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Bluefield Solar Income Fund LimitedAnnual report
2022
Helping people
create their tomorrow
Contents
01
Introduction
08
Our
purpose
16
Material
risks
28
Board of
directors
75
Financial
report
02
2022
highlights
10
How we
create value
04
Chair
message
12
Strategy
06
CEO
update
14
Sustainability
overview
20
22
24
Our approach
to governance
Group financial
performance
Business
review
32
36
Group executive
committee
Directors’
report
40
Remuneration
report
154
Additional
information
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About this report
Acknowledgement of Country
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 Corporate governance statement, dated
16 February 2023 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 16 February 2023.
Unless otherwise specified, all amounts are
in Australian dollars.
AMP Limited ABN 49 079 354 519.
Authorised for release by the AMP Limited Board.
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.
We continue to transform AMP,
building on its 174-year heritage
of supporting customers to live
financially well, and to meet their
needs today and into the future.
We have made strong progress in
our strategy to become a simpler,
purpose-led business in Australia
and New Zealand.
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Contents
01
Introduction
02
2022
highlights
message
04
Chair
12
Strategy
22
36
06
CEO
update
14
Sustainability
overview
24
40
Remuneration
report
Our approach
to governance
Group financial
performance
Business
review
Group executive
Directors’
committee
report
08
Our
purpose
16
Material
risks
28
Board of
directors
75
Financial
report
10
How we
create value
20
32
154
Additional
information
About this report
Acknowledgement of Country
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 Corporate governance statement, dated
16 February 2023 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 16 February 2023.
Unless otherwise specified, all amounts are
in Australian dollars.
AMP Limited ABN 49 079 354 519.
Authorised for release by the AMP Limited Board.
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.
2
2022
highlights
Financial
performance
Business
progress
Our
customers
Net profit after tax (NPAT)
(underlying)
$184m
Total assets under management
(AUM) and administration
$149b
Group surplus capital of
$923m
Growth in residential
mortgage book
$2.0b
Controllable cost reduction
(excluding AMP Capital
discontinued operations)
$54m
Increase in platform
cashflows from independent
financial advisers
31%
Reposition
Launched first of its
kind retirement offering
and drove growth
in AMP Bank through
competitive offers and
digital first experiences
Simplified
portfolio
Agreed transactions
to sell AMP Capital,
positioning the new
AMP for future growth
Explore
Launched partnerships
with innovative fintechs
to develop direct-to-
consumer offerings
in key markets
$2.0b
pension payments for
Australian customers
in retirement
Supporting
2,100+
members with free,
intra-fund advice on their
superannuation and
4,900+
members through
education webinars
with employer clients
Helped customers with
their banking needs
~188,000
New home loans
AMP Bank provided
9,290
2
2022
highlights
Financial
performance
Business
progress
Our
customers
Our
shareholders
People and
partners
Communities
and environment
Net profit after tax (NPAT)
(underlying)
$184m
Total assets under management
(AUM) and administration
$149b
Group surplus capital of
$923m
Growth in residential
mortgage book
$2.0b
Controllable cost reduction
(excluding AMP Capital
discontinued operations)
$54m
Increase in platform
cashflows from independent
financial advisers
31%
Reposition
Launched first of its
kind retirement offering
and drove growth
in AMP Bank through
competitive offers and
digital first experiences
Simplified
portfolio
Agreed transactions
to sell AMP Capital,
positioning the new
AMP for future growth
Explore
Launched partnerships
with innovative fintechs
to develop direct-to-
consumer offerings
in key markets
$2.0b
pension payments for
Australian customers
in retirement
Supporting
2,100+
members with free,
intra-fund advice on their
superannuation and
4,900+
members through
education webinars
with employer clients
Helped customers with
their banking needs
~188,000
New home loans
AMP Bank provided
9,290
455,000+
Total shareholders
Committed return of
capital to shareholders of
$1.1b
including
$350m
via an on-market
share buyback, with
$267m complete
at 31 December 2022
FY 22 final dividend
declared, 20% franked, of
2.5 cents
per share
Employee satisfaction
(eSat score)
73
Up from 71 at FY 21
6,277
hours employee learning
and development
40:40:20
Gender diversity targets
met across board,
middle management
and overall workforce
100%
of aligned advisers
completed Financial
Adviser exam
requirements
A-
rating from Carbon
Disclosure project (CDP),
Second highest rating
available
75%
reduction in operational
Scope 1 and 2 emissions
(from 2019 base year)
+30
ESG focused investment
options added to our
flagship investment
platform, MyNorth
$1m
donated by the AMP
Foundation Tomorrow
Maker Program
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4
Chair message
Transforming AMP
Purpose led and
customer focused
I am pleased to present the AMP Limited Annual
report for 2022.
It has been a year of substantial progress as we transform
AMP into a customer-focused and purpose-led business.
The strength and reliability of AMP has proved to be
important as we supported our customers and the
community through another challenging period, marked
by rising interest rates and cost of living, ongoing impacts
of the pandemic, and damaging floods in many parts
of Australia.
I’m proud of the role AMP plays during these times,
reflecting our founding purpose more than 170 years ago
to be a sure friend in uncertain times. Our refreshed purpose
statement today – helping people create their tomorrow
– continues our legacy to support and build the financial
wellbeing of Australians and New Zealanders.
The transformation of AMP continues at pace, and the
achievements of 2022 are reflected in the delivery of focused
strategic initiatives in retirement and banking, and stable
financial performance across the business. An improvement
in AMP’s share price, increasing 30.2 per cent in 2022,
is a positive sign the actions we’re taking are rebuilding and
transforming AMP for the benefit of all our stakeholders.
Financial performance
In 2022, AMP delivered an underlying net profit of
$184 million supported by strong growth in AMP Bank,
continued momentum in the Platforms business and
a significant reduction in losses in our Advice business
as we reshape it for the future.
This net profit is lower than the $280 million of 2021,
however is in line with our expectations reflecting
the challenging economic environment, as well as
management’s long-term strategic repricing of products and
services to remain competitive, helping to retain and attract
customers. AMP’s statutory net profit for the year was
$387 million, which includes the gain from the sale of the
AMP Capital infrastructure debt platform in February 2022.
Our business units delivered resilient performances in
challenging markets. AMP Bank’s residential mortgage book
grew by $2.0 billion, supported by our focus on competitive
rates and faster loan approval times for customers and
mortgage brokers, in addition to a loan book acquisition.
4
Chair message
Transforming AMP
Purpose led and
customer focused
The North platform has continued to win more cashflows
from independent financial advisers, a key growth market,
increasing 31 per cent on FY 21 to $1.7 billion.
The Advice business has been materially reshaped, reflected
in losses in the business improving by $78 million. There
is more work to do for Advice to operate as a standalone,
sustainable business but the progress is pleasing.
The Master Trust and New Zealand businesses continue
to perform in line with our expectations, contributing
$55 million and $32 million, respectively, to underlying
net profit.
Further detail on performance in 2022 is included in
the Business review section of this report.
Return of capital and dividends
AMP remains well-capitalised and has a strong balance
sheet, which enabled us in August 2022 to confirm
a return of capital to shareholders of $1.1 billion subject
to completion of the AMP Capital transactions, and any
required shareholder and regulatory approvals. This included
the immediate commencement of a $350 million on-market
share buyback, of which $267 million is already complete.
As part of our commitment around capital returns, AMP
will return a further $400 million via a FY 22 final dividend
of 2.5 cents per share, franked at 20%, and other capital
management initiatives in 2023. A further $350 million of
capital management initiatives will be announced following
completion of the remaining AMP Capital transaction.
Portfolio simplification
In November 2021, shortly after the appointment of CEO
Alexis George, AMP articulated a clear strategy to continue
to simplify its portfolio and reposition core businesses in
wealth management and retail banking to better compete,
whilst also exploring longer-term opportunities for growth.
As part of the portfolio simplification, in April 2022
we announced two agreements to sell the AMP Capital
infrastructure and real estate businesses rather than pursue
a demerger. The Board determined that the transactions
would deliver greater value and certainty for shareholders,
accelerate the realisation of that value, and provide stability
for AMP Capital’s clients and employees.
The sale and transfer of the international infrastructure
equity business to DigitalBridge completed in early February
2023. AMP continues to work on the final steps to complete
the transfer of the real estate and domestic infrastructure
equity business, which will mark the full divestment of the
separated AMP Capital business.
Governance
The AMP Limited Board remains committed to best-practice
governance as we guide AMP through the next stage
of its transformation. I would like to thank all AMP board
directors and management for their dedication to this
important challenge.
In addition to providing oversight of strategic and risk
management matters, as a board we have continued
to be actively engaged in AMP’s cultural transformation
during 2022. I’m proud of the changes AMP has made
in a relatively short space of time and I am very pleased
by the energy and excitement I see across the organisation
to continue fostering an inclusive and empowering culture.
Central to AMP’s cultural transformation was the launch
of the organisation’s new purpose statement – helping
people create their tomorrow – which is underpinned
by five values that put the customer first and support a high
performing, accountable and inclusive team. You’ll see the
purpose and values referenced throughout this Annual report.
As Chair, I am very conscious of the critical need for the board
to have the appropriate mix of skills and experience to provide
quality oversight of AMP’s transformation while also retaining
corporate knowledge. I’m very confident in the diverse range
of experience and insights of AMP’s highly committed board.
In July 2022, we welcomed Andrew Best as an independent
non-executive director to the AMP Limited Board, bringing
more than three decades of domestic and international
investment banking and financial markets experience.
Andrew will stand for election at the AGM in March 2023.
Community and sustainability
Grounded in AMP’s purpose, the board is committed to creating
a sustainable and more equitable future for all our stakeholders
– one that has shared value for our customers and members,
shareholders, employees, and the community and environment.
Our approach is articulated through AMP’s sustainability
framework, which is updated annually through a
comprehensive consultation process to ensure we focus
on the most material sustainability issues that impact our
business and society. AMP’s sustainability performance
is detailed in the annual Sustainability report, which is
prepared in accordance with leading disclosure frameworks.
In 2022, AMP continued to deliver strengthened performance
across a range of external ESG benchmarks. This includes
maintaining its ‘Prime’ rating by ISS ESG, which is only
awarded to companies with ESG performance above sector
specific thresholds. AMP is also now included in the Dow
Jones Sustainability Australia Index, which represents the
top 30% of the ASX 200 that lead the field in sustainability.
As part of our focus to support the financial wellbeing of
Australians, through the AMP Foundation, we support a
number of non-profit organisations that help disadvantaged
Australians build financial security. Since its inception in 1992,
the AMP Foundation has contributed more than $110 million
in the Australian community to help create positive change.
The AMP Foundation continues to grow as one of Australia’s
largest, independently funded corporate foundations.
Looking forward
We have now made significant strides in the simplification and
stabilisation of AMP. Following completion of the remaining
AMP Capital sale, we will enter the next era for AMP as a
simpler, customer-focused, purpose-led wealth management
and retail banking business in Australia and New Zealand.
We remain committed to the continuous improvement
of AMP’s financial performance and to delivering enduring
value to shareholders and all stakeholders. On behalf of the
AMP Limited Board, thank you for your ongoing support
as we continue to transform AMP.
Debra Hazelton
Chair, AMP Limited
I am pleased to present the AMP Limited Annual
report for 2022.
It has been a year of substantial progress as we transform
AMP into a customer-focused and purpose-led business.
The strength and reliability of AMP has proved to be
important as we supported our customers and the
community through another challenging period, marked
by rising interest rates and cost of living, ongoing impacts
of the pandemic, and damaging floods in many parts
of Australia.
I’m proud of the role AMP plays during these times,
reflecting our founding purpose more than 170 years ago
to be a sure friend in uncertain times. Our refreshed purpose
statement today – helping people create their tomorrow
– continues our legacy to support and build the financial
wellbeing of Australians and New Zealanders.
The transformation of AMP continues at pace, and the
achievements of 2022 are reflected in the delivery of focused
strategic initiatives in retirement and banking, and stable
financial performance across the business. An improvement
in AMP’s share price, increasing 30.2 per cent in 2022,
is a positive sign the actions we’re taking are rebuilding and
transforming AMP for the benefit of all our stakeholders.
Financial performance
In 2022, AMP delivered an underlying net profit of
$184 million supported by strong growth in AMP Bank,
continued momentum in the Platforms business and
a significant reduction in losses in our Advice business
as we reshape it for the future.
This net profit is lower than the $280 million of 2021,
however is in line with our expectations reflecting
the challenging economic environment, as well as
management’s long-term strategic repricing of products and
services to remain competitive, helping to retain and attract
customers. AMP’s statutory net profit for the year was
$387 million, which includes the gain from the sale of the
AMP Capital infrastructure debt platform in February 2022.
Our business units delivered resilient performances in
challenging markets. AMP Bank’s residential mortgage book
grew by $2.0 billion, supported by our focus on competitive
rates and faster loan approval times for customers and
mortgage brokers, in addition to a loan book acquisition.
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6
CEO update
The journey to
a simpler AMP
Q&A with Alexis George
Q: When you look back on 2022,
what are you most proud of?
A: I am proud of what we have been able
to achieve in 2022. Top of the list has been the
renewed energy in the organisation, supported
by AMP’s new purpose – helping people create
their tomorrow. It reinforces how we put the
customer at the centre of everything we do,
and has galvanised our people around our
purpose-led, customer-focused strategy.
During the year, we strengthened the
management and executive team with several
new appointments. The team is well positioned
to deliver on our transformative strategy and
continue fostering a strong, accountable and
inclusive culture.
The energy and focus across the organisation
have helped us achieve key milestones in our
three-year strategy to simplify AMP’s portfolio,
reposition our core businesses in retail
banking and wealth management to better
compete, and begin exploring opportunities
for long-term sustainable growth.
Q: How did AMP’s businesses perform?
A: We remain a profitable business with
a strong balance sheet, delivering an underlying
net profit after tax of A$184 million for the year.
Our profit reflects the challenging economic
environment we are facing, as well as strategic
repricing in the wealth management businesses.
While the Bank experienced good growth
during the year, profits were impacted by the
competitive environment from a funding and
lending perspective.
Our key growth businesses – AMP Bank and
Platforms – continue to perform and reflect
the investments we’re making in our offerings.
AMP Bank grew its loan book at 1.8x system,
through organic and inorganic growth, and our
North platform is increasing the percentage
of flows from the independent financial adviser
market. We’ve made good progress in our
financial advice business, with losses halved
to A$68 million as we continue to reposition
the business.
6
CEO update
The journey to
a simpler AMP
Q&A with Alexis George
Q: When you look back on 2022,
what are you most proud of?
A: I am proud of what we have been able
to achieve in 2022. Top of the list has been the
renewed energy in the organisation, supported
by AMP’s new purpose – helping people create
their tomorrow. It reinforces how we put the
customer at the centre of everything we do,
and has galvanised our people around our
purpose-led, customer-focused strategy.
During the year, we strengthened the
management and executive team with several
new appointments. The team is well positioned
to deliver on our transformative strategy and
continue fostering a strong, accountable and
inclusive culture.
The energy and focus across the organisation
have helped us achieve key milestones in our
three-year strategy to simplify AMP’s portfolio,
reposition our core businesses in retail
banking and wealth management to better
compete, and begin exploring opportunities
for long-term sustainable growth.
Q: How did AMP’s businesses perform?
A: We remain a profitable business with
a strong balance sheet, delivering an underlying
net profit after tax of A$184 million for the year.
Our profit reflects the challenging economic
environment we are facing, as well as strategic
repricing in the wealth management businesses.
While the Bank experienced good growth
during the year, profits were impacted by the
competitive environment from a funding and
lending perspective.
Our key growth businesses – AMP Bank and
Platforms – continue to perform and reflect
the investments we’re making in our offerings.
AMP Bank grew its loan book at 1.8x system,
through organic and inorganic growth, and our
North platform is increasing the percentage
of flows from the independent financial adviser
market. We’ve made good progress in our
financial advice business, with losses halved
to A$68 million as we continue to reposition
the business.
In our Master Trust superannuation
offering, we have simplified our
product set, reduced fees and
significantly improved investment
performance, however this sector
continues to experience challenging
operating conditions. Our New Zealand
business continues to deliver
a stable performance.
It has been a challenging period for
AMP Capital as the business prepared
for the separation and transition
to new owners. However, I’m proud
of the way the teams have continued
to deliver for our clients during this
time. The imminent completion of
the transactions will provide stability
and certainty for all stakeholders.
Q: How is AMP growing
its relationships with
customers?
A: AMP’s customer-focused strategy
seeks to meet our customers’ needs
around some of the key aspects of
their financial wellbeing, particularly
the important areas of home
ownership and retirement savings.
During the year AMP Bank helped
9,290 customers to buy their
own home, and we have invested
in new digital capabilities to make
the home loan approval process
easier and quicker for customers
and mortgage brokers.
In Australian Wealth Management,
we launched an innovative retirement
solution on the North platform that
provides the highest levels of lifetime
income in the market. This gives
retirees peace of mind around the
‘fear of running out’ in retirement, and
is another important way we support
our customers in these critical areas
of their financial wellbeing.
Q: How is AMP adapting
to industry disruption?
A: Change is constant, so we must
continually innovate to meet the
changing needs of customers.
This innovation mindset has
enabled us to bring to market some
exciting solutions that will support
our customers around the two biggest
assets most Australians will ever own
– their home and their retirement
savings. In 2022, as promised,
we launched our digital mortgage,
as well as a unique retirement
income solution, demonstrating
that we can be truly innovative.
Financial advice continues to be
a highly regulated and challenged
industry. However with the recent
Quality of Advice Review, I’m
confident we’re heading in the right
direction to make financial advice
affordable and accessible for more
Australians. We will continue to focus
on ensuring that our model for advice
is competitive and sustainable, as we
know that people who receive quality
advice have better financial outcomes.
Q: How is the simplification of
the business progressing?
A: In November 2021 we set out
a clear plan to simplify AMP’s business
and I’m pleased to say that we are
making good progress on delivering
on that plan.
Over the past 18 months, we agreed
and completed a number of asset
sales, including the AMP Capital
business and the remaining stake in
Resolution Life Australia, to simplify
our portfolio. We completed the sale
of the international infrastructure
equity business to DigitalBridge in
February 2023, and we have one
outstanding regulatory approval
required in China to complete the
sale of the real estate and domestic
infrastructure equity business
to Dexus.
In August 2022 we announced
a capital return of $1.1 billion to
shareholders, and as part of that we
have announced a FY 22 final dividend
of 2.5 cents per share. Returning
capital to shareholders remains one
of our key strategic priorities for 2023.
As we continue to execute on our
strategic plan, I am pleased that
our progress during 2022 has been
reflected in more stability and
growth in AMP’s share price.
Q: What’s your vision for AMP?
A: My vision is for AMP to be
a purpose-driven and leading retail
banking and wealth management
business. Guided by our purpose, we
see considerable opportunity to support
customers in new and innovative
ways around retirement. Our brand
remains iconic and is intertwined with
Australian history and I see this as
being a strong differentiator for AMP.
We have launched first-to-market
retirement solutions, including our
new lifetime income account, which
gives us a strong foundation for future
growth and the opportunity to be a
leader in this space.
Q: What are your priorities
for the coming year?
A: The management team
is committed to building on the
foundations we’ve put in place
during 2022, to build pride in AMP
for our shareholders, employees,
customers and the community.
We are delivering on our strategy
on the path to a new AMP, and
have defined our priorities
for the year ahead. We will
be focused on returning capital
to shareholders, growing IFA
flows in our Platforms business,
controlling costs, supporting new
growth opportunities particularly
through strategic partnerships,
growing AMP Bank, and continuing
to strengthen our culture and brand.
These critical parts of our strategy
will deliver a business that is robust,
growing and delivers long-term
value to shareholders.
We are committed to delivering
on AMP’s transformation, and
I thank shareholders for their
continued support as we execute
on our strategy. I’m excited
by what we will achieve in 2023.
Alexis George
AMP Chief Executive Officer
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8
Our purpose
Helping people
create their tomorrow
AMP’s new purpose brings to life the way we
help customers build their financial wellbeing
and achieve their goals – no matter how small.
Offering services in financial advice and
superannuation, retirement income, banking
and investment products, we are committed
to helping people create their tomorrow.
AMP Limited supports its customers through
key businesses and strategic partnerships.
AMP Bank
Providing customers with home
loans, deposit and transaction
accounts in Australia.
Australian Wealth
Management
Comprising three business
lines providing advice,
superannuation (Master Trust),
and investment management
platforms to customers.
New Zealand Wealth
Management
Supporting customers with super,
retirement, financial advice and
general insurance, directly and
through one of the largest networks
of financial advisers in New Zealand.
Strategic partnerships
Leveraging partnerships to
expand capabilities and meet
customer and market demands.
8
Our purpose
Helping people
create their tomorrow
AMP’s new purpose brings to life the way we
help customers build their financial wellbeing
and achieve their goals – no matter how small.
Offering services in financial advice and
superannuation, retirement income, banking
and investment products, we are committed
to helping people create their tomorrow.
AMP Limited supports its customers through
key businesses and strategic partnerships.
AMP Bank
Providing customers with home
loans, deposit and transaction
accounts in Australia.
Australian Wealth
Management
Comprising three business
lines providing advice,
superannuation (Master Trust),
and investment management
platforms to customers.
New Zealand Wealth
Management
Supporting customers with super,
retirement, financial advice and
general insurance, directly and
through one of the largest networks
of financial advisers in New Zealand.
Strategic partnerships
Leveraging partnerships to
expand capabilities and meet
customer and market demands.
Quay Quarter Tower
The Sydney Quay Quarter Tower (QQT) building, AMP’s
new headquarters and next door to its former office
in Circular Quay, was developed with a repurposed
core, saving approximately 8,000 tonnes of embodied
carbon and is powered by 100% renewable electricity.
It has been awarded a 6 Star Green Star – Office Design
v3 rating from the Green Building Council of Australia.
9
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10
How we create value
Our enablers
Our business areas
Respect risk
Embed appropriate governance structures
to maintain robust risk culture
Brand, reputation and ESG
Driving consistent delivery of positive
outcomes for our stakeholders: shareholders,
customers, people and communities
Digital and data
Leveraging digital and data to better
understand and serve our customers
Purpose and culture
Helping people create their tomorrow
C
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AMP Bank
New Zealand
Wealth
Management
AMP’s five values underpin our purpose
and drive the actions of employees
to deliver for our customers
Put customers first
Own it
Be brave
Play as one team
Custo
m
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r
s
d p artners
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10
How we create value
Our enablers
Our business areas
The value we create
Respect risk
Embed appropriate governance structures
to maintain robust risk culture
Brand, reputation and ESG
Driving consistent delivery of positive
outcomes for our stakeholders: shareholders,
customers, people and communities
Digital and data
Leveraging digital and data to better
understand and serve our customers
Purpose and culture
Helping people create their tomorrow
Custo
Custo
m
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r
s
s
C
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o
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tin
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AMP Bank
New Zealand
Wealth
Management
a
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s
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Australian
Wealth
Management
Strategic
partnerships
d p artners
d p artners
n
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p l e a
p l e a
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o
P e
P e
AMP’s five values underpin our purpose
and drive the actions of employees
to deliver for our customers
Put customers first
Own it
Be brave
Play as one team
Do the right thing
For shareholders
30%
FY 22 share
price uplift
$1.1b
capital return
committed
For customers
$2.0b
pension payments
9,290
mortgages to help more
Australians own their own home
For our people
4,300+
employees across Australia
and New Zealand
40:40:20
gender diversity targets met
across board, middle management
and overall workforce
For our communities
$1m
10
donated by AMP
Foundation Tomorrow
Maker program
years carbon
neutral across
all operations
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12
Strategy
The path to
a new AMP
AMP set out its strategic
growth plans for 2022–2024
on 30 November 2021.
Since then, AMP has been
focused on delivering on this
strategy by repositioning its
core capabilities in wealth
management and banking,
simplifying the organisation,
and exploring opportunities
for growth.
Reposition
Invest to grow AMP Bank
Drive profitable growth through digital and
technology investment, and expand into
natural adjacencies. Offering mortgage and
deposit solutions that address customer needs,
underpinned by great customer service.
Grow the North platform, building
new relationships with IFAs
Grow AMP’s flagship North platform by enhancing
offerings and digital functionality to support
aligned and independent advisers and their
clients. Differentiate AMP through leading
retirement and investment solutions.
Continue the transformation
of Advice
Simplify the Advice model, delivering valued
licensee services at a competitive and sustainable
price, and improve efficiency in AMP’s operations.
FY 23 focus
– return capital to shareholders
– drive operational efficiency
– grow AMP Bank
– grow IFA flows in North
– support new growth opportunities
– build on brand and culture
12
Strategy
The path to
a new AMP
AMP set out its strategic
growth plans for 2022–2024
on 30 November 2021.
Since then, AMP has been
focused on delivering on this
strategy by repositioning its
core capabilities in wealth
management and banking,
simplifying the organisation,
and exploring opportunities
for growth.
Reposition
Simplify
Explore
Invest to grow AMP Bank
Drive profitable growth through digital and
technology investment, and expand into
natural adjacencies. Offering mortgage and
deposit solutions that address customer needs,
underpinned by great customer service.
Grow the North platform, building
new relationships with IFAs
Grow AMP’s flagship North platform by enhancing
offerings and digital functionality to support
aligned and independent advisers and their
clients. Differentiate AMP through leading
retirement and investment solutions.
Continue the transformation
of Advice
Simplify the Advice model, delivering valued
licensee services at a competitive and sustainable
price, and improve efficiency in AMP’s operations.
Finalise sale transactions
Execute the AMP Capital sales, delivering
a simplified business.
Right-size the operating model
for agility and efficiency
Reflect AMP’s simplified portfolio and ensure
that the business is operating efficiently.
Continue to review the portfolio
of assets to ensure AMP is the
right owner
Establish direct-to-consumer
solutions in select areas
Diversify the channels of existing growth
businesses and identify new business model
opportunities within targeted market segments.
Develop leading position
in retirement
Build best-in-class retirement offerings to meet
the unaddressed needs of Australians transitioning
from the workforce into retirement, including
through AMP’s platforms strategy.
Ensure that the business is well positioned for the
future, and that the portfolio is strategically aligned.
Explore adjacent new
business models
Enhance shareholder value
Focus on disciplined capital management
to deliver shareholder value.
Explore organic and inorganic opportunities for
expansion, including partnership opportunities
with fintechs to achieve better outcomes for
AMP’s customers and shareholders.
FY 23 focus
– return capital to shareholders
– grow IFA flows in North
– drive operational efficiency
– support new growth opportunities
– grow AMP Bank
– build on brand and culture
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14
Sustainability
overview
AMP has a long tradition of serving the communities we operate
in. Today that is reflected in our purpose, helping people create
their tomorrow. Living this purpose means we are committed
to creating a sustainable and equitable future for our customers,
people, partners, communities and shareholders.
Customers
Financial Wellness
research
AMP’s 2022 Financial
Wellness research shows the
number of workers severely
stressed about their finances
is at record highs, having
almost doubled since 2020.
In 2022, our Member
Education teams had more
than 4,900 attendees to our
webinars and more than
3,400 one-on-one meetings
with members across
our employer and retail
members. Meetings covered
topics such as investment
options, making additional
contributions, understanding
insurance in super and
accessing super in retirement.
Consistent with AMP’s purpose, supporting the
financial wellbeing of our customers is key to our
sustainable success. AMP achieves this through
measures to address financial capability, services
to build wealth in retirement and manage through
periods of vulnerability.
As a customer-led business, we are committed to providing high-quality
products and services that create value for customers, including managing
complaints and responding to customer feedback.
AMP responds to digital disruption in financial services and embraces
opportunities to deliver personalised and proactive digital customer
experiences. This includes managing and maintaining security processes
to protect customer data.
14
Sustainability
overview
AMP has a long tradition of serving the communities we operate
in. Today that is reflected in our purpose, helping people create
their tomorrow. Living this purpose means we are committed
to creating a sustainable and equitable future for our customers,
people, partners, communities and shareholders.
Customers
Financial Wellness
research
AMP’s 2022 Financial
Wellness research shows the
number of workers severely
stressed about their finances
is at record highs, having
almost doubled since 2020.
In 2022, our Member
Education teams had more
than 4,900 attendees to our
webinars and more than
3,400 one-on-one meetings
with members across
our employer and retail
members. Meetings covered
topics such as investment
options, making additional
contributions, understanding
insurance in super and
accessing super in retirement.
Consistent with AMP’s purpose, supporting the
financial wellbeing of our customers is key to our
sustainable success. AMP achieves this through
measures to address financial capability, services
to build wealth in retirement and manage through
periods of vulnerability.
As a customer-led business, we are committed to providing high-quality
products and services that create value for customers, including managing
complaints and responding to customer feedback.
AMP responds to digital disruption in financial services and embraces
opportunities to deliver personalised and proactive digital customer
experiences. This includes managing and maintaining security processes
to protect customer data.
People and partners
AMP seeks to leverage its purpose, culture,
values and controls to build trust in AMP and the
financial services sector. This includes ensuring our
employees and advisers act ethically, and quickly
resolve issues to a high professional standard.
