of the year
Defined benefit obligation
Fair value of plan assets
2021
$m
(882)
(2)
–
(2)
62
–
–
(2)
44
(782)
2020
$m
(919)
–
1
(10)
(14)
–
–
2
58
(882)
2021
$m
784
–
–
2
39
1
–
3
(44)
785
2020
$m
818
–
–
10
19
1
–
(6)
(58)
784
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126
Notes to the financial statements
for the year ended 31 December 2021
4.1 DEFINED BENEFIT PLANS CONTINUED
(c) Analysis of defined benefit surplus/(deficit) by plan
Fair value of plan
assets
Present value of plan
obligation
Net recognised
surplus/(deficit)
Actuarial gains/(losses)
2021
$m
283
397
17
88
785
2020
$m
281
400
17
86
784
2021
$m
(296)
(356)
(20)
(110)
(782)
2020
$m
(334)
(386)
(24)
(138)
(882)
2021
$m
2020
$m
(13)
41
(3)
(22)
3
(53)
14
(7)
(52)
(98)
2021
$m
40
27
4
30
101
2020
$m
(5)
24
(1)
(13)
5
AMP Australia Plan I
AMP Australia Plan II
AMP New Zealand Plan I
AMP New Zealand Plan II
Total
(d) Principal actuarial assumptions
The following table sets out the principal actuarial assumptions used as at the reporting date in measuring the defined benefit obligations
of the Australian and New Zealand defined benefit funds:
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
2021
%
3.0
n/a
2020
%
2.1
n/a
2021
%
2.7
n/a
2020
%
0.9
n/a
2021
%
3.3
2.8
2020
%
2.4
3.3
2021
%
2.7
3.0
2020
%
1.4
3.0
Weighted average discount rate
Expected rate of salary increases
(e) Allocation of assets
The asset allocations of the defined benefit funds are shown in the following table:
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
2021
%
2020
%
2021
%
2020
%
2021
%
2020
%
2021
%
2020
%
42
38
9
4
7
41
41
8
4
6
52
37
0
11
0
38
38
4
14
6
18
54
6
9
13
15
59
6
8
12
52
37
0
11
0
46
34
4
14
2
Equity
Fixed interest
Property
Cash
Other
126
Notes to the financial statements
for the year ended 31 December 2021
4.1 DEFINED BENEFIT PLANS CONTINUED
4.1 DEFINED BENEFIT PLANS CONTINUED
(c) Analysis of defined benefit surplus/(deficit) by plan
(f) Sensitivity analysis
Fair value of plan
Present value of plan
assets
obligation
Net recognised
surplus/(deficit)
Actuarial gains/(losses)
2021
$m
2020
$m
2021
$m
283
397
17
88
785
2020
$m
281
400
17
86
784
2021
$m
(296)
(356)
(20)
(110)
(782)
2020
$m
(334)
(386)
(24)
(138)
(882)
(13)
41
(3)
(22)
3
2021
$m
40
27
4
30
101
2020
$m
(5)
24
(1)
(13)
5
AMP Australia Plan I
AMP Australia Plan II
AMP New Zealand Plan I
AMP New Zealand Plan II
Total
(d) Principal actuarial assumptions
The following table sets out the principal actuarial assumptions used as at the reporting date in measuring the defined benefit obligations
of the Australian and New Zealand defined benefit funds:
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
2021
2020
2021
2020
2021
2020
2021
2020
%
3.0
n/a
%
2.1
n/a
%
2.7
n/a
%
0.9
n/a
%
3.3
2.8
Weighted average discount rate
Expected rate of salary increases
(e) Allocation of assets
The asset allocations of the defined benefit funds are shown in the following table:
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
2021
2020
2021
2020
2021
2020
2021
2020
Equity
Fixed interest
Property
Cash
Other
%
42
38
9
4
7
%
41
41
8
4
6
%
52
37
0
11
0
%
38
38
4
14
6
%
18
54
6
9
13
%
2.7
3.0
%
52
37
0
11
0
%
1.4
3.0
%
46
34
4
14
2
(53)
14
(7)
(52)
(98)
%
2.4
3.3
%
15
59
6
8
12
The defined benefit obligation has been recalculated for each scenario by changing only the specified assumption as outlined below,
whilst retaining all other assumptions as per the base case. The table below shows the increase (decrease) for each assumption change.
Where an assumption is not material to the fund it has been marked as n/a.
2021
Assumption
Discount rate (+/- 0.5%) 1
Expected salary increase rate
(0.5%)
Expected deferred benefit
crediting rate (0.5%)
Pensioner indexation assumption
(0.5%) 2
Pensioner mortality assumption
(10%)
Life expectancy (additional 1 year)
2020
Assumption
Discount rate (+/- 0.5%) 1
Expected salary increase rate
(0.5%)
Expected deferred benefit
crediting rate (0.5%)
Pensioner indexation assumption
(0.5%) 2
Pensioner mortality assumption
(10%)
Life expectancy (additional 1 year)
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
(+)
$m
(15)
n/a
n/a
(-)
$m
16
n/a
n/a
16
(15)
n/a
n/a
11
n/a
(+)
$m
n/a
n/a
n/a
1
n/a
1
(-)
$m
2
n/a
n/a
n/a
n/a
n/a
(+)
$m
(19)
–
–
(-)
$m
21
n/a
n/a
19
(17)
n/a
n/a
8
n/a
(+)
$m
n/a
n/a
n/a
11
n/a
4
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
(+)
$m
(18)
n/a
n/a
20
n/a
n/a
(-)
$m
20
n/a
n/a
(18)
13
n/a
(+)
$m
n/a
n/a
n/a
1
n/a
1
(-)
$m
2
n/a
n/a
n/a
n/a
n/a
(+)
$m
(26)
–
2
26
n/a
n/a
(-)
$m
29
n/a
n/a
(23)
11
n/a
(+)
$m
n/a
n/a
n/a
14
n/a
4
(-)
$m
13
n/a
n/a
n/a
n/a
n/a
(-)
$m
18
n/a
n/a
n/a
n/a
n/a
1 (1%) discount rate applied to AMP New Zealand Plan I and II.
2 1% indexation increase applied to AMP New Zealand Plan I and II.
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128
Notes to the financial statements
for the year ended 31 December 2021
4.1 DEFINED BENEFIT PLANS CONTINUED
(g) Expected contributions and maturity profile of the defined benefit obligation
Expected employer contributions
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
$m
–
$m
–
$m
–
$m
–
Weighted average duration of the defined benefit obligation (years)
9
8
12
12
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Defined benefit plans
The AMP group recognises the net deficit or surplus position of each fund in the Consolidated statement of financial position. The deficit
or surplus is measured as the difference between the fair value of the funds’ assets and the discounted defined benefit obligations of the
funds, using discount rates determined with reference to market yields on high quality corporate bonds at the end of the reporting period.
After taking into account any contributions paid into the defined benefit funds during the period, movements in the net surplus or deficit
of each fund, except actuarial gains and losses, are recognised in the Consolidated income statement. Actuarial gains and losses arising
from experience adjustments and changes in actuarial assumptions over the period and the returns on plan assets are recognised
(net of tax) directly in retained earnings through Other comprehensive income.
Contributions paid into defined benefit funds are recognised as reductions in the deficit.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Defined benefit asset/liability
The value of the group’s defined benefit obligations are outputs of actuarial models dependent on a number of underlying
assumptions. Managed applies judgement in selecting the assumptions used. Key assumptions include:
–
–
–
discount rate;
expected future salary increases;
pension indexation;
– mortality; and
–
life expectancy.
128
Notes to the financial statements
for the year ended 31 December 2021
(g) Expected contributions and maturity profile of the defined benefit obligation
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
$m
–
$m
–
$m
–
$m
–
Expected employer contributions
Weighted average duration of the defined benefit obligation (years)
9
8
12
12
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Defined benefit plans
The AMP group recognises the net deficit or surplus position of each fund in the Consolidated statement of financial position. The deficit
or surplus is measured as the difference between the fair value of the funds’ assets and the discounted defined benefit obligations of the
funds, using discount rates determined with reference to market yields on high quality corporate bonds at the end of the reporting period.
After taking into account any contributions paid into the defined benefit funds during the period, movements in the net surplus or deficit
of each fund, except actuarial gains and losses, are recognised in the Consolidated income statement. Actuarial gains and losses arising
from experience adjustments and changes in actuarial assumptions over the period and the returns on plan assets are recognised
(net of tax) directly in retained earnings through Other comprehensive income.
Contributions paid into defined benefit funds are recognised as reductions in the deficit.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Defined benefit asset/liability
The value of the group’s defined benefit obligations are outputs of actuarial models dependent on a number of underlying
assumptions. Managed applies judgement in selecting the assumptions used. Key assumptions include:
discount rate;
expected future salary increases;
–
–
–
pension indexation;
– mortality; and
–
life expectancy.
4.1 DEFINED BENEFIT PLANS CONTINUED
4.2
SHARE-BASED PAYMENTS
AMP has multiple employee share-based payment plans. Share-based payment plans help create alignment between employees
participating in those plans (participants) and shareholders. Information on plans which AMP currently offers is provided below.
The following table shows the expense recorded for AMP share-based payment plans during the year:
Plans currently offered
Performance rights 1
Share rights and Restricted Shares – equity settled
Share rights – cash settled
Share options
Total share-based payments expense
2021
$’000
7,854
9,143
2,759
–
19,756
2020
$’000
12,123
7,461
1,873
53
21,510
1 Non-market performance rights which were forfeited or where performance conditions were not met were reversed during the year.
(a) Performance rights
The Executive KMP receive their long-term incentive (LTI) award in the form of performance rights. This is intended to ensure the interests of
those executives, who are able to most directly influence company performance, are appropriately aligned with the interests of shareholders.
Plan
Overview
LTI awards
Performance rights give the participant the right to acquire one fully paid ordinary share in AMP
Limited upon meeting specific performance hurdles. They are granted at no cost to the participant
and carry no dividend or voting rights until they vest. This award may be settled through an equivalent
cash payment, at the discretion of the board.
Vesting conditions
2019 LTI award (Transformation Incentive Award)
The vesting of the performance rights is subject to two separate gateways:
Risk and Conduct Gateway – if a participant’s performance and conduct is not in line with AMP’s
expectations, the board has discretion to amend the vesting outcome (including to zero).
Performance Gateway and Hurdle – a performance gateway is included so that no awards will vest
if both the Compound Annual Growth Rate (CAGR) is negative AND the CAGR is below the benchmark
index*. For risk and control roles i.e. Chief Risk Officer – the vesting outcome in relation to 25% of the
award will be determined by the Remuneration Committee at its sole discretion. The other 75% of the
award will be subject to the performance hurdle.
In determining the comparator group, all entities other than those in the global industry classification
standard (GICS) energy sector and GICS metals and mining industry are classified as industrial companies.
* The benchmark index is constructed from an equal weighted index of ASX 100 financial services
companies (excluding A-REITs).
129
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F
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a
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A
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f
o
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a
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i
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130
Notes to the financial statements
for the year ended 31 December 2021
4.2
SHARE-BASED PAYMENTS CONTINUED
(a) Performance rights continued
Plan
LTI awards
Vesting conditions
(continued)
2020 LTI award
No performance rights were granted under an LTI plan in 2020.
2021 LTI award
The performance period is 1 January 2021 to 31 December 2023 and the rights will convert to
Restricted Shares on or around the 1 January 2024 (Conversion Date) if the conditions of the Offer are
met. On the Conversion Date, participants may receive one fully paid Share for every Right awarded.
The Shares will remain restricted for an additional one year, under a holding lock, until the Vesting
Date is reached.
The vesting of the performance rights is subject to two separate gateways:
1. Risk and Conduct Gateway – if a participant’s performance and conduct is not in line with AMP’s
expectations, the board has discretion to amend the vesting outcome (including to zero).
2. The number of Rights that vest under the Award will be determined with reference to a comparison
of the compound annual growth rate (CAGR) in the Company’s total shareholder return (TSR) relative
to the CAGR in Total Shareholder Return (TSR) to the peer group of ASX 100 financial companies
excluding A-REITs as at 1 January 2021 measured over the performance period.
Vesting/performance
period
–
–
2019 LTI award – three and a half years for rights granted in 2019.
2021 LTI award – three years for rights plus a one year restriction period (holding lock) for LTI
awards granted in 2021.
Vested awards
Vested performance rights are automatically converted to shares.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed
for misconduct.
130
Notes to the financial statements
for the year ended 31 December 2021
(a) Performance rights continued
Plan
Vesting conditions
(continued)
LTI awards
2020 LTI award
2021 LTI award
Date is reached.
No performance rights were granted under an LTI plan in 2020.
The performance period is 1 January 2021 to 31 December 2023 and the rights will convert to
Restricted Shares on or around the 1 January 2024 (Conversion Date) if the conditions of the Offer are
met. On the Conversion Date, participants may receive one fully paid Share for every Right awarded.
The Shares will remain restricted for an additional one year, under a holding lock, until the Vesting
The vesting of the performance rights is subject to two separate gateways:
1. Risk and Conduct Gateway – if a participant’s performance and conduct is not in line with AMP’s
expectations, the board has discretion to amend the vesting outcome (including to zero).
2. The number of Rights that vest under the Award will be determined with reference to a comparison
of the compound annual growth rate (CAGR) in the Company’s total shareholder return (TSR) relative
to the CAGR in Total Shareholder Return (TSR) to the peer group of ASX 100 financial companies
excluding A-REITs as at 1 January 2021 measured over the performance period.
Vesting/performance
2019 LTI award – three and a half years for rights granted in 2019.
period
2021 LTI award – three years for rights plus a one year restriction period (holding lock) for LTI
–
–
awards granted in 2021.
Vested awards
Vested performance rights are automatically converted to shares.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed
for misconduct.
4.2
SHARE-BASED PAYMENTS CONTINUED
4.2
SHARE-BASED PAYMENTS CONTINUED
(a) Performance rights continued
CEO Sign-on Award
As part of the Chief Executive Officer’s (CEO) incentive package on appointment in 2021, the CEO was granted an award of rights with
performance conditions to replace existing incentive arrangements foregone with the previous employer. The award comprises:
Plan
Overview
Vesting conditions
CEO Sign-on Performance Rights Award
The Sign-on performance rights give the CEO the right to acquire one fully paid ordinary share in AMP
Limited (per right) upon meeting specific performance conditions, including hurdles that are subject
to an absolute and relative total shareholder return (TSR) measures.
The award was granted at no cost to the CEO and carries no dividend or voting rights. This award may
be settled through an equivalent cash payment, at the discretion of the board.