AMP is committed to attracting, developing and retaining the skills
and talent of our people and advisers, which is key to AMP’s ability to
create value for customers and shareholders. This includes diversity and
inclusion, health and wellbeing, and employee attraction and retention.
As part of AMP’s commitment to its partners and supply chains,
we support our advice network and intermediary network in delivery
of service excellence to customers. This includes how we manage
our key service provider relationships and risks of modern slavery
in our supply chain.
Respect@Work website
AMP played a significant role
in the development of the
Respect@Work website, which
is an initiative of the Australian
Human Rights Commission
(AHRC) and the Respect@Work
Council. The online resource for
Australian businesses was created
in response to recommendations
of the National Enquiry into
Sexual Harassment in Australian
workplaces. The Respect@Work
website was launched in November
2022 and is the first website of its
kind in Australia.
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Communities and environment
AMP’s commitment to communities is about doing
the right thing and investing in our communities
for a more sustainable and equitable future.
AMP is committed to responsible investment. We believe that attention
to environmental, social and governance (ESG) considerations improves
long-term financial outcomes and creates a sustainable and equitable
future for everyone in our community.
Climate change presents a range of physical, financial and legal risks to our
business, the investments we manage on behalf of our customers, and the
wider community, and AMP manages these risks. This includes leveraging
our influence as a global investor and how we reduce the impact of our
business activities.
Through its commitment to community investment, AMP creates value for
communities through philanthropic activities and engages employees with
fundraising and volunteering opportunities.
More information on AMP’s sustainability performance across these
key focus areas is detailed in the 2022 Sustainability report.
The AMP Foundation
The AMP Foundation is one
of the nation’s oldest and
largest corporate foundations.
As the independently funded
philanthropic arm of AMP, the
Foundation has committed
to investing in the wellbeing
of individuals, families,
communities and society. Since
1992, the AMP has invested
close to $110 million in the
Australian community to help
create positive change.
16
Material risks
Managing
our key risks
Risk is inherent to our business and AMP
takes measured risks within our risk appetite
to achieve our strategic objectives. AMP has
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
Effective risk management is fundamental
to understanding and responding to
changes in our operating environment,
enabling us to achieve our purpose and
strategic objectives. Risk management
is a responsibility of all AMP employees,
and is reflected in many of our values
– own it, be brave, do the right thing,
and put customers first.
AMP’s risk management framework
provides the foundation for how risks are
managed across AMP and enables AMP
to meet its legislative and regulatory
requirements, codes and ethical standards,
as well as internal policies and procedures.
It includes the following key components:
– Group strategy and business plans
– Risk management strategy
– Risk appetite statement
– Supporting policies and practices
By establishing the principles, requirements,
roles and responsibilities for management
of risk across AMP, the framework ensures
all employees have clarity on how risks
are to be managed to fulfil the obligations
to key stakeholders, including customers,
shareholders and regulators.
The risk appetite statement articulates the
level of risk the board is willing to accept
to ensure the effective delivery of AMP’s
strategic objectives. There is clear alignment
between AMP’s corporate strategy and
the risk appetite of the AMP Limited Board,
to ensure that decisions made are consistent
with the nature and level of risk the board
and management are willing to accept.
16
Material risks
Managing
our key risks
Risk is inherent to our business and AMP
takes measured risks within our risk appetite
to achieve our strategic objectives. AMP has
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
Effective risk management is fundamental
By establishing the principles, requirements,
to understanding and responding to
changes in our operating environment,
enabling us to achieve our purpose and
strategic objectives. Risk management
is a responsibility of all AMP employees,
and is reflected in many of our values
– own it, be brave, do the right thing,
and put customers first.
AMP’s risk management framework
roles and responsibilities for management
of risk across AMP, the framework ensures
all employees have clarity on how risks
are to be managed to fulfil the obligations
to key stakeholders, including customers,
shareholders and regulators.
The risk appetite statement articulates the
level of risk the board is willing to accept
to ensure the effective delivery of AMP’s
provides the foundation for how risks are
strategic objectives. There is clear alignment
managed across AMP and enables AMP
to meet its legislative and regulatory
between AMP’s corporate strategy and
the risk appetite of the AMP Limited Board,
requirements, codes and ethical standards,
to ensure that decisions made are consistent
as well as internal policies and procedures.
with the nature and level of risk the board
It includes the following key components:
and management are willing to accept.
– Group strategy and business plans
– Risk management strategy
– Risk appetite statement
– Supporting policies and practices
Key business challenges
AMP is focused on delivering its transformational strategy,
and in doing so remains conscious of various challenges
affecting the financial services industry. These include, but
are not limited to, the following (listed in alphabetical order):
Business, employee and
business partner conduct
Climate change
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 customer
outcomes, AMP’s reputation, or our value proposition
to customers.
Our Code of Conduct outlines how AMP seeks to conduct
its business and how it expects board members, leaders
employees and contractors 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 dependents of any of these people can utilise
AMP’s whistleblowing program to report conduct
or unethical behaviours.
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 detailed in AMP’s annual Sustainability
report. It includes providing low carbon 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 2022, AMP retained
an A- Leadership 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.
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18
Material risks
Competitor and
customer environment
Cyber security
threats
Operational risk
environment
The financial services industry, as
well as the community in Australia
and New Zealand more broadly,
have faced various challenges
throughout 2022, including natural
disasters, economic uncertainty, and
rising interest rates. Throughout
the year AMP supported customers
in a number of ways, including
activating AMP’s disaster relief
assistance program to provide
support for customers affected
by flooding.
Customer expectations are evolving
which is intensifying competition
within banking and wealth
management. Furthermore, as
economic uncertainty prevails, it is
affecting the performance of assets
under management across the
industry. AMP continues to adapt
its capabilities and operating model
in order to remain competitive and
relevant to customers.
In 2022, AMP continued to deliver
on its strategy to reposition
AMP as a simpler, purpose-led,
customer-focused business in
its core markets of banking and
wealth management. Solid progress
was made on this strategy during
2022, with notable developments
including the launch of AMP’s fully
digital mortgage, and a first-to-
market retirement solution.
Cyber risk remains a threat in
a rapidly changing technological
environment. AMP is committed
to continually uplifting its cyber
resilience through preventing,
detecting, and responding to
cyber incidents, in order to protect
AMP’s reputation, assets and
business operations.
AMP continues to invest in
enhancing its cyber security
capability so that it is both
sustainable and commensurate
to the threats faced. AMP’s Cyber
Defence Centre, launched in 2021
uses industry best practices,
advanced technologies and
intelligence sharing arrangements
with Australian Government and
industry entities to uplift AMP’s
cyber defenses, enhance situational
awareness and mitigate malicious
threats. The AMP Cyber Team
broadened its reach to include
financial advisers with the creation
of a dedicated cyber policy,
improved training materials, and
awareness campaigns, including
presentations at Professional
Development days. While AMP
continues to demonstrate
maturity uplifts against the
National Institute of Standards and
Technology (NIST) Cyber Security
Framework and improve its overall
control effectiveness, cyber security
threats remain a key risk to the
business given the evolving nature
of the threat.
Operational risk exposures for
AMP 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 the result
of a complex operating environment
associated with legacy products,
systems and, in some cases, manual
controls. This environment will be
further stressed by the other key
business challenges included in
this section.
Employee retention and key person
risk are key operational risks for
AMP, and these are currently
elevated across financial services as
a whole due to low unemployment
and a competitive talent market.
We are committed to mitigating
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
and we continue reshaping the
adviser network and simplifying
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.
18
Material risks
Competitor and
Cyber security
customer environment
threats
Operational risk
environment
Organisational
change
Regulatory
environment
The financial services industry, as
well as the community in Australia
and New Zealand more broadly,
have faced various challenges
Cyber risk remains a threat in
a rapidly changing technological
environment. AMP is committed
to continually uplifting its cyber
throughout 2022, including natural
resilience through preventing,
disasters, economic uncertainty, and
detecting, and responding to
rising interest rates. Throughout
cyber incidents, in order to protect
technology, human resources,
the year AMP supported customers
AMP’s reputation, assets and
Operational risk exposures for
AMP 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
internal and external fraud, money
laundering and counter-terrorism
financing, bribery and corruption.
High operational risks are the result
of a complex operating environment
associated with legacy products,
systems and, in some cases, manual
controls. This environment will be
further stressed by the other key
business challenges included in
this section.
Employee retention and key person
risk are key operational risks for
business operations.
AMP continues to invest in
enhancing its cyber security
capability so that it is both
sustainable and commensurate
to the threats faced. AMP’s Cyber
Defence Centre, launched in 2021
uses industry best practices,
advanced technologies and
intelligence sharing arrangements
with Australian Government and
industry entities to uplift AMP’s
in a number of ways, including
activating AMP’s disaster relief
assistance program to provide
support for customers affected
by flooding.
Customer expectations are evolving
which is intensifying competition
within banking and wealth
management. Furthermore, as
economic uncertainty prevails, it is
affecting the performance of assets
under management across the
industry. AMP continues to adapt
its capabilities and operating model
in order to remain competitive and
relevant to customers.
In 2022, AMP continued to deliver
on its strategy to reposition
AMP as a simpler, purpose-led,
customer-focused business in
its core markets of banking and
wealth management. Solid progress
was made on this strategy during
2022, with notable developments
including the launch of AMP’s fully
digital mortgage, and a first-to-
market retirement solution.
cyber defenses, enhance situational
AMP, and these are currently
awareness and mitigate malicious
threats. The AMP Cyber Team
broadened its reach to include
elevated across financial services as
a whole due to low unemployment
and a competitive talent market.
financial advisers with the creation
We are committed to mitigating
of a dedicated cyber policy,
improved training materials, and
awareness campaigns, including
presentations at Professional
Development days. While AMP
continues to demonstrate
maturity uplifts against the
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
and we continue reshaping the
National Institute of Standards and
adviser network and simplifying
Technology (NIST) Cyber Security
superannuation products and
Framework and improve its overall
investment options.
control effectiveness, cyber security
threats remain a key risk to the
business given the evolving nature
of the threat.
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.
More information about
our approach to these
risks can be found on
our website at:
corporate.amp.com.au/
about-amp/
corporate-sustainability
Significant changes
to the state of affairs
Apart from as elsewhere disclosed
in this report, there were no other
significant changes in the state
of affairs during the year.
Changes were made throughout
the year to simplify the operating
model of the ongoing business.
In 2022, AMP announced the
sale of AMP Capital’s real estate,
domestic infrastructure equity
and international infrastructure
equity businesses.
There is always a risk that
business momentum is lost
while organisational change is
implemented. There is a risk that
the extended period 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 its
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.
AMP operates in multiple
jurisdictions, and each of these
jurisdictions has its own legislative
and regulatory requirements, as
well as anticipated upcoming
changes to these requirements.
AMP continues to respond and
adjust its business processes for
any 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
strengthening its risk management
practices, its control environment
and enhancing its compliance
systems across its 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 cooperates with all regulators
to resolve such matters.
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20
Governance
Our approach
to governance
The Board oversees AMP as it continues its transformation,
building on its 174-year heritage of supporting customers
to live financially well. This transformation is supported
by AMP’s new purpose and values.
In November 2021 AMP outlined its strategic path, with
a streamlined portfolio and a customer-driven approach.
This strategy is underpinned by four key enablers: purpose
and culture; brand, reputation and environmental,
social and governance; digital and data capability;
and respect risk.
As the Board oversees AMP’s progress against this
strategy, the Board’s commitment to governance
was demonstrated in a number of key areas in 2022:
Purpose and values
AMP recommitted to being a purpose-led organisation.
AMP’s new purpose statement “Helping people create
their tomorrow” is AMP’s commitment to delivering value
to all stakeholders. AMP’s values help bring this purpose
to life and provide a simple and clear set of expectations
for all employees.
Reshaping Board Committee structure and
establishment of Advisory groups
As AMP’s transformation initiatives stabilised, and
in line with stakeholder feedback, AMP completed a
comprehensive review of its board committees structure
resulting in the reduction of committee members for
certain of its committees.
AMP’s board also established two advisory groups for an
initial six-month period to support and promote AMP’s
key strategic enablers. These board advisory groups
are tasked to conduct workshops and deep dives with
management with their key focus on ESG & sustainability
and technology transformation.
These changes were effected on 1 October 2022 and
resulted in a further reduction in the total amount of
fees paid to directors from that date, continuing the
progressive reduction in aggregate director fees since
2019 by a total of 40.4%.
Board appointment
AMP continued to ensure its board has a mix of
skills, background and experience relevant to AMP’s
continuing transformation, appointing Andrew Best
as a new independent non-executive director in July
2022 who brings to the board valuable insights in
capital management, financial markets and mergers
and acquisition.
To read more about AMP’s approach to corporate governance,
please see the 2022 Corporate governance statement.
20
Governance
Our approach
to governance
The Board oversees AMP as it continues its transformation,
building on its 174-year heritage of supporting customers
to live financially well. This transformation is supported
by AMP’s new purpose and values.
In November 2021 AMP outlined its strategic path, with
a streamlined portfolio and a customer-driven approach.
This strategy is underpinned by four key enablers: purpose
and culture; brand, reputation and environmental,
social and governance; digital and data capability;
and respect risk.
As the Board oversees AMP’s progress against this
strategy, the Board’s commitment to governance
was demonstrated in a number of key areas in 2022:
Purpose and values
AMP recommitted to being a purpose-led organisation.
AMP’s new purpose statement “Helping people create
their tomorrow” is AMP’s commitment to delivering value
to all stakeholders. AMP’s values help bring this purpose
to life and provide a simple and clear set of expectations
for all employees.
Reshaping Board Committee structure and
establishment of Advisory groups
As AMP’s transformation initiatives stabilised, and
in line with stakeholder feedback, AMP completed a
comprehensive review of its board committees structure
resulting in the reduction of committee members for
certain of its committees.
AMP’s board also established two advisory groups for an
initial six-month period to support and promote AMP’s
key strategic enablers. These board advisory groups
are tasked to conduct workshops and deep dives with
management with their key focus on ESG & sustainability
and technology transformation.
These changes were effected on 1 October 2022 and
resulted in a further reduction in the total amount of
fees paid to directors from that date, continuing the
progressive reduction in aggregate director fees since
2019 by a total of 40.4%.
Board appointment
AMP continued to ensure its board has a mix of
skills, background and experience relevant to AMP’s
continuing transformation, appointing Andrew Best
as a new independent non-executive director in July
2022 who brings to the board valuable insights in
capital management, financial markets and mergers
and acquisition.
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Corporate Governance framework
AMP’s governance framework provides clear separation
of the board’s oversight functions and the executive
responsibilities and accountability of the CEO and AMP’s
leadership team, the executive committee (ExCo). This
framework is supported by internal policies, charters,
standards and procedures which facilitate this separation
of responsibilities. An overview of AMP’s corporate
governance framework is depicted below.
Accountable to shareholders
AMP LIMITED BOARD OF DIRECTORS
(Including Chief Executive Officer)
Oversees management of AMP
for shareholders
Delegated Authority
Accountable to Board
AMP LIMITED BOARD COMMITTEES
AUDIT COMMITTEE
Oversees financial reporting
NOMINATION COMMITTEE
Oversees board and
committee membership
and succession planning
REMUNERATION COMMITTEE
Oversees key remuneration
and people policies and practices
RISK AND COMPLIANCE
COMMITTEE
Oversees current and
future risk management
AMP LIMITED SHAREHOLDERS
Delegated Authority
Accountable to Board
CHIEF EXECUTIVE OFFICER
Responsible for the day-to-day
management of the AMP group
and the implementation of our
strategic objectives
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Company
Secretary
Responsible
for the proper
functioning of
the board
AMP LIMITED EXECUTIVE
COMMITTEE
Responsible, with the CEO, for
executing AMP’s strategic objectives
and managing and conducting the
AMP group’s operations
AMP LIMITED EMPLOYEES
AMP Limited Policies, Charters, Standards and Procedures
To read more about AMP’s approach to corporate governance,
please see the 2022 Corporate governance statement.
From time to time, additional board committees, working or advisory groups are established, or a board member is appointed
as the board’s representative on management steering committees. In 2022, the board established two advisory groups
for an initial six-month program, an ESG & sustainability advisory group and a Technology transformation advisory group,
to enhance the board’s insight into these key strategic enablers.
22
Business review
Group financial
performance
Profit and loss (A$m)
Revenue
AUM based revenue
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
NPAT (underlying)
– AMP Bank
– Australian Wealth Management
– New Zealand Wealth Management
– AMP Capital continuing operations
– Group office
NPAT (underlying) by business unit
Items reported below NPAT
AMP Capital discontinued operations
NPAT (statutory)
Please refer to FY 22 Investor report.
FY 22
2H 22
1H 22
FY 21
% FY
843
382
153
1,378
(174)
(20)
(80)
(3)
(82)
(359)
1,019
(353)
(150)
(89)
(119)
(45)
(35)
(791)
228
(63)
71
(52)
184
103
50
32
41
(42)
184
152
51
387
394
206
71
671
(74)
(10)
(40)
(3)
(42)
(169)
502
449
176
82
707
(100)
(10)
(40)
–
(40)
(190)
517
(182)
(171)
(80)
(52)
(59)
(24)
(16)
(413)
89
(39)
37
(20)
67
57
14
15
15
(34)
67
(181)
20
(94)
(70)
(37)
(60)
(21)
(19)
(378)
139
(24)
34
(32)
117
46
36
17
26
(8)
117
333
31
481
1,062
399
164
1,625
(237)
(22)
(71)
26
(138)
(442)
1,183
(387)
(138)
(101)
(142)
(42)
(35)
(845)
338
(66)
102
(94)
280
153
89
39
37
(38)
280
(608)
76
(252)
(20.6)
(4.3)
(6.7)
(15.2)
26.6
9.1
(12.7)
n/a
40.6
18.8
(13.9)
8.8
(8.7)
11.9
16.2
(7.1)
–
6.4
(32.5)
4.5
(30.4)
44.7
(34.3)
(32.7)
(43.8)
(17.9)
10.8
(10.5)
(34.3)
n/a
(32.9)
n/a
22
Business review
Group financial
performance
– Regulatory, insurance and professional services
Profit and loss (A$m)
Revenue
AUM based revenue
Net interest income
Other revenue
Total revenue
Variable costs
– Investment management expense
– Marketing and distribution
– Brokerage and commissions
– Loan impairment expense
– Other variable costs
Total variable costs
Gross profit
Controllable costs
– Employee costs
– Technology
– Project costs
– Property costs
EBIT
Interest expense
Investment income
Tax expense
NPAT (underlying)
– AMP Bank
– Other operating expenses
Total controllable costs
– Australian Wealth Management
– New Zealand Wealth Management
– AMP Capital continuing operations
– Group office
NPAT (underlying) by business unit
Items reported below NPAT
AMP Capital discontinued operations
NPAT (statutory)
Please refer to FY 22 Investor report.
843
382
153
1,378
(174)
(20)
(80)
(3)
(82)
(359)
1,019
(353)
(150)
(89)
(119)
(45)
(35)
(791)
228
(63)
71
(52)
184
103
50
32
41
(42)
184
152
51
387
394
206
71
671
(74)
(10)
(40)
(3)
(42)
(169)
502
(413)
(80)
(52)
(59)
(24)
(16)
89
(39)
37
(20)
67
57
14
15
15
(34)
67
(181)
20
(94)
449
176
82
707
(100)
(10)
(40)
–
(40)
(190)
517
(70)
(37)
(60)
(21)
(19)
(378)
139
(24)
34
(32)
117
46
36
17
26
(8)
117
333
31
481
1,062
399
164
1,625
(237)
(22)
(71)
26
(138)
(442)
1,183
(387)
(138)
(101)
(142)
(42)
(35)
(845)
338
(66)
102
(94)
280
153
89
39
37
(38)
280
(608)
76
(252)
(20.6)
(4.3)
(6.7)
(15.2)
26.6
9.1
(12.7)
n/a
40.6
18.8
(13.9)
8.8
(8.7)
11.9
16.2
(7.1)
–
6.4
(32.5)
4.5
(30.4)
44.7
(34.3)
(32.7)
(43.8)
(17.9)
10.8
(10.5)
(34.3)
n/a
(32.9)
n/a
FY 22
2H 22
1H 22
FY 21
% FY
FY 22
2H 22
1H 22
FY 21
Earnings
EPS – underlying (cps)
EPS – actual (cps)
RoE – underlying
RoE – actual
Dividend
Dividend per share (cps)
Franking rate
Ordinary shares on issue (m)
Weighted average number of shares on issue (m)
– basic
Share price for the period – closing (A$)
– fully diluted
– statutory
– low
– high
(182)
(171)
Market capitalisation – end period (A$m)
Capital and corporate debt
AMP shareholder equity (A$m)
Corporate debt (A$m)
Corporate gearing
Interest cover – underlying (times)
Interest cover – actual (times)
Margins
5.7
12.0
4.6%
9.7%
2.5
20%
3,043
3,215
3,266
3,213
0.87
1.40
4,002
4,077
1,078
16%
4.8
9.0
2.1
(3.0)
3.1%
(4.4%)
2.5
20%
3,043
3,164
3,214
3,162
0.96
1.40
4,002
4,077
1,078
16%
4.8
9.0
3.6
14.7
5.6%
23.0%
–
–
3,266
3,266
3,312
3,264
0.87
1.21
3,135
4,479
1,431
20%
6.4
2.8
8.4
(7.6)
6.9%
(6.2%)
–
–
3,266
3,337
3,384
3,335
0.91
1.62
3,299
3,874
1,431
22%
8.0
–
AMP Bank net interest margin (over average interest earning assets)
1.38%
1.44%
1.32%
1.62%
Australian Wealth Management AUM based revenue to average AUM (bps)
Platforms AUM based revenue to average AUM (bps)
Master Trust AUM based revenue to average AUM (bps)
Volumes
AMP Bank total loans (A$m)
Australian Wealth Management net cashflows (A$m)
Platforms net cashflows (A$m)
Master Trust net cashflows (A$m)
Australian Wealth Management AUM (A$b)
Platforms AUM (A$b)
Master Trust AUM (A$b)
Total AUM and administration (A$b)
Controllable costs (pre-tax) and cost ratios
Controllable costs – excluding AMP Capital discontinued operations (A$m)
Controllable costs – AMP Capital discontinued operations (A$m)
55
48
67
24,033
(5,278)
936
(3,897)
124.2
65.5
54.0
149.1
791
278
53
47
66
24,033
(2,377)
472
(2,270)
124.2
65.5
54.0
149.1
413
118
57
49
67
22,730
(2,901)
464
(1,627)
125.1
63.9
55.2
151.1
378
160
Cost to income ratio (excl. AMP Capital discontinued operations)
72.4%
76.4%
68.4%
Please refer to FY 22 Investor report.
67
53
85
22,058
(7,213)
83
(5,246)
142.3
71.1
62.9
171.9
845
440
67.1%
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24
Business review
AMP Bank
NPAT
$103m
Residential
mortgage
book grew
$2.0b
to
$23.8b
from 2021 through
organic and
inorganic growth
Full year 2022 highlights
During the year, AMP Bank has helped over 188,000 customers with their banking needs,
and enabled over 9,290 Australians to purchase their own home. The bank’s residential
mortgage book grew at 1.8x system, while maintaining strong credit quality. This was
underpinned by ongoing service improvements to drive organic growth, as well as the
acquisition of Nano’s residential mortgage book. The residential mortgage book grew by
9% to $23.8 billion. Net interest margin (NIM) of 1.38% in FY 22, compared to 1.62% in
FY 21, was primarily driven by mortgage margin compression and asset mix changes, and
partially offset by favourable deposit margins. The second half of FY 22 saw NIM improve
to 1.44% as funding demand and competition in the market normalised. AMP Bank’s NPAT
(underlying) of $103 million reflects the competitive environment from a funding and
lending perspective, as well as the benefit of the one-off loan impairment release in FY 21
not repeated in FY 22.
Operational highlights
AMP Bank continued to take a disciplined approach to growing its loan book, supported
by improving service and turnaround times, and competitive pricing. AMP Bank also
continued its strategic investment in technology, enhancing its offering to further digitise
and automate the lending experience for brokers, advisers and customers. Continued
investment in home loan processing technology improved customer cycle times to
unconditional approval by 33%. Partnerships with innovative fintechs position AMP Bank
to reach a broader direct-to-consumer base. AMP Bank partnered with Bricklet, a shared
equity home platform, to enable more Australians to get into the property market earlier
in life. A partnership with fintech platform Nano enables AMP Bank to offer fully digital
mortgages, with unconditional approval in as little as 10 minutes.
AMP Indigenous designed
bank card
In 2022, AMP Bank launched its redesigned Visa
debit cards, featuring a series of Indigenous
artworks by emerging artist, Chloe Little, that
celebrate the Indigenous cultures of Australia.
AMP Bank is one of the first banks in Australia
to feature Indigenous artwork on its debit
cards. The new designs are on the physical debit
cards and available for customers to add to their
digital wallet on their mobile phones. The designs
have been rolled out to new and existing customers
on all cards issued by AMP Bank from early 2023.
The new cards are also produced using more
sustainable materials.
24
Business review
AMP Bank
NPAT
$103m
Residential
mortgage
book grew
$2.0b
to
$23.8b
from 2021 through
organic and
inorganic growth
Full year 2022 highlights
During the year, AMP Bank has helped over 188,000 customers with their banking needs,
and enabled over 9,290 Australians to purchase their own home. The bank’s residential
mortgage book grew at 1.8x system, while maintaining strong credit quality. This was
underpinned by ongoing service improvements to drive organic growth, as well as the
acquisition of Nano’s residential mortgage book. The residential mortgage book grew by
9% to $23.8 billion. Net interest margin (NIM) of 1.38% in FY 22, compared to 1.62% in
FY 21, was primarily driven by mortgage margin compression and asset mix changes, and
partially offset by favourable deposit margins. The second half of FY 22 saw NIM improve
to 1.44% as funding demand and competition in the market normalised. AMP Bank’s NPAT
(underlying) of $103 million reflects the competitive environment from a funding and
lending perspective, as well as the benefit of the one-off loan impairment release in FY 21
not repeated in FY 22.
Operational highlights
AMP Bank continued to take a disciplined approach to growing its loan book, supported
by improving service and turnaround times, and competitive pricing. AMP Bank also
continued its strategic investment in technology, enhancing its offering to further digitise
and automate the lending experience for brokers, advisers and customers. Continued
investment in home loan processing technology improved customer cycle times to
unconditional approval by 33%. Partnerships with innovative fintechs position AMP Bank
to reach a broader direct-to-consumer base. AMP Bank partnered with Bricklet, a shared
equity home platform, to enable more Australians to get into the property market earlier
in life. A partnership with fintech platform Nano enables AMP Bank to offer fully digital
mortgages, with unconditional approval in as little as 10 minutes.
Australian Wealth Management
Australian Wealth Management includes three key businesses – Platforms, Master
Trust and Advice. NPAT for the overall business was $50 million (FY 21: $89 million),
reflecting strategic repricing in Platforms and Master Trust to attract and retain
customers, as well as the impact of volatile investment markets partly offset
by lower costs.
Platforms
AMP’s flagship platform, North, continued to generate solid inflows from both IFAs
and aligned advisers, which follows strategic repricing initiatives and continued
investment in the platform’s functionality. NPAT (underlying) of $66 million
(FY 21: $123 million) was impacted by market volatility including losses on the
North Guarantee product and planned strategic repricing. Controllable costs
of $157 million (FY 21: $146 million) reflect the decision to increase spending
to support future business growth.
Overall Platforms AUM of $65.5 billion (FY 21: $71.1 billion) reflects volatile
investment markets partly offset by cash inflows of $936 million (FY 21: $83 million).
North AUM remained relatively stable at $61.3 billion, with volatile investment
markets offset by net cash inflows of $5.7 billion.
NPAT
$50m
31%
increase in inflows
from external
financial advisers
to North platform
25
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AMP Indigenous designed
bank card
In 2022, AMP Bank launched its redesigned Visa
debit cards, featuring a series of Indigenous
artworks by emerging artist, Chloe Little, that
celebrate the Indigenous cultures of Australia.
AMP Bank is one of the first banks in Australia
to feature Indigenous artwork on its debit
cards. The new designs are on the physical debit
cards and available for customers to add to their
digital wallet on their mobile phones. The designs
have been rolled out to new and existing customers
on all cards issued by AMP Bank from early 2023.
The new cards are also produced using more
sustainable materials.
AMP launches market-first
retirement solution
In 2022, AMP launched a market-first retirement solution, MyNorth Lifetime,
an innovative new option for retirees that provides the peace of mind and
certainty of higher income for life. Available through MyNorth, it delivers
on a key strategic priority for AMP to help more Australians achieve a
better-quality life throughout retirement.
Customers and their financial advisers have complete control over investment
choice and strategy, with access to North’s extensive investment menu. This
ensures advisers can support their customer’s specific investment goals and
retirement objectives, and make changes over time as circumstances change.