Absolute Total Shareholder Return (aTSR) Hurdle
Absolute TSR performance measures the compound annual growth (CAGR) in the Company’s TSR over
the relevant Performance Period.
The percentage of Rights subject to the absolute TSR hurdle which will be eligible to vest, if any, will
be determined by reference to the following schedule:
Level of achievement
CAGR of 8.5% or above
Vesting level of Rights subject to the absolute
TSR hurdle in the relevant tranche
100%
Between positive TSR and 8.5% CAGR
Pro-rata straight line vesting between 50% and 100%
Positive TSR
Nil or Negative TSR
50%
0%
Relative Total Shareholder Return (rTSR) Hurdle
Relative TSR performance measures the Company’s TSR performance relative to a peer group over the
relevant Performance Period.
The comparator group for the relative TSR performance hurdle will be the ASX100 Financials index
as at 30 July 2021. The comparator group may be adjusted by the Board to take into account corporate
actions, including but not limited to takeovers, mergers, de-mergers or de-listing. The percentage
of your Rights subject to the relative TSR hurdle which will be eligible to vest, if any, will be determined
by reference to the following schedule:
Percentile ranking
Vesting level of Rights subject to the relative
TSR hurdle in the relevant tranche
75th percentile or higher
100%
Between the 50th and 75th percentile
Pro-rata straight line vesting between 50% and 100%
50th percentile
Below the 50th percentile
50%
0%
Vesting period/Testing
dates
The board will test the performance hurdles on or around the following testing dates:
–
–
–
22 November 2021 (First Testing Date);
22 November 2023 (Second Testing Date); and
22 November 2024 (Third Testing Date);
If the performance hurdles are met, the rights vest and become exercisable.
Vested awards
Vested rights are automatically converted to AMP Limited shares on behalf of the CEO.
Unvested awards
Unvested awards are forfeited if the CEO voluntarily ceases employment or is dismissed
for misconduct.
131
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a
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i
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132
Notes to the financial statements
for the year ended 31 December 2021
4.2
SHARE-BASED PAYMENTS CONTINUED
(a) Performance rights continued
Valuation of performance rights
The values for performance rights are based on valuations prepared by an independent external consultant. The valuations are based on the
10-day volume weighted average share price over the 10-day trading period prior to the start of the award’s valuation period. Assumptions
regarding the dividend yield and volatility have been estimated based on AMP’s dividend yield and volatility over an appropriate period.
In determining the share-based payments expense, the number of instruments expected to vest has been adjusted to reflect the number
of employees expected to remain with AMP until the end of the performance period, this is revisited each reporting date.
Valuations are prepared by an independent external consultant. The valuations are based on AMP’s closing share price at the valuation date.
Assumptions regarding the dividend yield and volatility have been estimated based on AMP’s dividend yield and volatility over an appropriate period.
The following table shows the factors considered in determining the value of the performance rights granted during the period:
Share price
life (years) Dividend yield
Volatility 1 Risk-free rate 1
Contractual
TSR
performance
hurdle
discount
TSR
performance
rights fair
value
$1.65
4.0
4.0%
44%
0.1%
51%
$0.81
Grant date
01/01/2021
1 Applies to performance rights subject to a relative TSR performance hurdle.
The following table shows the factors considered in determining the value of the CEO Sign-on Rights Award granted during the period with
an absolute and relative TSR hurdle:
Grant date
09/08/2021
09/08/2021
09/08/2021
Share price
Contractual
life (years)
Dividend
yield
Volatility Risk-free rate
TSR performance
hurdle discount
Share rights
fair value
$1.075
$1.075
$1.075
0.3
2.3
3.3
0.0%
3.0%
5.0%
42%
42%
42%
0.8%
0.8%
0.8%
46%
42%
43%
$0.59
$0.63
$0.62
Grant date
Share price
Contractual
life (years)
Dividend
yield
Volatility Risk-free rate
TSR performance
hurdle discount
Share rights
fair value
09/08/2021
09/08/2021
09/08/2021
$1.075
$1.075
$1.075
0.3
2.3
3.3
0.0%
3.0%
5.0%
42%
42%
42%
0.8%
0.8%
0.8%
49%
41%
41%
$0.55
$0.64
$0.64
The following table shows the movement in number of performance rights outstanding during the period:
Grant date
19/05/2017
12/09/2019
01/01/2021
09/08/2021
Total
Balance at
1 Jan 2021
Granted
during the year
Exercised
during the year
Lapsed
during the year
Balance at
31 Dec 2021
1,880,700
30,357,128
–
–
32,237,828
–
–
2,801,550
2,807,038
5,608,588
–
–
–
(638,168)
(638,168)
(1,880,700) 1
–
(5,451,010)
24,906,118
–
(122,010)
2,801,550
2,046,860
(7,453,720)
29,754,528
1 AMP’s TSR performance against its peer comparator group was measured for the period 1 January 2017 up to 31 December 2020. The outcome resulted
in nil vesting of the award and the award lapsed in full.
4.2
SHARE-BASED PAYMENTS CONTINUED
4.2
SHARE-BASED PAYMENTS CONTINUED
(a) Performance rights continued
CEO sign-on award vesting outcomes:
–
–
Sign-on performance rights (tranche 1) with an absolute TSR measure representing 27% of the total grant was tested on 22 November
2021 resulting in full vesting of 190,038 units;
Sign-on performance rights (tranche 1) with a relative TSR measure representing 27% of the total grant was tested on 22 November
2021 resulting in a partial vesting of 448,130 units and the remaining 122,010 units were lapsed.
Performance test results are provided in the table below:
Performance period
Measure
AMP’s TSR
performance
AMP’s CAGR TSR
performance
Vesting outcome
(portion of
tranche vested)
2 Aug – 22 Nov 2021
Absolute TSR
8.49%
30.4%
100%
Performance period
Measure
AMP’s
TSR performance
AMP’s
percentile rank
Vesting outcome
(portion of
tranche vested)
2 Aug – 22 Nov 2021
Relative TSR
8.49%
64.3%
78.6%
Grant date
09 Aug 2021
Grant date
09 Aug 2021
(b) Share rights
–
–
–
–
–
LTI participants below the Executive KMP may be awarded share rights as part of their overall LTI award.
Short-term Incentive deferral participants are nominated executives and selected senior leaders who have the ability to impact
AMP’s financial soundness. This requires a portion of the participant’s annual short-term incentive outcome to be deferred and
awarded as share rights.
Transition Incentive awards were made to select participants in the form of share rights as a transitionary award between
remuneration arrangements and the finalisation of strategy.
Retention awards were made to selected senior leaders who are critical to on-going operations and the delivery of AMP’s strategy
during the portfolio review and the completion of any subsequent corporate transactions.
Enterprise Profit Share Plan supports AMP Capital’s remuneration framework by aligning its strategic intent and rewarding
behaviour that leads to sustainably increased profit and shareholder value. The participants are the AMP Capital Leadership
Team whereby a portion of their annual profit share outcome is deferred into share rights.
– Deferred Bonus Equity Plan applies to selected AMP Capital participants whereby a portion of their annual short-term incentive
outcome (above a specified threshold) is deferred into share rights.
132
Notes to the financial statements
for the year ended 31 December 2021
(a) Performance rights continued
Valuation of performance rights
The values for performance rights are based on valuations prepared by an independent external consultant. The valuations are based on the
10-day volume weighted average share price over the 10-day trading period prior to the start of the award’s valuation period. Assumptions
regarding the dividend yield and volatility have been estimated based on AMP’s dividend yield and volatility over an appropriate period.
In determining the share-based payments expense, the number of instruments expected to vest has been adjusted to reflect the number
of employees expected to remain with AMP until the end of the performance period, this is revisited each reporting date.
Valuations are prepared by an independent external consultant. The valuations are based on AMP’s closing share price at the valuation date.
Assumptions regarding the dividend yield and volatility have been estimated based on AMP’s dividend yield and volatility over an appropriate period.
The following table shows the factors considered in determining the value of the performance rights granted during the period:
Grant date
01/01/2021
Share price
life (years) Dividend yield
Volatility 1 Risk-free rate 1
$1.65
4.0
4.0%
44%
0.1%
Contractual
1 Applies to performance rights subject to a relative TSR performance hurdle.
TSR
TSR
performance
performance
hurdle
discount
51%
rights fair
value
$0.81
The following table shows the factors considered in determining the value of the CEO Sign-on Rights Award granted during the period with
an absolute and relative TSR hurdle:
Share price
Contractual
life (years)
Dividend
Volatility Risk-free rate
hurdle discount
fair value
TSR performance
Share rights
Grant date
Share price
Contractual
life (years)
Dividend
yield
Volatility Risk-free rate
hurdle discount
fair value
TSR performance
Share rights
$1.075
$1.075
$1.075
$1.075
$1.075
$1.075
0.3
2.3
3.3
0.3
2.3
3.3
yield
0.0%
3.0%
5.0%
0.0%
3.0%
5.0%
42%
42%
42%
42%
42%
42%
0.8%
0.8%
0.8%
0.8%
0.8%
0.8%
46%
42%
43%
49%
41%
41%
$0.59
$0.63
$0.62
$0.55
$0.64
$0.64
The following table shows the movement in number of performance rights outstanding during the period:
Balance at
1 Jan 2021
1,880,700
30,357,128
–
–
32,237,828
Granted
Exercised
Lapsed
during the year
during the year
during the year
Balance at
31 Dec 2021
–
–
2,801,550
2,807,038
5,608,588
–
–
–
(638,168)
(638,168)
(1,880,700) 1
–
(5,451,010)
24,906,118
–
(122,010)
2,801,550
2,046,860
(7,453,720)
29,754,528
Grant date
09/08/2021
09/08/2021
09/08/2021
09/08/2021
09/08/2021
09/08/2021
Grant date
19/05/2017
12/09/2019
01/01/2021
09/08/2021
Total
1 AMP’s TSR performance against its peer comparator group was measured for the period 1 January 2017 up to 31 December 2020. The outcome resulted
in nil vesting of the award and the award lapsed in full.
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134
Notes to the financial statements
for the year ended 31 December 2021
4.2
SHARE-BASED PAYMENTS CONTINUED
(b) Share rights continued
Plan
Overview
Vesting
conditions/period
Long-term Incentive Plan
Short-term incentive Deferral
Plan, Transition Incentive
award and Retention award
Enterprise Profit Share Plan and
Deferred Bonus Equity Plan
Share rights give the participant the right to acquire one fully paid ordinary share in AMP Limited after
a specified service period. They are granted at no cost to the participant and carry no dividend or voting
rights until they vest. This award may be settled through an equivalent cash payment at the discretion
of the board.
All awards are subject to ongoing employment, compliance with AMP policies and the board’s discretion.
AMP group participants
2017 LTI
–
Four years continued service.
No share rights under the LTI
plan were granted in 2018, 2019
or 2020.
2021 LTI
–
Four years continued service
–
the award carries voting
rights and a dividend
equivalent on any Rights
that may vest.
AMP Capital participants
Continued service for three years.
Some awards may also vary
where the share rights are
awarded as a sign-on equity
award or to retain an employee
for a critical period.
Short-term Incentive
deferral/
2019 and 2020 STI awards with
40% deferral and continued
service for two or four years.
Enterprise Profit Share Plan
The grant is split into two
tranches with continued
service for two and three years
respectively.
The award carries voting rights
and a dividend equivalent on any
Rights that may vest.
For awards relating to the 2019,
2020 and 2021 performance
years, share rights were granted
to select participants. The
award was subject to a one year
service condition. After this
period, an additional three year
holding period is applicable to
participants except for the AMP
Capital Chief Executive Officer
where the holding period is
four years.
Deferred Bonus Equity Plan
The grant is split into two
tranches with continued
service for two and three years
respectively.
Transition Incentive award
2019 – the award is split into
two tranches with continued
service for approximately one
and two years respectively.
Retention award
2020 – the award has 40% of the
award granted in share rights and
is subject to a one year service
condition plus an additional
three year holding period. Vesting
scheduled to occur in 2024.
2021 STI
60% delivered in equity.
CEO awards: one third of award
to vest over years two, three
and four.
AMP’s Group Executive
Committee awards: 50% of
award to vest in year two and
50% at year three
Other STI awards with a 40%
deferral and continued service
for two or four years
Vested awards
Vested share rights are automatically converted to shares on behalf of participants.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed for misconduct.
134
Notes to the financial statements
for the year ended 31 December 2021
(b) Share rights continued
Plan
Overview
Vesting
conditions/period
Long-term Incentive Plan
Short-term incentive Deferral
Plan, Transition Incentive
award and Retention award
Enterprise Profit Share Plan and
Deferred Bonus Equity Plan
Share rights give the participant the right to acquire one fully paid ordinary share in AMP Limited after
a specified service period. They are granted at no cost to the participant and carry no dividend or voting
rights until they vest. This award may be settled through an equivalent cash payment at the discretion
of the board.
All awards are subject to ongoing employment, compliance with AMP policies and the board’s discretion.
AMP group participants
Short-term Incentive
Enterprise Profit Share Plan
2017 LTI
deferral/
–
Four years continued service.
2019 and 2020 STI awards with
No share rights under the LTI
plan were granted in 2018, 2019
or 2020.
2021 LTI
–
–
Four years continued service
the award carries voting
rights and a dividend
equivalent on any Rights
that may vest.
AMP Capital participants
Continued service for three years.
Some awards may also vary
where the share rights are
awarded as a sign-on equity
award or to retain an employee
for a critical period.
The grant is split into two
tranches with continued
service for two and three years
respectively.
The award carries voting rights
and a dividend equivalent on any
Rights that may vest.
For awards relating to the 2019,
2020 and 2021 performance
years, share rights were granted
to select participants. The
award was subject to a one year
service condition. After this
period, an additional three year
holding period is applicable to
participants except for the AMP
Capital Chief Executive Officer
where the holding period is
four years.
Deferred Bonus Equity Plan
The grant is split into two
tranches with continued
service for two and three years
respectively.
40% deferral and continued
service for two or four years.
Transition Incentive award
2019 – the award is split into
two tranches with continued
service for approximately one
and two years respectively.
Retention award
2020 – the award has 40% of the
award granted in share rights and
is subject to a one year service
condition plus an additional
three year holding period. Vesting
scheduled to occur in 2024.
2021 STI
60% delivered in equity.
CEO awards: one third of award
to vest over years two, three
and four.
AMP’s Group Executive
Committee awards: 50% of
award to vest in year two and
50% at year three
Other STI awards with a 40%
deferral and continued service
for two or four years
Vested awards
Vested share rights are automatically converted to shares on behalf of participants.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed for misconduct.