This market-first retirement solution, MyNorth Lifetime, has won two awards
at the annual Plan For Life (PFL) Longevity Cover Excellence Awards. MyNorth
Lifetime won the Innovation award for longevity cover and MyNorth Deferred
Lifetime Income won best Deferred Lifetime Investment Linked cover.
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Business review
Australian Wealth Management continued
Master Trust
The Master Trust business continues its strategy of simplification, driving operational
efficiency and reducing costs while improving investment performance, despite challenging
operating conditions for this business. NPAT (underlying) of $55 million was impacted by the
simplification initiatives completed in Q3 21, lower average AUM and the decision to deliver
price reductions for members in the previous year to reset Master Trust’s competitive
position in the market.
The focus on operational efficiency continued, with controllable costs falling to $192 million
(FY 21: $216 million) driven by focused cost reduction activity and lower project costs, with
the major simplification programs largely complete.
Advice
Strong progress was made on the transformation of Advice to a sustainable, standalone
business, reducing NPAT losses by $78 million to $68 million. Costs were carefully managed,
with controllable costs reducing by 25% to $138 million. Advice revenues of $56 million
(FY 21: $58 million) were impacted by the sale of the employed business, and partially offset
by higher licensee fees.
53%
reduction in losses
in Advice to A$68m
25%
reduction in
controllable
costs to A$138m
AMP SignatureSuper
wins awards
Our focus on delivering value to members
has recently been recognised with
SignatureSuper Allocated Pension winning
the 2023 Money Magazine award for the
best value retirement product.
This follows AMP’s SignatureSuper
products being awarded the highest
Platinum rating by respected research house,
SuperRatings in 2022. AMP SignatureSuper,
AMP SignatureSuper – MySuper and AMP
SignatureSuper Allocated pension all received
Platinum ratings while the AMP SignatureSuper
Personal Superannuation received a Gold rating.
26
Business review
Australian Wealth Management continued
New Zealand Wealth Management
53%
reduction in losses
in Advice to A$68m
25%
reduction in
controllable
costs to A$138m
Master Trust
The Master Trust business continues its strategy of simplification, driving operational
efficiency and reducing costs while improving investment performance, despite challenging
operating conditions for this business. NPAT (underlying) of $55 million was impacted by the
simplification initiatives completed in Q3 21, lower average AUM and the decision to deliver
price reductions for members in the previous year to reset Master Trust’s competitive
position in the market.
The focus on operational efficiency continued, with controllable costs falling to $192 million
(FY 21: $216 million) driven by focused cost reduction activity and lower project costs, with
the major simplification programs largely complete.
Advice
Strong progress was made on the transformation of Advice to a sustainable, standalone
business, reducing NPAT losses by $78 million to $68 million. Costs were carefully managed,
with controllable costs reducing by 25% to $138 million. Advice revenues of $56 million
(FY 21: $58 million) were impacted by the sale of the employed business, and partially offset
by higher licensee fees.
Full year 2022 highlights
New Zealand Wealth Management (NZWM) provides customers with
a variety of wealth management solutions, including KiwiSaver, corporate
superannuation, retail investments, a wrap investment management
platform and general insurance. In FY 22, NPAT of $32 million reflects
volatile investment markets impacting average AUM, as well as the repricing
of the KiwiSaver product. In FY 22, AUM based revenue was $92 million,
with AUM at 31 December 2022 of $10.5 billion. NZWM continues to focus
on simplifying its business, with costs controls resulting in controllable costs
down 2.8% to $35 million.
Operational highlights
2022 was the first full year of NZWM’s index-based investment philosophy
with a focus on sustainable investing. This approach has enabled NZWM
to reduce the carbon footprint of its funds while also reducing fees for
clients. While volatility in global financial markets is likely to continue
to impact average AUM balances, NZWM is well positioned in the market.
NPAT
$32m
Resilient earnings
despite investment
market impacts
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AMP SignatureSuper
wins awards
Our focus on delivering value to members
has recently been recognised with
SignatureSuper Allocated Pension winning
the 2023 Money Magazine award for the
best value retirement product.
This follows AMP’s SignatureSuper
products being awarded the highest
Platinum rating by respected research house,
SuperRatings in 2022. AMP SignatureSuper,
AMP SignatureSuper – MySuper and AMP
SignatureSuper Allocated pension all received
Platinum ratings while the AMP SignatureSuper
Personal Superannuation received a Gold rating.
Supporting vulnerable customers
Being a customer-led business means supporting customers
who face hardship or require access to funds on compassionate
grounds. This includes those impacted by cost of living pressures
and financial vulnerability.
– In 2022, AMP processed 1,304 superannuation withdrawals
totalling $24.6 million for members on compassionate grounds
and 1,949 withdrawals for those experiencing financial hardship
for a total of $13 million.
– AMP Bank provided financial hardship assistance to 447 home
loan accounts valued at a total of $202 million.
– AMP’s aligned network of financial advisors continued to deliver
educational material through a suite of webinars to clients
covering topics such as retirement, budgeting, early release
of super, investment market updates and estate planning.
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Board of directors
Left to right: Kate McKenzie, Michael Sammells, Andrea Slattery, Mike Hirst,
Debra Hazelton, Andrew Best, Alexis George and Rahoul Chowdry.
Debra was appointed to the AMP Limited Board as a Non-executive director in June 2019
and as the Chair in August 2020. She was also appointed as the Chair of the Nomination
Committee in August 2020 and is a member of the Remuneration Committee. Debra is also
the Chair of the AMP Bank Board.
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
in Japan. She has expertise across financial markets, institutional banking, risk management,
treasury, human resource management and global corporate culture transformation.
Debra is also a Non-executive director on the boards of Treasury Corporation of Victoria and
Persol Asia Pacific Pte Ltd (Singapore), Vice President of the Australia-Japan Business Cooperation
Committee and a Principal of Kokusai Business Advisory.
Her previous board experience includes Australia-Japan Foundation, Australian Financial Markets
Association, Asia Society and Women in Banking and Finance. She has graduate and post-graduate
degrees in philosophy, Japanese language and literature as well as economics and finance.
Directorships of other ASX listed companies:
• None
Government and community involvement
• Non-executive director, Treasury Corporation of Victoria (appointed August 2018)
• Member and Vice President, Australia-Japan Business Cooperation Committee (appointed
November 2020 and appointed as Vice President October 2021)
• Member, Chief Executive Women Australia (appointed January 2020)
Debra
Hazelton
BA (Hons), MCom,
GAICD
Independent Chair
28
Board of directors
Left to right: Kate McKenzie, Michael Sammells, Andrea Slattery, Mike Hirst,
Debra Hazelton, Andrew Best, Alexis George and Rahoul Chowdry.
Debra was appointed to the AMP Limited Board as a Non-executive director in June 2019
and as the Chair in August 2020. She was also appointed as the Chair of the Nomination
Committee in August 2020 and is a member of the Remuneration Committee. Debra is also
the Chair of the AMP Bank Board.
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
in Japan. She has expertise across financial markets, institutional banking, risk management,
treasury, human resource management and global corporate culture transformation.
Debra is also a Non-executive director on the boards of Treasury Corporation of Victoria and
Persol Asia Pacific Pte Ltd (Singapore), Vice President of the Australia-Japan Business Cooperation
Committee and a Principal of Kokusai Business Advisory.
Her previous board experience includes Australia-Japan Foundation, Australian Financial Markets
Association, Asia Society and Women in Banking and Finance. She has graduate and post-graduate
degrees in philosophy, Japanese language and literature as well as economics and finance.
Directorships of other ASX listed companies:
• None
Government and community involvement
• Non-executive director, Treasury Corporation of Victoria (appointed August 2018)
• Member and Vice President, Australia-Japan Business Cooperation Committee (appointed
November 2020 and appointed as Vice President October 2021)
• Member, Chief Executive Women Australia (appointed January 2020)
Debra
Hazelton
BA (Hons), MCom,
GAICD
Independent Chair
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 Board in August 2021.
Experience
Alexis has more than 30 years’ experience in the financial services industry in Australia and
overseas. She spent seven years at ANZ, including most recently as the Deputy Chief Executive
Officer, working with the CEO to drive group-wide strategic initiatives in addition to having
responsibility for its 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 to Zurich and IOOF.
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.
Directorships of other ASX listed companies:
• None
Government and community involvement
• Member, Chief Executive Women Australia (appointed October 2016)
Andrew was appointed to the AMP Limited Board as a Non-executive director in July 2022 and
is a member of the Nomination and Risk and Compliance Committees. At the same time, Andrew
was appointed to the AMP Bank Board and is a member of its Risk and Compliance Committee.
Experience
Andrew is a senior financial services executive with over 30 years’ international and domestic
experience across banking and financial markets in Australia, London, Hong Kong and
Singapore, with a particular focus on capital markets and mergers and acquisitions. From
1989 to 2020, Andrew worked with J.P. Morgan Chase & Co holding various roles over his
three-decade career with the company, including most recently as Head of Investment
Banking for Australia and New Zealand from 2017 to 2020. Prior to that role, Andrew was
Head of the Financial Institutions investment banking business for Australia and New Zealand
from 2004. Andrew is a member of the Ord Minnett Private Opportunities Fund Investment
Committee, a panel member for Adara Group, which provides independent pro bono advice
to Australian companies as well as being an executive coach with Foresight Global Coaching.
Directorships of other ASX listed companies:
• None
Government and community involvement
• Member, National Heart Foundation Advisory Board (appointed April 2020)
Rahoul was appointed to the AMP Limited Board as a Non-executive director in January 2020.
He served as Chair of the Risk Committee from May 2020 to October 2022. He was appointed
the Chair of the Audit Committee in October 2022 and is a member of the Nomination and Risk
and Compliance Committees. At the same time, Rahoul was appointed to the AMP Bank Board
and is Chair of its Audit Committee and a member of its Risk and Compliance Committee.
Experience
Rahoul has over 40 years’ experience in professional services, advising complex multinational
organisations in Australia and overseas. Rahoul is a Senior Advisor at Minter Ellison and is a member
of the Audit and Risk Committee of the firm’s Partnership Board. Between 2018 and 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)
Alexis
George
BCom, FCA, GAICD
Chief Executive
Officer
Andrew
Best
BLaws, BSc, MAICD
Independent,
Non-executive
director
Rahoul
Chowdry
BCom, FCA
Independent,
Non-executive
director
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Board of directors
Mike
Hirst
BCom, SFFin, MAICD
Independent,
Non-executive
director
Kate
McKenzie
BA, LLB, GAICD
Independent,
Non-executive
director
Mike was appointed to the AMP Limited Board as a Non-executive director in July 2021.
He was appointed the Chair of the Risk and Compliance Committee in October 2022 and
is a member of the Nomination and Remuneration Committees. At the same time, Mike
was appointed to the AMP Bank Board and is Chair of its Risk and Compliance Committee.
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. Mike was the Managing
Director of Bendigo and Adelaide Bank from 2009 to 2018 and prior to this, he worked in senior
executive and management positions with Colonial Limited, Westpac Banking Corporation
and Chase AMP Bank. Mike served as Deputy Chair of the Treasury Corporation of Victoria and
previously held non-executive directorships with Austraclear Limited, Colonial First State, Rural
Bank and Barwon Health Limited. Mike 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 Chair of the Australian Banking Association.
Directorships of other ASX listed companies:
• Non-executive director, AMCIL Limited (appointed January 2019)
• Non-executive director, Butn Limited (appointed September 2020)
Directorships of other companies:
• Non-executive director of GMHBA Limited (appointed July 2018)
Government and community involvement
• Deputy Chair, Racing Victoria (appointed October 2016)
• Honorary Member, Business Council of Australia (appointed July 2018)
Kate was appointed to the AMP Limited Board as a Non-executive director in November 2020
and is a member of the Nomination Committee. At the same time, Kate was appointed to the
AMP Bank Board.
Experience
Kate has more than 25 years of experience in other board and senior executive leadership roles.
Kate is a Non-executive director of Stockland Corporation and Healius and the Chair of NBN Co.
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, and held several executive roles in her 12 year tenure at Telstra, including
as Chief Operating Officer.
Directorships of other ASX listed companies:
• Non-executive director, Stockland Corporation Limited (appointed December 2019)
• Non-executive director, Healius Ltd (appointed February 2021)
Government and community involvement
• Non-executive director and Chair, NBN Co (appointed in December 2019 and
Chair in January 2022)
• Member, Chief Executive Women Australia (appointed January 2006)
30
Board of directors
Mike
Hirst
BCom, SFFin, MAICD
Independent,
Non-executive
director
Kate
McKenzie
BA, LLB, GAICD
Independent,
Non-executive
director
Mike was appointed to the AMP Limited Board as a Non-executive director in July 2021.
He was appointed the Chair of the Risk and Compliance Committee in October 2022 and
is a member of the Nomination and Remuneration Committees. At the same time, Mike
was appointed to the AMP Bank Board and is Chair of its Risk and Compliance Committee.
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. Mike was the Managing
Director of Bendigo and Adelaide Bank from 2009 to 2018 and prior to this, he worked in senior
executive and management positions with Colonial Limited, Westpac Banking Corporation
and Chase AMP Bank. Mike served as Deputy Chair of the Treasury Corporation of Victoria and
previously held non-executive directorships with Austraclear Limited, Colonial First State, Rural
Bank and Barwon Health Limited. Mike 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 Chair of the Australian Banking Association.
Directorships of other ASX listed companies:
• Non-executive director, AMCIL Limited (appointed January 2019)
• Non-executive director, Butn Limited (appointed September 2020)
Directorships of other companies:
• Non-executive director of GMHBA Limited (appointed July 2018)
Government and community involvement
• Deputy Chair, Racing Victoria (appointed October 2016)
• Honorary Member, Business Council of Australia (appointed July 2018)
Kate was appointed to the AMP Limited Board as a Non-executive director in November 2020
and is a member of the Nomination Committee. At the same time, Kate was appointed to the
AMP Bank Board.
Experience
and Workcover.
Kate has more than 25 years of experience in other board and senior executive leadership roles.
Kate is a Non-executive director of Stockland Corporation and Healius and the Chair of NBN Co.
She has previously served on the boards of Allianz Australia, Foxtel, Telstra Ventures, Sydney Water
Kate was the Chief Executive Officer of Chorus, the New Zealand telecommunication group, listed
on the ASX and NZX, and held several executive roles in her 12 year tenure at Telstra, including
as Chief Operating Officer.
Directorships of other ASX listed companies:
• Non-executive director, Stockland Corporation Limited (appointed December 2019)
• Non-executive director, Healius Ltd (appointed February 2021)
Government and community involvement
• Non-executive director and Chair, NBN Co (appointed in December 2019 and
Chair in January 2022)
• Member, Chief Executive Women Australia (appointed January 2006)
Michael
Sammells
BBus, FCPA, GAICD
Independent,
Non-executive
director
Andrea
Slattery
BAcc, MCom, FCPA,
FCA, FSSA, FAICD,
GCB.D(ESG)
Independent,
Non-executive
director
Michael was appointed to the AMP Limited Board as a Non-executive director in March
2020. He was appointed as the Chair of the Remuneration Committee in August 2020 and
is a member of the Audit and Nomination Committees. At the same time, Michael was
also appointed to the AMP Bank Board and is a member of its Audit Committee.
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 in ASX Listed companies as well as the public sector. Michael is also a Non-executive
director and Chair of Sigma Healthcare and has served on numerous private boards since 2010.
Directorships of other ASX listed companies:
• Non-executive director and Chair, Sigma Healthcare Limited (appointed February 2020
and Chair in August 2022)
Andrea was appointed to the AMP Limited Board as a Non-executive director in February
2019 and is a member of the Audit, Nomination and Risk and Compliance Committees. At the
same time, she was appointed to the AMP Bank Board and is a member of its Audit and Risk
and Compliance Committees. In addition, Andrea was also appointed to the AMP Foundation
Board in March 2022.
Experience
As a Non-executive director, Andrea has substantial experience on global, public and private
companies and government advisory committees in the finance, clean energy, infrastructure,
superannuation, professional services and defence industries, spanning more than 30 years.
As an executive, Andrea was the co-founder, managing director and CEO of the SMSF Association
from 2003 to 2017. Prior to this, Andrea was a financial adviser and Principal of her own
tax consulting and advisory business. Andrea’s previous Government Advisory Committee
appointments include the Federal Government’s Innovation Investment Partnership, Industry
Working Group, Stronger Super Peak Consultative Group, Superannuation Advisory Group and the
Future of Financial Advice.
Directorships of other ASX listed companies:
• Non-executive director, Argo Global Listed Infrastructure (April 2015 – June 2022)
Government and community involvement
• Non-executive director, Clean Energy Finance Corporation (appointed February 2018)
• Non-executive director, Infrabuild Ltd (appointed December 2022)
• Deputy Chair, Woomera Prohibited Area Advisory Board (appointed July 2019)
• Member, Chief Executive Women Australia (appointed January 2017)
• Member, Global Competent Boards (appointed November 2021)
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Group Executive
Committee
Left to right: Sean O’Malley, David Cullen, Nicola Rimmer-Hollyman, Alexis George, Blair Vernon,
Scott Hartley, Peter Fredricson, Rebecca Nash and Felicia Trewin.
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 Board in August 2021.
Experience
Alexis has more than 30 years’ experience in the financial services industry in Australia and overseas.
She spent seven years at ANZ, including most recently as the Deputy Chief Executive Officer,
working with the CEO to drive group-wide strategic initiatives in addition to having responsibility
for its 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 to Zurich
and IOOF. 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.
Alexis is a member of the Institute of Chartered Accountants and a graduate of the Australian
Institute of Company Directors. Alexis is an active member of Chief Executive Women and
is a passionate advocate for women in leadership roles.
Alexis
George
BCom, FCA, GAICD
Chief Executive
Officer
32
Group Executive
Committee
Left to right: Sean O’Malley, David Cullen, Nicola Rimmer-Hollyman, Alexis George, Blair Vernon,
Scott Hartley, Peter Fredricson, Rebecca Nash and Felicia Trewin.
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 Board in August 2021.
Experience
Alexis has more than 30 years’ experience in the financial services industry in Australia and overseas.
She spent seven years at ANZ, including most recently as the Deputy Chief Executive Officer,
working with the CEO to drive group-wide strategic initiatives in addition to having responsibility
for its 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 to Zurich
and IOOF. 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.
Alexis is a member of the Institute of Chartered Accountants and a graduate of the Australian
Institute of Company Directors. Alexis is an active member of Chief Executive Women and
is a passionate advocate for women in leadership roles.
Alexis
George
BCom, FCA, GAICD
Chief Executive
Officer
Peter joined the Group as Chief Financial Officer in January 2023. He is responsible for
leading the financial and strategic activities of AMP including financial control, statutory and
regulatory reporting, performance reporting, tax, treasury, investor relations, M&A, strategic
sourcing and workplace experience.
Experience
Prior to joining AMP, Peter was the CFO of ASX listed APA Group from June 2009 to December
2020 and CFO then Acting CEO of Oil Search Limited from March 2021 to January 2022 prior
to its merger with ASX listed Santos Limited. Peter also has 15 years of career experience
in the financial services sector including roles with Tower Corporation in New Zealand and
Merrill Lynch in Australia and New Zealand.
Peter holds a Bachelor of Commerce degree from the University of Auckland, is a Chartered
Accountant with the Institute of Chartered Accountants of Australia and New Zealand and
is a graduate of the Australian Institute of Company Directors.
Peter
Fredricson
BCom, CA, GAICD
Chief Financial Officer
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 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 was appointed CEO of Australian Wealth Management (previously known as AMP
Australia) in January 2021. Australian Wealth Management is focused on strengthening
client-led outcomes across investments, super, platforms, and advice.
Experience
Scott has more than 25 years’ experience in executive management roles, including over
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, a graduate of the Australian Institute of Company Directors, and a Director of the
Financial Services Council.
David
Cullen
BCom, LLB, LLM
Group General
Counsel
Scott
Hartley
BBus, GAICD
Chief Executive,
Australian Wealth
Management
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34
Group Executive Committee
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 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 joined AMP in August 2019 as Head of Internal Audit and became Chief Audit Executive
in February 2020. She was appointed Acting Chief Risk Officer in February 2022 and Chief Risk
Officer in May 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.
Rebecca
Nash
BBus, GAICD, GradCert
Chief People Officer
Sean
O’Malley
MBA, BCom, FIML
Group Executive,
AMP Bank
Nicola
Rimmer-
Hollyman
BA (Hons), MSc,
CMIIA, QAIP
Chief Risk Officer
34
Group Executive Committee
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 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 joined AMP in August 2019 as Head of Internal Audit and became Chief Audit Executive
in February 2020. She was appointed Acting Chief Risk Officer in February 2022 and Chief Risk
Officer in May 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.
Rebecca
Nash
BBus, GAICD, GradCert
Chief People Officer
Sean
O’Malley
MBA, BCom, FIML
Group Executive,
AMP Bank
Nicola
Rimmer-
Hollyman
BA (Hons), MSc,
CMIIA, QAIP
Chief Risk Officer
Felicia joined AMP in March 2022 and is responsible for leading the group’s technology
strategy, and accelerating the adoption of digital and data technology across AMP.
Experience
Felicia joined AMP from AustralianSuper, where she led the technology function and was
a member of the Group Executive for three and a half years. She was responsible for setting
and delivering the Fund’s global IT strategy across all technology infrastructure, applications,
cyber, architecture, governance and risk management. At ANZ between 2014 and 2018,
Felicia held various senior leadership roles, including Global Head of Technology (Corporate
and Commercial Banking), General Manager (Technology Australia), Head of Strategy and
Business Optimisation (Corporate Commercial Banking), and as the Group Head of Emerging
Technology Labs.
Prior to ANZ, Felicia was a Director in Deloitte UK’s Financial Services Technology Consulting
practice where she provided technology advisory services to CXO level clients covering
IT strategies, operating models, large-scale outsourcing and commercial restructuring,
and leading complex transformation programs. Felicia’s early career was spent at Andersen
Consulting in Australia as a software engineer, and Microsoft in the US and UK, where she
was a system designer and led global operations teams. Her qualifications include a Bachelor
of Economics from the Australian National University and post graduate studies at the
University of New South Wales, Cranfield School of Management (UK) and MIT (US).
Blair joined AMP in 2009 and took up the role of Group Executive, Transformation & New
Zealand in April 2022.
Experience
Blair was previously CEO/Managing Director of New Zealand Wealth Management 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.
Felicia
Trewin
BEc, GradDipProj Mgt
Chief Technology
Officer
Blair
Vernon
Group Executive,
Transformation &
New Zealand
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36
Directors’ report
for the year ended 31 December 2022
ABOUT THE DIRECTORS’ REPORT
This directors’ report provides information on the structure and progress of our business, our 2022
financial performance, our strategies and prospects for the future. It covers AMP Limited and the
entities it controlled during the year ended 31 December 2022.
OPERATING AND FINANCIAL REVIEW
Principal activities
AMP is a leading wealth management business 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).
AMP holds several strategic partnerships including:
–
–
–
19.99% of China Life Pension Company (CLPC)
14.97% of China Life AMP Asset Management Company Ltd (CLAMP), and
23.87% in US real estate investment manager, PCCP.
For the purposes of this report, our business is divided into three main areas: AMP Bank, Australian Wealth Management and
New Zealand Wealth Management.
Description of business units
AMP Bank offers residential mortgages, deposits and some limited transactional banking services. 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 2022, AMP Bank helped around 188,000 customers with their banking needs and provided over 9,290 new home loans.
Australian Wealth Management (AWM) comprises three business lines providing advice, superannuation, retirement income and managed
investments, with the inclusion of the AMP Investments team supporting investment management and capability:
–
Platforms includes superannuation, retirement and investment offers 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 online wrap platform which continues to deliver on its commitment of strengthening and broadening investment
choice for clients and providing a contemporary platform for advisers to manage their clients’ funds.
– Master Trust offers a market competitive super and pension solution across individual and corporate super through one of the
largest retail Master Trusts in Australia (SignatureSuper) with around 700,000 customer accounts. 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 Independent Financial Advisers (IFAs). 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 wealth management, financial advice and general insurance distribution businesses
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 general insurance.
Sale of AMP Capital businesses
Global Equities and Fixed Income (GEFI)
On 8 July 2021, AMP announced the sale of its GEFI business to Macquarie Asset Management, which completed on 28 March 2022.
The remaining AMP Capital public markets business, the Multi-Asset Group, which is responsible for asset allocation on behalf of AMP’s
Master Trust and Platform clients was transitioned to Australian Wealth Management from 1 January 2022 (now called AMP Investments).
Infrastructure Debt Platform
On 24 December 2021, AMP announced the sale of its Infrastructure Debt platform to Ares Holdings LP (Ares) which completed on 11 February 2022.
International Infrastructure Equity business
On 3 February 2023, AMP announced the completion of the sale and transfer of AMP Capital’s international infrastructure equity business
to DigitalBridge Group, inc. (DigitalBridge). The completion supports the delivery of AMP’s strategic objective to simplify its portfolio and
focus on its core businesses of retail banking and wealth management in Australia and New Zealand. Total consideration received was $521m.
AMP also remains eligible for a further cash earn-out of up to $180m which is contingent on future fund raisings for Global Infrastructure
Fund III and Global Infrastructure Fund IV.
36
Directors’ report
for the year ended 31 December 2022
ABOUT THE DIRECTORS’ REPORT
This directors’ report provides information on the structure and progress of our business, our 2022
financial performance, our strategies and prospects for the future. It covers AMP Limited and the
entities it controlled during the year ended 31 December 2022.
OPERATING AND FINANCIAL REVIEW
Principal activities
AMP is a leading wealth management business 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).
AMP holds several strategic partnerships including:
19.99% of China Life Pension Company (CLPC)
14.97% of China Life AMP Asset Management Company Ltd (CLAMP), and
23.87% in US real estate investment manager, PCCP.
–
–
–
For the purposes of this report, our business is divided into three main areas: AMP Bank, Australian Wealth Management and
New Zealand Wealth Management.
Description of business units
AMP Bank offers residential mortgages, deposits and some limited transactional banking services. 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 2022, AMP Bank helped around 188,000 customers with their banking needs and provided over 9,290 new home loans.
Australian Wealth Management (AWM) comprises three business lines providing advice, superannuation, retirement income and managed
investments, with the inclusion of the AMP Investments team supporting investment management and capability:
–
Platforms includes superannuation, retirement and investment offers 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 online wrap platform which continues to deliver on its commitment of strengthening and broadening investment
choice for clients and providing a contemporary platform for advisers to manage their clients’ funds.
– Master Trust offers a market competitive super and pension solution across individual and corporate super through one of the
largest retail Master Trusts in Australia (SignatureSuper) with around 700,000 customer accounts. 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 Independent Financial Advisers (IFAs). 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 wealth management, financial advice and general insurance distribution businesses
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 general insurance.
On 8 July 2021, AMP announced the sale of its GEFI business to Macquarie Asset Management, which completed on 28 March 2022.
The remaining AMP Capital public markets business, the Multi-Asset Group, which is responsible for asset allocation on behalf of AMP’s
Master Trust and Platform clients was transitioned to Australian Wealth Management from 1 January 2022 (now called AMP Investments).
Sale of AMP Capital businesses
Global Equities and Fixed Income (GEFI)
Infrastructure Debt Platform
International Infrastructure Equity business
Domestic Real Estate and Infrastructure Equity businesses
As announced on 9 January 2023, there remains an outstanding condition precedent for the completion of the sale of AMP Capital’s domestic real
estate and infrastructure equity businesses to Dexus Funds Management Ltd (Dexus) under the current sale agreement. This relates to receiving
approval from the applicable regulator in China for the transfer of AMP’s interest in China Life AMP Asset Management (CLAMP) out of the sale
perimeter. AMP and Dexus have agreed to extend the date for satisfaction or waiver of conditions precedent to 28 February 2023. However, the base
purchase price has been reduced by $25m to $225m, and the remaining potential funds under management (FUM) based earnout has been forfeited.
Potential revised transaction structure
AMP and Dexus have entered into a non-binding term sheet which contemplates a revised transaction structure with a two-stage
completion process. If binding agreements are entered into, the revised transaction structure would allow for most legal entities (holding
the majority of the AMP Capital domestic assets and management rights) as well as employees, to transfer to Dexus at first completion,
prior to the satisfaction of the remaining condition precedent. The transfer of one remaining entity (which currently holds the interest
in CLAMP) would occur at final completion following receipt of the necessary regulatory approval. This alternative transaction approach
is being pursued alongside the existing initial transaction structure for maximum flexibility.
Divestment of equity interest in Resolution Life Australasia
On 3 November 2021, AMP Limited announced it had agreed to the divestment of its 19.13% equity interest in Resolution Life Australasia
(RLA) for a consideration of $524m to Resolution Life Group. This transaction completed on 28 June 2022.
Review of operations and results
The profit attributable to shareholders of AMP Limited for the year ended 31 December 2022 was $387m (2021: loss of $252m). Basic
earnings per share for the year ended 31 December 2022 on a statutory basis was 12.0 cents (2021: (7.6) cents). On an underlying basis,
earnings per share was 5.7 cents (2021: 8.4 cents). Key performance measures of the group were as follows:
–
2022 NPAT (underlying) of $184m decreased 34% from $280m in 2021. This decrease largely reflects the impact of lower AMP Bank
earnings (-33%) relative to 2021 reflecting lower net interest margin, as well as 2021 benefitting from a one-off credit loss provision
release. Lower Australian Wealth Management earnings (-44%) reflecting strategic competitive repricing and market volatility, and
lower New Zealand Wealth Management earnings (-18%) in a weaker market, also impacted NPAT.
2022 NPAT (statutory) profit of $387m was favourably impacted by a ~$390m gain on the sale of the Infrastructure Debt platform,
partly offset by $90m of separation costs, $68m of impairments, $61m of transformation costs, $25m of remediation and related
costs and other one-off items.
Total AUM and administration of $149.1b in 2022 decreased by $22.8b (-13%) from 2021 due to negative investment market returns
and net cash outflows.
Australian Wealth Management net cash outflows were $5.3b in 2022, compared to net cash outflows of $7.2b in 2021. This was
largely attributable to lower outflows across both platforms and Master Trust and growth in inflows from Independent Financial
Advisers (IFAs). 2022 net cash outflows also included $2.0b of regular pension payments to members (2021: $1.9b).
AMP Bank’s residential mortgage book increased by $2.0b (9%) to $23.8b driven by competitive pricing, ongoing service improvements
and targeted growth in principal and interest loans across both owner-occupied and investment lending. This increase also included
~$400m of loans acquired from Nano in December 2022. This represents 1.5x system growth or 1.81x system growth including Nano
(based on December 2022 APRA data).
AMP’s controllable costs, excluding AMP Capital discontinued operations, of $791m were 6% lower than 2021 due to cost out
benefits partly offset by structural cost increases.
AMP group cost to income ratio was 72.4% in 2022, up from 67.1% in 2021 due to lower revenues.
–
–
–
–
–
–
– Underlying return on equity was 4.6% in 2022 (2021: 6.9%).
–
2022 total eligible capital resources were $923m above regulatory and target capital requirements, up from $383m at 31 December 2021.
Operating results by business area
The operating results of each business area for 2022 were as follows:
AMP Bank – NPAT of $103m decreased by $50m (33%) from 2021 predominantly driven by increased loan impairment expense
(2021 included $26m release of credit loss provision related to the impact of COVID-19), reduction in net interest income $17m (4%) from
2021, largely due to NIM compression in 1H22, and an increase in costs to support ongoing growth.
Australian Wealth Management – NPAT fell from $89m in 2021 to $50m in 2022 primarily due to the impact of strategic competitive repricing
in Master Trust and Platforms, lower revenue predominantly from investment market volatility and the impact of stressed and volatile markets
on the North guarantee, partly offset by lower variable and controllable costs from cost reduction initiatives.
New Zealand Wealth Management – NPAT of $32m in 2022 decreased $7m (2021: $39m) primarily due to a significant drop in global
investment markets.
AMP Capital – Continuing operations NPAT of $41m was up 11% from $37m in 2021 due to higher contributions from joint venture investments.
On 24 December 2021, AMP announced the sale of its Infrastructure Debt platform to Ares Holdings LP (Ares) which completed on 11 February 2022.
Capital management and dividend
On 3 February 2023, AMP announced the completion of the sale and transfer of AMP Capital’s international infrastructure equity business
to DigitalBridge Group, inc. (DigitalBridge). The completion supports the delivery of AMP’s strategic objective to simplify its portfolio and
focus on its core businesses of retail banking and wealth management in Australia and New Zealand. Total consideration received was $521m.
AMP also remains eligible for a further cash earn-out of up to $180m which is contingent on future fund raisings for Global Infrastructure
Fund III and Global Infrastructure Fund IV.
Equity and reserves of the AMP Group attributable to shareholders of AMP Limited was $4.2b at 31 December 2022 ($4.0b as at 31 December
2021). AMP’s Group Surplus Capital as at 31 December 2022 is $923m ($383m at 31 December 2021). The board has resolved to declare a 2022
final dividend of ~$75m (2.5cps) franked to 20%. The board continues to maintain a conservative approach to capital management to support
the transformation of the business and maintain balance sheet strength. As announced in the half yearly results in August 2022, AMP intends
to return a total of $1.1b of capital to shareholders as a result of previously announced business sales. Further capital returns beyond the
$350m current on-market buyback are subject to regulatory and shareholder approval.
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38
Directors’ report
for the year ended 31 December 2022
Strategy and prospects
AMP set out its strategic growth plans for 2022–2024 on 30 November 2021. This outlined a clear path to create a new AMP. Since then, AMP has
made strong progress to reposition its core capabilities in wealth management and banking with investment in new, innovative products and
services during 2022. A continued focus on simplification is driving further efficiency and re-shaping AMP’s business portfolio. The business has
built early momentum in exploring new opportunities for growth, including establishing partnerships to grow AMP’s direct to consumer channel.
Reposition
Simplify
Explore
AMP’s strategy is to reposition its core capabilities
to drive growth in banking and wealth platforms,
investing in key areas to differentiate AMP’s offering,
and transforming its business model.
Strategic priorities for 2023
AMP is focused on
simplifying the business to
drive efficiency and agility.
AMP will continue to explore organic and
inorganic growth opportunities, including
strategic partnerships with fintechs.
AMP is delivering on its transformation strategy to a path to the new AMP and has defined its priorities for the year ahead. AMP will
be focused on returning capital to shareholders; growing IFA flows in our platforms business; controlling costs; supporting new growth
opportunities, particularly through strategic partnerships; growing AMP Bank; and continuing the revitalisation of its culture and brand.
Further detail on strategy and prospects is included in the Strategy section of this report on pages 12–13.
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 a review of AMP’s 2022 sustainability performance in AMP’s 2022 Sustainability report at corporate.amp.
com.au/about-amp/corporate-sustainability, as well as further information on AMP’s environmental policy and activities.
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 2022 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:
Executive Director:
Debra Hazelton (Chair)
Andrew Best (appointed as a director on 1 July 2022)
Rahoul Chowdry
Mike Hirst
Kate McKenzie
Michael Sammells
Andrea Slattery
Attendance at board and committee meetings
Alexis George (Chief Executive Officer and Managing Director)
Former Non-executive Director:
John O’Sullivan (resigned as a director on 8 April 2022)
The AMP Limited Board met 21 times during the year ended 31 December 2022. 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 2022. Any voluntary attendances
by directors in the capacity as observers are not included in the following table below:
AMP Limited
Board
Meetings1
Audit
Committee
Risk
Committee
Nomination
Committee
Remuneration
Committee
AMP Ltd ESG &
Sustainability
Advisory
Group 2
AMP Ltd
Technology
Transformation
Advisory
Group 3
Subsidiary
board and
committee
meetings4
Additional
Committees 5
A
21
8
21
21
21
21
21
21
6
B
21
8
21
21
20
21
21
21
6
A
3
1
4
3
3
3
4
–
1
B
3
1
4
3
3
3
4
–
1
A
4
3
6
6
4
4
6
–
2
B
4
3
6
6
3
4
6
–
2
A
4
2
4
4
4
4
4
–
1
B
4
2
4
4
4
4
4
–
1
A
9
3
6
9
6
9
6
–
3
B
9
3
6
9
6
9
6
–
3
A
2
–
–
–
–
2
2
–
–
B
2
–
–
–
–
2
2
–
–
A
–
2
–
2
2
–
–
–
–
B
–
2
–
2
2
–
–
–
–
A
1
–
–
–
–
1
–
–
–
B
1
–
–
–
–
1
–
–
–
B
2
–
–
–
–
4
6
–
4
Board/committee
Held/attended
Debra Hazelton
Andrew Best 6
Rahoul Chowdry
Mike Hirst
Kate McKenzie
Michael Sammells
Andrea Slattery
Alexis George
John O’Sullivan 7
38
Directors’ report
for the year ended 31 December 2022
Strategy and prospects
AMP set out its strategic growth plans for 2022–2024 on 30 November 2021. This outlined a clear path to create a new AMP. Since then, AMP has
made strong progress to reposition its core capabilities in wealth management and banking with investment in new, innovative products and
services during 2022. A continued focus on simplification is driving further efficiency and re-shaping AMP’s business portfolio. The business has
built early momentum in exploring new opportunities for growth, including establishing partnerships to grow AMP’s direct to consumer channel.
Reposition
Simplify
Explore
AMP’s strategy is to reposition its core capabilities
AMP is focused on
to drive growth in banking and wealth platforms,
investing in key areas to differentiate AMP’s offering,
simplifying the business to
drive efficiency and agility.
AMP will continue to explore organic and
inorganic growth opportunities, including
strategic partnerships with fintechs.
and transforming its business model.
Strategic priorities for 2023
AMP is delivering on its transformation strategy to a path to the new AMP and has defined its priorities for the year ahead. AMP will
be focused on returning capital to shareholders; growing IFA flows in our platforms business; controlling costs; supporting new growth
opportunities, particularly through strategic partnerships; growing AMP Bank; and continuing the revitalisation of its culture and brand.
Further detail on strategy and prospects is included in the Strategy section of this report on pages 12–13.
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 a review of AMP’s 2022 sustainability performance in AMP’s 2022 Sustainability report at corporate.amp.
com.au/about-amp/corporate-sustainability, as well as further information on AMP’s environmental policy and activities.
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 2022 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:
Executive Director:
Debra Hazelton (Chair)
Andrew Best (appointed as a director on 1 July 2022)
Rahoul Chowdry
Mike Hirst
Kate McKenzie
Michael Sammells
Andrea Slattery
Alexis George (Chief Executive Officer and Managing Director)
Former Non-executive Director:
John O’Sullivan (resigned as a director on 8 April 2022)
Attendance at board and committee meetings
The AMP Limited Board met 21 times during the year ended 31 December 2022. 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 2022. Any voluntary attendances
by directors in the capacity as observers are not included in the following table below:
Audit
Risk
Nomination
Remuneration
Advisory
Committee
Committee
Committee
Committee
Group 2
Advisory
Group 3
committee
Additional
meetings4
Committees 5
AMP Ltd
AMP Ltd ESG &
Technology
Subsidiary
Sustainability
Transformation
board and
Board/committee
Held/attended
Debra Hazelton
Andrew Best 6
Rahoul Chowdry
Mike Hirst
Kate McKenzie
Michael Sammells
Andrea Slattery
Alexis George
John O’Sullivan 7
AMP Limited
Board
Meetings1
A
21
8
21
21
21
21
21
21
6
B
21
8
21
21
20
21
21
21
6
A
3
1
4
3
3
3
4
–
1
B
3
1
4
3
3
3
4
–
1
A
4
3
6
6
4
4
6
–
2
B
4
3
6
6
3
4
6
–
2
A
4
2
4
4
4
4
4
–
1
B
4
2
4
4
4
4
4
–
1
A
9
3
6
9
6
9
6
–
3
B
9
3
6
9
6
9
6
–
3
A
2
–
–
–
–
2
2
–
–
B
2
–
–
–
–
2
2
–
–
A
–
2
–
2
2
–
–
–
–
B
–
2
–
2
2
–
–
–
–
A
1
–
–
–
–
1
–
–
–
B
1
–
–
–
–
1
–
–
–
B
2
–
–
–
–
4
6
–
4
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 AMP Ltd ESG & Sustainability Advisory Group established 1 October 2022.
3 AMP Ltd Technology Transformation Advisory Group established 1 October 2022.
4 Subsidiary board and committee meetings refer to the board and committee meetings of Collimate Capital Limited.
5 Additional committees were convened during the year on matters including due diligence and financial results.
6 Andrew Best was appointed as a director of AMP Limited effective 1 July 2022.
7 John O’Sullivan resigned as director of AMP Limited effective 8 April 2022.
COMPANY SECRETARY DETAILS
Details of each company secretary of AMP Limited as at the date of this report, including their qualifications and experience, are set out below.
David Cullen, Group General Counsel
BCom, LLB, LLM
David was appointed as the Company Secretary for AMP Limited on 4 March 2022. 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. Prior to his appointment
as Group Counsel, David was the Group Company Secretary and General Counsel, Governance at AMP, which included acting as Company
Secretary for AMP Limited.
Kate Gordon, Head of Corporate Governance
BA (Juris), LLB, LLM
Kate was appointed as the Company Secretary for AMP Limited on 4 March 2022 and is also secretary of several other AMP group companies.
Kate joined AMP as a Senior Company Secretary & Senior Legal Counsel in June 2020. Kate has significant experience in the legal profession
with expertise in corporate governance, mergers & acquisitions, corporate and commercial law. Before joining AMP, Kate worked at Henry
Davis York (now Norton Rose Fulbright) and HWL Ebsworth Lawyers.
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 2022, 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, and a subsidiary of the company and each of the company secretaries, are parties
to deeds of indemnity, insurance and access. Those deeds provide that:
–
–
–
–
these officers 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, and a subsidiary of the company indemnifies the secretaries, to the extent permitted by law,
and to the extent and for the amount that the relevant officer 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 officer in their capacity as a current or former director
or secretary of the company, or as a director or secretary 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 2022.
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 2022. 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.
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40
Remuneration
report
In 2022, our leaders and employees
delivered strong outcomes to
continue the transformation of AMP
and establish a new purpose-led
and customer-focused culture.
Remuneration report
Contents
1
2
3
4
5
6
Remuneration
snapshot
Remuneration
strategy and framework
Performance and
reward outcomes
Remuneration
governance
Executive shareholdings
and contracts
Non-executive director
fees and shareholding
requirements
7 Statutory tables
42
52
55
61
64
66
68
Dear fellow shareholder
Under the first full year of CEO Alexis George’s stewardship, the 2022 financial
year has marked a significant turning point for AMP. The board firmly believes
Alexis and the Executive Committee have developed a clear roadmap for the
future growth of AMP and have successfully delivered against 2022 priorities.
Notable achievements during 2022
In the first quarter, the demerger of AMP Capital from AMP was well
progressed. Following the completion of the sale of the Infrastructure Debt
business to Ares in February 2022, the board made a decision in late April
2022 to instead, deliver greater certainty for and value to AMP shareholders
through asset sales to DigitalBridge and Dexus. The DigitalBridge transaction
completed in February 2023.
Against this challenging backdrop, we delivered a number of strategically
important outcomes in the context of AMP’s broader transformation
objectives to become a leading wealth management and banking business
in Australia and New Zealand. These include:
–
The simplification of AMP’s portfolio to five core businesses with clearly
defined offerings in each.
– Disciplined cost management has reduced costs by $54m down to $791m
through simplification of operational structure.
–
–
–
Action was taken to reduce the prices of several of the Bank’s product
offerings while the bank and platforms businesses launched innovative
new solutions for customers, including a unique to market retirement
income offer.
AMP’s new purpose – helping people create their tomorrow – and
underpinning values were successfully introduced and have helped the
business to take a more forward view anchored in the customer.
The full-year inclusion index of 75 points was achieved and buoyed
by gender diversity targets met at the Board, Executive Management,
Middle Management and AMP workforce more broadly.
The early response from key stakeholders to these initiatives is pleasing and
supportive of AMP’s transformation strategy.
40
Remuneration
report
In 2022, our leaders and employees
delivered strong outcomes to
continue the transformation of AMP
and establish a new purpose-led
and customer-focused culture.
Under the first full year of CEO Alexis George’s stewardship, the 2022 financial
year has marked a significant turning point for AMP. The board firmly believes
Alexis and the Executive Committee have developed a clear roadmap for the
future growth of AMP and have successfully delivered against 2022 priorities.
Notable achievements during 2022
In the first quarter, the demerger of AMP Capital from AMP was well
progressed. Following the completion of the sale of the Infrastructure Debt
business to Ares in February 2022, the board made a decision in late April
2022 to instead, deliver greater certainty for and value to AMP shareholders
through asset sales to DigitalBridge and Dexus. The DigitalBridge transaction
completed in February 2023.
Against this challenging backdrop, we delivered a number of strategically
important outcomes in the context of AMP’s broader transformation
objectives to become a leading wealth management and banking business
in Australia and New Zealand. These include:
–
The simplification of AMP’s portfolio to five core businesses with clearly
defined offerings in each.
– Disciplined cost management has reduced costs by $54m down to $791m
through simplification of operational structure.
–
Action was taken to reduce the prices of several of the Bank’s product
offerings while the bank and platforms businesses launched innovative
new solutions for customers, including a unique to market retirement
income offer.
–
AMP’s new purpose – helping people create their tomorrow – and
underpinning values were successfully introduced and have helped the
business to take a more forward view anchored in the customer.
–
The full-year inclusion index of 75 points was achieved and buoyed
by gender diversity targets met at the Board, Executive Management,
Middle Management and AMP workforce more broadly.
The early response from key stakeholders to these initiatives is pleasing and
supportive of AMP’s transformation strategy.
Remuneration report
Dear fellow shareholder
Contents
strategy and framework
52
Remuneration
snapshot
Remuneration
Performance and
reward outcomes
Remuneration
governance
1
2
3
4
5
6
Executive shareholdings
and contracts
Non-executive director
fees and shareholding
requirements
7 Statutory tables
42
55
61
64
66
68
Shareholders
A strong indication of AMP’s turning point during 2022 is reflected in the
company’s share price increase, delivering a 12-month total shareholder
return of 30.2%, outperforming the S&P ASX 200 Financials.
Customers
Improved outcomes for AMP’s brand and reputation were achieved with the
AMP RepTrak score increasing three points from the prior year. The result is also
the highest since the 2018 royal commission into the financial services industry.
AMP’s net promoter score (NPS) was +23.
People
Since Alexis George took leadership of the business, employee engagement has been
improving steadily and achieved the target score of 73 satisfaction. Participation
in the voluntary survey was up to 79% compared with 65% a year before.
2022 Pay for Performance
The board determined the incentive pool after considering the AMP scorecard
result of 68%, achievement of outcomes not represented on the scorecard, the
economic and operating environment, shareholder value creation and applying
a risk overview. After careful consideration the board exercised its discretion
in determining the incentive pool funding of 70%. A further 15% has been
awarded in cash and will be paid upon the commencement of the second tranche
of capital expected to be returned to shareholders during 2023. 1 This equates
to a possible total payout of 85% of target, of which 60% will be paid in cash
and 40% delivered in share rights that vest over four years. It seeks to reward,
retain and incentivise AMP’s key executives who have delivered on a significant
number of strategically important outcomes that will underpin AMP’s growth.
Recognising that they worked through the complexities of the sale of the AMP
Capital business, while placing a priority on returning capital to shareholders
and enhancing shareholder value.
In considering the role of the board in applying discretion and judgements on
performance pay, the board remains cognisant of the balance of rewarding executive
leadership and performance while being focused on shareholder outcomes.
During 2022, no long-term incentive awards were performance tested and
therefore no long-term incentive (LTI) vested. A portion of the CEO sign on share
rights vested.
Key Management Personnel (KMP)
As a result of the April 2022 agreements to sell the AMP Capital real estate and
infrastructure businesses, and the subsequent simplified portfolio for AMP, the
board determined that the current KMP designated roles include the CEO, Chief
Financial Officer, Chief Risk Officer, Chief Executive Officer – Australian Wealth
Management and Group Executive – AMP Bank. The Group General Counsel,
Chief People Officer and AMP Capital CEO are no longer classified as KMP roles.
After serving more than 20 years at AMP, CFO James Georgeson will depart
AMP. Peter Fredricson was announced as CFO, commencing on 9 January 2023.
The AMP Capital CEO role will be made redundant in 2023 after the completion
of the sales of the AMP Capital businesses.
Other remuneration outcomes
Sean O’Malley, Group Executive – AMP Bank, is the only Executive Committee
member who has been awarded a fixed remuneration increase for 2023.
Further detail is provided in section 5.3.
In recognition of his contribution to AMP, James Georgeson will be treated as
a good leaver for equity plan purposes and will retain his equity awards on foot
in accordance with the plan terms including the original vesting and restriction
periods of the relevant plan.
Looking to 2023
To enhance the effectiveness of executive
remuneration, comply with APRA’s new
remuneration Prudential Standard CPS 511 and
meet the evolving expectations of stakeholders,
the board undertook comprehensive
consultation with APRA, shareholders and
shareholder advisory service firms. The Board
made several changes to the 2023 executive
remuneration framework in response.
The appropriate balance was sought between
financial and non-financial objectives in respect
of total variable reward while maintaining
a material weighting to non-financial
measures overall.
–
–
–
–
–
The weighting of financials within the LTI
plan will no longer account for 100% and
be based solely on relative TSR. Instead,
financial measures will account for 70%
(measured 35% on relative TSR and 35%
on adjusted EPS growth) and 30% will
be based on a non-financial measure
(assessed on AMP’s reputation ranking
against a peer group selected from
RepTrak’s Benchmark 60 Index).
The LTI vesting period for the Executive
Committee will be extended from four
years to a total of six years for the CEO
and five years for the other Executive
Committee members. This will allow
sufficient time to detect any potential risk
or conduct issue that may subsequently
present itself, providing the Board with
the ability to apply malus or clawbacks
if appropriate.
The financial weighting in the AMP 2023
scorecard increased from 30% to 40%.
The STI cash and equity mix has been set
at 60:40 to balance the extension of deferral
periods and counter the other changes made
and ensure executives remain appropriately
remunerated in a competitive market place
for leadership talent. This change was also
applied to 2022 outcomes.
The STI deferral remains unchanged for the
CEO with 33.4% paid in year two and 33.3%
paid in years three and four; however, for
the other Executive Committee members,
STI deferral periods have gone from 50%
in year two and 50% in year three to mirror
the CEO’s STI deferral periods.
On behalf of the board I would like to thank
you for your continued support and invite you
to read the full remuneration report in detail.
We always appreciate and welcome feedback
from our stakeholders.
1 Excluding ordinary dividends declared in the normal course.
Michael Sammells
Chair, Remuneration Committee
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42
Remuneration report
This report details the remuneration framework and outcomes for Key Management Personnel (KMP) of AMP
Limited for the year ended 31 December 2022. 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
Position
Chief Executive Officer
James Georgeson
Chief Financial Officer
Term as KMP
Full year
Full year
Chief Executive Officer, Australian Wealth Management
Full year
Scott Hartley
Sean O’Malley
Group Executive, AMP Bank
Nicola Rimmer-Hollyman
Chief Risk Officer
David Cullen
Shawn Johnson
Rebecca Nash
Phil Pakes 1
Non-executive directors
Debra Hazelton
Andrew Best
Rahoul Chowdry
Michael Hirst
Kathryn McKenzie
Michael Sammells
Andrea Slattery
John O’Sullivan
Group General Counsel
Chief Executive Officer, AMP Capital
Chief People Officer
Former Chief Risk Officer
Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full year
From 12 Feb 2022
Until 27 April 2022
Until 27 April 2022
Until 27 April 2022
Until 11 Feb 2022
Full year
From 1 July 2022
Full year
Full year
Full year
Full year
Full year
Until 8 April 2022
1 Phil Pakes’ formal termination date was 1 May 2022. Termination payment details are included in Table 7.1 of this report.
The board carried out a review of the Executive KMP to reflect the simplified go-forward business and the way Alexis George has been
running the core business since the Board announced the sale of the AMP Capital businesses on 27 April 2022. Following that review, the
board determined that the following roles as Executive KMP from that date: Chief Executive Officer, Chief Financial Officer, Chief Executive
Officer, Australian Wealth Management, Chief Risk Officer, Group Executive AMP Bank.
Consequently, the following roles ceased as Executive KMP from 28 April 2022:
– Group General Counsel and Chief People Officer: With the sale of AMP Capital businesses and simplification of AMP, these roles are
now considered mostly advisory roles. The Chief Technology Officer (CTO) and Group Executive Transformation & Managing Director
NZ, who form part of the Executive Committee, are also not considered to be KMP for similar reasons.
– AMP Capital CEO: After deciding to sell the AMP Capital businesses, the board concluded that the primary accountability of the AMP
Capital CEO is to execute and close out the AMP Capital sale processes in order to optimise value for shareholders. Therefore, the role
is not considered to be KMP from the date the sales were announced. The AMP Capital’s CEO role will be made redundant in 2023 after
the completion of the sales.
Peter Fredricson was appointed as Chief Financial Officer, effective 9 January 2023. This change has no impact on the 2022 remuneration
disclosed in this report.
42
Remuneration report
This report details the remuneration framework and outcomes for Key Management Personnel (KMP) of AMP
Limited for the year ended 31 December 2022. It has been prepared and audited in accordance with the disclosure
requirements of the Corporations Act 2001.
1.2
2022 REMUNERATION FRAMEWORK
The following diagram illustrates the remuneration framework that applied in 2022 to the AMP Executive Committee, which includes the
Executive KMP.
It is underpinned by the remuneration governance, risk management and consequence management frameworks and is subject to overall
AMP Board discretion. The remuneration framework was developed to strengthen and simplify AMP’s overall approach to remuneration
and work effectively within the context of AMP’s strategic 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 the
Banking Executive Accountability Regime (BEAR). Effective from financial year 2023, the remuneration framework has been further
enhanced to meet the requirements of APRA Prudential Standard CPS 511 (CPS 511) and strengthen the overall alignment with the
interests of our stakeholders. Refer to Section 1.5 for further information.
OUR REMUNERATION PRINCIPLES
Market competitive
to attract the
right people
Reflect our
purpose and
values
Differentiate for
performance and
adjust for risk
Linked to strategy
and sustainable
value creation
Balance interests
of customers,
people and
shareholders
ELEMENT
PURPOSE
AWARD MIX
TARGET
TIME FRAME
OUR REMUNERATION FRAMEWORK
Fixed Remuneration
(FR)
Short-Term Incentive
(STI) 1
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
Equity: Align reward
to shareholder success
with upside for superior
performance relative
to market peers
Cash
60% cash
40% equity
Market median of
relevant peer group
Target is 100% of FR 2
Max is 200% of Target (or 200% of FR) 2
n/a
Cash paid following the
performance year
Equity deferred over
three years
VESTING
On award
On award
33.3% in year two
33.3% in year three
33.4% in year four
Equity rights
at face value
Up to 100% of FR in
performance rights 2
Three-year performance
period and additional
one-year restriction
Based on Total
Shareholder Return
(TSR) relative to ASX 100
financial organisations
ex A-REITs over a
three-year performance
period with further
12-month restriction
1 The proportion of cash and equity deferred for 2022 is aligned with the 2023 framework that has been enhanced to meet the requirements of CPS 511.
2 The Chief Risk Officer’s (CRO) STI target is 70% of FR (maximum is 200% of target or 140% of FR) and LTI maximum opportunity is up to 70% of FR.
REMUNERATION SNAPSHOT
1.1
KEY MANAGEMENT PERSONNEL
Position
Term as KMP
James Georgeson
Chief Financial Officer
Chief Executive Officer
Nicola Rimmer-Hollyman
Chief Risk Officer
Group Executive, AMP Bank
Chief Executive Officer, Australian Wealth Management
Full year
1
SECTION
Name
Executive KMP
Alexis George
Scott Hartley
Sean O’Malley
David Cullen
Shawn Johnson
Rebecca Nash
Phil Pakes 1
Group General Counsel
Chief Executive Officer, AMP Capital
Chief People Officer
Former Chief Risk Officer
Non-executive directors
Debra Hazelton
Andrew Best
Rahoul Chowdry
Michael Hirst
Kathryn McKenzie
Michael Sammells
Andrea Slattery
John O’Sullivan
Chair
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Full year
Full year
Full year
From 12 Feb 2022
Until 27 April 2022
Until 27 April 2022
Until 27 April 2022
Until 11 Feb 2022
From 1 July 2022
Full year
Full year
Full year
Full year
Full year
Full year
Until 8 April 2022
1 Phil Pakes’ formal termination date was 1 May 2022. Termination payment details are included in Table 7.1 of this report.
The board carried out a review of the Executive KMP to reflect the simplified go-forward business and the way Alexis George has been
running the core business since the Board announced the sale of the AMP Capital businesses on 27 April 2022. Following that review, the
board determined that the following roles as Executive KMP from that date: Chief Executive Officer, Chief Financial Officer, Chief Executive
Officer, Australian Wealth Management, Chief Risk Officer, Group Executive AMP Bank.
Consequently, the following roles ceased as Executive KMP from 28 April 2022:
– Group General Counsel and Chief People Officer: With the sale of AMP Capital businesses and simplification of AMP, these roles are
now considered mostly advisory roles. The Chief Technology Officer (CTO) and Group Executive Transformation & Managing Director
NZ, who form part of the Executive Committee, are also not considered to be KMP for similar reasons.
– AMP Capital CEO: After deciding to sell the AMP Capital businesses, the board concluded that the primary accountability of the AMP
Capital CEO is to execute and close out the AMP Capital sale processes in order to optimise value for shareholders. Therefore, the role
is not considered to be KMP from the date the sales were announced. The AMP Capital’s CEO role will be made redundant in 2023 after
the completion of the sales.
disclosed in this report.