4.2
SHARE-BASED PAYMENTS CONTINUED
4.2
SHARE-BASED PAYMENTS CONTINUED
(b) Share rights continued
CEO Sign-on Share Rights Award
As part of the CEO’s sign-on package on appointment, the CEO was granted an award of share rights with a service (employment) condition
to compensate for incentives forgone from the CEO’s previous employer.
Plan
Overview
Vesting
conditions/period
CEO Sign-on Share Rights Award
The sign-on share rights give the CEO the right to acquire one fully paid ordinary share in AMP Limited
(per right) after a specified service period. They were granted at no cost to the CEO and carry no dividend
or voting rights until they vest. This award may be settled through an equivalent cash payment at the
discretion of the board.
The rights may vest in accordance with the vesting schedule set out below:
–
–
–
–
50% on 22 November 2021
32% on 22 November 2022
14% on 22 November 2023
4% on 22 November 2024
Vested awards
Vested share rights are automatically converted to shares on behalf of the former CEO.
Unvested awards
Unvested awards are forfeited if the CEO voluntarily ceases employment or is dismissed for misconduct.
Valuation of share rights
The fair value of share rights has been calculated as at the grant date, by external consultants using a ‘discounted cash flow’ methodology.
Fair value has been discounted for the present value of dividends expected to be paid during the vesting period to which the participant
is not entitled. For the purposes of the valuation it is assumed share rights are exercised as soon as they have vested. Assumptions regarding
the dividend yield have been estimated based on AMP’s dividend yield over an appropriate period.
In determining the share-based payments expense, the number of instruments expected to vest has been adjusted to reflect the number
of employees expected to remain with AMP until the end of the performance period.
For the current CEO’s share rights awards, the valuations are prepared by an independent external consultant. The valuations are based
on AMP’s closing share price at the valuation date. Assumptions regarding the dividend yield and volatility have been estimated based
on AMP’s dividend yield and volatility over an appropriate period.
The following table shows the factors which were considered in determining the independent fair value of the share rights granted during the period:
Grant date
01/04/2021
01/04/2021
01/04/2021
01/04/2021
01/04/2021
01/04/2021
09/08/2021
09/08/2021
09/08/2021
09/08/2021
Share price
Contractual
life (years)
Dividend yield Dividend discount
Fair value
$1.35
$1.35
$1.35
$1.35
$1.35
$1.35
$1.07
$1.07
$1.07
$1.07
1.9
3.9
0.9
1.9
2.9
4.0
0.3
1.3
2.3
3.3
3.0%
3.0%
n/a
3.0%
3.0%
n/a
0.0%
3.0%
5.0%
5.0%
7%
13%
2%
7%
10%
2%
0%
0%
2%
7%
$1.25
$1.18
$1.33
$1.25
$1.22
$1.33
$1.075
$1.075
$1.05
$1.00
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136
Notes to the financial statements
for the year ended 31 December 2021
4.2
SHARE-BASED PAYMENTS CONTINUED
(b) Share rights continued
The following table shows the movement in share rights outstanding during the period:
Grant Date
19/05/2017
02/04/2018
13/08/2018
03/12/2018
21/08/2018
01/04/2019
10/05/2019
17/05/2019
19/07/2019
20/09/2019
01/04/2020
23/11/2020
01/04/2021
09/08/2021
Total
Balance at
1 Jan 2021
Granted
during the year
Exercised
during the year
Lapsed
during the year
Balance at
31 Dec 2021
974,463
1,507,500
53,191
40,816
726,744
2,127,923
957,447
773,997
91,787
8,287
7,357,477
1,627,444
–
–
–
–
–
–
–
–
–
–
–
–
—
4,496,095
(974,463)
(1,488,308)
(53,191)
(40,816)
(436,046)
(222,163)
(957,447)
—
(53,140)
—
(1,096,400)
—
—
— 1,015,806
(507,243)
—
(19,192)
—
—
—
—
—
—
—
290,698
(298,788)
1,606,972
—
—
—
(8,287)
(412,320)
(187,977)
—
—
–
773,997
38,647
—
5,848,757
1,439,467
4,496,095
508,563
16,247,076
5,511,901
(5,829,217)
(926,564)
15,003,196
(c) Restricted shares
AMP Capital Enterprise Profit Share Plan
The AMP Capital Leadership Team is comprised of a select group of senior executives who are eligible to participate in the Enterprise
Profit Share Plan. This plan was designed to support AMP Capital’s remuneration framework by aligning its strategic intent and rewarding
behaviour that leads to sustainably increased profit and shareholder value. It is required that 40% of the participants’ profit share outcomes
be deferred. Half of the deferred component is awarded in the form of restricted shares for participants who reside in Australia with the
exception of the AMP Capital Chief Executive Officer. The objective of this is to create greater alignment with our shareholders. The equity
component of this plan was granted in 2019.
No restricted shares were granted under the above disclosed Plan in 2020 or 2021, however, share rights were granted to eligible participants.
Plan
Overview
Enterprise Profit Share Plan
The deferred component of the 2018 Enterprise Profit Share award was granted in the form of restricted shares.
Restricted shares are fully paid ordinary shares in AMP Limited that are held in the AMP Employee Share Trust on
behalf of the participant until the specified service/holding period has been met. They were granted at no cost
to participants and carry the same dividend or voting rights as other fully paid ordinary shares. Any dividends
paid on shares are received in the ordinary course on the dividend payment date(s).
Vesting
conditions/period
The restricted shares will vest after one year and continue to be subject to a disposal restriction for an additional
three year period. Prior to each vesting date and the release date, the board will undertake a conduct/risk review
to confirm that vesting and release of the award aligns with the conduct and risk outcomes of the group.
Vested awards
On the relevant release dates, the restriction on the shares is released.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed for misconduct.
4.2
SHARE-BASED PAYMENTS CONTINUED
4.2
SHARE-BASED PAYMENTS CONTINUED
AMP Executive Performance Incentive Plan
The Executive Performance Incentive (EPI) Plan takes a combined incentive approach, whereby a portion of the participant’s annual EPI
outcome is paid out in cash and the remainder is deferred as restricted shares or share rights. The objective of this plan is to create equity
ownership across a select group of senior executives if performance objectives are met. The equity component of this plan was granted
in 2019.
No restricted share awards were granted under the above disclosed Plan in 2020 or 2021.
Plan
Overview
Executive Performance Incentive Plan
For 2019, the deferred component of the Executive Performance Incentive Plan was granted in the form
of restricted shares. Restricted shares are fully paid ordinary shares in AMP Limited that are held in the AMP
Employee Share Trust on behalf of the participant until the specified service/holding period has been met. They
were granted at no cost to participants and carry the same dividend or voting rights as other fully paid ordinary
shares. Any dividends paid on shares are received in the ordinary course on the dividend payment date(s).
Vesting
conditions/period
The restricted shares will vest after one year and continue to be subject to a disposal restriction for an
additional three year period. Prior to each of the vesting date and the release date, the board will undertake
a conduct/risk review to confirm that vesting and release of the award aligns with the conduct and risk
outcomes of the group.
Vested awards
On the relevant release dates, the restriction on the shares is released. Some shares may be released early for
participants who cease employment to assist participants in managing their tax liability.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed for misconduct.
16,247,076
5,511,901
(5,829,217)
(926,564)
15,003,196
Salary Sacrifice Plans
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136
Notes to the financial statements
for the year ended 31 December 2021
(b) Share rights continued
The following table shows the movement in share rights outstanding during the period:
Grant Date
19/05/2017
02/04/2018
13/08/2018
03/12/2018
21/08/2018
01/04/2019
10/05/2019
17/05/2019
19/07/2019
20/09/2019
01/04/2020
23/11/2020
01/04/2021
09/08/2021
Total
Balance at
1 Jan 2021
974,463
1,507,500
53,191
40,816
726,744
2,127,923
957,447
773,997
91,787
8,287
7,357,477
1,627,444
Granted
Exercised
Lapsed
during the year
during the year
during the year
Balance at
31 Dec 2021
–
–
–
–
–
–
–
–
–
–
–
–
(974,463)
(1,488,308)
(53,191)
(40,816)
(436,046)
(222,163)
(957,447)
(53,140)
(1,096,400)
—
—
—
—
290,698
(298,788)
1,606,972
(19,192)
—
—
—
—
—
—
—
—
—
(8,287)
(412,320)
(187,977)
—
—
—
—
–
—
773,997
38,647
5,848,757
1,439,467
4,496,095
508,563
—
4,496,095
— 1,015,806
(507,243)
(c) Restricted shares
AMP Capital Enterprise Profit Share Plan
The AMP Capital Leadership Team is comprised of a select group of senior executives who are eligible to participate in the Enterprise
Profit Share Plan. This plan was designed to support AMP Capital’s remuneration framework by aligning its strategic intent and rewarding
behaviour that leads to sustainably increased profit and shareholder value. It is required that 40% of the participants’ profit share outcomes
be deferred. Half of the deferred component is awarded in the form of restricted shares for participants who reside in Australia with the
exception of the AMP Capital Chief Executive Officer. The objective of this is to create greater alignment with our shareholders. The equity
component of this plan was granted in 2019.
No restricted shares were granted under the above disclosed Plan in 2020 or 2021, however, share rights were granted to eligible participants.
Plan
Enterprise Profit Share Plan
Overview
The deferred component of the 2018 Enterprise Profit Share award was granted in the form of restricted shares.
Restricted shares are fully paid ordinary shares in AMP Limited that are held in the AMP Employee Share Trust on
behalf of the participant until the specified service/holding period has been met. They were granted at no cost
to participants and carry the same dividend or voting rights as other fully paid ordinary shares. Any dividends
paid on shares are received in the ordinary course on the dividend payment date(s).
Vesting
The restricted shares will vest after one year and continue to be subject to a disposal restriction for an additional
conditions/period
three year period. Prior to each vesting date and the release date, the board will undertake a conduct/risk review
to confirm that vesting and release of the award aligns with the conduct and risk outcomes of the group.
Vested awards
On the relevant release dates, the restriction on the shares is released.
Unvested awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed for misconduct.
2019 AMP EMPLOYEE SHARE PLAN – $1,000 TAX EXEMPT PLAN
All permanent employees as at 12 December 2018 were offered a $1,000 gift of shares subject to employment on the allocation date
in March 2019. These shares are subject to a restriction on sale and transfer for up to three-years from the date they are allocated. Any
shares acquired as a gift will be released to the participant at the end of the three-year period or when they leave employment with AMP
(whichever is earlier).
2020 AMP EMPLOYEE SHARE PLAN – $1,000 TAX EXEMPT PLAN
For the period 1 April 2020, eligible participants may acquire $1,000 fully paid ordinary shares in AMP by sacrificing $1,000 of their 2019
short-term incentive (STI) award. These shares are subject to a restriction on sale and transfer for up to three-years from the date they are
allocated. Any shares acquired will be released to the participant at the end of the three-year period or when they leave employment with
AMP (whichever is earlier).
The AMP $1,000 Tax Exempt Plan was not reoffered to employees in 2021 in its current format.
2019–2021 AMP EMPLOYEE SHARE PLAN – $5,000 SALARY SACRIFICE PLAN
All permanent employees in Australia were offered the opportunity to salary sacrifice between $1,000 – $5,000 over a 12-month period to
acquire shares in AMP. AMP offered a matching contribution on a 2:5 basis (1:5 in 2019 and 2020), meaning that employees who opted to salary
sacrifice $5,000 would receive an upfront matched allocation of $2,000 in AMP shares ($1,000 in AMP shares in 2019 and 2020) . The salary
sacrifice and matching shares are both held in an employee share plan trust on behalf of the employees and are subject to a restriction on sale
and transfer for up to three years from the date they are allocated.
Offer
2019
2020 and 2021
Purchased Shares
Matching Shares 1
Any purchased shares acquired during
2019, 2020 and 2021 will be released
to the participant at the end of the
three-year period.
Matching shares will be released at the end of the three-year period
or when they leave employment with AMP (whichever is earlier).
Matching shares will be released at the end of the two-year period
or when they leave employment with AMP (whichever is earlier).
1 Matching shares are forfeited if a participant voluntarily ceases employment before the end of the holding period.
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Notes to the financial statements
for the year ended 31 December 2021
4.2
SHARE-BASED PAYMENTS CONTINUED
(c) Restricted shares continued
Valuation of restricted shares
The restricted share awards are based on valuations prepared by an independent external consultant. The valuations are based on the
10-day volume weighted average share price over the 10-day trading period prior to the start of the award’s valuation period. Assumptions
regarding the dividend yield and volatility have been estimated based on AMP’s dividend yield and volatility over an appropriate period.
For the AMP Employee Share Plan $1,000 Tax Exempt Plan and $5,000 Salary Sacrifice Plan, the fair value of the shares was determined
as the market price of AMP ordinary shares on the grant date. As employees holding restricted shares are entitled to dividend payments,
no adjustment has been made to the fair value in respect of future dividend payments.
In determining the share-based payments expense for the period, the number of instruments expected to vest has been adjusted to reflect
the number of employees expected to remain with AMP until the end of the vesting period.
Grant date
25/02/2019
25/02/2019
14/03/2019
26/04/2019
13/08/2019
28/04/2020
30/04/2021
Share price
Contractual
life (years)
Vesting Date
Dividend yield
Fair value
$2.38
$2.38
$2.39
$2.39
$1.81
$1.675
$1.45
2.0
3.0
3.0
3.0
0.0
2.0
2.0
15/02/2021
15/02/2022
14/03/2022
26/04/2022
15/08/2021
30/04/2022
30/04/2023
n/a
n/a
n/a
n/a
4.0%
n/a
n/a
$2.38
$2.38
$2.39
$2.39
$1.81
$1.675
$1.45
The following table shows the movement in restricted shares outstanding for the period:
Grant date
25/02/2019
14/03/2019
26/04/2019
17/05/2019
13/08/2019
28/04/2020
30/04/2021
Total
Balance at
1 Jan 2021
791,143
1,446,144
263,778
1,308,206
234,932
289,737
—
4,333,940
Granted
during the year
Released
during the year
Lapsed
during the year
Balance at
31 Dec 2021
—
—
—
—
—
—
713,159
713,159
(791,143)
(407,085)
(38,145)
(230,854)
(234,932)
(33,942)
(39,084)
—
—
(37,065)
—
—
(37,224)
(93,985)
—
1,039,059
188,568
1,077,352
—
218,571
580,090
(1,775,185)
(168,274)
3,103,640
(d) Former CEO awards
The former CEO was awarded a range of awards during his tenure as CEO of AMP and as part of his exit agreement with the Company,
those awards remain on foot and will vest in accordance with the original terms of the award. The following awards remain outstanding
as at 31 December 2021.