Peter Fredricson was appointed as Chief Financial Officer, effective 9 January 2023. This change has no impact on the 2022 remuneration
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Remuneration report
1.3
2022 SCORECARD AND OUTCOMES
PRIORITIES
Financials
Strategic
Customer
People
Risk
FINANCIALLY ALIGNED 50%
NON-FINANCIAL 50%
2022
OBJECTIVES
Manage return
Grow AMP bank
on equity
Improve
profitability
Grow the
platform
business
Simplify the
business
through cost
management
Commence
second tranche
of capital return
Deliver for our
customers
Improve our
brand and
reputation
Improve
employee
engagement
Build an
inclusive
culture
Operate within
risk appetite
Embed risk
culture
WEIGHTING
30%
20%
20%
20%
10%
PERCENTAGE
OF
OBJECTIVES
ACHIEVED
SCORECARD
RESULT
STI
POOL
BOARD
DISCRETION
OVERLAY
45%
38%
78%
109%
100%
68%
AMP STI pool 70%1 + 15% additional pool² = Total AMP STI pool of 85% of target3
The board considered a number of factors, including a risk overview and shareholder experience,
and determined that funding the pool at this level is appropriate and equitably rewards the
contribution of executives for the shareholder value that was created in 2022
(refer to Section 4 for further information on how the board makes remuneration decisions)
1 The STI incentive pool excludes AMP Capital which is delivered through a profit share arrangement.
2 The board determined that 15% of the STI pool funding will be paid upon the commencement of the second tranche of capital return. Refer to section 3.2
for further information.
3 Where target is the midpoint of the overall incentive opportunity.
1.3
2022 SCORECARD AND OUTCOMES
1.4
ACTUAL REMUNERATION REALISED IN 2022
Under AMP’s remuneration framework in 2022, executives are eligible to receive a mix of fixed remuneration, STI (delivered 60% in cash
and 40% deferred in share rights, aligned with the 2023 framework, see Section 1.5) and LTI (delivered 100% in performance rights).
The table below sets out the actual remuneration received during 2022 for those executives who were deemed KMP as at 31 December
2022 and the market value of any equity awarded in prior years (either as deferred STI and/or LTI) vesting during 2022.
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.
Executive KMP
Alexis George
James Georgeson
Scott Hartley
Sean O'Malley
Nicola Rimmer-Hollyman 7
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Fixed 1
remuneration
$'000
Cash STI
paid 2
$'000
Other cash
awards
paid 3
$'000
1,715
714
750
750
900
875
600
556
517
–
655
172
284
186
297
206
204
112
151
–
–
733
–
450
–
–
–
–
–
–
STI &
other
equity
awards
vested 4
$'000
420
1,317
72
33
–
–
48
–
–
–
LTI equity
awards
vested 5
$'000
Benefits 6
$'000
Total
remuneration
received
$'000
–
–
–
–
–
–
–
–
–
–
2
–
5
1
1
105
4
2
–
–
2,792
2,936
1,111
1,420
1,198
1,186
856
670
668
–
1 Fixed remuneration (FR) includes superannuation and salary sacrificed benefits and reflects the time in role during 2022.
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 the portion of the total STI awarded to be paid as cash in March 2023. As outlined in Section 3.2, the board have decided to withhold a portion
of the cash STI which will only be released upon the commencement of the second tranche of the capital return, therefore this amount has been excluded from
this table. The remaining 40% of the STI award will be deferred in share rights in April 2023.
3 In 2021, James Georgeson received in October 2021 a cash payment as a part of the Portfolio Review retention awards granted in 2020. In 2021, 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 the 2021 Remuneration Report.
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 amounts disclosed includes the portion of Alexis George’s sign-on awards that vested during 2022
and 2021.
5 No LTI equity awards were performance tested or vested during 2022 or 2021.
6 Other benefits may include non-monetary benefits and any related FBT exempt and FBT payable benefits, excluding salary sacrificed benefits.
7 The FR for Nicola Rimmer-Hollyman reflects her current KMP and prior non-KMP role.
44
Remuneration report
PRIORITIES
Financials
Strategic
Customer
People
Risk
FINANCIALLY ALIGNED 50%
NON-FINANCIAL 50%
2022
OBJECTIVES
on equity
Improve
profitability
Manage return
Grow AMP bank
Deliver for our
Improve
customers
Improve our
brand and
reputation
employee
engagement
Build an
inclusive
culture
Operate within
risk appetite
Embed risk
culture
Grow the
platform
business
Simplify the
business
through cost
management
Commence
second tranche
of capital return
PERCENTAGE
OF
OBJECTIVES
ACHIEVED
SCORECARD
RESULT
STI
POOL
BOARD
DISCRETION
OVERLAY
WEIGHTING
30%
20%
20%
20%
10%
45%
38%
78%
109%
100%
68%
AMP STI pool 70%1 + 15% additional pool² = Total AMP STI pool of 85% of target3
The board considered a number of factors, including a risk overview and shareholder experience,
and determined that funding the pool at this level is appropriate and equitably rewards the
contribution of executives for the shareholder value that was created in 2022
(refer to Section 4 for further information on how the board makes remuneration decisions)
1 The STI incentive pool excludes AMP Capital which is delivered through a profit share arrangement.
2 The board determined that 15% of the STI pool funding will be paid upon the commencement of the second tranche of capital return. Refer to section 3.2
for further information.
3 Where target is the midpoint of the overall incentive opportunity.
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Remuneration report
1.5
LOOKING TO 2023
Executive Remuneration Framework for 2023
In 2021, APRA released the remuneration prudential standard CPS 511 which AMP is required to comply with from 1 January 2023. CPS 511
is designed to heighten the governance requirements on entities’ remuneration arrangements in response to remuneration practices in the
financial services industry that have been a factor driving poor consumer outcomes.
In ensuring AMP complies with the new requirements, the Board has undertaken a comprehensive review of its approach to executive
remuneration and governance. As a part of that process, we have extensively engaged with a broad range of stakeholders including APRA,
shareholder advisory service firms and our largest shareholders (representing approximately 20% of issued capital). These meetings
were held over the second half of 2022, to seek feedback and consider opportunities to further enhance the effectiveness of the KMP
remuneration structure. Over the consultation period, 13 stakeholder meetings were held in total.
Following the completion of that review and in line with the requirements of CPS 511, we made the following changes to the executive
remuneration framework that applies to the CEO and Executive Committee (which includes the Executive KMP), effective 1 January 2023.
Former
Future
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STI award mix 1
Cash 40%
STI deferral 60%
Cash 60%
STI deferral 40%
STI deferral period 1
CEO
Year 2: 33.3%
Year 3: 33.3%
Year 4: 33.4%
CEO
No change
Executive committee
Executive committee
Year 2: 50%
Year 3: 50%
Year 2: 33.3%
Year 3: 33.3%
Year 4: 33.4%
Rationale
The balance between cash and equity, and the vesting period of deferred remuneration, has been adjusted. In light of the other
changes we have made to our framework (see LTI below), the cash and equity balance has been revised so that our remuneration
framework remains market competitive and keeps our current executives engaged and motivated. With the final CPS 511 standard
being released and confirmation of our approach to LTI, we have adjusted both the cash and equity mix, and the STI vesting periods
to apply to remuneration that is deferred and granted from 1 January 2023 (ie. the STI changes were also applied to the 2022
outcomes). These changes have been considered in totality with the other changes made.
LTI vesting period
CEO
Three-year performance period plus one-year
restriction period
Executive committee
Three-year performance period plus one year
restriction period
Rationale
CEO
Three-year performance period plus up to three-year
restriction period (pro-rata)
Executive committee
Three-year performance plus up to two-year restriction
period (pro-rata)
CPS 511 sets out minimum deferral periods for specified roles, including the CEO and Senior Managers, which corresponds
to AMP’s Executive Committee level. For the CEO, CPS 511 requires that at least 60% of the CEO’s total variable reward
(ie. across STI and LTI) must be deferred over a minimum deferral period of six years, vesting no faster than on a pro-rata
basis and only after four years. For Senior Managers (which is equivalent to AMP’s Executive Committee level), CPS 511
requires at least 40% of the total variable reward be deferred over a minimum deferral period of five years, vesting
no faster than on a pro-rata basis and only after four years. Having longer deferral periods reflects the length of time,
risk and conduct issues can take to appear and crystallise.
1 The changes to the STI Award Mix and Deferral Period were also applied to 2022 outcomes.
46
Remuneration report
1.5
LOOKING TO 2023
1.5
LOOKING TO 2023 continued
Executive Remuneration Framework for 2023
In 2021, APRA released the remuneration prudential standard CPS 511 which AMP is required to comply with from 1 January 2023. CPS 511
is designed to heighten the governance requirements on entities’ remuneration arrangements in response to remuneration practices in the
financial services industry that have been a factor driving poor consumer outcomes.
In ensuring AMP complies with the new requirements, the Board has undertaken a comprehensive review of its approach to executive
remuneration and governance. As a part of that process, we have extensively engaged with a broad range of stakeholders including APRA,
shareholder advisory service firms and our largest shareholders (representing approximately 20% of issued capital). These meetings
were held over the second half of 2022, to seek feedback and consider opportunities to further enhance the effectiveness of the KMP
remuneration structure. Over the consultation period, 13 stakeholder meetings were held in total.
Following the completion of that review and in line with the requirements of CPS 511, we made the following changes to the executive
remuneration framework that applies to the CEO and Executive Committee (which includes the Executive KMP), effective 1 January 2023.
Former
Future
Former
LTI metrics
Future
Financial 100%
Financial 70%
Non-financial 30%
100% Relative Total Shareholder Return
(ASX100 Financials less A-REITs)
35% Relative Total Shareholder Return
(ASX200 Financials less A-REITs)
35% EPS Growth
(Adjusted EPS)
30% Reputation
(RepTrak score
improvement relative
to a comparator group
taken from RepTrak’s
Benchmark 60 Index)
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STI award mix 1
Cash 40%
STI deferral 60%
Cash 60%
STI deferral 40%
Rationale
Each performance metric has a vesting schedule from
a minimum threshold level through to a maximum level.
CPS 511 requires that total variable reward must give material weight to non-financial measures. The Board considered a range
of potential LTI measures and concluded that Relative Total Shareholder Return (RTSR), adjusted Earnings Per Share (EPS) Growth
and Reputation are appropriate measures for driving long term sustainable performance. The Board has selected these measures
for the following reasons:
–
–
–
RTSR: The board considers RTSR to be an appropriate measure as it provides a robust measure of AMP management’s
financial performance and returns for shareholders in comparison to other companies. Being a relative measure it
normalises against the rise and fall of the market. The RTSR peer group has been expanded to cover S&P ASX200 Financials
ex A-REITs, as the Board considers this a more appropriate peer group given the reduction in the size of the company post
the sales of the AMP Capital businesses, our current market capitalisation and who we compete with in the financial
services industry.
EPS Growth: In response to several stakeholders’ feedback regarding a long-term return measure, EPS has been introduced.
The board are of the view that EPS Growth is an appropriate proxy for measuring intrinsic long-term shareholder value
creation. In introducing EPS Growth, management are assessed on their direct financial contribution.
Reputation: The board is highly cognisant of the shareholder experience over recent years, which has been impacted
by organisational instability, poor customer experiences and reputation related events, which have impacted on AMP’s
reputation and share price. Rebuilding trust with our stakeholders and restoring the AMP brand remains paramount. The
board has selected reputation as a measure for the LTI, measured using external data provided by RepTrak, an independent
company that measures brand reputation and sentiment through surveying members of the community. This can include
AMP customers, shareholders and employees at any given time. The RepTrak measure tracks corporate reputation across
a broad range of areas, including scores for ESG performance, products and services, corporate citizenship, conduct,
workplace, leadership and innovation. With risk and conduct being a key consideration under CPS 511, measuring our
reputation provides an all encompassing measure of brand awareness, our contribution to society and shareholder wealth
creation. RepTrak has been a part of the AMP Scorecard for STI purposes for the past couple of years and is measured
on an absolute basis in the STI.
In order to meet the requirements of a material weighting to non-financial measures in CPS 511, the board also included
a RepTrak measure for LTI purposes, measured on a relative basis to track the long-term improvement in our score relative
to the chosen comparator group. This ensures that management’s performance is measured on a basis that removes the
impacts and/or influences of the market (ie. removing the likelihood of a scenario where favourable market factors benefit
all market participants). Including RepTrak in both the STI and LTI ensures that management are focused on both absolute
and relative performance.
In selecting the performance measures that apply to the LTI, the board also considered a broad range of metrics but ultimately
determined that RTSR, adjusted EPS Growth and the recovery of our reputation and rebuilding trust with our shareholders,
customers and the community is a key enabler to long-term sustainable business performance and shareholder value creation.
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STI deferral period 1
CEO
Year 2: 33.3%
Year 3: 33.3%
Year 4: 33.4%
CEO
No change
Executive committee
Executive committee
Year 2: 50%
Year 3: 50%
Year 2: 33.3%
Year 3: 33.3%
Year 4: 33.4%
Rationale
The balance between cash and equity, and the vesting period of deferred remuneration, has been adjusted. In light of the other
changes we have made to our framework (see LTI below), the cash and equity balance has been revised so that our remuneration
framework remains market competitive and keeps our current executives engaged and motivated. With the final CPS 511 standard
being released and confirmation of our approach to LTI, we have adjusted both the cash and equity mix, and the STI vesting periods
to apply to remuneration that is deferred and granted from 1 January 2023 (ie. the STI changes were also applied to the 2022
outcomes). These changes have been considered in totality with the other changes made.
Three-year performance period plus one-year
Three-year performance period plus up to three-year
Three-year performance period plus one year
Three-year performance plus up to two-year restriction
CEO
restriction period (pro-rata)
Executive committee
period (pro-rata)
LTI vesting period
CEO
restriction period
Executive committee
restriction period
Rationale
CPS 511 sets out minimum deferral periods for specified roles, including the CEO and Senior Managers, which corresponds
to AMP’s Executive Committee level. For the CEO, CPS 511 requires that at least 60% of the CEO’s total variable reward
(ie. across STI and LTI) must be deferred over a minimum deferral period of six years, vesting no faster than on a pro-rata
basis and only after four years. For Senior Managers (which is equivalent to AMP’s Executive Committee level), CPS 511
requires at least 40% of the total variable reward be deferred over a minimum deferral period of five years, vesting
no faster than on a pro-rata basis and only after four years. Having longer deferral periods reflects the length of time,
risk and conduct issues can take to appear and crystallise.
1 The changes to the STI Award Mix and Deferral Period were also applied to 2022 outcomes.
47
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Remuneration report
1.5
LOOKING TO 2023 continued
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Future
Targets
Relative Total Shareholder Return (RTSR)
35% of the 2023 LTI award will be determined based on AMP’s Compound Average Growth Rate (CAGR) in Total
Shareholder Return (TSR) relative to a peer group of ASX 200 financial companies excluding A-REITs, as at 1 January 2023.
RTSR performance is tested over a three-year performance period from 1 January 2023 through to 31 December 2025.
The performance rights will vest according to the following vesting schedule:
CAGR TSR performance
Proportion of LTI grant vesting
AMP’s TSR ranking below the 50th percentile of the peer group
AMP’s TSR ranking at the 50th percentile of the peer group
0%
50%
AMP’s TSR ranking between the 50th and 75th
percentile of the peer group
Straight-line vesting from 50% to 100%
(rounded to nearest whole percentile)
AMP’s TSR ranking is at least at the 75th percentile of the peer group
100%
The board considers RTSR to be an appropriate measure as it provides a robust measure of AMP’s financial performance
and returns for shareholders in comparison to other companies. Being a relative measure, it normalises against the rise
and fall of the market. The RTSR peer group for the 2023 LTI award has been expanded to cover S&P ASX200 Financials
excluding A-REITs.
The peer group consists of the following organisations:
Peer group as at 1 January 2023 S&P ASX200 Financials excluding A-REITs
AMP
ANZ Bank
ASX
AUB Group
Bendigo & Adelaide Bank Insignia Financial
Challenger
Commonwealth Bank Macquarie Group
Credit Corp Group
Magellan Financial Group Perpetual
nib holdings
Insurance Australia Group Netwealth Group
Steadfast
Suncorp
Virgin Money UK PLC
National Australia Bank QBE Insurance
Bank of Queensland HUB24
Medibank
Pinnacle Investment
Management
Westpac
The board considers this an appropriate peer group given the reduction in the size of the company upon completion
of the sales of the AMP Capital businesses, our current market capitalisation, and our competitors in the financial
services industry.
Adjusted Earnings Per Share (EPS)
35% of the 2023 LTI award will be determined based on AMP’s Compound Average Growth Rate (CAGR) in AMP’s Adjusted
EPS. EPS is calculated by dividing the AMP’s adjusted net profit after tax for the relevant reporting period by the weighted
average number of ordinary shares of AMP during the period. The underlying net profit after tax may be adjusted by the
board, where appropriate, to better reflect underlying performance and remove one-off gains and losses. EPS performance
is tested over a three-year performance period from 1 January 2023 through to 31 December 2025. The performance rights
will vest according to the following vesting schedule:
CAGR EPS performance
AMP’s EPS below 4% per annum
AMP’s EPS at 4% per annum
AMP’s EPS from 4% to 8% per annum
Proportion of LTI grant vesting
0%
50%
Straight-line vesting from 50% to 100%
(rounded to nearest whole percentile)
AMP’s EPS above 8% per annum
100%
The targets are set based on market norms and expectations for EPS growth. The board are of the view that the targets
set are robust, sufficiently challenging and in line with our shareholders’ interests and expectations.
48
Remuneration report
1.5
LOOKING TO 2023 continued
1.5
LOOKING TO 2023 continued
Future 2023
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Reputation
30% of the 2023 LTI award will be determined based on AMP’s RepTrak Score improvement relative to a subset of 15
organisations positioned similarly to AMP in RepTrak’s Benchmark 60 Index, as at 1 January 2023. The RepTrak Benchmark
60 index is a group of organisations RepTrak has been measuring consistently over a long period of time, selected based
on revenue and market presence. AMP’s RepTrak performance will be tested over a three-year performance period from 1
January 2023 through to 31 December 2025. As at 1 January 2023, the RepTrak score for AMP is 57.8 and will be used as the
starting point for testing purposes.
The performance rights will vest according to the following vesting schedule:
RepTrak Score Improvement
Proportion of LTI grant vesting
AMP’s RepTrak improvement below the 50th percentile of the peer group
0%
AMP’s RepTrak improvement at the 50th percentile of the peer group
50%
AMP’s RepTrak improvement ranking between the 50th and 75th
percentile of the peer group
Straight-line vesting from 50% to 100%
(rounded to nearest whole percentile)
AMP’s RepTrak improvement ranking above the 75th percentile
100%
The comparator group for measuring RepTrak improvement consists of the following organisations:
Peer Group Companies
AGL Energy
Australian Taxation Office National Australia Bank Optus
Alinta
ANZ Bank
Commonwealth Bank
NBNCo
Origin
Medibank Private
News Corp Australia
Reserve Bank of Australia Westpac
RioTinto
Telstra
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The selection of organisations that form the comparator group have been carefully considered. The board is of the view
that a meaningful movement in reputation is best measured by how we perform against a comparator group that includes
a reasonable representation of financial services organisations and organisations from across industries. This is in line with our
aspiration to be a trusted brand and continue focusing on our contribution to society. Therefore, it is appropriate to compare our
reputation against a broader set of organisations.
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Relative Total Shareholder Return (RTSR)
35% of the 2023 LTI award will be determined based on AMP’s Compound Average Growth Rate (CAGR) in Total
Shareholder Return (TSR) relative to a peer group of ASX 200 financial companies excluding A-REITs, as at 1 January 2023.
RTSR performance is tested over a three-year performance period from 1 January 2023 through to 31 December 2025.
The performance rights will vest according to the following vesting schedule:
CAGR TSR performance
Proportion of LTI grant vesting
AMP’s TSR ranking below the 50th percentile of the peer group
AMP’s TSR ranking at the 50th percentile of the peer group
0%
50%
AMP’s TSR ranking between the 50th and 75th
percentile of the peer group
Straight-line vesting from 50% to 100%
(rounded to nearest whole percentile)
AMP’s TSR ranking is at least at the 75th percentile of the peer group
100%
The board considers RTSR to be an appropriate measure as it provides a robust measure of AMP’s financial performance
and returns for shareholders in comparison to other companies. Being a relative measure, it normalises against the rise
and fall of the market. The RTSR peer group for the 2023 LTI award has been expanded to cover S&P ASX200 Financials
excluding A-REITs.
The peer group consists of the following organisations:
Peer group as at 1 January 2023 S&P ASX200 Financials excluding A-REITs
AMP
ANZ Bank
ASX
AUB Group
Bendigo & Adelaide Bank Insignia Financial
National Australia Bank QBE Insurance
Challenger
Insurance Australia Group Netwealth Group
Commonwealth Bank Macquarie Group
nib holdings
Steadfast
Suncorp
Credit Corp Group
Magellan Financial Group Perpetual
Virgin Money UK PLC
Bank of Queensland HUB24
Medibank
Pinnacle Investment
Management
Westpac
The board considers this an appropriate peer group given the reduction in the size of the company upon completion
of the sales of the AMP Capital businesses, our current market capitalisation, and our competitors in the financial
services industry.
Adjusted Earnings Per Share (EPS)
35% of the 2023 LTI award will be determined based on AMP’s Compound Average Growth Rate (CAGR) in AMP’s Adjusted
EPS. EPS is calculated by dividing the AMP’s adjusted net profit after tax for the relevant reporting period by the weighted
average number of ordinary shares of AMP during the period. The underlying net profit after tax may be adjusted by the
board, where appropriate, to better reflect underlying performance and remove one-off gains and losses. EPS performance
is tested over a three-year performance period from 1 January 2023 through to 31 December 2025. The performance rights
will vest according to the following vesting schedule:
CAGR EPS performance
AMP’s EPS below 4% per annum
AMP’s EPS at 4% per annum
AMP’s EPS from 4% to 8% per annum
AMP’s EPS above 8% per annum
Proportion of LTI grant vesting
0%
50%
100%
Straight-line vesting from 50% to 100%
(rounded to nearest whole percentile)
The targets are set based on market norms and expectations for EPS growth. The board are of the view that the targets
set are robust, sufficiently challenging and in line with our shareholders’ interests and expectations.
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1.5
LOOKING TO 2023 continued
New framework
The new framework is illustrated as follows:
CEO
Fixed remuneration cash
STI cash 60%
STI deferral 40%
RTSR – market hurdle 35%
LTI 100%
EPS – other financial 35%
Reputation – non-financial 30%
Group Executive KMP
Fixed remuneration cash
STI cash 60%
STI deferral 40%
RTSR – market hurdle 35%
LTI 100%
EPS – other financial 35%
Reputation – non-financial 30%
Legend:
Grant
Release
1/3
1/3
s
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t
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c
n
a
m
r
o
f
r
e
P
1/3
1/3
1/3
1/3
1/3
1/3
1/3
1/3
1/3
1/3
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
1/3
1/3
s
t
s
e
t
e
c
n
a
m
r
o
f
r
e
P
1/3
1/2
1/2
1/2
1/2
1/2
1/2
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
In making these adjustments to the executive remuneration framework as a result of the CPS 511 regulatory changes, the board has sought
to ensure that these changes continue to reflect our core remuneration principles (see section 1.2), attract and retain executive talent,
support the AMP strategy and deliver value to shareholders.
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New framework
The new framework is illustrated as follows:
CEO
Fixed remuneration cash
STI cash 60%
STI deferral 40%
RTSR – market hurdle 35%
LTI 100%
EPS – other financial 35%
Reputation – non-financial 30%
Group Executive KMP
Fixed remuneration cash
STI cash 60%
STI deferral 40%
RTSR – market hurdle 35%
LTI 100%
EPS – other financial 35%
Reputation – non-financial 30%
Legend:
Grant
Release
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
1/3
1/3
1/3
s
t
s
e
t
e
c
n
a
m
r
o
f
r
e
P
1/3
s
t
s
e
t
e
c
n
a
m
r
o
f
r
e
P
1/3
1/3
1/3
1/3
1/3
1/3
1/3
1/3
1/2
1/2
1/2
1/3
1/3
1/3
1/2
1/2
1/2
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
In making these adjustments to the executive remuneration framework as a result of the CPS 511 regulatory changes, the board has sought
to ensure that these changes continue to reflect our core remuneration principles (see section 1.2), attract and retain executive talent,
support the AMP strategy and deliver value to shareholders.
1.5
LOOKING TO 2023 continued
1.5
LOOKING TO 2023 continued
2023 scorecard
For 2023, we have listened to market feedback regarding increasing the weighting of financial objectives to 40% focused on profitability.
In addition, we have sought to strike the right balance between financial and non-financial objectives, yet maintain a material weighting
to non-financial measures in total variable reward as required by CPS 511. This is partly achieved by having an appropriate weighting
of financial and non-financial measures in the 2023 scorecard. While the key result areas remain consistent for 2023, their respective
weightings, along with the objectives and measures, have changed. The scorecard ensures clarity and alignment of collective goals and
increases focus on the successful achievement of our critical objectives and financial outcomes.
Key result areas
Objectives
Metric
2023 SCORECARD
Financially aligned
Financial
WEIGHTING
Profitability
Net profit after tax (statutory)
Net profit after tax (underlying)
40%
Strategy
WEIGHTING
20%
Non-financial
Grow bank profitability
Bank strategic objectives tracking to plan
Deliver wealth management strategic
priorities
Wealth Management strategic objectives
tracking to plan
Create portfolio of new growth options
Tracking to approved business benefits case,
including mission timeline
Customer
WEIGHTING
Improve our brand and reputation
Improvement in absolute RepTrak score
Deliver to our customers
Customer satisfaction
15%
People
WEIGHTING
Improve employee engagement
Employee satisfaction
Build an inclusive culture
15%
Inclusion index
Gender diversity
Risk
WEIGHTING
Effective risk management
Effective management of risks
Deliver a culture that respects risk
Risk culture maturity assessment
10%
100%
The overall AMP performance scorecard outcome is subject
to board discretion and a risk overview, and is one aspect the board
considers in assessing overall performance and determining the incentive
pool for STI outcomes
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2
SECTION
REMUNERATION STRATEGY AND FRAMEWORK
2.1
REMUNERATION STRATEGY
The goal of the AMP remuneration strategy is to align performance, prudent risk management and reward outcomes. It is designed to support
the attraction, retention and reward of high-performing talent required to deliver strong customer 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. Business unit scorecards are aligned to AMP priorities and performance is assessed on overall,
business unit, team and individual goals. 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, purpose and values, 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
purpose and
values
Differentiate for
performance and
adjust for risk
Linked to strategy
and sustainable
value creation
Balance interests
of clients, people
and shareholders
4.
KEY RESULT
AREAS
5.
DELIVER
AND TRACK
6.
PERFORMANCE
ASSESSMENT
7.
REWARD
1.
AMP PURPOSE
2.
AMP STRATEGY
3.
BUSINESS UNIT
STRATEGY
Financials
Strategy
AWM
Customer
Bank
People
NZWM
AMPC
Risk
Plan
What
– Set AMP scorecard
for year ahead
AMP scorecard and
other outcomes
– Set business area
scorecard aligned
to AMP scorecard
Track
– Track progress
quarterly
– Review and
overlay qualitative
risk assessment
quarterly
Report
– Report progress
to board quarterly
Business unit
scorecard
Individual
performance
assessment
How
Values and
behaviours
Personal risk
management
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 and outcomes
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, are
recommended by the:
– CEO for each
Executive
Committee member
– the Chair of the AMP
board for the CEO
Vests based on
financial and non-
financial performance
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Remuneration report
2
SECTION
REMUNERATION STRATEGY AND FRAMEWORK
2.1
REMUNERATION STRATEGY
The goal of the AMP remuneration strategy is to align performance, prudent risk management and reward outcomes. It is designed to support
the attraction, retention and reward of high-performing talent required to deliver strong customer 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. Business unit scorecards are aligned to AMP priorities and performance is assessed on overall,
business unit, team and individual goals. 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, purpose and values, 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
purpose and
values
Differentiate for
performance and
adjust for risk
Linked to strategy
and sustainable
value creation
Balance interests
of clients, people
and shareholders
4.
KEY RESULT
AREAS
5.
DELIVER
AND TRACK
6.
PERFORMANCE
ASSESSMENT
7.
REWARD
AMP PURPOSE
1.
2.
3.
AMP STRATEGY
BUSINESS UNIT
STRATEGY
Financials
Strategy
AWM
Customer
Bank
People
NZWM
AMPC
Risk
Plan
What
– Set AMP scorecard
AMP scorecard and
for year ahead
other outcomes
– Set business area
scorecard aligned
to AMP scorecard
Track
– Track progress
quarterly
– Review and
overlay qualitative
risk assessment
quarterly
Report
– Report progress
to board quarterly
Business unit
scorecard
Individual
performance
assessment
How
Values and
behaviours
Personal risk
management
Enabling functions
and tracking of stretch goals
Operating rhythms to check in, assess, course correct, including setting
8.