Replacement Recovery Performance Rights Award
The recovery performance rights give the former CEO the right to acquire one fully paid ordinary share in AMP Limited (per right) upon
meeting specific performance hurdles, being the achievement of certain share price targets. The share price targets will be tested on
15 February 2022 (First Testing Date) and 15 February 2023 (Second Testing Date) and will vest as follows:
–
–
First Testing Date – 50% of rights granted will vest if the share price is $2.45 (adjusted for any significant capital initiatives); and
Second Testing Date – if the first share price target of $2.45 is not met at the first testing date, it will be retested and 50% will vest
if the $2.45 target is met. The remaining balance may also vest depending on the share price being higher than $2.45 and will vest
on a straight-line basis with 100% vesting if the share price is $2.75 (adjusted for any significant capital initiatives).
138
Notes to the financial statements
for the year ended 31 December 2021
(c) Restricted shares continued
Valuation of restricted shares
The restricted share awards are based on valuations prepared by an independent external consultant. The valuations are based on the
10-day volume weighted average share price over the 10-day trading period prior to the start of the award’s valuation period. Assumptions
regarding the dividend yield and volatility have been estimated based on AMP’s dividend yield and volatility over an appropriate period.
For the AMP Employee Share Plan $1,000 Tax Exempt Plan and $5,000 Salary Sacrifice Plan, the fair value of the shares was determined
as the market price of AMP ordinary shares on the grant date. As employees holding restricted shares are entitled to dividend payments,
no adjustment has been made to the fair value in respect of future dividend payments.
In determining the share-based payments expense for the period, the number of instruments expected to vest has been adjusted to reflect
the number of employees expected to remain with AMP until the end of the vesting period.
Share price
Vesting Date
Dividend yield
Fair value
Contractual
life (years)
Grant date
25/02/2019
25/02/2019
14/03/2019
26/04/2019
13/08/2019
28/04/2020
30/04/2021
Grant date
25/02/2019
14/03/2019
26/04/2019
17/05/2019
13/08/2019
28/04/2020
30/04/2021
Total
$2.38
$2.38
$2.39
$2.39
$1.81
$1.675
$1.45
Balance at
1 Jan 2021
791,143
1,446,144
263,778
1,308,206
234,932
289,737
—
4,333,940
2.0
3.0
3.0
3.0
0.0
2.0
2.0
—
—
—
—
—
—
15/02/2021
15/02/2022
14/03/2022
26/04/2022
15/08/2021
30/04/2022
30/04/2023
(791,143)
(407,085)
(38,145)
(230,854)
(234,932)
(33,942)
(39,084)
n/a
n/a
n/a
n/a
4.0%
n/a
n/a
(37,065)
—
—
—
—
(37,224)
(93,985)
$2.38
$2.38
$2.39
$2.39
$1.81
$1.675
$1.45
—
1,039,059
188,568
1,077,352
—
218,571
580,090
713,159
713,159
(1,775,185)
(168,274)
3,103,640
(d) Former CEO awards
as at 31 December 2021.
The former CEO was awarded a range of awards during his tenure as CEO of AMP and as part of his exit agreement with the Company,
those awards remain on foot and will vest in accordance with the original terms of the award. The following awards remain outstanding
Replacement Recovery Performance Rights Award
The recovery performance rights give the former CEO the right to acquire one fully paid ordinary share in AMP Limited (per right) upon
meeting specific performance hurdles, being the achievement of certain share price targets. The share price targets will be tested on
15 February 2022 (First Testing Date) and 15 February 2023 (Second Testing Date) and will vest as follows:
–
–
First Testing Date – 50% of rights granted will vest if the share price is $2.45 (adjusted for any significant capital initiatives); and
Second Testing Date – if the first share price target of $2.45 is not met at the first testing date, it will be retested and 50% will vest
if the $2.45 target is met. The remaining balance may also vest depending on the share price being higher than $2.45 and will vest
on a straight-line basis with 100% vesting if the share price is $2.75 (adjusted for any significant capital initiatives).
4.2
SHARE-BASED PAYMENTS CONTINUED
4.2
SHARE-BASED PAYMENTS CONTINUED
Buy-out Incentive Share Rights Award
The Buy-out Incentive share rights give the Former CEO the right to acquire one fully paid ordinary share in AMP Limited (per right) after
a specified period. All outstanding awards will vest by 15 February 2022.
Buy-out Incentive Restricted Shares Award
The Buy-out Incentive restricted shares are fully paid ordinary shares in AMP Limited that are held in the AMP Employee Share Trust
on behalf of the former CEO until the specified period has been met. All outstanding awards vested during the period.
2019 Short-term Incentive (STI) Award
The former CEO was awarded STI for the performance year 2019. 40% of the STI was awarded in share rights which were granted in 2020
and deferred for two years. The award will vest on 15 February 2022.
The following table shows the movement in the former CEO’s outstanding awards during the period:
Grant date
12/09/2019
21/08/2018
13/08/2019
01/04/2020
13/08/2019
Total
Award Type
Balance at
1 Jan 2021
Exercised
during the year
Lapsed
during the year
Balance at
31 Dec 2021
Performance
6,367,402
–
(1,245,334)
5,122,068
Share right
Share right
Share rights
726,744
(436,046)
–
290,698
293,664
(176,198)
–
117,466
264,000
–
–
264,000
Restricted share
408,164
(408,164)
–
–
8,059,974
(1,020,408)
(1,245,334)
5,794,232
The following table shows the movement in restricted shares outstanding for the period:
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Granted
Released
Lapsed
during the year
during the year
during the year
Balance at
31 Dec 2021
Equity-settled share-based payments
The cost of equity-settled share-based payments is measured using their fair value at the date on which they are granted. The fair value
calculation takes into consideration a number of factors, including the likelihood of achieving market-based vesting conditions such as total
shareholder return (market conditions).
The cost of equity-settled share-based payments is recognised in the income statement, together with a corresponding increase in the
share-based payment reserve (SBP reserve) in equity, over the vesting period of the instrument. At each reporting date, the AMP group
reviews its estimates of the number of instruments that are expected to vest and any changes to the cost are recognised in the Income
statement and the SBP reserve, over the remaining vesting period.
Where the terms of an equity-settled share-based payment are modified and the expense increases as a result of the modification,
the increase is recognised over the remaining vesting period. When a modification reduces the expense, there is no adjustment and the
pre-modification cost continues to be recognised.
Where an equity-settled award does not ultimately vest, expenses are not reversed; except for awards where vesting is conditional upon
a non-market condition, in which case all expenses are reversed in the period in which the instrument lapses.
Cash-settled share-based payments
Cash settled share-based payments are recognised when the terms of the arrangement provide AMP group with the discretion to settle
in cash or by issuing equity instruments and it has a present obligation to settle the arrangement in cash. A present obligation may occur
where the past practice has set a precedence for future settlements in cash.
Cash settled share-based payments are recognised, over the vesting period of the award, in the Income statement, together with
a corresponding liability. The fair value is measured on initial recognition and re-measured at each reporting date up to and including
the settlement date, with any changes in fair value recognised in the Income statement. Similar to equity-settled awards, number
of instruments expected to vest are reviewed at each reporting date and any changes are recognised in the Income statement and
corresponding liability. The fair value is determined using appropriate valuation techniques.
139
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140
Notes to the financial statements
for the year ended 31 December 2021
5
SECTION
GROUP ENTITIES
This section explains significant aspects of the AMP group structure, including significant investments in
controlled operating entities, and investments in associates. It also provides information on business acquisitions
and disposals made during the year.
5.1 Controlled entities
5.2
5.3
5.4
Investments in associates
Parent entity information
Related party disclosures
5.1
CONTROLLED ENTITIES
Significant investments in controlled operating entities are as follows:
Operating entities
Name of entity
AMP Advice Holdings Pty Ltd
AMP Bank Limited
AMP Capital Funds Management Limited
AMP Capital Holdings Limited
Country of
registration
Australia
Australia
Australia
Australia
AMP Capital Investors (New Zealand) Limited
New Zealand
AMP Capital Investors Limited
AMP Capital Office and Industrial Pty Limited
AMP Capital Shopping Centres Pty Limited
AMP Financial Planning Pty Limited
AMP Group Finance Services Limited
AMP Group Holdings Limited
AMP Services (NZ) Limited
AMP Services Limited
AMP Superannuation Limited
AMP Wealth Management Holdings Pty Ltd
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
AMP Wealth Management New Zealand Limited
New Zealand
Hillross Financial Services Limited
Ipac Group Services Pty Ltd
National Mutual Funds Management (Global) Limited
National Mutual Funds Management Ltd
N.M. Superannuation Pty Ltd
NMMT Limited
Australia
Australia
Australia
Australia
Australia
Australia
% holdings
Share type
2021
2020
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord A
Ord
Ord A
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
5.2
INVESTMENTS IN ASSOCIATES
Investments in associates accounted for using the equity method:
Ownership interest
Carrying amount 1
Associate
Principal activity
Place of business
2021
%
2020
%
Resolution Life NOHC 2, 3
Life insurance company
Australia
19.13%
19.62%
China Life Pension Company 3
Pension Company
China
19.99%
19.99%
China Life AMP Asset Management
Company Ltd
Investment Management
China
14.97%
14.97%
Global Infrastructure Fund Sponsor 4
Fund
Global Infrastructure Fund II 4
AMP Capital Infrastructure Debt
Fund IV USD LP4
AMP Capital Infrastructure Debt
Fund V USD LP2
Fund
Fund
Fund
Cayman Island
Cayman Island
4.74%
2.81%
4.74%
2.81%
Luxembourg
1.25%
1.25%
64
Luxembourg
1.80%
7.72%
3.08%
–
2021
$m
–
416
74
71
119
–
106
157
83
2020
$m
514
348
57
80
91
56
66
–
137
93
Significant investments in controlled operating entities are as follows:
ACRT Finance Pty Limited 4
Investment Management
Australia
Country of
registration
% holdings
Share type
2021
2020
PCCP, LLC (Pacific Coast Capital
Partners)
Other
Total investments in associates
Investment Management United States
24.90%
24.90%
n/a
n/a
1,090
1,442
AMP Capital Investors (New Zealand) Limited
New Zealand
1 The carrying amount is after recognising $150m (2020: $81m) share of current period profit or loss from its associates accounted for using the equity method.
2 Resolution Life NOHC and AMP Capital Infrastructure Debt Fund V USD LP are classified as assets held for sale as at 31 December 2021.
3 The AMP group has significant influence through representation on the entity's board.
4 Entities within the AMP group have been appointed investment manager, therefore the group is considered to have significant influence.
140
Notes to the financial statements
for the year ended 31 December 2021
This section explains significant aspects of the AMP group structure, including significant investments in
controlled operating entities, and investments in associates. It also provides information on business acquisitions
5
SECTION
GROUP ENTITIES
and disposals made during the year.
5.1 Controlled entities
5.2
5.3
5.4
Investments in associates
Parent entity information
Related party disclosures
5.1
CONTROLLED ENTITIES
Operating entities
Name of entity
AMP Advice Holdings Pty Ltd
AMP Bank Limited
AMP Capital Funds Management Limited
AMP Capital Holdings Limited
AMP Capital Investors Limited
AMP Capital Office and Industrial Pty Limited
AMP Capital Shopping Centres Pty Limited
AMP Financial Planning Pty Limited
AMP Group Finance Services Limited
AMP Group Holdings Limited
AMP Services (NZ) Limited
AMP Services Limited
AMP Superannuation Limited
AMP Wealth Management Holdings Pty Ltd
AMP Wealth Management New Zealand Limited
New Zealand
Hillross Financial Services Limited
Ipac Group Services Pty Ltd
National Mutual Funds Management (Global) Limited
National Mutual Funds Management Ltd
N.M. Superannuation Pty Ltd
NMMT Limited
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord A
Ord
Ord A
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
141
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142
Notes to the financial statements
for the year ended 31 December 2021
5.2
INVESTMENTS IN ASSOCIATES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Investments in associates
INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
Investments in entities over which the AMP group has the ability to exercise significant influence, but not control, are accounted for using
the equity method of accounting. The investment is measured at cost plus post-acquisition changes in the AMP group’s share of the
associates’ net assets, less any impairment in value. The AMP group’s share of profit or loss of associates is included in the Consolidated
income statement. Any dividend or distribution received from associates is accounted for as a reduction in carrying value of the associate.
Any impairment is recognised in the Consolidated income statement when there is objective evidence a loss has been incurred. It is measured
as the amount by which the carrying amount of the investment in entities exceeds the recoverable amount.
5.3
PARENT ENTITY INFORMATION
(a) Statement of comprehensive income – AMP Limited entity
Dividends interest from controlled entities and net gains or losses on financial assets 1
Service fee revenue
Share of profit or loss of associates accounted for using the equity method
Operating expenses
Impairment of investments in controlled entities
Finance costs
Income tax credit 2
Loss for the year
Total comprehensive loss for the year
1 Dividend income from controlled entities $169m (2020: $413m) is not assessable for tax purposes.
2 Income tax credit includes $nil (2020: $nil) utilisation of previously unrecognised tax losses.
2021
$m
185
14
52
(109)
(450)
(37)
43
(302)
(302)
2020
$m
427
12
33
10
(2,295)
(39)
20
(1,832)
(1,832)
142
Notes to the financial statements
for the year ended 31 December 2021
Investments in associates
INVESTMENTS IN ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
Investments in entities over which the AMP group has the ability to exercise significant influence, but not control, are accounted for using
the equity method of accounting. The investment is measured at cost plus post-acquisition changes in the AMP group’s share of the
associates’ net assets, less any impairment in value. The AMP group’s share of profit or loss of associates is included in the Consolidated
income statement. Any dividend or distribution received from associates is accounted for as a reduction in carrying value of the associate.
Any impairment is recognised in the Consolidated income statement when there is objective evidence a loss has been incurred. It is measured
as the amount by which the carrying amount of the investment in entities exceeds the recoverable amount.
5.3
PARENT ENTITY INFORMATION
(a) Statement of comprehensive income – AMP Limited entity
Dividends interest from controlled entities and net gains or losses on financial assets 1
Share of profit or loss of associates accounted for using the equity method
Impairment of investments in controlled entities
Service fee revenue
Operating expenses
Finance costs
Income tax credit 2
Loss for the year
Total comprehensive loss for the year
1 Dividend income from controlled entities $169m (2020: $413m) is not assessable for tax purposes.
2 Income tax credit includes $nil (2020: $nil) utilisation of previously unrecognised tax losses.
2021
$m
185
14
52
(109)
(450)
(37)
43
(302)
(302)
2020
$m
427
12
33
10
(39)
20
(2,295)
(1,832)
(1,832)
5.2
INVESTMENTS IN ASSOCIATES CONTINUED
5.3
PARENT ENTITY INFORMATION CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
(b) Statement of financial position – AMP Limited entity
Current assets
Cash and cash equivalents
Receivables and prepayments 1
Current tax assets
Loans and advances to subsidiaries
Investments in other financial assets
Non-current assets
Investments in controlled entities
Investments in associates
Loans and advances to subsidiaries
Deferred tax assets 2
Total assets
Current liabilities
Payables 1
Current tax liabilities
Provisions
Subordinated debt 3
Non-current liabilities
Subordinated debt 3
Deferred tax liabilities
Total liabilities
Net assets
Equity – AMP Limited entity
Contributed equity
Share-based payment reserve
Other reserve
Retained earnings 4
Total equity
2021
$m
2020
$m
64
160
201
–
63
16
141
153
570
–
5,359
5,336
427
500
177
358
250
52
6,951
6,876
1,129
66
90
250
523
–
2,058
4,893
395
70
2
265
772
10
1,514
5,362
10,206
10,402
32
14
(5,359)
4,893
27
(10)
(5,057)
5,362
1 Receivables and payables include tax-related amounts receivable from subsidiaries $155m (2020: $97m) and payable to subsidiaries $614m (2020: $359m).
2 Deferred tax assets include amounts recognised for losses available for offset against future taxable income $nil (2020: $43m).
3 The AMP Limited entity is the issuer of: AMP Wholesale Capital Notes; AMP Capital Notes, AMP Capital Notes 2, AMP Subordinated Notes and AMP Notes 3.
Further information on these is provided in note 3.2.
4 Changes in retained earnings comprise $302m loss (2020: $1,832m loss) for the year less dividends paid of $nil (2020: $343m).
(c) Contingent liabilities of the AMP Limited entity
The AMP Limited entity has entered into deeds to provide capital maintenance and liquidity support to AMP Bank Limited. At the reporting
date, the likelihood of any outflow in settlement of these obligations is considered remote.
143
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A
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f
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a
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144
Notes to the financial statements
for the year ended 31 December 2021
5.4 RELATED PARTY DISCLOSURES
(a) Key management personnel
Compensation of key management personnel
Short-term benefits
Post-employment benefits
Share-based payments
Other long-term benefits
Termination benefits
Total
2021
$’000
10,215
198
11,947
217
2,777
25,354
2020
$’000
12,537
454
10,767
728
3,143
27,629
Compensation of the group’s key management personnel includes salaries, non-cash benefits and contributions to the post-employment
defined benefit plans (refer to note 4.1). Executive officers also participate in share-based incentive programs (refer to note 4.2). The amounts
disclosed in the table are recognised as an expense during the reporting period.
Loans to key management personnel
Loans to key management personnel and their related parties are provided by AMP Bank and are on similar terms and conditions generally
available to other employees within the group. No guarantees are given or received in relation to these loans. Loans have been made to five
key management personnel and their related parties. Details of these loans are:
Balance as at the beginning of the year
Net (repayments) advances
Balance as at the end of the year
Interest charged
2021
$’000
3,751
1,474
5,225
69
2020
$’000
9,212
(174)
9,038
203
Key management personnel access to AMP’s products
From time to time, key management personnel or their related entities may have had access to certain AMP products and services such
as investment products, personal banking and financial investment services. These products and services are offered to key management
personnel on the same terms and conditions as those entered into by other group employees or customers.
144
Notes to the financial statements
for the year ended 31 December 2021
(a) Key management personnel
Compensation of key management personnel
Short-term benefits
Post-employment benefits
Share-based payments
Other long-term benefits
Termination benefits
Total
2021
$’000
10,215
198
11,947
217
2,777
25,354
2020
$’000
12,537
454
10,767
728
3,143
27,629
2021
$’000
3,751
1,474
5,225
69
2020
$’000
9,212
(174)
9,038
203
Compensation of the group’s key management personnel includes salaries, non-cash benefits and contributions to the post-employment
defined benefit plans (refer to note 4.1). Executive officers also participate in share-based incentive programs (refer to note 4.2). The amounts
disclosed in the table are recognised as an expense during the reporting period.
Loans to key management personnel
Loans to key management personnel and their related parties are provided by AMP Bank and are on similar terms and conditions generally
available to other employees within the group. No guarantees are given or received in relation to these loans. Loans have been made to five
key management personnel and their related parties. Details of these loans are:
Balance as at the beginning of the year
Net (repayments) advances
Balance as at the end of the year
Interest charged
Key management personnel access to AMP’s products
From time to time, key management personnel or their related entities may have had access to certain AMP products and services such
as investment products, personal banking and financial investment services. These products and services are offered to key management
personnel on the same terms and conditions as those entered into by other group employees or customers.
5.4 RELATED PARTY DISCLOSURES
5.4 RELATED PARTY DISCLOSURES CONTINUED
(b) Transactions with related parties
Transactions with non-executive directors
Some of the non-executive directors hold directorships or positions in other companies or organisations. AMP may provide or receive
services from these companies or organisations negotiated based on arm’s length terms. None of the non-executive directors were, or are,
involved in any procurement or board decision making regarding the companies or organisations with which they have an association.
Transactions with Resolution Life Australasia
Transactions during the period involve activities in conjunction with the sale of the WP and mature businesses to Resolution Life
Australasia. To facilitate the transition of these businesses to new ownership, the group provides operational services under a Transitional
Services Agreement (TSA). Fees charged under the TSA are in accordance with negotiated terms equivalent to those that prevail in arm’s
length transactions.
The group also provides Resolution Life Australasia with investment management and advice-related services in the normal course of business.
Resolution Life Australasia currently has funds on deposit with AMP Bank for which interest expense has been incurred and accrued for
by the group.
Transactions with other associates
The group provides investment management and banking services under general service level agreements with other associates as well
as support to financial advice practices.
Dividends were received from associates.
Transactions with investment entities
In conjunction with the establishment of new investment funds managed by AMP Capital or other group associates, the group, from time
to time, invests seed and sponsor capital. The structure of the fund or the group’s level of ownership may result in the fund being treated
as an associate of the group. See note 5.2 for details of the group’s associates. Management fees are earned by AMP or its associates for
managing and administering these investment funds.
All transactions between the group, its associates and the funds are on an arm’s length basis.
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Short-term benefits – Liabilities arising in respect of salaries and wages and any other employee entitlements expected to be settled within
12 months of the reporting date are measured at their nominal amounts.
Post-employment benefits – Defined contribution funds – The contributions paid and payable by the AMP group to defined contributions
funds are recognised in the Consolidated income statement as an operating expense when they fall due. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.
Share-based payments – Refer to note 4.2.
Other long-term benefits – Other employee entitlements are measured at the present value of the estimated future cash outflows to be made
in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, discount rates
are determined with reference to market yields at the end of the reporting period on high quality corporate bonds or, in countries where there
is no deep market in such bonds, by using market yields at the end of the period on government bonds.
145
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146
Notes to the financial statements
for the year ended 31 December 2021
6
SECTION
OTHER DISCLOSURES
This section includes disclosures other than those covered in the previous sections, required for the AMP group
to comply with the accounting standards and pronouncements.
6.1 Notes to Consolidated statement of cash flows
6.2 Commitments
6.3 Right of use assets and lease liabilities
6.4
Provisions and contingent liabilities
6.5 Auditors’ remuneration
6.6 New accounting standards
6.7
Events occurring after reporting date
6.1 NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
(a) Reconciliation of cash flow from operating activities
Net (loss)/profit after income tax
Depreciation of operating assets
Amortisation and impairment of intangibles
Investment (losses)/gains and movements in external unitholders' liabilities
Dividend and distribution income received/(reinvested)
Share-based payments
Decrease in receivables, intangibles and other assets
(Decrease)/increase in guarantee liabilities
Decrease in net policy liabilities
Increase/(decrease) in income tax balances
Increase in deposits, other payables and provisions
Net cash provided by/(used in) operating activities
(b) Reconciliation of cash
Comprises:
Cash and cash equivalents
Cash included in assets held for sale
Short-term bills and notes (included in Debt securities)
Cash and cash equivalents for the purpose of the Statement of cash flows
2021
$m
(254)
62
227
(187)
121
14
174
(66)
–
(18)
1,616
1,689
2021
$m
2,916
21
107
3,044
2020
$m
194
74
144
7,846
(1,223)
9
281
30
(10,506)
(1,136)
1,545
(2,742)
2020
$m
2,428
–
225
2,653
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Cash and cash equivalents
Cash and cash equivalents comprise cash-on-hand that is available on demand and deposits that are held at call with financial institutions.
Cash and cash equivalents are measured at fair value, being the principal amount. For the purpose of the Consolidated statement of cash
flows, Cash and cash equivalents also include other highly liquid investments not subject to significant risk of change in value, with short
periods to maturity, net of outstanding bank overdrafts. Bank overdrafts are shown within Interest-bearing liabilities in the Consolidated
statement of financial position.
146
Notes to the financial statements
for the year ended 31 December 2021
This section includes disclosures other than those covered in the previous sections, required for the AMP group
to comply with the accounting standards and pronouncements.
6.1 Notes to Consolidated statement of cash flows
6
SECTION
OTHER DISCLOSURES
6.2 Commitments
6.3 Right of use assets and lease liabilities
6.4
Provisions and contingent liabilities
6.5 Auditors’ remuneration
6.6 New accounting standards
6.7
Events occurring after reporting date
6.1 NOTES TO CONSOLIDATED STATEMENT OF CASH FLOWS
6.2 COMMITMENTS
(a) Commitments for leases not yet commenced
The future lease payments for which the group is committed but the leases have not yet commenced as at 31 December 2021 are $734m
(2020: $735m). Lease commitments do not include non-lease components per AMP’s accounting policy based on AASB 16 Leases.
(b) Buy-back arrangements
Historically, AMP has had contractual arrangements with financial advice businesses in AMP’s aligned advice network to purchase
their client registers at agreed multiples to revenue subject to certain conditions being met. These buy-back arrangements included
arrangements known as Buyer of Last Resort (BOLR). Advice businesses must register their intention to invoke buy-back arrangements,
which have six to 18-month lead times and are subject to audit prior to finalising the purchase price. On 26 July 2021, as part of the new
Licensee commercial terms, AMP announced the conclusion of these client register buy-back arrangements, with eligible practices able to
register their intention to invoke buy-back arrangements through 31 December 2021. The pipeline of buy-back arrangements where an
intention to invoke has been registered by 31 December 2021 is $42m (2020: $89m), all of which relates to arrangements expected to settle
in the next 18 months. The commitment value reflects the unaudited value as advised by the advice businesses. AMP’s experience is that
the ultimate purchase price after audit is typically less than the initially advised value and not all of the buy-back progress to completion.
Over the 12 months ended 31 December 2021, $54m was paid for executed buy-back arrangements. Where a notice of intention to invoke
the buy-back arrangement has been received by 31 December 2021 and AMP has concluded that the purchase price of the register exceeds
the value of the client register to AMP, or where ongoing service arrangements would be unable to be serviced or sold, a provision has been
raised for the difference. Refer to note 6.4 for further details.
(a) Reconciliation of cash flow from operating activities
(c)
Investment commitments
Investment (losses)/gains and movements in external unitholders' liabilities
Net (loss)/profit after income tax
Depreciation of operating assets
Amortisation and impairment of intangibles
Dividend and distribution income received/(reinvested)
Share-based payments
Decrease in receivables, intangibles and other assets
(Decrease)/increase in guarantee liabilities
Decrease in net policy liabilities
Increase/(decrease) in income tax balances
Increase in deposits, other payables and provisions
Net cash provided by/(used in) operating activities
(b) Reconciliation of cash
Comprises:
Cash and cash equivalents
Cash included in assets held for sale
Short-term bills and notes (included in Debt securities)
Cash and cash equivalents for the purpose of the Statement of cash flows
2021
$m
(254)
62
227
(187)
121
14
174
(66)
–
(18)
1,616
1,689
2021
$m
2,916
21
107
3,044
2020
$m
194
74
144
7,846
(1,223)
9
281
30
(10,506)
(1,136)
1,545
(2,742)
2020
$m
2,428
–
225
2,653
At 31 December 2021 AMP Capital Finance Limited, a controlled entity of AMP Limited, had uncalled investment commitments of $452m
(2020: $217m) in relation to certain funds managed by AMP Capital. Subsequent to the reporting date, $nil of this committed capital was
invested by AMP Capital Finance Limited into AMP Capital managed funds. These investment commitments will only be called when
suitable investment opportunities arise, and the exact timeline could not be specified.
(d) AMP Bank credit-related commitments
At 31 December 2021 AMP Bank had credit-related commitments of $3,702m (2020: $3,398m), which include undrawn balances on
customer approved limits as well as loan offers pending signing by customers and signed loan contracts pending settlement. The bank
expects that not all of the credit-related commitments will be drawn before their contractual expiry.
6.3
RIGHT OF USE ASSETS AND LEASE LIABILITIES
The AMP group adopted AASB 16 Leases (AASB 16) from 1 January 2019. Per AASB 16, the group recognises leases on balance sheet as lease
liabilities except for short-term leases and leases of low value, with corresponding right of use assets being recognised on balance sheet
as well.
(a) Right of use assets
The main type of ROU asset recognised by the group is buildings. The following table details the carrying amount of the ROU assets
at 31 December 2021 and the movements during the year.
Balance at the beginning of the year
Derecognitions during the year
Impairment expense
Depreciation expense
Foreign currency exchange rate changes and other
Transferred to assets held for sale
Balance at the end of the year
2021
$m
174
(20)
(12)
(45)
2
(3)
96
2020
$m
245
(5)
(11)
(51)
(4)
–
174
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Cash and cash equivalents
Cash and cash equivalents comprise cash-on-hand that is available on demand and deposits that are held at call with financial institutions.
Cash and cash equivalents are measured at fair value, being the principal amount. For the purpose of the Consolidated statement of cash
flows, Cash and cash equivalents also include other highly liquid investments not subject to significant risk of change in value, with short
periods to maturity, net of outstanding bank overdrafts. Bank overdrafts are shown within Interest-bearing liabilities in the Consolidated
statement of financial position.
147
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148
Notes to the financial statements
for the year ended 31 December 2021
6.3
RIGHT OF USE ASSETS AND LEASE LIABILITIES CONTINUED
(b) Lease liabilities
The following table details the carrying amount of lease liabilities at 31 December 2021 and the movements during the year.