SHAREHOLDER
EXPERIENCE
Long-term incentive through performance rights
Demonstrate desired conduct and risk behaviours and outcomes
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, are
recommended by the:
– CEO for each
Executive
Committee member
– the Chair of the AMP
board for the CEO
Vests based on
financial and non-
financial performance
2.2
REMUNERATION FRAMEWORK
Remuneration mix
A significant portion of total remuneration is deferred to reflect the need to balance the reward, retention and motivation of executives
whilst aligning to shareholder experience and long-term value creation. By deferring variable reward, executives are held accountable
(individually or collectively) over the long term as the board has the ability, if appropriate, to adjust past, present and future remuneration
downwards through clawback and malus (refer to sections 4.2 and 4.3 for further information). The remuneration mix for the CEO and
Executive Committee members (excluding the CRO) at maximum opportunity delivers 75% of total remuneration as variable reward
and ‘at risk’ remuneration. The CRO’s remuneration mix is different to the other Executive Committee members in order to maintain the
independence of the role and safeguard against any conflicts of interest in carrying out the risk control function across the organisation.
CEO and other Executive Committee members
Chief Risk Officer
Fixed Remuneration
STI Cash
25%
30%
STI Deferred Share Rights
20%
LTI Performance Rights
25%
Fixed Remuneration
STI Cash
32%
27%
STI Deferred Share Rights
18%
LTI Performance Rights
23%
2022 SHORT-TERM INCENTIVE
OVERVIEW
STI is the variable reward at-risk component designed to motivate and reward for performance during the year.
Refer to Section 1.5 for further information on the 2023 STI.
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% of target.
AWARD
DETERMINATION
STI OPPORTUNITY
STI OUTCOME
FR
$
x
Target STI
opportunity
%
=
Target STI
opportunity
$
x
STI pool
outcome
Adjusted for
individual
performance
and behaviours
Risk
overview
=
Individual
STI
outcome
STI outcomes are determined with reference to the holistic performance of AMP and the AMP incentive pool, and
Executive KMP individual performance and behaviours. The AMP incentive pool is determined by the Board based on:
–
A scorecard comprising financials, strategy, customer, people priorities and objectives that supports AMP’s risk
management framework.
– Other outcomes including shareholder value creation.
–
Behaviour in line with AMP’s values, conduct and risk appetite.
The board considers both the achievement of the risk metrics as well as a risk overview when determining the
incentive pool.
DELIVERY
60% of the STI award is delivered as cash and 40% is deferred into equity. 1
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
2022
2023
CEO and KMP Executives
Performance
2024
33.3%
2025
33.3%
2026
33.4%
FORFEITURE (MALUS)
The board has the ability to adjust and lapse 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). Refer to section 4.3 for further information on how the
board considers adjusting remuneration for material risk and conduct events.
1 Applied to 2022 outcomes to align with 2023 STI deferral.
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2.2
REMUNERATION FRAMEWORK DETAILS continued
2022 LONG-TERM INCENTIVE
OVERVIEW
LTI awards granted during 2022 by the board in the form of performance rights that vest subject to a relative
Total Shareholder Return (TSR) against a peer group. Refer to section 1.5 for further information on the 2023 LTI.
LTI OPPORTUNITY
The allocation value of LTI awards that was granted during 2022 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 10-trading day period up to 1 January 2022.
LTI OPPORTUNITY
LTI GRANT
FR
$
x
LTI
opportunity
%
=
LTI
opportunity
$
÷
10‑day VWAP
(face value
allocation)
=
Number of
performance
rights granted
PERFORMANCE
PERIOD
1 January 2022 to 31 December 2024 with a further one-year restriction period subject to continued service
(comprising a total vesting period of four years).
PERFORMANCE
HURDLES
Measure
The 2022 LTI award is subject to a relative TSR measure, where AMP’s Compound Average Growth Rate (CAGR)
in Total Shareholder Return relative to peer group of S&P/ASX100 financial companies, excluding A-REITs
as at 1 January 2022.
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 a 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 is no retesting if the performance hurdle is not met.
DIVIDEND
ENTITLEMENTS
FORFEITURE
CONDITIONS
No dividend is paid or payable on any unvested rights or vested and unexercised rights.
If an executive is terminated for cause or gives notice of resignation to AMP before the vesting date, all vested
rights (or restricted shares) will lapse or be forfeited, unless the board determines otherwise. In all other cases,
unless the board determines otherwise:
–
–
A pro rata portion of the executive’s performance rights (calculated based on the portion of the performance
period that has elapsed up until the date of termination) will remain on foot to be tested in the ordinary course.
All restricted shares allocated to the executive on vesting of the performance rights will remain on foot until
the end of the 12-month restriction period.
CLAWBACK/MALUS
The board retains the discretion to adjust downwards and lapse the unvested portion of any LTI award, including
to zero.
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2.2
REMUNERATION FRAMEWORK DETAILS continued
2022 LONG-TERM INCENTIVE
OVERVIEW
LTI awards granted during 2022 by the board in the form of performance rights that vest subject to a relative
Total Shareholder Return (TSR) against a peer group. Refer to section 1.5 for further information on the 2023 LTI.
LTI OPPORTUNITY
The allocation value of LTI awards that was granted during 2022 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 10-trading day period up to 1 January 2022.
LTI OPPORTUNITY
LTI GRANT
FR
$
LTI
%
LTI
$
10‑day VWAP
Number of
allocation)
rights granted
x
opportunity
=
opportunity
÷
(face value
=
performance
PERFORMANCE
PERIOD
(comprising a total vesting period of four years).
1 January 2022 to 31 December 2024 with a further one-year restriction period subject to continued service
PERFORMANCE
HURDLES
Measure
The 2022 LTI award is subject to a relative TSR measure, where AMP’s Compound Average Growth Rate (CAGR)
in Total Shareholder Return relative to peer group of S&P/ASX100 financial companies, excluding A-REITs
as at 1 January 2022.
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%
DIVIDEND
ENTITLEMENTS
FORFEITURE
CONDITIONS
Vesting of LTI is subject to a 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 is no retesting if the performance hurdle is not met.
No dividend is paid or payable on any unvested rights or vested and unexercised rights.
If an executive is terminated for cause or gives notice of resignation to AMP before the vesting date, all vested
rights (or restricted shares) will lapse or be forfeited, unless the board determines otherwise. In all other cases,
unless the board determines otherwise:
–
A pro rata portion of the executive’s performance rights (calculated based on the portion of the performance
period that has elapsed up until the date of termination) will remain on foot to be tested in the ordinary course.
–
All restricted shares allocated to the executive on vesting of the performance rights will remain on foot until
the end of the 12-month restriction period.
CLAWBACK/MALUS
The board retains the discretion to adjust downwards and lapse the unvested portion of any LTI award, including
to zero.
3
SECTION
PERFORMANCE AND REWARD OUTCOMES
3.1
SUMMARY OF 2022 OUTCOMES
The table below illustrates AMP’s performance over the past five years and remuneration outcomes.
Financial results
Profit (loss) after tax attributable to shareholders ($m)
Net profit after tax (underlying) ($m) 1
Cost to income ratio (%) 1
Shareholder outcomes
Total dividends paid during the year (cents per share)
Share price at 31 December ($)
Remuneration outcomes
Relative TSR percentile 2
LTI vesting outcome (% of grant)
Average STI received by Executive KMP (as % of target
opportunity) 3
Average STI received by Executive KMP (as % of maximum
opportunity)
2018
2019
2020
2021
2022
28
680
56
14
2.45
8th
–
–
–
(2,467)
439
66
–
1.91
–
–
46
23
177
233
76
10
1.56
–
–
–
–
(252)
356
67
–
1.01
n/a
n/a
39
20
387
184
72
–
1.31
n/a
n/a
88
44
1 NPAT (underlying) represents shareholder attributable net profit or loss after tax after excluding non-recurring revenue and expenses. Note, NPAT (underlying)
and associated cost to income ratio for financial years 2018 – 2021 are as reported and have not been restated to reflect the removal of AMP Capital
discontinued operations from NPAT (underlying).
2 No LTI grants were tested during 2021 and 2022.
3 The average STI received by Executive KMP excludes Shawn Johnson who 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. The average STI outcome is higher in 2022 than 2021, as this table reflects the KMP as at the
reporting date and due to a smaller KMP cohort for 2022, the average is higher.
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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 scorecard is underpinned by five key priorities, which have objectives, metrics and targets that were set
at the beginning of 2022. Achievements against these objectives were used by the board as one of the key inputs
in determining the incentive pool (excluding AMP Capital).
Finance
OBJECTIVE
METRIC
Manage return on equity
Return On Equity (statutory)
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Improve profitability
Net Profit After Tax (statutory)
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Improve profitability
Net Profit After Tax (underlying)
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
30%
45% 13.5%
Financial performance was assessed
on three measures.
Return on equity of 9.0% was below
the target.
AMP’s statutory net profit for the
year was $387m and included the
proceeds of the AMP Capital sale
of the infra-debt business.
AMP delivered an underlying net
profit of $184m supported by strong
earnings in AMP Bank, continuing
growth in the Platforms business
and a strong contribution from our
strategic partnership with China Life
Pension Company.
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3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT
3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT continued
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 scorecard is underpinned by five key priorities, which have objectives, metrics and targets that were set
at the beginning of 2022. Achievements against these objectives were used by the board as one of the key inputs
in determining the incentive pool (excluding AMP Capital).
Finance
OBJECTIVE
METRIC
Manage return on equity
Return On Equity (statutory)
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
30%
45% 13.5%
Financial performance was assessed
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Improve profitability
Net Profit After Tax (statutory)
Significantly below
Below
Achieved
Exceeded
Improve profitability
Net Profit After Tax (underlying)
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
on three measures.
Return on equity of 9.0% was below
the target.
AMP’s statutory net profit for the
year was $387m and included the
proceeds of the AMP Capital sale
of the infra-debt business.
AMP delivered an underlying net
profit of $184m supported by strong
earnings in AMP Bank, continuing
growth in the Platforms business
and a strong contribution from our
strategic partnership with China Life
Pension Company.
Strategy
OBJECTIVE
METRIC
Grow the bank
ACHIEVEMENT
Mortgage book growth
Significantly below
Below
Achieved
Exceeded
Grow the Platform business
Net cashflow total platforms
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Commence second tranche of
capital return
ACHIEVEMENT
Tracking to plan (RAG)
Significantly below
Below
Achieved
Exceeded
Simplify the business
Achieve target total cost base
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
20%
38%
7%
Bank experienced good growth during
the year, however in response to market
conditions, we focused on sustainable
growth rather than pursue a mortgage
book growth target at the cost of
profitability.
Our North platform is increasing the
percentage of cash flows from the
independent financial adviser market
and we have made good progress in our
financial advice business, as we continue
the repositioning of the business as a
professional services provider to aligned
financial advisers.
As a result of our strengthened capital
position, we commenced the return of
$1.1b to shareholders. We completed
$267m of an announced $350m
on-market buy-backs, with further
capital return to take place subject to
shareholder and regulatory approval.
In 2022, we continued to control costs
and delivered against our three-year
cost out transformation objective.
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3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT continued
Customer
OBJECTIVE
METRIC
Improve our brand and reputation
Reputational score RepTrak
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Deliver to our customers
Customer NPS
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
20%
78% 15.5%
AMP recorded a RepTrak score of 57.2
which was an improvement on our 2021
score of 55. This is our highest year end
result since the 2018 royal commission
into the financial services industry,
demonstrating that our reputation
is recovering and trending upwards.
The NPS score was 23 and despite not
achieving target, good progress continues
to be made with call centre wait times
and operational service improving.
New processes were introduced
to assist customers online, including
improvements to mortgage processing
time and the launch of a direct-to-
customer, rapid-approval digital mortgage
product, resulting in overall enhanced
digital and customer experiences.
People
OBJECTIVE
METRIC
Improve employee engagement
Employee satisfaction
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Build an inclusive culture
Inclusion index
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Build an inclusive culture
Gender diversity tracking (for senior executives)
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
20%
109% 22%
2022 continued to present challenges
and uncertainty for our people
through ongoing transformation and
the sale of AMP Capital businesses.
Notwithstanding, our employee
satisfaction survey participation rates
and scores increased to the highest
in five years, 79% and 73 respectively,
a two-point improvement from last year.
We achieved our inclusion index and
exceeded our gender diversity target
of 40:40:20, with female representation
at 45%. Evidence of our commitment
to being a values-led organisation that
supports our people, through a diverse
and inclusive culture.
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20%
78% 15.5%
which was an improvement on our 2021
score of 55. This is our highest year end
result since the 2018 royal commission
into the financial services industry,
demonstrating that our reputation
is recovering and trending upwards.
The NPS score was 23 and despite not
achieving target, good progress continues
to be made with call centre wait times
and operational service improving.
New processes were introduced
to assist customers online, including
improvements to mortgage processing
time and the launch of a direct-to-
customer, rapid-approval digital mortgage
product, resulting in overall enhanced
digital and customer experiences.
20%
109% 22%
2022 continued to present challenges
and uncertainty for our people
through ongoing transformation and
the sale of AMP Capital businesses.
Notwithstanding, our employee
satisfaction survey participation rates
and scores increased to the highest
in five years, 79% and 73 respectively,
a two-point improvement from last year.
We achieved our inclusion index and
exceeded our gender diversity target
of 40:40:20, with female representation
at 45%. Evidence of our commitment
to being a values-led organisation that
supports our people, through a diverse
and inclusive culture.
3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT continued
3.2
PERFORMANCE OBJECTIVES AND ASSESSMENT continued
Customer
OBJECTIVE
METRIC
Improve our brand and reputation
Reputational score RepTrak
Risk
OBJECTIVE
METRIC
Operate within risk appetite
95–100% compliance within stated risk appetite,
and action plans where appropriate
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
AMP recorded a RepTrak score of 57.2
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Deliver to our customers
Customer NPS
10%
100%
10%
Overall risk scorecard performance
declined slightly. The risk culture
assessment was on target, with all
areas of focus showing improvement
over the year. Performance against
risk appetite showed a slight decline,
reflecting some metrics moving out
of appetite due to holding excess capital
as a result of the sales of the AMP capital
business. We continue to work towards
returning further capital to shareholders,
subject to approvals.
Significantly below
Below
Achieved
Exceeded
Embed Risk Culture
Risk Culture self-assessment
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
People
OBJECTIVE
METRIC
Improve employee engagement
Employee satisfaction
WEIGHTING
%
ACHIEVED
WEIGHTED
OUTCOME
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
Build an inclusive culture
Inclusion index
Significantly below
Below
Achieved
Exceeded
Build an inclusive culture
Gender diversity tracking (for senior executives)
ACHIEVEMENT
ACHIEVEMENT
Significantly below
Below
Achieved
Exceeded
BOARD DISCRETION AND INCENTIVE POOL DETERMINATION
The overall scorecard outcome was 68%. This is a solid result in a challenging year with the uncertainty of the
macroeconomic environment, the continuing impacts of the pandemic and the decision to sell AMP Capital
infrastructure and real estate businesses rather than pursue a demerger. The board determined an incentive
pool of 70%. However, considering the results achieved under the CEO and Executive Committee’s stewardship,
the board have applied discretion and awarded an additional 15% that will be withheld (against the cash
portion of the STI) until the commencement of the second tranche of capital return. This reflects the need
to balance the reward, retention and motivation of employees whilst recognising and aligning to shareholder
experience over the period. In arriving at a decision, the board especially considered progress on:
– Shareholder value creation – AMP’s total
shareholder return over the past 12 months
was +30.2%.
– Improving risk management and customer
satisfaction, notwithstanding ongoing
transformation and transactions.
– Portfolio strategy – significant progress on
– Improving employee engagement to 73,
simplifying the portfolio, repositioning our core
businesses in wealth management and retail
banking and progress in executing the AMP
Capital divestment strategy.
the highest in five years.
– Continued improvement in our reputation score,
evidence our reputation is recovering.
SCORECARD
RESULT
68%
POOL
70%
+
15%
WITHHELD
=
85%
TOTAL POOL
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3.3
ADJUSTMENT PRINCIPLES
The board may, in its absolute discretion, adjust outcomes where an event occurs that means the targets of the relevant scorecard
objective are no longer appropriate. Situations where this discretion to adjust 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 costs or gains that were
unforeseen, were not in the ordinary course of business or were not the direct result of Executive KMP efforts. For 2022, no adjustments
were made to any of the outcomes for the metrics making up the 2022 scorecard. The board did exercise discretion in determining the pool,
refer to section 3.2 for further information.
3.4
EXECUTIVE AND EMPLOYEE PERFORMANCE AND CONTRIBUTION
For the Executive Committee, performance is assessed based on AMP and their business unit scorecards. In this way, an executive’s
performance is aligned to both company and their individual business unit performance. Their individual performance, conduct and how
they demonstrate the values is also considered when determining the individual STI outcome. For all other employees, their performance
assessment reflects achievement against agreed goals and objectives set based on the AMP key result areas combined with consideration
of risk management, values and conduct in line with the performance management process and Code of Conduct. An individual’s incentive
opportunity and performance rating determine the portion of the incentive pool allocated to them.
3.5
SHORT-TERM INCENTIVES AWARDED
The following table shows the STI awarded to current and former Executive KMP for the 2022 performance year. It differs from the
statutory table in Section 7.1 which is prepared according to Australian Accounting Standards.
Total Cash – 60%
Cash to
be paid
in March
2023 3
$'000
Cash
withheld 3
$'000
Deferred
equity –
40%
To be
delivered
in share
rights 3
$'000
STI awarded
as % of
pro rated
target STI
opportunity 4
%
STI awarded
as % of
pro rated
max STI
opportunity 4
%
Fixed
remuneration
(FR)
$'000
Pro rated
target STI
opportunity 1
$'000
Total STI
outcome
awarded 2
$'000
1,715
1,715
1,520
Executive KMP
Alexis George
David Cullen
James Georgeson
Scott Hartley
Shawn Johnson 5
Rebecca Nash
Sean O'Malley
Nicola Rimmer-
Hollyman
Total STI awarded
750
750
900
950
700
600
600
240
750
900
n/a
224
600
336
212
660
720
354
197
490
655
91
284
297
159
85
204
336
4,489
151
1,926
257
36
112
135
53
33
90
51
767
608
85
264
288
142
79
196
134
1,796
89%
88%
88%
80%
n/a
88%
82%
100%
44%
44%
44%
40%
n/a
44%
41%
50%
1 For David Cullen, Rebecca Nash and Nicola Rimmer-Hollyman, the prorated opportunity reflects their prorated FR and incentive opportunities in line with
their KMP period.
2 The STI outcome awarded is based on performance during 2022 and reflects their outcome in line with their KMP period.
3 Of the STI awarded, 60% is delivered in cash and 40% is delivered in share rights that will be granted in March 2023. However, as outlined in Section 3.2,
the board have withheld a portion of the cash STI which will only be paid upon the commencement of the second tranche of the capital return, excluding
ordinary dividends declared in the normal course.
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 prorated for time in role and does not represent a percentage of a STI opportunity. The outcome
included under the Total STI outcome column has been prorated in line with his KMP period. 60% of the STI is paid in cash and the remaining 40% delivered in AMP
share rights. In line with the other Executive Committee members, a portion of the cash STI will only be paid upon the commencement of the second tranche of
the capital return.
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 has adopted a remuneration adjustment
framework to guide the board in determining the appropriate remuneration outcomes. Refer to Section 4.3 for further information on the
remuneration adjustment guideline. From time to time the Remuneration Committee may seek external guidance or benchmarking
information from independent remuneration advisers. Any advice provided by external advisers 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. The Remuneration Committee did
not engage any independent remuneration advisers who provided remuneration recommendations, as defined in the Corporations Act.
The following diagram outlines AMP’s remuneration governance framework.
REMUNERATION GOVERNANCE FRAMEWORK
3.5
SHORT-TERM INCENTIVES AWARDED
AMP LIMITED BOARD
AMP SUBSIDIARY BOARDS
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Risk and Compliance 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 remuneration
outcomes.
Risk-related adjustments for the incentive pool.
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.
–
Reviewing and making recommendations in relation
to equity awards, including malus and clawback.
Management
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.
Independent remuneration advisers
The Remuneration Committee may engage
remuneration advisers when it needs
additional information to assist the AMP
Board in making remuneration decisions.
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3.3
ADJUSTMENT PRINCIPLES
The board may, in its absolute discretion, adjust outcomes where an event occurs that means the targets of the relevant scorecard
objective are no longer appropriate. Situations where this discretion to adjust 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 costs or gains that were
unforeseen, were not in the ordinary course of business or were not the direct result of Executive KMP efforts. For 2022, no adjustments
were made to any of the outcomes for the metrics making up the 2022 scorecard. The board did exercise discretion in determining the pool,
refer to section 3.2 for further information.
3.4
EXECUTIVE AND EMPLOYEE PERFORMANCE AND CONTRIBUTION
For the Executive Committee, performance is assessed based on AMP and their business unit scorecards. In this way, an executive’s
performance is aligned to both company and their individual business unit performance. Their individual performance, conduct and how
they demonstrate the values is also considered when determining the individual STI outcome. For all other employees, their performance
assessment reflects achievement against agreed goals and objectives set based on the AMP key result areas combined with consideration
of risk management, values and conduct in line with the performance management process and Code of Conduct. An individual’s incentive
opportunity and performance rating determine the portion of the incentive pool allocated to them.
The following table shows the STI awarded to current and former Executive KMP for the 2022 performance year. It differs from the
statutory table in Section 7.1 which is prepared according to Australian Accounting Standards.
Deferred
equity –
40%
Total Cash – 60%
Cash to
be paid
in March
2023 3
$'000
Cash
withheld 3
$'000
STI awarded
STI awarded
To be
delivered
in share
as % of
pro rated
target STI
as % of
pro rated
max STI
rights 3
opportunity 4
opportunity 4
$'000
%
%
Fixed
remuneration
Pro rated
target STI
(FR)
opportunity 1
$'000
$'000
Total STI
outcome
awarded 2
$'000
1,715
1,715
1,520
750
750
900
950
700
600
600
240
750
900
n/a
224
600
336
212
660
720
354
197
490
655
91
284
297
159
85
204
336
4,489
151
1,926
257
36
112
135
53
33
90
51
767
608
85
264
288
142
79
196
134
1,796
89%
88%
88%
80%
n/a
88%
82%
100%
44%
44%
44%
40%
n/a
44%
41%
50%
Executive KMP
Alexis George
David Cullen
James Georgeson
Scott Hartley
Shawn Johnson 5
Rebecca Nash
Sean O'Malley
Nicola Rimmer-
Hollyman
Total STI awarded
their KMP period.
1 For David Cullen, Rebecca Nash and Nicola Rimmer-Hollyman, the prorated opportunity reflects their prorated FR and incentive opportunities in line with
2 The STI outcome awarded is based on performance during 2022 and reflects their outcome in line with their KMP period.
3 Of the STI awarded, 60% is delivered in cash and 40% is delivered in share rights that will be granted in March 2023. However, as outlined in Section 3.2,
the board have withheld a portion of the cash STI which will only be paid upon the commencement of the second tranche of the capital return, excluding
ordinary dividends declared in the normal course.
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 prorated for time in role and does not represent a percentage of a STI opportunity. The outcome
included under the Total STI outcome column has been prorated in line with his KMP period. 60% of the STI is paid in cash and the remaining 40% delivered in AMP
share rights. In line with the other Executive Committee members, a portion of the cash STI will only be paid upon the commencement of the second tranche of
the capital return.
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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 (CRO)
reports at each of the standing
Remuneration Committee
meetings, the overall
assessment of risk management
at the conclusion of the
performance year as an input
to the determination of the
incentive pool.
At the conclusion of each
performance year, the Chair
of the Risk and Compliance
Committee (who is also a member
of the Remuneration Committee)
provides an overview of the key
issues considered by the Risk and
Compliance Committee that are
likely to be relevant to assessing
the remuneration outcomes
for the CEO and Executive
Committee members by the
Remuneration Committee.
Allows the board to adjust and
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.
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 past, present
and future remuneration
if appropriate.
The board may
apply its absolute
discretion to adjust
past, present and
future remuneration,
subject to the equity
incentive plan rules
governing the plan
and in compliance
with the relevant
policies.
It does this in line with
the remuneration
adjustment
framework to provide
greater consistency
in remuneration
adjustments (refer
to section 4.3 below).
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. There is a standing agenda item at each Remuneration
Committee for the CRO to present any risk related information the Committee should consider when making remuneration decisions.
This also gives the Remuneration Committee an opportunity to make enquiries and have unfettered access to risk and internal audit
executives. The Remuneration Committee considers both the achievement of the risk metrics as well as a risk overview 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 strengthened in 2021 and again in 2022 to align with best practice management
of sexual harassment, other misconduct matters, and due to the implementation of CPS 511. AMP has a Consequence Management
Committee (CMC), which was established to ensure consistent management of workplace conduct matters and application of AMP’s
Consequence Management policy. The CMC comprises the CEO, Chief People Officer and Chief Risk Officer as standing members. Statistics
and insights on all conduct cases across AMP Limited are reported to the Risk and Compliance Committee on a biannual basis, following
review by the CMC. Under the consequence management framework, all substantiated cases of misconduct require the application
of a management and/or remuneration consequence. Where there is a recommendation from People & Culture (and as endorsed by the
CMC) to apply malus or clawback of past remuneration as a part of the recommended remuneration consequence, submissions are made
to the Remuneration Committee to exercise its discretion to lapse the unvested equity award.
During the year there were no conduct matters related to executives that needed to be taken into account in relation to 2022 performance.
However, there were a number of conduct matters related to other employees 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 2022 presented many challenges from a people perspective, including a competitive talent market and ongoing COVID related issues,
total substantiated misconduct cases were lower in 2022 than the previous two years. This is a positive outcome and is largely driven by the
work completed to uplift leadership training and enhanced communication of conduct expectations. Senior leadership continues to play
an important role in setting the tone, driving cultural transformation and prioritising improvements to the level of support made available
to employees as part of increased speak up channels.
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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 (CRO)
reports at each of the standing
Remuneration Committee
meetings, the overall
assessment of risk management
at the conclusion of the
performance year as an input
to the determination of the
incentive pool.
At the conclusion of each
performance year, the Chair
of the Risk and Compliance
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
Committee (who is also a member
managed, including
of the Remuneration Committee)
adjustments to past, present
provides an overview of the key
and future remuneration
issues considered by the Risk and
if appropriate.
Compliance Committee that are
likely to be relevant to assessing
the remuneration outcomes
for the CEO and Executive
Committee members by the
Remuneration Committee.
Allows the board to adjust and
The board may
lapse (malus) unvested equity
apply its absolute
awards or reclaim (clawback)
discretion to adjust
vested incentives in certain
past, present and
circumstances.
All deferred incentives are
subject to a conduct and risk
review before vesting.
This applies to current and
former employees.
future remuneration,
subject to the equity
incentive plan rules
governing the plan
and in compliance
with the relevant
policies.
It does this in line with
the remuneration
adjustment
framework to provide
greater consistency
in remuneration
adjustments (refer
to section 4.3 below).
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. There is a standing agenda item at each Remuneration
Committee for the CRO to present any risk related information the Committee should consider when making remuneration decisions.
This also gives the Remuneration Committee an opportunity to make enquiries and have unfettered access to risk and internal audit
executives. The Remuneration Committee considers both the achievement of the risk metrics as well as a risk overview 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 strengthened in 2021 and again in 2022 to align with best practice management
of sexual harassment, other misconduct matters, and due to the implementation of CPS 511. AMP has a Consequence Management
Committee (CMC), which was established to ensure consistent management of workplace conduct matters and application of AMP’s
Consequence Management policy. The CMC comprises the CEO, Chief People Officer and Chief Risk Officer as standing members. Statistics
and insights on all conduct cases across AMP Limited are reported to the Risk and Compliance Committee on a biannual basis, following
review by the CMC. Under the consequence management framework, all substantiated cases of misconduct require the application
of a management and/or remuneration consequence. Where there is a recommendation from People & Culture (and as endorsed by the
CMC) to apply malus or clawback of past remuneration as a part of the recommended remuneration consequence, submissions are made
to the Remuneration Committee to exercise its discretion to lapse the unvested equity award.
During the year there were no conduct matters related to executives that needed to be taken into account in relation to 2022 performance.
However, there were a number of conduct matters related to other employees 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 2022 presented many challenges from a people perspective, including a competitive talent market and ongoing COVID related issues,
total substantiated misconduct cases were lower in 2022 than the previous two years. This is a positive outcome and is largely driven by the
work completed to uplift leadership training and enhanced communication of conduct expectations. Senior leadership continues to play
an important role in setting the tone, driving cultural transformation and prioritising improvements to the level of support made available
to employees as part of increased speak up channels.
4.2
RISK MANAGEMENT IN REMUNERATION
4.3
REMUNERATION ADJUSTMENT GUIDELINES
The board has adopted a remuneration adjustment framework to provide guidance in exercising discretion related to past, present and
future remuneration and to provide greater consistency in remuneration adjustments. The framework is considered at each remuneration
decision point to identify whether there have been any material conduct or risk events that have impacted on shareholder experience,
the reputation of the company or led to disciplinary action from our regulators.