Balance at the beginning of the year
Derecognitions during the year
Interest expense
Payments made
Foreign currency exchange rate changes and other
Transferred to liabilities held for sale
Balance at the end of the year
2021
$m
211
(26)
7
(56)
2
(3)
135
2020
$m
266
(7)
10
(54)
(4)
–
211
The AMP group paid $4m (2020: $8m) in relation to short-term leases and $nil (2020: $1m) in relation to variable lease payments. The total
cash outflow for leases in 2021 was $60m (2020: $63m).
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
At inception, the AMP group assesses whether a contract is or contains a lease. Such assessment involves the application of judgement
as to whether:
–
–
–
the contract involves the use of an identified asset;
the group obtains substantially all the economic benefits from the asset; and
the group has the right to direct the use of the asset.
It is AMP’s policy to separate non-lease components when recognising the lease liability.
The group recognises a Right of Use (ROU) asset and a lease liability at the lease commencement date. The ROU asset is initially measured
as the present value of future lease payments, plus initial direct costs and restoration costs of the underlying asset, less any lease incentives
received. The ROU asset is depreciated over the shorter of the lease term and the useful life of the underlying asset. The ROU asset is tested
for impairment if there is an indicator, and is adjusted for certain remeasurements of the lease liability.
A lease liability is initially measured at the present value of future lease payments discounted using the group’s incremental borrowing rate.
Lease payments generally include fixed payments and variable payments that depend on an index, eg CPI. A lease liability is remeasured
when there is a change in future lease payments from a change in an index, or if the group’s assessment of whether an option will be
exercised changes.
Interest expense on lease liabilities is recognised within finance costs in the Consolidated income statement.
The group has elected not to recognise ROU assets and lease liabilities for leases where the lease term is less than or equal to 12 months.
Payments for such leases are recognised as an expense on a straight-line basis over the lease term.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The group recognises lease liabilities and corresponding ROU assets for all leases where the group is a lessee, except for
short term leases and leases where the underlying asset is of low value. Management applies judgement in identifying and
measuring lease liabilities and assessing impairment indicators for ROU assets which includes:
–
–
–
–
–
assessing whether a contract contains a lease;
determining lease term and incremental borrowing rate;
separating lease and non-lease components;
assessing lease modification vis-a-vis new lease;
assessing the usage of ROU assets and the associated benefits.
6.3
RIGHT OF USE ASSETS AND LEASE LIABILITIES CONTINUED
6.4
PROVISIONS AND CONTINGENT LIABILITIES
(b) Lease liabilities
The following table details the carrying amount of lease liabilities at 31 December 2021 and the movements during the year.
(a) Provisions
Client remediation
Buy-back arrangements
Compliance and regulatory 1
Obligations relating to corporate reorganisation
Other 2
Total provisions
2021
$m
87
20
44
138
299
588
2020
$m
579
67
20
253
137
1,056
(b) Movements in provisions
Balance at the beginning of the year
Net provisions made during the year
Provisions used during the year
Transferred to liabilities held for sale
Balance at the end of the year
Client
remediation
$m
Buy-back
arrangements
$m
Compliance
and
regulatory 1
$m
Obligations
relating to
corporate
reorganisation
$m
Other 2
$m
Total
$m
579
32
(524)
–
87
67
–
(47)
–
20
20
27
(3)
–
44
253
127
(101)
(141)
138
137
277
(115)
–
299
1,056
463
(790)
(141)
588
1 Includes provisions related to APRA enforceable undertaking.
2 Other provisions include provisions for onerous lease arrangements, deferred payments relating to purchase of client registers, make-good provisions
relating to rental premises and other operational provisions. $8m (2020:$16m) is expected to be settled more than 12 months from the reporting date.
148
Notes to the financial statements
for the year ended 31 December 2021
Balance at the beginning of the year
Derecognitions during the year
Interest expense
Payments made
Foreign currency exchange rate changes and other
Transferred to liabilities held for sale
Balance at the end of the year
2021
$m
211
(26)
7
(56)
2
(3)
135
2020
$m
266
(7)
10
(54)
(4)
–
211
The AMP group paid $4m (2020: $8m) in relation to short-term leases and $nil (2020: $1m) in relation to variable lease payments. The total
cash outflow for leases in 2021 was $60m (2020: $63m).
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
At inception, the AMP group assesses whether a contract is or contains a lease. Such assessment involves the application of judgement
as to whether:
–
–
–
the contract involves the use of an identified asset;
the group obtains substantially all the economic benefits from the asset; and
the group has the right to direct the use of the asset.
It is AMP’s policy to separate non-lease components when recognising the lease liability.
The group recognises a Right of Use (ROU) asset and a lease liability at the lease commencement date. The ROU asset is initially measured
as the present value of future lease payments, plus initial direct costs and restoration costs of the underlying asset, less any lease incentives
received. The ROU asset is depreciated over the shorter of the lease term and the useful life of the underlying asset. The ROU asset is tested
for impairment if there is an indicator, and is adjusted for certain remeasurements of the lease liability.
A lease liability is initially measured at the present value of future lease payments discounted using the group’s incremental borrowing rate.
Lease payments generally include fixed payments and variable payments that depend on an index, eg CPI. A lease liability is remeasured
when there is a change in future lease payments from a change in an index, or if the group’s assessment of whether an option will be
exercised changes.
Interest expense on lease liabilities is recognised within finance costs in the Consolidated income statement.
The group has elected not to recognise ROU assets and lease liabilities for leases where the lease term is less than or equal to 12 months.
Payments for such leases are recognised as an expense on a straight-line basis over the lease term.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The group recognises lease liabilities and corresponding ROU assets for all leases where the group is a lessee, except for
short term leases and leases where the underlying asset is of low value. Management applies judgement in identifying and
measuring lease liabilities and assessing impairment indicators for ROU assets which includes:
–
–
–
–
–
assessing whether a contract contains a lease;
determining lease term and incremental borrowing rate;
separating lease and non-lease components;
assessing lease modification vis-a-vis new lease;
assessing the usage of ROU assets and the associated benefits.
149
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150
Notes to the financial statements
for the year ended 31 December 2021
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Provisions
Provisions are recognised when:
–
–
–
the AMP group has a present obligation (legal or constructive) as a result of a past event;
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
a reliable estimate can be made of the amount of the obligation.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The group recognises a provision where a legal or constructive obligation exists at the balance sheet date and a reliable
estimate can be made of the likely outcome. Provisions are reviewed on a regular basis and adjusted for management’s
best estimates, however significant judgement is required to estimate likely outcomes and future cash flows.
The judgemental nature of these items means that future amounts settled may be different from those provided for.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation
at the reporting date. For provisions other than employee entitlements, the discount rate used to determine the present value reflects
current market assessments of the time value of money and the risks specific to the liability.
A contingent liability is disclosed where a legal or constructive obligation is possible, but not probable; or where the obligation is probable,
but the financial impact of the event is unable to be reliably estimated.
From time to time, the AMP group may incur obligations or suffer financial loss arising from litigation or contracts entered into in the
normal course of business, including guarantees issued by the parent for performance obligations of controlled entities in the AMP group.
Legal proceedings threatened against AMP may also, if filed, result in AMP incurring obligations or suffering financial loss. A contingent
liability exists in relation to actual and likely potential legal proceedings.
Where it is determined that the disclosure of information in relation to a contingent liability can be expected to seriously prejudice the
position of the AMP group (or its insurers) in a dispute, accounting standards allow the AMP group not to disclose such information.
It is the AMP group’s policy that such information is not disclosed in this note.
Industry and regulatory compliance investigations
AMP is subject to review from time to time by regulators, both in Australia and offshore. In Australia, AMP’s principal regulators are
APRA, ASIC and AUSTRAC, although other government agencies may have jurisdiction depending on the circumstances. The reviews and
investigations conducted by regulators may be industry-wide or specific to AMP and the outcomes of those reviews and investigations can
vary and may lead to the imposition of penalties, for example, variations or restrictions to licences, the compensation of clients, enforceable
undertakings or recommendations and directions for AMP to enhance its control framework, governance and systems.
AMP also performs internal investigations to determine, amongst other things, where clients or other stakeholders, including employees,
may have been disadvantaged. In some instances, compensation has been paid and where the results of our reviews have reached the
point that compensation is likely and can be reliably estimated then a provision has been raised.
Client remediation
Since 2018 AMP has been actively engaged in a large-scale customer review and remediation program. This program was established
to identify and compensate clients who have suffered loss or detriment as a result of either:
–
inappropriate advice from their adviser; or
– where clients have been charged an advice service fee without the provision of financial advice services (or insufficient evidence
of the provision of financial advice services).
AMP has completed the review of all in scope customers and the majority of remediation payments have been made to date with
a remaining $60m provision held at 31 December 2021. Remaining payments are targeted to complete in the first half of 2022.
Provisions for client remediation do not include amounts for potential recoveries from advisers and insurers.
150
Notes to the financial statements
for the year ended 31 December 2021
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Provisions
Provisions are recognised when:
–
–
–
the AMP group has a present obligation (legal or constructive) as a result of a past event;
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and
a reliable estimate can be made of the amount of the obligation.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The group recognises a provision where a legal or constructive obligation exists at the balance sheet date and a reliable
estimate can be made of the likely outcome. Provisions are reviewed on a regular basis and adjusted for management’s
best estimates, however significant judgement is required to estimate likely outcomes and future cash flows.
The judgemental nature of these items means that future amounts settled may be different from those provided for.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation
at the reporting date. For provisions other than employee entitlements, the discount rate used to determine the present value reflects
current market assessments of the time value of money and the risks specific to the liability.
A contingent liability is disclosed where a legal or constructive obligation is possible, but not probable; or where the obligation is probable,
but the financial impact of the event is unable to be reliably estimated.
From time to time, the AMP group may incur obligations or suffer financial loss arising from litigation or contracts entered into in the
normal course of business, including guarantees issued by the parent for performance obligations of controlled entities in the AMP group.
Legal proceedings threatened against AMP may also, if filed, result in AMP incurring obligations or suffering financial loss. A contingent
liability exists in relation to actual and likely potential legal proceedings.
Where it is determined that the disclosure of information in relation to a contingent liability can be expected to seriously prejudice the
position of the AMP group (or its insurers) in a dispute, accounting standards allow the AMP group not to disclose such information.
It is the AMP group’s policy that such information is not disclosed in this note.
Industry and regulatory compliance investigations
AMP is subject to review from time to time by regulators, both in Australia and offshore. In Australia, AMP’s principal regulators are
APRA, ASIC and AUSTRAC, although other government agencies may have jurisdiction depending on the circumstances. The reviews and
investigations conducted by regulators may be industry-wide or specific to AMP and the outcomes of those reviews and investigations can
vary and may lead to the imposition of penalties, for example, variations or restrictions to licences, the compensation of clients, enforceable
undertakings or recommendations and directions for AMP to enhance its control framework, governance and systems.
AMP also performs internal investigations to determine, amongst other things, where clients or other stakeholders, including employees,
may have been disadvantaged. In some instances, compensation has been paid and where the results of our reviews have reached the
point that compensation is likely and can be reliably estimated then a provision has been raised.
Client remediation
Since 2018 AMP has been actively engaged in a large-scale customer review and remediation program. This program was established
to identify and compensate clients who have suffered loss or detriment as a result of either:
–
inappropriate advice from their adviser; or
of the provision of financial advice services).
– where clients have been charged an advice service fee without the provision of financial advice services (or insufficient evidence
AMP has completed the review of all in scope customers and the majority of remediation payments have been made to date with
a remaining $60m provision held at 31 December 2021. Remaining payments are targeted to complete in the first half of 2022.
Provisions for client remediation do not include amounts for potential recoveries from advisers and insurers.
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
OTHER MATTERS
In addition to the inappropriate advice and advice service fee reviews mentioned above, other reviews, as part of ongoing monitoring
and supervision activities, have been performed. These reviews are ongoing and where the reviews have identified instances of clients
having suffered loss or detriment, compensation has been paid. As at 31 December 2021, provisions and project costs of $27m have been
recognised for the estimated compensation due to clients, including lost earnings for these matters. These provisions are judgemental and
the actual compensation to clients could vary from the amounts provided.
Buy-back arrangement
Historically, AMP has had contractual arrangements with financial advice businesses in AMP’s aligned advice network to purchase
their client registers at agreed multiples to revenue subject to certain conditions being met. These buy-back arrangements included
arrangements known as Buyer of Last Resort (BOLR). On 26 July 2021, as part of the new Licensee commercial terms, AMP announced
the conclusion of these client register buy-back arrangements, with eligible practices able to register their intention to invoke buy-back
arrangements on or before 31 December 2021. Where a notice of intention to invoke the buy-back arrangement has been received and
AMP has concluded that the purchase price of the register exceeds the value of the client register to AMP, or where ongoing service
arrangements would be unable to be serviced or sold, a provision has been raised for the difference. The provision is judgemental and the
actual resulting loss incurred upon settlement of the arrangements may vary from the provision.
Contingent liabilities for future buy-backs, where no notification was received on or before 31 December 2021, no longer remain following
the cessation of the buy-back arrangements.
Litigation
SHAREHOLDER CLASS ACTIONS
During May and June 2018, AMP Limited was served with five competing shareholder class actions, one filed in the Supreme Court of NSW
and the others filed in the Federal Court of Australia. The actions follow the financial advice hearing block in the Royal Commission in April
2018 and allege breaches by AMP Limited of its continuous disclosure obligations. Each action is on behalf of shareholders who acquired
an interest in AMP Limited shares over a specified time period. Subsequently, the four proceedings commenced in the Federal Court of
Australia were transferred to the Supreme Court of NSW. The Supreme Court of NSW determined that a consolidated class action (of two
of the class actions) should continue, and the other three proceedings were permanently stayed. Following various appeals (including to the
High Court of Australia), the consolidated class action continues. AMP Limited has filed its defence to the proceedings. The claims are yet
to be quantified and participation has not been determined. Currently it is not possible to determine the ultimate impact of these claims,
if any, upon AMP. AMP Limited is defending these actions.
SUPERANNUATION CLASS ACTIONS
During May and June 2019, certain subsidiaries of AMP Limited, namely, N.M. Superannuation Proprietary Limited (NM Super), AMP
Superannuation Limited (AMP Super), NMMT Limited and AMP Services Limited (AMP Services), were served with two class actions in
the Federal Court of Australia. The first of those class actions relates to the fees charged to members of certain of AMP superannuation
funds. The second of those actions relates to the fees charged to members, and interest rates received and fees charged on cash-only
fund options. The two proceedings were brought on behalf of certain superannuation clients and their beneficiaries. Subsequently, the
Federal Court ordered that the two proceedings be consolidated into one class action. The AMP respondents have filed defences to the
proceedings. The claims are yet to be quantified and participation has not been determined. Currently, it is not possible to determine the
ultimate impact of these claims, if any, upon AMP. The proceedings are being defended.