This tool is intended to help the AMP Board in making potential downward adjustments to variable remuneration. It is not intended to be used
as a prescriptive or formulaic decision tree, as board judgement will always need to be applied according to the facts and circumstances
of a particular situation. Whilst the framework is designed to deal with material risk and conduct events, the board can also exercise its
discretion to apply positive adjustments if appropriate.
The following chart is an example of the types of qualitative and quantitative indicators the board may consider in exercising discretion
in relation to material conduct and risk events.
Considerations for adjusting remuneration
Is the remuneration outcome on an individual or cohort basis in line with the actual values and original intent?
Qualitative indicators
Quantitative indicators
Customer and people
Has there been a potential breakdown of trust with our employees,
customers, fund beneficiaries or members of the community
or operated in a way that is contrary to our stated values?
RepTrak, Customer NPS or Employee
Satisfaction scores
Reputation
Has there been unexpected widespread media coverage about our
company or services that has impacted our reputation or brand?
Shareholder experience
Risk
Has there been a material deterioration in the risk culture
or profile of the company?
Unacceptable level of risk appetite
Finance
Have we behaved in a way that was not fiscally responsible and
there was an impact on our prudential standing or reputation?
Capital adequacy, credit rating
POTENTIAL ADJUSTING EVENT IDENTIFIED
Decision making
Remuneration Committee
Board decision
Adjust remuneration
Adjustment to be proportionate to the severity of the risk and conduct outcome
Reduction or
cancellation of
cash payments
Malus applied to
existing equity
awards on foot
Clawback of
already paid/
released equity
awards
Downward
adjustment
to in period
remuneration
Pre grant
adjustment to
quantum of future
LTI grant
s
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Remuneration report
5
SECTION
EXECUTIVE SHAREHOLDINGS AND CONTRACTS
5.1
EXECUTIVE MINIMUM SHAREHOLDING REQUIREMENTS
The relevant amount of AMP equity required to be held by the Executive Committee (which includes the Executive KMP) 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%
Executive KMP 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
SECURITIES HELD BY EXECUTIVE KMP
We assess compliance with our minimum shareholding requirement each year. The table below summaries the position of each Executive
KMP as at 31 December 2022 against the requirement at the reporting date.
Executive KMP
Alexis George
James Georgeson
Scott Hartley
Sean O’Malley
Nicola Rimmer-Hollyman
Fixed pay 1
$'000
1,715
700
900
600
600
Unit balance
#
1,925,980
747,432
328,268
460,776
208,885
Value of holding 2
$'000
Target date to meet
requirement
2,533
1 August 2026
983
432
606
275
n/a 3
10 January 2026
14 November 2026
12 February 2027
1 Fixed pay includes cash salary plus superannuation and has been captured as an annualised amount in Australian dollars on 31 December 2022 to calculate
the shareholding value.
2 The total value of each holding was calculated on 30 December 2022 using a closing price of $1.315.
3 James Georgeson will depart AMP during 2023.
64
Remuneration report
5
SECTION
EXECUTIVE SHAREHOLDINGS AND CONTRACTS
5.1
EXECUTIVE MINIMUM SHAREHOLDING REQUIREMENTS
The relevant amount of AMP equity required to be held by the Executive Committee (which includes the Executive KMP) 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 are expected to
AMP Limited shares: Ordinary AMP Limited
achieve the minimum shareholding
shares registered in the Executive KMP’s name
Executive KMP
100%
requirement within a five-year period
or a related party
from commencement in their role
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
SECURITIES HELD BY EXECUTIVE KMP
We assess compliance with our minimum shareholding requirement each year. The table below summaries the position of each Executive
KMP as at 31 December 2022 against the requirement at the reporting date.
Executive KMP
Fixed pay 1
Unit balance
Value of holding 2
$'000
1,715
700
900
600
600
#
1,925,980
747,432
328,268
460,776
208,885
Target date to meet
requirement
1 August 2026
n/a 3
10 January 2026
14 November 2026
12 February 2027
$'000
2,533
983
432
606
275
Alexis George
James Georgeson
Scott Hartley
Sean O’Malley
Nicola Rimmer-Hollyman
the shareholding value.
1 Fixed pay includes cash salary plus superannuation and has been captured as an annualised amount in Australian dollars on 31 December 2022 to calculate
2 The total value of each holding was calculated on 30 December 2022 using a closing price of $1.315.
3 James Georgeson will depart AMP during 2023.
5.3
EXECUTIVE EMPLOYMENT CONTRACTS
Contract term
CEO
Length of contract
Open-ended
Executive KMP
Open-ended
Notice period
Six months by AMP or by Alexis George
Six 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
Six-month restraint on entering employment with a competitor and 12-month restraint
on solicitation of AMP clients and employees.
Fixed remuneration increases
The only fixed remuneration increase awarded is for the Group Executive AMP Bank, Sean O’Malley, whose remuneration will increase
by 8.3%, effective 1 April 2023. This change reflects the fixed remuneration levels of similar roles in other ASX financial services entities
and an acknowledgement of his contribution and performance since commencing in the role.
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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 Non-Executive Director (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 $4.620m,
which was approved by shareholders at the 2015 Annual General Meeting (AGM). The total remuneration earned by AMP Limited NEDs during
2022 was $2.264m, which represents 49.0% of the annual fee pool compared with 56.2% earned in 2021. This represents an overall 12.8% cost
reduction in aggregate NED fee spend year on year.
Between 1 January to 30 September 2022, all AMP non-executive directors continued to be members of each standing committee. This was
to ensure that all non-executive directors were sufficiently well informed of the matters presented to the committees by management and
advisers as AMP traversed significant and time-sensitive strategic and business transformation matters. A review of the board committee
structure was conducted in mid-2022 and the board determined it was reasonable to reduce the number of members for each standing
committee (other than the Nomination committee) as the transformation initiatives had stabilised. The changes were effected on 1 October
2022 and these changes resulted in a further reduction in the total fees paid to directors from that date, continuing the progressive reduction
in director fees since 2019 by a total of 40.4%. The current members and role of each standing committee as at the date of this statement are
set out in the Corporate governance statement.
As part of the committee structure review, AMP’s board established two advisory groups for an initial six-month period to support and
promote AMP’s key strategic enablers. These advisory groups are tasked to conduct workshops and deep dives with management with their
key focus on ESG & sustainability and technology transformation. The fee structure of the advisory groups is provided below.
The following table shows the annual NED fees for the Board and permanent committees of AMP Limited and its main subsidiaries for 2022.
AMP Limited
Board
Audit Committee
Risk and Compliance Committee
Remuneration Committee
Nomination Committee
Demerger Due Diligence Committee 4
ESG Advisory Group
Technology Transformation Advisory Group
AMP Bank
Board
Audit Committee
Risk and Compliance Committee
Chair base fee 1
2022 3
$
Member base
fee 2
2022 3
$
561,000
204,000
46,750
46,750
46,750
nil
475/hr
46,750
46,750
nil
nil
nil
21,590
21,590
21,590
nil
337.50/hr
21,590
21,590
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 There was a restructure of the AMP Limited and Bank Board committee memberships on 1 October 2022 to incorporate the establishment of the ESG &
Sustainability and Technology Transformation Advisory Groups.
4 The Demerger Due Diligence Committee was removed effective 26 May 2022.
66
Remuneration report
6
SECTION
NON-EXECUTIVE DIRECTOR FEES AND
SHAREHOLDING REQUIREMENTS
6.1
NON-EXECUTIVE DIRECTOR FEES
The Remuneration Committee is responsible for reviewing Non-Executive Director (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 $4.620m,
which was approved by shareholders at the 2015 Annual General Meeting (AGM). The total remuneration earned by AMP Limited NEDs during
2022 was $2.264m, which represents 49.0% of the annual fee pool compared with 56.2% earned in 2021. This represents an overall 12.8% cost
reduction in aggregate NED fee spend year on year.
Between 1 January to 30 September 2022, all AMP non-executive directors continued to be members of each standing committee. This was
to ensure that all non-executive directors were sufficiently well informed of the matters presented to the committees by management and
advisers as AMP traversed significant and time-sensitive strategic and business transformation matters. A review of the board committee
structure was conducted in mid-2022 and the board determined it was reasonable to reduce the number of members for each standing
committee (other than the Nomination committee) as the transformation initiatives had stabilised. The changes were effected on 1 October
2022 and these changes resulted in a further reduction in the total fees paid to directors from that date, continuing the progressive reduction
in director fees since 2019 by a total of 40.4%. The current members and role of each standing committee as at the date of this statement are
set out in the Corporate governance statement.
As part of the committee structure review, AMP’s board established two advisory groups for an initial six-month period to support and
promote AMP’s key strategic enablers. These advisory groups are tasked to conduct workshops and deep dives with management with their
key focus on ESG & sustainability and technology transformation. The fee structure of the advisory groups is provided below.
The following table shows the annual NED fees for the Board and permanent committees of AMP Limited and its main subsidiaries for 2022.
AMP Limited
Board
Audit Committee
Risk and Compliance Committee
Remuneration Committee
Nomination Committee
Demerger Due Diligence Committee 4
ESG Advisory Group
Technology Transformation Advisory Group
AMP Bank
Board
Audit Committee
Risk and Compliance Committee
Chair base fee 1
2022 3
$
Member base
fee 2
2022 3
$
561,000
204,000
46,750
46,750
46,750
nil
475/hr
46,750
46,750
nil
nil
nil
21,590
21,590
21,590
nil
337.50/hr
21,590
21,590
nil
nil
nil
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. For the purposes of determining whether the minimum shareholding has been met, the value of each share held
by a NED will be the share price at the time the share was acquired. 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 6.3. 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. Between
2019 and 2022, opportunities for NEDs to acquire shares during the trading windows in accordance with AMP’s Trading Policy were limited due
to the on-going transactions, including the sale of AMP Life, portfolio review and sales of AMP Capital businesses. In 2022, NEDs have been able
to increase their share ownership and have either met the MSR as at 31 December 2022, or are within the four-year period to achieve the MSR.
6.3
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 2022. 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
1 Jan 2022
#
Shares acquired
during the year
#
Shares disposed
during the year
#
Balance on
31 Dec 2022 1
#
Value on
31 Dec 2022 per
the MSR 2
$
Progress
against the MSR
Debra Hazelton 3
Andrew Best 4
274,562
–
Rahoul Chowdry
100,000
125,723
100,000
–
Michael Hirst 5
Kathryn McKenzie 6
Michael Sammells 7
Andrea Slattery 8
John O'Sullivan 9
–
200,000
120,000
70,000
139,975
88,194
78,000
50,000
64,000
–
–
–
–
–
–
–
–
–
400,285
100,000
100,000
200,000
198,000
120,000
203,975
88,194
519,934
109,084
14 June 2023
1 July 2026
205,000
31 December 2023
222,950
30 June 2025
184,201
17 November 2024
148,780
29 February 2024
296,578
14 February 2023
n/a
n/a
1 As at 31 December 2022 and 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. For John O'Sullivan, the closing balance represents the date he ceased to be a KMP.
2 The total value of each holding was calculated as at 31 December 2022 using purchase price (per the Non-Executive Director Shareholding Policy).
3 Debra Hazelton purchased 89,687 AMP Limited shares on 31 May 2022 at a market price of $1.115 per share and 36,036 shares on 31 August 2022 at a market
price of $1.110 per share.
4 Andrew Best purchased 50,000 AMP Limited shares in two tranches on 16 August 2022 at market prices of $1.075 and $1.0825 per share and 50,000 shares
in two tranches on 17 August 2022 at a market price of $1.085 and $1.120 per share.
5 Michael Hirst purchased 80,000 AMP Limited shares on 1 June 2022 at a market price of $1.095, 20,000 AMP Limited Shares on 2 June 2022 at a market
price of $1.105 per share and 100,000 AMP Limited shares on 17 August 2022 at a market prices of $1.1325 per share.
6 Kathryn McKenzie purchased 50,000 AMP Limited shares on 30 May 2022 in two tranches at market prices of $1.1025 and $1.1050 per share and 28,000
AMP Limited shares on 18 August 2022 at a market price of $1.125 per share.
7 Michael Sammells purchased 50,000 AMP Limited shares on 24 May 2022 at a market price of $1.105 per share.
8 Andrea Slattery purchased 46,000 AMP Limited shares on 10 June 2022 at a market price of $1.065 per share and 18,000 AMP Limited shares on 6 September
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.
2022 at a market price of $1.110 per share.
9 John O’Sullivan retired from the AMP Board on 8 April 2022.
3 There was a restructure of the AMP Limited and Bank Board committee memberships on 1 October 2022 to incorporate the establishment of the ESG &
Sustainability and Technology Transformation Advisory Groups.
4 The Demerger Due Diligence Committee was removed effective 26 May 2022.
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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 2022 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, reflective of the relevant
KMP period.
Short-term employee benefits
Post-
employment
benefits
Share-
based
payments 4
Long-term
benefits
Cash
salary 1
$'000
1,678
711
230
717
724
725
871
836
270
472
217
87
565
73
455
–
93
663
Executive KMP
Alexis George
David Cullen 8
James Georgeson
Scott Hartley
Shawn Johnson 8 , 9
Rebecca Nash 8
Sean O'Malley
Nicola Rimmer-
Hollyman 8
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Former Executive KMP
Phil
Pakes 10
Total
2022
2021
2022
2021
Cash
STI 2
$'000
Other
short-term
benefits 3
$'000
Super-
annuation
benefits
$'000
Rights
and
options
$'000
Other 5
$'000
Termination
payments 6
$'000
Total 7
$'000
912
172
127
180
396
186
432
206
212
274
118
15
294
14
202
–
–
–
25
799
18
410
14
403
5
115
45
69
(7)
14
36
31
22
–
5
426
163
2,205
27
13
8
25
26
25
28
54
45
16
8
3
26
3
52
–
4
25
1,360
1,277
286
1,156
1,756
1,040
583
271
94
286
108
39
467
54
203
–
(1,280)
784
224
3,577
164
4,907
5
2
(1)
19
12
134
3
2
–
–
2
–
27
2
13
–
(6)
4
55
163
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,007
2,974
668
2,507
2,928
2,513
1,922
1,484
666
1,117
446
158
1,415
115
947
–
291
–
291
–
(893)
1,902
12,106
12,770
5,103
4,284
2,693
1,047
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Remuneration report
7
SECTION
STATUTORY TABLES
The following disclosures provide additional information and/or are required under the Corporations Act. This includes the 2022 Executive
KMP remuneration that is prepared according to Australian Accounting Standards.
7.1
STATUTORY REMUNERATION DISCLOSURE
Short-term employee benefits
benefits
payments 4
benefits
Post-
employment
Share-
based
Long-term
Cash
STI 2
$'000
Other
short-term
benefits 3
$'000
Super-
annuation
Rights
and
benefits
options
$'000
$'000
Other 5
$'000
Termination
payments 6
$'000
Total 7
$'000
25
799
18
410
14
403
5
115
45
69
(7)
14
36
31
22
–
912
172
127
180
396
186
432
206
212
274
118
15
294
14
202
–
–
–
1,360
1,277
286
1,156
1,756
1,040
583
271
94
286
108
39
467
54
203
–
27
13
8
25
26
25
28
54
45
16
8
3
26
3
52
–
4
25
5
2
(1)
19
12
134
3
2
–
–
2
–
27
2
13
–
(6)
4
55
163
4,007
2,974
668
2,507
2,928
2,513
1,922
1,484
666
1,117
446
158
1,415
115
947
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,103
4,284
2,693
1,047
5
426
163
2,205
(1,280)
784
224
3,577
164
4,907
291
291
(893)
1,902
12,106
12,770
Executive KMP
Alexis George
David Cullen 8
James Georgeson
Scott Hartley
Shawn Johnson 8 , 9
Rebecca Nash 8
Sean O'Malley
Nicola Rimmer-
Hollyman 8
Former Executive KMP
Phil
Pakes 10
Total
Cash
salary 1
$'000
1,678
711
230
717
724
725
871
836
270
472
217
87
565
73
455
–
93
663
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
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, reflective of the relevant
KMP period.
5 Other long-term benefits represent the net change in long service leave accrued.
6 The termination payment for Phil Pakes includes five months' notice.
1 Cash salary is inclusive of base salary and short-term compensated absences, less superannuation deductions.
2 Cash STI for 2022 reflects 60% of STI award outcome for the performance year for Executive KMP. As outlined in Section 3.2, the Board have withheld a
portion of the cash STI which will only be paid upon the commencement of the second tranche of the capital return. For a breakdown of these amounts,
refer to the table 3.5.
3 Other short-term benefits include non-monetary benefits and any related FBT exempt benefits and FBT payable benefits, for example car parking and leasing
arrangements, insurances, professional memberships and subscriptions, employee referral bonuses, vouchers and the net change in annual leave accrued.
4 The values in the table reflect the current year expense for all share rights and performance rights outstanding at any point during the year. It is based on
the fair value of each award which takes into consideration a number of factors, including the likelihood of achieving market-based vesting conditions such
as total shareholder return. 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. For James Georgeson, as a result of his employment ending with AMP, the share-based payment expense reflects
the acceleration of amounts that were expected to be amortised in future periods. For Phil Pakes, the negative value is due to the reversal of previously
recognised expenses for awards that have lapsed.
7 The total in this table for 2021 of $12.770 million is different to the total for 2021 in the 2021 Remuneration Report as it does not include $7.605 million
for Francesco De Ferrari (former Chief Executive Officer, AMP) and $4.979 million for Helen Livesey (former Group Executive, People and Corporate Affairs),
reported in the 2021 Remuneration Report.
8 For David Cullen, Rebecca Nash, Shawn Johnson and Nicola Rimmer-Hollyman, the amounts disclosed in this table have been prorated to reflect their KMP period.
9 Shawn Johnson has points in AMP Capital carried interest arrangements. This is a form of performance fee funded by investors and standard market
practice for closed end funds. No carried interest was realised and paid in 2022.
10 After the release of the 2021 Remuneration Report, Phil Pakes resigned from AMP and forfeited his 2021 STI.
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 2022 Written off
$’000
$’000
Net advances
(repayments)
$’000
Balance on
31 Dec 2022
$’000
Interest
charged
$’000
not charged
$’000
Highest
indebtedness
during year
$’000
–
916
1,067
1,622
3,605
–
–
–
–
–
680
(5)
(43)
(72)
560
680
911
1,024
1,550
10
29
23
52
4,165
114
–
–
–
–
–
687
916
1,067
1,622
4,292
KMP
Executive KMP
Alexis George
James Georgeson
Scott Hartley
Sean O’Malley
Total
(incl. related parties) 1
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.
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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 2022. 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
Executive KMP
Balance at
1 Jan 2022
Granted 1
Exercised/
released 2
Forfeited/
lapsed
Other
transactions 3
Balance on
31 Dec 2022 4
Alexis George
Shares
1,148,669
–
328,260
268,748
(328,260)
Share rights
David Cullen 5
Shares
Share rights
James Georgeson
Shares
Share rights
Scott Hartley
Shares
Share rights
Shawn Johnson 5
Shares
Share rights
Rebecca Nash 5
Shares
508,563
336,383
226,054
226,754
230,054
5,180
–
–
–
–
–
281,250
–
290,624
–
321,874
–
428,706
–
Share rights
115,740
178,750
Sean O'Malley
Shares
89,524
–
Share rights
195,664
174,374
Nicola Rimmer-
Hollyman 5
Shares
Share rights
10,035
92,828
–
106,022
Former Executive KMP
Phil Pakes 5
Shares
Share rights
10,035
173,650
–
–
52,000
(52,000)
56,000
(56,000)
–
–
–
–
–
–
37,280
(37,280)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,214
–
–
–
–
–
1,215
–
1,215
–
–
–
1,476,929
449,051
388,383
455,304
282,754
464,678
6,394
321,874
–
428,706
–
294,490
128,019
332,758
11,250
198,850
10,035
173,650
1 Relates to share rights awarded as part of the 2021 STI deferral on 11 April 2022, with a fair values of $0.95 for Tranche 1, $0.92 for Tranche 2 and
(applicable to only the CEO) $0.88 for Tranche 3. For Nicola Rimmer-Hollyman, the amount granted relates to 2022 Share Rights that were awarded as part
of her Director role prior to becoming an Executive Committee member, with a fair value of $0.95.
2 A portion of share rights granted to Alexis George as part of her sign-on award on 2 August 2021 vested and was exercised to AMP Limited shares
on 22 November 2022 at a market price of $1.28 per share. For David Cullen, James Georgeson and Sean O'Malley, Share Rights exercised relates to the 2019
STI deferral that vested on 17/02/2022 at a market price of $1.01.
3 Other market transactions are shares awarded as part of the executive’s participation in the AMP Share Purchase Plan (SPP) with shares allocated on 24
February 2022 at a market value of $0.94 and 29 March 2022 at a market value of $0.95.
4 There are no share rights held by any KMP’s related parties and no share rights held indirectly or beneficially by our KMP. As at 31 December 2022, there
were no share rights vested, or vested and exercisable or vested and unexercisable. No amount is payable by the Executive KMP on grant, vesting or
exercise of their share rights. Any share rights that vest following the end of the vesting period will be automatically exercised.
5 The opening balance shown for Nicola Rimmer-Hollyman and the closing balances shown for David Cullen, Shawn Johnson, Rebecca Nash and Phil Pakes
are reflective of their holdings on the respective dates they became or ceased KMP, respectively.
70
Remuneration report
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.
Balance at
1 Jan 2022
Granted 1
Exercised/
released 2
Forfeited/
Other
Balance on
lapsed
transactions 3
31 Dec 2022 4
Alexis George
Shares
1,148,669
328,260
1,476,929
Share rights
268,748
(328,260)
Name
Type
Executive KMP
David Cullen 5
Shares
James Georgeson
Shares
Scott Hartley
Shares
Shawn Johnson 5
Shares
Rebecca Nash 5
Shares
Share rights
Share rights
Share rights
Share rights
Nicola Rimmer-
Hollyman 5
Shares
Share rights
Former Executive KMP
Phil Pakes 5
Shares
Share rights
508,563
336,383
226,054
226,754
230,054
5,180
–
–
–
–
10,035
92,828
10,035
173,650
281,250
290,624
321,874
428,706
106,022
–
–
–
–
–
–
–
–
–
–
52,000
(52,000)
56,000
(56,000)
37,280
(37,280)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,214
1,215
1,215
449,051
388,383
455,304
282,754
464,678
6,394
321,874
–
–
428,706
294,490
128,019
332,758
11,250
198,850
10,035
173,650
Share rights
115,740
178,750
Sean O'Malley
Shares
89,524
Share rights
195,664
174,374
1 Relates to share rights awarded as part of the 2021 STI deferral on 11 April 2022, with a fair values of $0.95 for Tranche 1, $0.92 for Tranche 2 and
(applicable to only the CEO) $0.88 for Tranche 3. For Nicola Rimmer-Hollyman, the amount granted relates to 2022 Share Rights that were awarded as part
of her Director role prior to becoming an Executive Committee member, with a fair value of $0.95.
2 A portion of share rights granted to Alexis George as part of her sign-on award on 2 August 2021 vested and was exercised to AMP Limited shares
on 22 November 2022 at a market price of $1.28 per share. For David Cullen, James Georgeson and Sean O'Malley, Share Rights exercised relates to the 2019
STI deferral that vested on 17/02/2022 at a market price of $1.01.
3 Other market transactions are shares awarded as part of the executive’s participation in the AMP Share Purchase Plan (SPP) with shares allocated on 24
February 2022 at a market value of $0.94 and 29 March 2022 at a market value of $0.95.
4 There are no share rights held by any KMP’s related parties and no share rights held indirectly or beneficially by our KMP. As at 31 December 2022, there
were no share rights vested, or vested and exercisable or vested and unexercisable. No amount is payable by the Executive KMP on grant, vesting or
exercise of their share rights. Any share rights that vest following the end of the vesting period will be automatically exercised.
5 The opening balance shown for Nicola Rimmer-Hollyman and the closing balances shown for David Cullen, Shawn Johnson, Rebecca Nash and Phil Pakes
are reflective of their holdings on the respective dates they became or ceased KMP, respectively.
7.3
EXECUTIVE SHARES AND SHARE RIGHTS HOLDING
7.4
EXECUTIVE PERFORMANCE RIGHTS HOLDINGS
The following table shows the number of shares and share rights held by Executive KMP or their related parties during 2022. A related party
The following table shows the performance rights which were granted, exercised or lapsed during 2022.
Grant date
Performance
measure
Fair value
per right
Holding at
1 Jan 2022
Granted
Vested
Executive KMP
Lapsed/
cancelled
Held on
31 Dec
2022 1
Rights
exercised
to AMP
Limited
shares
Alexis
George 2
Total
David
Cullen 3
Total
James
Georgeson
Total
Scott
Hartley
Total
Shawn
Johnson 4
Total
Rebecca
Nash 3
Total
Sean
O'Malley
Total
Nicola
Rimmer-
Hollyman 3
Total
9-Aug-21
9-Aug-21
30-May-22
ATSR
RTSR
RTSR
12-Sep-19
CAGR of TSR
1-Jan-21
TSR
12-Sep-19
CAGR of TSR
1-Jan-21
30-May-22
1-Jan-21
30-May-22
TSR
RTSR
TSR
RTSR
0.62
0.61
0.59
1.21
0.81
1.21
0.81
0.59
0.81
0.59
511,702
1,535,158
–
–
–
1,818,278
2,046,860
1,818,278
1,933,701
454,821
2,388,522
1,657,458
454,821
–
–
–
–
–
–
795,165
2,112,279
795,165
545,785
–
954,198
545,785
954,198
–
–
–
–
–
–
–
–
12-Sep-19
CAGR of TSR
1.21
690,607
12-Sep-19
CAGR of TSR
30-May-22
RTSR
1.21
0.59
12-Sep-19
CAGR of TSR
1.21
276,243
–
30-May-22
RTSR
0.59
–
318,066
–
–
–
–
–
690,607
552,486
–
636,132
552,486
636,132
276,243
318,066
1,381,215
424,499
1,805,714
–
–
–
Former Executive KMP
12-Sep-19
CAGR of TSR
1-Jan-21
TSR
1.21
0.81
Phil
Pakes 3
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
511,702
1,535,158
1,818,278
3,865,138
1,933,701
454,821
2,388,522
1,657,458
454,821
795,165
2,907,444
545785
954,198
1,499,983
–
–
690,607
690,607
552,486
636,132
1,188,618
276,243
318,066
594,309
(1,381,215)
(424,499)
(1,805,714)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 There are no options or performance rights held by any KMP’s related parties and no options or performance rights held indirectly or beneficially by our
KMP. As at 31 December 2022, there were no performance rights vested, or vested and exercisable or vested and unexercisable. No amount is payable by the
Executive KMP on grant, vesting or exercise of their performance rights. Any performance rights that vest following the testing of the performance condition
will be automatically exercised and any performance rights that do not vest following the performance testing will lapse (and expire) at that time.
2 Performance rights were granted to the CEO Alexis George as part of her sign-on award on 2 August 2021. During 2022, no performance rights were
performance tested under her sign-on award.
3 The balance shown for Nicola Rimmer-Hollyman in the Holding at 1 January 2022 column reflects her respective holdings on the date she was appointed
to KMP. The balances shown for David Cullen, Rebecca Nash, Shawn Johnson and Phil Pakes in the Holding at 31 December 2022 column reflects the dates
they ceased to be KMPs. Refer to Section 1.1 for further information.
4 Shawn Johnson did not receive any performance rights. He was awarded points in AMP Capital carried interest arrangements. This is a form of
performance fee funded by investors and standard market practice for closed end funds. No carried interest was realised and paid in 2022.
71
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Remuneration report
7.5
NON-EXECUTIVE DIRECTOR REMUNERATION
The following table shows the remuneration earned by AMP Limited NEDs for 2022.
NED
Debra Hazelton
Andrew Best
Rahoul Chowdry
Mike Hirst
Kathryn McKenzie
Michael Sammells
Andrea Slattery
Former NED
John O’Sullivan 4
Total
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Short-term benefits
Post-employment
benefits
AMP Limited
Board and
committee fees
$’000
Fees for other
group boards 1
$’000
Additional
board duties 2
$’000
Superannuation 3
$’000
536
596
111
–
264
302
257
136
228
274
265
298
255
300
67
274
1,983
2,180
–
–
–
–
–
–
–
–
–
–
64
124
–
13
–
–
64
137
–
–
5
–
–
14
5
–
12
–
13
21
19
6
9
98
63
139
25
23
12
–
24
22
13
2
24
22
23
26
27
24
6
22
154
141
Total
$’000
561
619
128
–
288
338
275
138
264
296
365
469
301
343
82
394
2,264
2,597
1 As disclosed in the 2021 Remuneration Report, the Chair Base fee for the Collimate Capital Limited Board (formerly known as AMP Capital Holdings) is
$124,000 per annum. The amount disclosed includes fees paid to Michael Sammells in his capacity as Chair until his resignation on 7 July 2022.