FINANCIAL ADVISER CLASS ACTION
In July 2020, a subsidiary of AMP Limited, namely, AMP Financial Planning Pty Limited (AMPFP), was served with a class action in the Federal
Court of Australia. The proceeding is brought on behalf of certain financial advisers who are or have been authorised by AMPFP. The claim
relates to changes made by AMPFP to its Buyer of Last Resort policy in 2019. The claim is yet to be quantified and participation has not been
determined. Currently it is not possible to determine the ultimate impact of this claim, if any, upon AMP. AMPFP has filed its defence to the
proceedings, and AMPFP is confident in the actions it took in 2019 and is defending the proceeding accordingly.
COMMISSIONS FOR ADVICE AND INSURANCE ADVICE CLASS ACTION
In July 2020, certain subsidiaries of AMP Limited, namely, AMPFP and Hillross Financial Services Limited (Hillross) were served with a class
action in the Federal Court of Australia. The class action related to advice provided by some aligned financial advisers in respect of certain
life and other insurance products. Subsequently, in August 2020, AMP Limited, and certain subsidiaries of AMP Limited, namely, AMPFP,
Hillross and Charter Financial Planning Limited (Charter), were served with a class action in the Federal Court of Australia. The class action
primarily related to the payment of commissions to some aligned financial advisers in respect of certain life insurance and other products
and in respect of allegations of charging of fees where advice services were not provided. In December 2020, the Federal Court ordered that
these two class actions be consolidated. The AMP respondents have filed a defence to the proceedings. The claim is yet to be quantified
and participation has not been determined. Currently, it is not possible to determine the ultimate impact of this claim, if any, upon AMP.
The proceedings are being defended.
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152
Notes to the financial statements
for the year ended 31 December 2021
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
ASIC CIVIL PENALTY PROCEEDINGS IN RESPECT OF DECEASED CUSTOMERS
Certain subsidiaries of AMP Limited, namely, AMPFP, NM Super, AMP Super and AMP Services, are the subject of proceedings brought
by ASIC on 26 May 2021. The proceedings allege contraventions of the Corporations Act 2001 (Cth) (Corporations Act) and the Australian
Securities and Investments Commission Act 2001 (Cth) (ASIC Act) relating to the alleged charging and retention of insurance premiums and
advice service fees following the death of members of superannuation funds in the period between 26 May 2015 and 31 August 2019.
ASIC’s claim is in respect of 2,069 deceased members affected by the retention of premiums, and 27 deceased members affected by the
retention of advice fees. AMP has completed remediation for customers identified as being affected by such instances.
ASIC is seeking declarations of contraventions of various sections of the Corporations Act and ASIC Act and orders for the payment
of pecuniary penalties and other consequential orders. The AMP respondents have filed a defence to the proceedings. Currently, it is not
possible to determine the ultimate impact of this claim upon AMP.
ASIC CIVIL PENALTY PROCEEDINGS IN RESPECT OF PLAN SERVICE FEES
Certain subsidiaries of AMP Limited, namely, AMPFP, Hillross, Charter, AMP Super and AMP Services, are the subject of proceedings brought
by ASIC on 29 July 2021. The proceedings allege contraventions of the Corporations Act and the ASIC Act relating to the alleged charging
and retention of plan service fees following members of superannuation funds delinking from their corporate super plan into a retail
account in the period between 31 July 2015 and 30 June 2019. ASIC’s claim is in respect of around 1500 members affected by the retention
of plan service fees. AMP has completed remediation for customers identified as being affected by such instances.
ASIC is seeking declarations of contraventions of various sections of the Corporations Act and ASIC Act and orders for the payment
of pecuniary penalties and other consequential orders. The AMP respondents have filed a defence to the proceedings. Currently, it is not
possible to determine the ultimate impact of this claim upon AMP.
ADDRESSING HISTORICAL MATTERS THROUGH REGULATOR ACTIONS
AMP has been working through a number of historical matters raised at the Royal Commission and elsewhere, and since 2018, has been taking
action to strengthen controls, accountability and processes, improve compliance and risk management, and remediate impacted customers.
In 2021, AMP’s Superannuation Trustees (AMP Superannuation Limited and N.M. Superannuation Proprietary Limited) entered into
an enforceable undertaking (EU) with APRA for historical matters in the Superannuation business. APRA has acknowledged that AMP has
addressed and completed remediation for several matters, and at the completion of this EU, AMP envisages that all outstanding matters
referred to APRA by the Financial Services Royal Commission will be concluded.
INDEMNITIES AND WARRANTIES TO RESOLUTION LIFE
Under the terms of the sale agreement for the sale of the wealth protection and mature businesses to Resolution Life Australia Pty
Ltd (Resolution Life), AMP has given certain covenants, warranties and indemnities in favour of Resolution Life in connection with the
transaction. A breach of these covenants or warranties, or the triggering of an indemnity, may result in AMP being liable for some future
payments to Resolution Life. Management’s best estimate of future payments for these indemnities and warranties has been recognised
within these financial statements where they can be reliably estimated. There remain other indemnities and warranties for which no
provision has been recognised and a contingent liability exists should such indemnities and warranties be called upon or where actual
outcomes differ from management’s expectations.
152
Notes to the financial statements
for the year ended 31 December 2021
ASIC CIVIL PENALTY PROCEEDINGS IN RESPECT OF DECEASED CUSTOMERS
Certain subsidiaries of AMP Limited, namely, AMPFP, NM Super, AMP Super and AMP Services, are the subject of proceedings brought
by ASIC on 26 May 2021. The proceedings allege contraventions of the Corporations Act 2001 (Cth) (Corporations Act) and the Australian
Securities and Investments Commission Act 2001 (Cth) (ASIC Act) relating to the alleged charging and retention of insurance premiums and
advice service fees following the death of members of superannuation funds in the period between 26 May 2015 and 31 August 2019.
ASIC’s claim is in respect of 2,069 deceased members affected by the retention of premiums, and 27 deceased members affected by the
retention of advice fees. AMP has completed remediation for customers identified as being affected by such instances.
ASIC is seeking declarations of contraventions of various sections of the Corporations Act and ASIC Act and orders for the payment
of pecuniary penalties and other consequential orders. The AMP respondents have filed a defence to the proceedings. Currently, it is not
possible to determine the ultimate impact of this claim upon AMP.
ASIC CIVIL PENALTY PROCEEDINGS IN RESPECT OF PLAN SERVICE FEES
Certain subsidiaries of AMP Limited, namely, AMPFP, Hillross, Charter, AMP Super and AMP Services, are the subject of proceedings brought
by ASIC on 29 July 2021. The proceedings allege contraventions of the Corporations Act and the ASIC Act relating to the alleged charging
and retention of plan service fees following members of superannuation funds delinking from their corporate super plan into a retail
account in the period between 31 July 2015 and 30 June 2019. ASIC’s claim is in respect of around 1500 members affected by the retention
of plan service fees. AMP has completed remediation for customers identified as being affected by such instances.
ASIC is seeking declarations of contraventions of various sections of the Corporations Act and ASIC Act and orders for the payment
of pecuniary penalties and other consequential orders. The AMP respondents have filed a defence to the proceedings. Currently, it is not
possible to determine the ultimate impact of this claim upon AMP.
ADDRESSING HISTORICAL MATTERS THROUGH REGULATOR ACTIONS
AMP has been working through a number of historical matters raised at the Royal Commission and elsewhere, and since 2018, has been taking
action to strengthen controls, accountability and processes, improve compliance and risk management, and remediate impacted customers.
In 2021, AMP’s Superannuation Trustees (AMP Superannuation Limited and N.M. Superannuation Proprietary Limited) entered into
an enforceable undertaking (EU) with APRA for historical matters in the Superannuation business. APRA has acknowledged that AMP has
addressed and completed remediation for several matters, and at the completion of this EU, AMP envisages that all outstanding matters
referred to APRA by the Financial Services Royal Commission will be concluded.
INDEMNITIES AND WARRANTIES TO RESOLUTION LIFE
Under the terms of the sale agreement for the sale of the wealth protection and mature businesses to Resolution Life Australia Pty
Ltd (Resolution Life), AMP has given certain covenants, warranties and indemnities in favour of Resolution Life in connection with the
transaction. A breach of these covenants or warranties, or the triggering of an indemnity, may result in AMP being liable for some future
payments to Resolution Life. Management’s best estimate of future payments for these indemnities and warranties has been recognised
within these financial statements where they can be reliably estimated. There remain other indemnities and warranties for which no
provision has been recognised and a contingent liability exists should such indemnities and warranties be called upon or where actual
outcomes differ from management’s expectations.
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
6.5 AUDITORS’ REMUNERATION
Audit and review services
– Group
– Controlled entities
Total audit and review services remuneration
Statutory assurance services
Other assurance services - audit related
Other assurance services - non-audit related 1
Total assurance services remuneration
2021
$'000
1,691
3,074
4,765
285
1,154
1,667
3,106
2020
$'000
1,444
3,901
5,345
351
1,097
156
1,604
Total audit, review and assurance services remuneration
7,871
6,949
Other non-audit services
Taxation and compliance services 1
Other services
Total other non-audit services remuneration
Total auditors' remuneration 2
503
1,109
1,612
84
425
509
9,483
7,458
1 Increase in fees in 2021 relates primarily to additional services performed for the Private Markets demerger.
2 Total amount excludes fees paid or payable for Trust and Fund audit/non-audit and/or review services for entities not consolidated into the group.
Total fees excluded are $7,872k (2020: $10,520k) of which $383k (2020: $572k) is for non-audit services.
Statutory assurance services relate to AFSL audits and certain APRA reporting assurance required to be performed by the statutory
auditor. Other assurance services – audit related primarily relate to other compliance reporting, compliance plan audits, derivative risk
statement assurance and internal controls reviews. Other assurance services – non-audit related include IT reviews, operational review
and compliance engagements. Other services include transaction support, risk management reviews and benchmarking services.
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154
Notes to the financial statements
for the year ended 31 December 2021
6.6 NEW ACCOUNTING STANDARDS
(a) New and amended accounting standards adopted by the AMP group
A number of new accounting standards amendments have been adopted effective 1 January 2021. These have not had a material effect
on the financial position or performance of the AMP group other than as described below.
Interest Rate Benchmark Reform
Transition from Interbank Offered Rates (IBORs), primarily but not exclusively the London Interbank Offered Rate (LIBOR), to Alternative
Reference Rates (ARR) has been an area of ongoing industry focus with regulators signalling the need to use alternative benchmark rates.
A number of benchmark rates have been discontinued requiring transition to alternate benchmarks across a broad array of financial
products, including any IBOR-based securities, loans and other financial products. AMP has successfully completed its IBOR transition
activities during the year ended 31 December 2021.
Key activity included:
–
transitioning impacted financial contracts utilising International Swaps and Derivative Association fall back protocols and via bilateral
re-negotiation,
– monitoring local and international regulatory guidance for the transition from IBORs to Risk Free Rate benchmarks,
–
engaging with regulators on the group’s transition plans and contributing to industry wide forums, and
– working closely with industry bodies to understand and manage the risks and impacts of transition on our businesses.
The most significant interest rate benchmark to which the group is exposed is the Bank Bill Swap Rate (BBSW). As a result, the IBOR reforms,
in conjunction with the practical expedients provided for in the applicable accounting standards, have had an insignificant financial impact
on the group. Presently, there are no indications that regulators of jurisdictions in which the group operates intend to discontinue the use
of BBSW in the way that the Financial Conduct Authority discontinued the use of LIBOR.
(b) New accounting standards issued but not yet effective
A number of new accounting standards and amendments have been issued but are not yet effective, none of which have been early adopted
by the AMP group in this financial report. These new standards and amendments, when applied in future periods, are not expected to have
a material impact on the financial position or performance of the AMP group.
6.7
EVENTS OCCURRING AFTER REPORTING DATE
As at the date of this report, the directors are not aware of any matters or circumstances that have arisen since the end of the financial year
that have significantly affected, or may significantly affect:
–
–
–
the AMP group’s operation in future years;
the results of those operations in future years; or
the AMP group’s state of affairs in future financial years.
154
Notes to the financial statements
for the year ended 31 December 2021
Directors’ declaration
for the year ended 31 December 2021
6.6 NEW ACCOUNTING STANDARDS
(a) New and amended accounting standards adopted by the AMP group
A number of new accounting standards amendments have been adopted effective 1 January 2021. These have not had a material effect
on the financial position or performance of the AMP group other than as described below.
Interest Rate Benchmark Reform
Transition from Interbank Offered Rates (IBORs), primarily but not exclusively the London Interbank Offered Rate (LIBOR), to Alternative
Reference Rates (ARR) has been an area of ongoing industry focus with regulators signalling the need to use alternative benchmark rates.
A number of benchmark rates have been discontinued requiring transition to alternate benchmarks across a broad array of financial
products, including any IBOR-based securities, loans and other financial products. AMP has successfully completed its IBOR transition
activities during the year ended 31 December 2021.
Key activity included:
re-negotiation,
–
transitioning impacted financial contracts utilising International Swaps and Derivative Association fall back protocols and via bilateral
– monitoring local and international regulatory guidance for the transition from IBORs to Risk Free Rate benchmarks,
–
engaging with regulators on the group’s transition plans and contributing to industry wide forums, and
– working closely with industry bodies to understand and manage the risks and impacts of transition on our businesses.
The most significant interest rate benchmark to which the group is exposed is the Bank Bill Swap Rate (BBSW). As a result, the IBOR reforms,
in conjunction with the practical expedients provided for in the applicable accounting standards, have had an insignificant financial impact
on the group. Presently, there are no indications that regulators of jurisdictions in which the group operates intend to discontinue the use
of BBSW in the way that the Financial Conduct Authority discontinued the use of LIBOR.
(b) New accounting standards issued but not yet effective
A number of new accounting standards and amendments have been issued but are not yet effective, none of which have been early adopted
by the AMP group in this financial report. These new standards and amendments, when applied in future periods, are not expected to have
a material impact on the financial position or performance of the AMP group.
6.7
EVENTS OCCURRING AFTER REPORTING DATE
As at the date of this report, the directors are not aware of any matters or circumstances that have arisen since the end of the financial year
that have significantly affected, or may significantly affect:
–
–
–
the AMP group’s operation in future years;
the results of those operations in future years; or
the AMP group’s state of affairs in future financial years.
In accordance with a resolution of the directors of AMP Limited, for the purposes of section 295(4) of the Corporations Act 2001, the
directors declare that:
(a) in the opinion of the directors there are reasonable grounds to believe that AMP Limited will be able to pay its debts as and when
they become due and payable;
(b) in the opinion of the directors the financial statements and the notes of AMP Limited and the consolidated entity for the financial
year ended 31 December 2021 are in accordance with the Corporations Act 2001, including section 296 (compliance with accounting
standards) and section 297 (true and fair view);
(c) the notes to the financial statements of AMP Limited and the consolidated entity for the financial year ended 31 December 2021
include an explicit and unreserved statement of compliance with the International Financial Reporting Standards; and
(d) the declarations required by section 295A of the Corporations Act 2001 have been given to the directors.
Debra Hazelton
Chair
Alexis George
Chief Executive Officer and Managing Director
Sydney, 10 February 2022
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156
Independent auditor’s report
to the Shareholders of AMP Limited
Ernst & Young
200 George Street
Sydney NSW 2000 Australia
GPO Box 2646 Sydney NSW 2001
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
ey.com/au
Report on the Financial Report for the Year Ended 31 December 2021
Qualified opinion
We have audited the financial report of AMP Limited (the Company) and its subsidiaries (collectively the Group or AMP), which comprises
the consolidated statement of financial position as at 31 December 2021, the consolidated income statement, the consolidated statement
of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended;
notes to the financial statements, including a summary of significant accounting policies; and the directors’ declaration.
In our opinion, except for the possible effects of the matter described in the Basis for qualified opinion section of our report, the
accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a. giving a true and fair view of the consolidated financial position of the Group as at 31 December 2021 and of their financial
performance for the year ended on that date; and
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for qualified opinion
The Company’s investment in China Life Pension Company (CLPC), a foreign associate accounted for using the equity method, is carried
at $416 million on the consolidated statement of financial position as at 31 December 2021. The Company’s share of CLPC’s post-tax
net income of $52 million is included in the Company’s income for the year then ended. We were unable to obtain sufficient appropriate
evidence about the Company’s share of CLPC’s net income for the year and consequently the carrying amount of the Company’s investment
in CLPC as at 31 December 2021 to the extent this share of net income is included in the carrying amount, because the financial statements
of CLPC are still in the process of being audited by CLPC’s auditor at the date of this report. Whilst we have been able to perform limited
procedures on the equity accounted results of CLPC, in the absence of the completed audit we were unable to determine whether any
adjustments to these amounts were necessary.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report
of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, but we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for qualified opinion,
we have determined the matters described below to be the key audit matters to be communicated in our report. For each matter below,
our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report,
including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Independent auditor’s report
to the Shareholders of AMP Limited
CREDIT PROVISIONS
Financial report reference: Section 2.1: Loans and advances, Section 3.3 Financial Risk Management
Why significant
How our audit addressed the matter
As disclosed in section 2.1 of the financial report, the Group
has loans and advances as at 31 December 2021, against which
provisions for expected credit losses are required to be booked
in accordance with Australian Accounting standards.
This was a key audit matter due to the value of the provisions,
and the degree of judgment and estimation uncertainty
associated with the provision calculation.
Our audit procedures included the following:
– We assessed the alignment of the Group’s expected credit
loss model and its underlying methodology against the
requirements of AASB 9, with consideration of the ongoing
impact of the COVID-19 pandemic.
– We assessed the following for exposures evaluated on
a collective basis and associated overlays:
Key areas of judgment included:
–
–
–
–
the application of the impairment requirements of AASB 9
Financial Instruments within the Group’s expected credit
loss methodology;
the identification of exposures with a significant deterioration
in credit risk;
assumptions used in the expected credit loss model (for
exposures assessed on an individual or collective basis); and
the incorporation of forward-looking information to reflect
current and anticipated future external factors, including
economic scenarios adopted and the probability weighting
determined for each scenario.
–
–
significant modelling and forward-looking
macroeconomic assumptions;
the basis for and data used to determine the provision
as at 31 December 2021; and
– We involved our actuarial specialists to test the
mathematical accuracy of the model and to benchmark
key assumptions.
– We examined a sample of exposures assessed on an
individual basis by:
–
–
assessing the reasonableness and timeliness of internal
credit quality assessments based on the borrowers’
particular circumstances; and
evaluating the associated provisions by assessing the
reasonableness of key inputs into the calculation, with
particular focus on collateral values, work out strategies
and the value and timing of recoveries.
– We considered the associated financial report disclosures.
156
Independent auditor’s report
to the Shareholders of AMP Limited
Ernst & Young
200 George Street
Tel: +61 2 9248 5555
Fax: +61 2 9248 5959
Sydney NSW 2000 Australia
ey.com/au
GPO Box 2646 Sydney NSW 2001
Report on the Financial Report for the Year Ended 31 December 2021
Qualified opinion
We have audited the financial report of AMP Limited (the Company) and its subsidiaries (collectively the Group or AMP), which comprises
the consolidated statement of financial position as at 31 December 2021, the consolidated income statement, the consolidated statement
of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended;
notes to the financial statements, including a summary of significant accounting policies; and the directors’ declaration.
In our opinion, except for the possible effects of the matter described in the Basis for qualified opinion section of our report, the
accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a. giving a true and fair view of the consolidated financial position of the Group as at 31 December 2021 and of their financial
performance for the year ended on that date; and
b. complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for qualified opinion
The Company’s investment in China Life Pension Company (CLPC), a foreign associate accounted for using the equity method, is carried
at $416 million on the consolidated statement of financial position as at 31 December 2021. The Company’s share of CLPC’s post-tax
net income of $52 million is included in the Company’s income for the year then ended. We were unable to obtain sufficient appropriate
evidence about the Company’s share of CLPC’s net income for the year and consequently the carrying amount of the Company’s investment
in CLPC as at 31 December 2021 to the extent this share of net income is included in the carrying amount, because the financial statements
of CLPC are still in the process of being audited by CLPC’s auditor at the date of this report. Whilst we have been able to perform limited
procedures on the equity accounted results of CLPC, in the absence of the completed audit we were unable to determine whether any
adjustments to these amounts were necessary.
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described
in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance
with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional
and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are
relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial report
of the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, but we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for qualified opinion,
we have determined the matters described below to be the key audit matters to be communicated in our report. For each matter below,
our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report,
including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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158
Independent auditor’s report
to the Shareholders of AMP Limited
PROVISIONS, AMORTISATION & CONTINGENT LIABILITIES
Financial report reference: Section 2.3 Intangibles, 6.3 Right of use assets and lease liabilities, 6.4 Provisions and contingent liabilities
Why significant
How our audit addressed the matter
Our audit procedures included the following:
– We held discussions with management, reviewed Board
of Directors and Board committee minutes, reviewed
correspondence with regulators and attended Board Audit
Committee and Board Risk and Compliance Committee
meetings to understand key regulatory, compliance and
legal matters.
– We assessed the Group’s key assumptions used to determine
provisions or accelerated amortisation, which included
benchmarking vacancy periods and rental estimates and the
assessment of the reasonableness of useful lives.
–
For those matters where the Group determined that either
a present obligation as a result of a past event does not exist,
or where a sufficiently reliable estimate of the amount of the
obligation cannot be made and for which no provisions have
been recognised, we assessed the basis for the conclusions.
– We considered the disclosures within the financial report
related to these provisions and contingent liability disclosure.
As disclosed in section 2.3, 6.3 and 6.4, the Group has recorded
provisions, amortisation and disclosed contingent liabilities as follows:
–
–
–
–
provisions for client remediation and compliance matters;
accelerated amortisation of intangible assets;
provisions for onerous lease contracts; and
contingent liability disclosures in relation to existing
class actions, ASIC civil penalty proceedings, industry
and regulatory matters and indemnities and warranties
to Resolution Life.
This was considered a key audit matter due to the judgment
required to determine the reasonable estimates.
Key areas of judgment included:
–
the decision as to whether to recognise a provision and/or
disclose a contingent liability, including whether there is
a present obligation as a result of past events and whether
sufficient information existed to allow a provision to be
reliably measured; and
–
key assumptions used to determine provisions or amortisation
acceleration, including:
–
–
–
the estimates of compensation amounts and costs
required to complete the remediation programs;
the useful life and future economic benefits associated
with intangible assets; and
vacancy periods, sub-lease rental estimates increase for
onerous lease provisions.
158
Independent auditor’s report
to the Shareholders of AMP Limited
Independent auditor’s report
to the Shareholders of AMP Limited
PROVISIONS, AMORTISATION & CONTINGENT LIABILITIES
Financial report reference: Section 2.3 Intangibles, 6.3 Right of use assets and lease liabilities, 6.4 Provisions and contingent liabilities
TAXATION
Financial report reference: Section 1.4: Taxation
Why significant
How our audit addressed the matter
Why significant
How our audit addressed the matter
As disclosed in section 2.3, 6.3 and 6.4, the Group has recorded
Our audit procedures included the following:
provisions, amortisation and disclosed contingent liabilities as follows:
– We held discussions with management, reviewed Board
provisions for client remediation and compliance matters;
of Directors and Board committee minutes, reviewed
This was considered a key audit matter due to the judgment
assessment of the reasonableness of useful lives.
correspondence with regulators and attended Board Audit
Committee and Board Risk and Compliance Committee
meetings to understand key regulatory, compliance and
legal matters.
– We assessed the Group’s key assumptions used to determine
provisions or accelerated amortisation, which included
benchmarking vacancy periods and rental estimates and the
–
For those matters where the Group determined that either
a present obligation as a result of a past event does not exist,
or where a sufficiently reliable estimate of the amount of the
obligation cannot be made and for which no provisions have
been recognised, we assessed the basis for the conclusions.
– We considered the disclosures within the financial report
related to these provisions and contingent liability disclosure.
–
–
–
–
accelerated amortisation of intangible assets;
provisions for onerous lease contracts; and
contingent liability disclosures in relation to existing
class actions, ASIC civil penalty proceedings, industry
and regulatory matters and indemnities and warranties
to Resolution Life.
required to determine the reasonable estimates.
Key areas of judgment included:
–
the decision as to whether to recognise a provision and/or
disclose a contingent liability, including whether there is
a present obligation as a result of past events and whether
sufficient information existed to allow a provision to be
–
key assumptions used to determine provisions or amortisation
reliably measured; and
acceleration, including:
–
the estimates of compensation amounts and costs
required to complete the remediation programs;
–
the useful life and future economic benefits associated
with intangible assets; and
–
vacancy periods, sub-lease rental estimates increase for
onerous lease provisions.
As presented in the consolidated statement of financial position
and Section 1.4 of the financial report, the Group has significant
tax balances as at 31 December 2021, being a current tax asset
of $221 million, a current tax liability of $67 million, a deferred tax
asset of $655 million, and a deferred tax liability of $136 million.
Due to the complexity and high level of judgment required in the
following areas, we considered this to be a key audit matter:
–
–
–
The tax consequences of recent changes to the entities within
the AMP Limited tax consolidated group;
Estimating future taxable income and assessing the
recoverability of tax losses and other deferred tax assets
in future years; and
The adequacy of provisioning and assessing the recoverability
of current tax.
Our audit procedures included the following:
– We involved our tax specialists to assess the application of tax
laws and regulations in the determination of the Group’s tax
balances, including the Group’s assessment of the impact of
entities leaving and joining the tax consolidated group on the
determination of tax balances.
– We examined the Group’s deferred tax asset recoverability
assessment and evaluated the reasonableness of key
assumptions, including:
–
–
analysing the Group’s growth and other key assumptions
and reviewing tax adjustments made to the Group’s profit
forecasts to determine future taxable income; and
reviewing and assessing the Group’s analysis to determine
the period over which deferred tax assets attributable
to tax losses are forecast to be utilised.
– We considered management’s assessment of the
recoverability of current tax assets including the underlying
tax principles applied and management forecasts.
– We considered the associated financial report disclosures.
INFORMATION TECHNOLOGY (IT) SYSTEMS AND CONTROLS OVER FINANCIAL REPORTING
Financial report reference: n/a
Why significant
How our audit addressed the matter
159
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The Group’s operations and financial reporting processes
are primarily reliant on IT systems for the processing and
recording of a high volume of transactions.
– We focused our audit procedures on those systems and
controls that are significant to the Group’s financial
reporting process.
The group-wide IT environment is complex in terms of
the scale and nature of IT systems relied upon. IT General
Controls (ITGCs) support the continuous operation of the
automated and other IT dependent controls within the
business processes related to financial reporting. Effective
ITGCs are needed to ensure that IT applications process
business data as expected and that changes are made
in an appropriate manner.
The possibility of IT application users gaining access privileges
beyond those necessary to perform their assigned duties
may result in breaches in segregation of duties, including
inappropriate manual intervention, unauthorised changes
to systems, data or programmes.
– We involved our IT specialists, as audit procedures over
IT systems and controls require specific expertise.
– We assessed the design and tested the operating
effectiveness of the Group’s IT controls, including those
related to user access, change management, IT operations
and data integrity.
– Where we identified design or operating deficiencies in the IT
control environment, we performed additional procedures to:
–
–
Assess the integrity and reliability of the systems and
data related to financial reporting; and
Assess alternative controls that were not reliant on the
IT control environment.
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160
Independent auditor’s report
to the Shareholders of AMP Limited
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in the Company’s
2021 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report (including the
remuneration report) that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance
conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears
to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
–
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
–
–
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
–
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial
report represents the underlying transactions and events in a manner that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial
report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
160
Independent auditor’s report
to the Shareholders of AMP Limited
Independent auditor’s report
to the Shareholders of AMP Limited
Information Other than the Financial Report and Auditor’s Report Thereon
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December 2021.
In our opinion, the Remuneration Report of AMP for the year ended 31 December 2021, complies with section 300A of the Corporations
Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Ernst & Young
Andrew Price
Partner
Sydney
10 February 2022
161
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The directors are responsible for the other information. The other information comprises the information included in the Company’s
2021 Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report (including the
remuneration report) that is to be included in the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the
remaining sections of the Annual Report after the date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance
conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears
to be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Group are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
–
Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
–
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made
by the directors.
–
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
–
Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial
report represents the underlying transactions and events in a manner that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit.
We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial
report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should
not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
162
Securityholder information
Distribution of AMP Capital Notes 2 holdings as at 11 February 2022
Range
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,000 over
TOTAL
Number of
holders
Notes held
% of issued
capital
2,256
292
23
23
3
775,664
591,418
170,658
607,519
604,744
28.21
21.51
6.21
22.09
21.99
2,597
2,750,000
100.00
As at 11 February 2022, the total number of shareholders holding less than a marketable parcel of 5 AMP Capital Notes is three.
Twenty largest AMP Capital Notes 2 holders as at 11 February 2022
Rank Name
Notes held % of issued Notes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Citicorp Nominees Pty Limited
BNP Paribas Nominees Pty Ltd
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