2 Additional work for special committees and projects including per diem fees on actual time spent for the Demerger Due Diligence Committee.
3 Superannuation contributions have been disclosed separately in this table but are included in the base NED fees disclosed elsewhere in this report.
4 John O’Sullivan retired from the AMP Board on 8 April 2022 and the fees disclosed are reflective of his KMP period during 2022.
72
Remuneration report
7.5
NON-EXECUTIVE DIRECTOR REMUNERATION
The following table shows the remuneration earned by AMP Limited NEDs for 2022.
NED
Year
committee fees
Short-term benefits
Post-employment
benefits
AMP Limited
Board and
$’000
Fees for other
group boards 1
$’000
Additional
board duties 2
Superannuation 3
$’000
$’000
Debra Hazelton
Andrew Best
Rahoul Chowdry
Mike Hirst
Kathryn McKenzie
Michael Sammells
Andrea Slattery
Former NED
John O’Sullivan 4
Total
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
536
596
111
–
264
302
257
136
228
274
265
298
255
300
67
274
1,983
2,180
–
–
–
–
–
–
–
–
–
–
64
124
–
13
–
–
64
137
–
–
5
–
–
5
–
14
12
–
13
21
19
6
9
98
63
139
Total
$’000
561
619
128
–
288
338
275
138
264
296
365
469
301
343
82
394
2,264
2,597
25
23
12
–
24
22
13
2
24
22
23
26
27
24
6
22
154
141
1 As disclosed in the 2021 Remuneration Report, the Chair Base fee for the Collimate Capital Limited Board (formerly known as AMP Capital Holdings) is
$124,000 per annum. The amount disclosed includes fees paid to Michael Sammells in his capacity as Chair until his resignation on 7 July 2022.
2 Additional work for special committees and projects including per diem fees on actual time spent for the Demerger Due Diligence Committee.
3 Superannuation contributions have been disclosed separately in this table but are included in the base NED fees disclosed elsewhere in this report.
4 John O’Sullivan retired from the AMP Board on 8 April 2022 and the fees disclosed are reflective of his KMP period during 2022.
Directors’ report
for the year ended 31 December 2022
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 2022, by the company’s auditor, 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 Chief Financial Officer (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, 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, 16 February 2023
Alexis George
Chief Executive Officer and Managing Director
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74
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 2022, 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
16 February 2023
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
74
Auditor’s independence declaration
Financial report
for the year ended 31 December 2022
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 2022, 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
16 February 2023
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
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 Discontinued operations
5.3
Investments in associates
5.4 Parent entity information
5.5 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 Auditor’s remuneration
6.6 New accounting standards
6.7 Events occurring after reporting date
76
77
78
79
81
82
83
83
84
84
88
89
90
93
96
98
100
101
101
102
107
108
110
117
120
122
127
132
133
134
135
137
139
140
140
142
145
146
146
147
148
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76
Consolidated income statement
for the year ended 31 December 2022
Fee revenue
Interest income using the effective interest method
Other investment gains
Share of profit from associates
Movement in guarantee liabilities
Other income
Total revenue
Fee and commission expenses
Staff and related expenses
Finance costs
Other operating expenses
Other investment losses
Total expenses
Loss before tax
Income tax credit
Loss after tax from continuing operations
Profit from discontinued operations
Profit/(Loss) for the year
Profit/(Loss) attributable to:
Shareholders of AMP Limited 2
Non-controlling interests
Profit/(Loss) for the year
Earnings/(Loss) per share
Basic
Diluted
Loss per share from continuing operations
Basic
Diluted
Note
1.1(c)
5.3
1.2
1.4(a)
5.2
1.3
1.3
1.3
1.3
2022
$m
1,432
803
–
80
21
33
2021 1
$m
1,610
607
39
66
66
81
2,369
2,469
(692)
(612)
(591)
(537)
(1)
(690)
(697)
(337)
(1,092)
–
(2,433)
(2,816)
(64)
60
(4)
391
387
387
–
387
cents
12.0
11.9
(0.1)
(0.1)
(347)
66
(281)
27
(254)
(252)
(2)
(254)
cents
(7.6)
(7.6)
(8.4)
(8.4)
1 Results for the year ended 31 December 2021 have been restated to be on a continuing operations basis. Refer to note 5.2.
2 Profit/(Loss) attributable to shareholders of AMP Limited is comprised of $4m loss from continuing operations (FY21: $279m loss) and $391m profit from
discontinued operations (FY21: $27m profit).
76
Consolidated income statement
for the year ended 31 December 2022
Consolidated statement of comprehensive income
for the year ended 31 December 2022
Note
2022
$m
(4)
2021 1
$m
(281)
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Loss for the year from continuing operations
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Fair value reserve
– net loss on fair value asset reserve
– tax effect on fair value asset reserve loss
– net amount transferred to profit or loss for the year
– tax effect on amount transferred to profit or loss for the year
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– net gain on cash flow hedges
– tax effect on cash flow hedge gain
– net amount transferred to profit or loss for the year
– tax effect on amount transferred to profit or loss for the year
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 (losses)/gains
– tax effect on actuarial (losses)/gains
4.1(a)
Other comprehensive income for the year from continuing operations
Total comprehensive income/(loss) for the year from continuing operations
Profit for the year from discontinued operations
Other comprehensive (loss)/income for the year from discontinued operations
Total comprehensive income/(loss) for the year
Total comprehensive income/(loss) attributable to shareholders of AMP Limited
Total comprehensive income/(loss) attributable to non-controlling interests
Total comprehensive income/(loss) for the year
1 Results for the year ended 31 December 2021 have been restated to be on a continuing operations basis. Refer to note 5.2.
Fee revenue
Interest income using the effective interest method
Other investment gains
Share of profit from associates
Movement in guarantee liabilities
Other income
Total revenue
Fee and commission expenses
Staff and related expenses
Finance costs
Other operating expenses
Other investment losses
Total expenses
Loss before tax
Income tax credit
Loss after tax from continuing operations
Profit from discontinued operations
Profit/(Loss) for the year
Profit/(Loss) attributable to:
Shareholders of AMP Limited 2
Non-controlling interests
Profit/(Loss) for the year
Earnings/(Loss) per share
Loss per share from continuing operations
Basic
Diluted
Basic
Diluted
Note
1.1(c)
5.3
1.2
1.4(a)
5.2
1.3
1.3
1.3
1.3
2,369
2,469
(2,433)
(2,816)
2022
$m
1,432
803
–
80
21
33
(692)
(612)
(591)
(537)
(1)
(64)
60
(4)
391
387
387
–
387
cents
12.0
11.9
(0.1)
(0.1)
2021 1
$m
1,610
607
39
66
66
81
(690)
(697)
(337)
(1,092)
–
(347)
66
(281)
27
(254)
(252)
(2)
(254)
cents
(7.6)
(7.6)
(8.4)
(8.4)
1 Results for the year ended 31 December 2021 have been restated to be on a continuing operations basis. Refer to note 5.2.
2 Profit/(Loss) attributable to shareholders of AMP Limited is comprised of $4m loss from continuing operations (FY21: $279m loss) and $391m profit from
discontinued operations (FY21: $27m profit).
78
Consolidated statement of financial position
as at 31 December 2022
Assets
Cash and cash equivalents
Receivables
Investments in other financial assets
Current tax assets
Assets held for sale 1
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 1
Provisions
Interest-bearing liabilities
Lease liabilities
Deferred tax liabilities
Guarantee 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
2022
$m
1,816
428
5,794
76
746
2.1(a)
24,080
771
396
556
198
65
12
2021
$m
2,916
572
3,684
221
575
22,047
1,090
96
520
330
150
3
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32,204
234
57
178
261
140
297
349
67
412
293
174
588
28,962
26,117
569
5
64
135
1
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30,767
28,221
4,171
3,983
5,002
297
(1,128)
4,171
–
4,171
10,200
(2,327)
(3,893)
3,980
3
3,983
5.3
6.3
1.4(c)
2.3
2.4
4.1(a)
2.6
2.2
6.4
3.2
6.3
1.4(c)
3.1
1 Assets and liabilities held for sale as at 31 December 2022 include AMP Capital's real estate and infrastructure equity businesses (31 December 2021:
assets and liabilities held for sale include AMP Capital's Global Equities and Fixed Income (GEFI) and Infrastructure Debt platform, as well as AMP's interest
in Resolution Life NOHC).
78
Consolidated statement of financial position
as at 31 December 2022
Consolidated statement of changes in equity
for the year ended 31 December 2022
Investments in other financial assets
Assets
Receivables
Cash and cash equivalents
Current tax assets
Assets held for sale 1
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 1
Provisions
Interest-bearing liabilities
Lease liabilities
Deferred tax liabilities
Guarantee liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
2.1(a)
24,080
Note
2.5
2.2
1.4(c)
5.3
6.3
2.3
2.4
4.1(a)
2.6
2.2
6.4
3.2
6.3
3.1
1.4(c)
2022
$m
1,816
428
5,794
76
746
771
396
556
198
65
12
234
57
178
261
140
297
569
5
64
2021
$m
2,916
572
3,684
221
575
22,047
1,090
96
520
330
150
3
349
67
412
293
174
588
135
1
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34,938
32,204
28,962
26,117
30,767
28,221
4,171
3,983
5,002
297
(1,128)
4,171
–
4,171
10,200
(2,327)
(3,893)
3,980
3
3,983
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Consolidated statement of cash flows
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Note
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Cash receipts in the course of operations
Interest received
Dividends and distributions received
Cash payments in the course of operations
Net movement in deposits from customers
Finance costs
Income tax received
7
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and Infrastructure Debt platform
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Payments for loan book acquisition
Net cash used in investing activities
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Proceeds from issuance of subordinated debt – banking operations
Payments for buyback of shares
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Lease payments
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents prior to deconsolidation and transfers
Cash and cash equivalents deconsolidated
Cash and cash equivalents at the end of the year
6.1
2022
$m
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3,044
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2021
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690
130
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1,662
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116
1,678
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(49)
–
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188
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(267)
(49)
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391
2,653
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1 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.
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82
Notes to the financial statements
for the year ended 31 December 2022
ABOUT THIS REPORT
This section outlines the structure of the AMP group, information useful to understand 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
financial report, including restated comparative information to reflect the impact of discontinued operations as detailed in note 5.2.
AMP Limited is a for-profit entity and is limited by shares. The financial statements for the year ended 31 December 2022 were authorised
for issue on 16 February 2023 in accordance with a resolution of the directors.
Sale of AMP Capital
On 23 April 2021, AMP announced its intention to exit AMP Capital’s private markets investment management business via demerger.
Subsequent to that announcement, and as part of AMP’s divestment strategy, AMP announced a series of sales transactions, which
includes AMP Capital’s private markets investment management business and other AMP Capital businesses (collectively AMP Capital
businesses). The residual investments of AMP Capital (China Life AMP Management Company Ltd (CLAMP), Pacific Coast Capital Partners
(PCCP) and certain seed and sponsor investments) will remain a part of the AMP group. These transactions and their impact on AMP’s
financial statements for the year ended 31 December 2022 are as follows:
– On 11 February 2022, AMP completed the sale of its infrastructure debt platform to Ares Holdings LP. The results relating to the
infrastructure debt platform have been classified as discontinued operations in the Consolidated income statement and the impact
of the sale is included within the Gain on disposal of businesses sold in note 5.2.
– On 28 March 2022, AMP completed the sale of its Global Equities and Fixed Income (GEFI) business to Macquarie Asset Management
(MAM). The sale included the opportunity for deferred consideration of $75m. In December 2022, AMP and MAM agreed to a final
deferred consideration amount of $23m. The results relating to the GEFI business have been classified as discontinued operations
in the Consolidated income statement and the impact of the sale is included in the Gain on disposal of businesses sold in note 5.2.
– On 27 April 2022, AMP announced it had entered into an agreement for the sale of AMP Capital’s real estate and domestic
infrastructure equity business to Dexus Funds Management Ltd (Dexus). On 9 January 2023, AMP announced an update on the sale,
which included an agreement to extend the date for satisfaction or waiver of conditions precedent to 28 February 2023. In accordance
with the 8 January announcement, upfront cash consideration is expected to be $225m. In addition, Dexus will acquire AMP’s existing
and committed sponsor stakes in the platform for cash consideration expected to be approximately $94m (final consideration based
on valuation at completion). The transaction is subject to regulatory approvals. The results of this business have been classified as
discontinued operations in the Consolidated income statement (refer to note 5.2) and its assets and liabilities have been separately
classified as held for sale in the Consolidated statement of financial position. The gain or loss on disposal will be included in the results
for the year ended 31 December 2023.
– On 3 February 2023, AMP announced the completion of the sale of AMP Capital’s international infrastructure equity business to
DigitalBridge Investment Holdco, LLC which had previously been announced on 28 April 2022. Total value realised is $582m, comprising
of $521m cash payment, $57m of value from retained estimated future carry and performance fees and $4m of gains on foreign
exchange hedges of the estimated consideration, between signing and completion. In addition, AMP remains eligible for a further cash
earn-out of up to $180m which is contingent on future fund raisings. The results of this business have been classified as discontinued
operations in the Consolidated income statement (refer to note 5.2) and its assets and liabilities have been separately classified as held
for sale in the Consolidated statement of financial position. The gain or loss on disposal will be included in the results for the year ended
31 December 2023.
(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.
Interest, dividend and distribution 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.
83
A
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AMP Limited is a for-profit entity and is limited by shares. The financial statements for the year ended 31 December 2022 were authorised
for issue on 16 February 2023 in accordance with a resolution of the directors.
Foreign currency transactions
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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a
t
i
o
n
82
Notes to the financial statements
for the year ended 31 December 2022
ABOUT THIS REPORT
This section outlines the structure of the AMP group, information useful to understand 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
financial report, including restated comparative information to reflect the impact of discontinued operations as detailed in note 5.2.
Sale of AMP Capital
On 23 April 2021, AMP announced its intention to exit AMP Capital’s private markets investment management business via demerger.
Subsequent to that announcement, and as part of AMP’s divestment strategy, AMP announced a series of sales transactions, which
includes AMP Capital’s private markets investment management business and other AMP Capital businesses (collectively AMP Capital
businesses). The residual investments of AMP Capital (China Life AMP Management Company Ltd (CLAMP), Pacific Coast Capital Partners
(PCCP) and certain seed and sponsor investments) will remain a part of the AMP group. These transactions and their impact on AMP’s
financial statements for the year ended 31 December 2022 are as follows:
– On 11 February 2022, AMP completed the sale of its infrastructure debt platform to Ares Holdings LP. The results relating to the
infrastructure debt platform have been classified as discontinued operations in the Consolidated income statement and the impact
of the sale is included within the Gain on disposal of businesses sold in note 5.2.
– On 28 March 2022, AMP completed the sale of its Global Equities and Fixed Income (GEFI) business to Macquarie Asset Management
(MAM). The sale included the opportunity for deferred consideration of $75m. In December 2022, AMP and MAM agreed to a final
deferred consideration amount of $23m. The results relating to the GEFI business have been classified as discontinued operations
in the Consolidated income statement and the impact of the sale is included in the Gain on disposal of businesses sold in note 5.2.
– On 27 April 2022, AMP announced it had entered into an agreement for the sale of AMP Capital’s real estate and domestic
infrastructure equity business to Dexus Funds Management Ltd (Dexus). On 9 January 2023, AMP announced an update on the sale,
which included an agreement to extend the date for satisfaction or waiver of conditions precedent to 28 February 2023. In accordance
with the 8 January announcement, upfront cash consideration is expected to be $225m. In addition, Dexus will acquire AMP’s existing
and committed sponsor stakes in the platform for cash consideration expected to be approximately $94m (final consideration based
on valuation at completion). The transaction is subject to regulatory approvals. The results of this business have been classified as
discontinued operations in the Consolidated income statement (refer to note 5.2) and its assets and liabilities have been separately
classified as held for sale in the Consolidated statement of financial position. The gain or loss on disposal will be included in the results
for the year ended 31 December 2023.
– On 3 February 2023, AMP announced the completion of the sale of AMP Capital’s international infrastructure equity business to
DigitalBridge Investment Holdco, LLC which had previously been announced on 28 April 2022. Total value realised is $582m, comprising
of $521m cash payment, $57m of value from retained estimated future carry and performance fees and $4m of gains on foreign
exchange hedges of the estimated consideration, between signing and completion. In addition, AMP remains eligible for a further cash
earn-out of up to $180m which is contingent on future fund raisings. The results of this business have been classified as discontinued
operations in the Consolidated income statement (refer to note 5.2) and its assets and liabilities have been separately classified as held
for sale in the Consolidated statement of financial position. The gain or loss on disposal will be included in the results for the year ended
31 December 2023.
84
Notes to the financial statements
for the year ended 31 December 2022
(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 in the following notes:
Accounting estimates and judgements
Note
Taxes
Impairment of financial assets
Fair value of financial assets and liabilities
Goodwill and acquired intangible assets
Defined benefit plan
Discontinued operations
Right of use assets and lease liabilities
Provisions and contingent liabilities
1.4
2.1
2.2
2.3
4.1
5.2
6.3
6.4
Taxes
Expected credit losses (ECLs)
Investments in other financial assets and liabilities
Intangibles
Defined benefit plan asset
Discontinued operations
Right of use asset and lease liabilities
Provisions and contingent liabilities
Page
92
96
97
100
126
134
141
144
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, and
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
1.1
SEGMENT PERFORMANCE
The AMP group identifies its operating segments based on separate financial information that is regularly reviewed by the Chief Executive Officer
and the 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 three business lines providing advice, superannuation, retirement income and managed
investment products through:
–
– Master Trust – provides a whole of wealth solution for both retail and corporate members.
Advice – provides financial advice services and equity investments in advisor practices.
–
Platforms – provides a wrap platform which includes superannuation, retirement and investment solutions.
AMP Bank
AMP Bank offers residential mortgages, deposits and transactional banking services.
AMP Capital
continuing
operations
New Zealand Wealth
Management
(NZWM)
AMP Capital continuing operations represents AMP’s investment in CLAMP, PCCP and certain seed and
sponsor investments.
New Zealand wealth management encompasses wealth management, financial advice and general insurance
distribution businesses 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 general insurance.
Accounting estimates and judgements
Note
(a)
Segment profit
1.1
SEGMENT PERFORMANCE CONTINUED
2022
Segment profit/(loss) after income tax
Segment revenue
Presentation adjustments 4
Total statutory revenue from contracts
with customers
Other segment information
Income tax (expense)/credit
Depreciation and amortisation
Investment income/(loss) 5
2021
Segment profit/(loss) after income tax
Segment revenue
Presentation adjustments 4
Total statutory revenue from contracts
with customers
Other segment information
Income tax (expense)/credit
Depreciation and amortisation
Investment income/(loss) 5
AMP Bank
$m
103
397
AWM 1
$m
50
806
NZWM
$m
32
125
(44)
(10)
–
153
413
(66)
(16)
–
(18)
(23)
(14)
89
1,013
(38)
(28)
15
(13)
(1)
–
39
150
(16)
(4)
–
AMP Capital
continuing
operations 2
$m
Group Office
$m
41
50
(8)
–
–
37
49
(8)
–
–
(42)
–
31
–
85
(38)
–
34
–
87
Total 3
$m
184
1,378
87
1,465
(52)
(34)
71
280
1,625
66
1,691
(94)
(48)
102
1 AMP Investments (formerly reported as the Multi-Asset Group within AMP Capital) has, following its transition to AWM, been presented within Australian
Wealth Management and the performance for the year ended 31 December 2021 has been restated accordingly.
2 Includes CLAMP, PCCP and certain seed and sponsor investments.
3 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
4 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.
5 Investment income for group office includes income from investible capital, fair value movements from corporate hedging activity as well as equity
accounted profits from AMP’s 19.99% investment in CLPC and 19.13% investment in Resolution Life Australasia through 30 June 2021.
84
Notes to the financial statements
for the year ended 31 December 2022
(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 in the following notes:
Taxes
Impairment of financial assets
Fair value of financial assets and liabilities
Goodwill and acquired intangible assets
Defined benefit plan
Discontinued operations
Right of use assets and lease liabilities
Provisions and contingent liabilities
1.4
2.1
2.2
2.3
4.1
5.2
6.3
6.4
Taxes
Expected credit losses (ECLs)
Investments in other financial assets and liabilities
Intangibles
Defined benefit plan asset
Discontinued operations
Right of use asset and lease liabilities
Provisions and contingent liabilities
Page
92
96
97
100
126
134
141
144
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, and
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
Earnings per share
1.3
1.4
Taxes
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 the 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
AWM comprises three business lines providing advice, superannuation, retirement income and managed
Management (AWM)
investment products through:
–
Platforms – provides a wrap platform which includes superannuation, retirement and investment solutions.
– Master Trust – provides a whole of wealth solution for both retail and corporate members.
–
Advice – provides financial advice services and equity investments in advisor practices.
AMP Bank
AMP Bank offers residential mortgages, deposits and transactional banking services.
AMP Capital continuing operations represents AMP’s investment in CLAMP, PCCP and certain seed and
sponsor investments.
New Zealand Wealth
New Zealand wealth management encompasses wealth management, financial advice and general insurance
distribution businesses 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 general insurance.
AMP Capital
continuing
operations
Management
(NZWM)
85
A
M
P
2
0
2
2
A
n
n
u
a
l
r
e
p
o
r
t
O
v
e
r
v
e
w
i
i
B
u
s
n
e
s
s
r
e
v
e
w
i
D
i
r
e
c
t
o
r
s
’
r
e
p
o
r
t
i
F
n
a
n
c
a
i
l
r
e
p
o
r
t
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
t
i
o
n
86
Notes to the financial statements
for the year ended 31 December 2022
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)):
AMP Capital
continuing
operations 2
$m
NZWM
$m
Group Office
AMP
Bank
$m
–
–
–
382
15
397
–
–
–
399
14
413
2022
Investment related
Management fees
Performance and transaction fees
Net interest income
Other revenue
Total segment revenue per segment
note
Presentation adjustments 4
Total statutory revenue from contracts
with customers
2021
Investment related
Management fees
Performance and transaction fees
Net interest income
Other revenue
Total segment revenue per segment
note
Presentation adjustments 4
Total statutory revenue from contracts
with customers
AWM 1
$m
719
–
–
–
87
92
–
–
–
33
806
125
920
–
–
–
93
1,013
116
–
–
–
34
150
32
–
–
–
18
50
26
6
2
–
15
49
–
–
–
–
–
–
–
–
–
–
–
–
Total 3
$m
843
–
–
382
153
1,378
87
1,465
1,062
6
2
399
156
1,625
66
1,691
1 AMP Investments (formerly reported as the Multi-Asset Group within AMP Capital) has, following its transition to AWM, been presented within Australian
Wealth Management and the performance for the year ended 31 December 2021 has been restated accordingly.
2 Includes CLAMP, PCCP and certain seed and sponsor investments.
3 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
4 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.
(c) Statutory revenue:
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
2022
$m
836
596
1,432
33
1,465
2021 1
$m
999
611
1,610
81
1,691
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2 A substantial majority of the financial advisory fees received are paid to advisers. For statutory reporting purposes, financial advisory fees are presented
gross of the related cost which is presented in Fee and commission expenses in the Consolidated income statement.
86
Notes to the financial statements
for the year ended 31 December 2022
(b) The following table allocates the disaggregated segment revenue from contracts with
customers to the group’s operating segments (see note 1.1(a)):
AWM 1
NZWM
Group Office
AMP Capital
continuing
operations 2
806
125
AMP
Bank
$m
–
–
–
382
15
397
–
–
–
399
14
413
$m
719
–
–
–
87
920
–
–
–
93
1,013
$m
92
–
–
–
33
116
–
–
–
34
150
$m
32
–
–
–
18
50
26
6
2
–
15
49
2022
Investment related
Management fees
Net interest income
Other revenue
Performance and transaction fees
Total segment revenue per segment
note
Presentation adjustments 4
Total statutory revenue from contracts
with customers
2021
Investment related
Management fees
Net interest income
Other revenue
Performance and transaction fees
Total segment revenue per segment
note
Presentation adjustments 4
Total statutory revenue from contracts
with customers
1 AMP Investments (formerly reported as the Multi-Asset Group within AMP Capital) has, following its transition to AWM, been presented within Australian
Wealth Management and the performance for the year ended 31 December 2021 has been restated accordingly.
2 Includes CLAMP, PCCP and certain seed and sponsor investments.
3 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
4 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.
Total 3
$m
843
–
–
382
153
1,378
87
1,465
1,062
6
2
399
156
1,625
66
1,691
2021 1
$m
999
611
1,610
81
1,691
–
–
–
–
–
–
–
–
–
–
–
–
2022
$m
836
596
1,432
33
1,465
(c) Statutory revenue:
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
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2 A substantial majority of the financial advisory fees received are paid to advisers. For statutory reporting purposes, financial advisory fees are presented
gross of the related cost which is presented in Fee and commission expenses in the Consolidated income statement.
1.1
SEGMENT PERFORMANCE CONTINUED
1.1
SEGMENT PERFORMANCE CONTINUED
(d) Reconciliations
Segment profit after income tax differs from profit/(loss) attributable to shareholders of AMP Limited due to the exclusion of the following items:
Total segment profit after income tax
Client remediation and related costs
Transformation cost out
Separation costs
Impairments
Other items 2
Amortisation of acquired intangible assets
AMP Capital discontinued operations 3
Net profit/(loss) after tax
Profit/(Loss) attributable to shareholders of AMP Limited
Profit/(Loss) attributable to non-controlling interests
Profit/(Loss) for the year
2022
$m
184
(25)
(61)
(90)
(68)
400
(4)
51
387
387
–
387
2021 1
$m
280
(78)
(133)
(75)
(312)
11
(21)
76
(252)
(252)
(2)
(254)
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2 Other items largely comprise the gain on sale of the Infrastructure Debt platform, permanent tax differences and other one-off related impacts.
3 Includes the results of Infrastructure Debt, Global Equities and Fixed Income (GEFI), International Infrastructure Equity and Real Estate and Domestic
Infrastructure Equity for the period that they have been controlled by AMP Capital.
Total segment revenue differs from Total revenue as follows:
Total segment revenue
Add revenue excluded from segment revenue
– Investment gains (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
Total revenue
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2022
$m
1,378
–
33
502
435
21
2021 1
$m
1,625
39
81
276
382
66
2,369
2,469
(e) Segment assets
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.
87
A
M
P
2
0
2
2
A
n
n
u
a
l
r
e
p
o
r
t
O
v
e
r
v
e
w
i
i
B
u
s
n
e
s
s
r
e
v
e
w
i
D
i
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c
t
o
r
s
’
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e
p
o
r
t
i
F
n
a
n
c
a
i
l
r
e
p
o
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t
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
t
i
o
n
88
Notes to the financial statements
for the year ended 31 December 2022
1.1
SEGMENT PERFORMANCE CONTINUED
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.
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
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2022
$m
(9)
(11)
(188)
(52)
(87)
(49)
(49)
(92)
2021 1
$m
(25)
(25)
(182)
(118)
(181)
(202)
(53)
(306)
(537)
(1,092)
88
Notes to the financial statements
for the year ended 31 December 2022
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.
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
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2022
$m
(9)
(11)
(188)
(52)
(87)
(49)
(49)
(92)
2021 1
$m
(25)
(25)
(182)
(118)
(181)
(202)
(53)
(306)
(537)
(1,092)
1.1
SEGMENT PERFORMANCE CONTINUED
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.
Profit/(Loss) attributable to shareholders of AMP
Continuing operations
Discontinued operations
Profit/(Loss) attributable to shareholders of AMP
Weighted average number of ordinary shares for basic EPS 2
Add: potential ordinary shares considered dilutive
Weighted average number of ordinary shares used in the calculation of dilutive earnings/(loss) per share
Earnings/(Loss) per share
Basic
Diluted 3
Loss per share for continuing operations
Basic
Diluted 3
2022
$m
2021 1
$m
(4)
391
387
2022
$m
3,213
51
3,264
2022
cents
12.0
11.9
(0.1)
(0.1)
(279)
27
(252)
2021
$m
3,335
–
3,335
2021
cents
(7.6)
(7.6)
(8.4)
(8.4)
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2 The weighted average number of ordinary shares outstanding is calculated after deducting the weighted average number of treasury shares held during
the period.
3 Where the results are a loss for the period, the weighted average number of shares used in the diluted Earnings Per Share calculation excludes potential
ordinary shares as their inclusion is considered anti-dilutive.
Earnings per share for discontinued operations
Basic
Diluted
12.1
12.0
0.8
0.8
89
A
M
P
2
0
2
2
A
n
n
u
a
l
r
e
p
o
r
t
O
v
e
r
v
e
w
i
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B
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n
e
s
s
r
e
v
e
w
i
D
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c
t
o
r
s
’
r
e
p
o
r
t
i
F
n
a
n
c
a
i
l
r
e
p
o
r
t
A
d
d
i
t
i
o
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 2022
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 before tax
Tax at the Australian tax rate of 30% (2021: 30%)
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 (expense)/credit
Increase/(Decrease) in deferred tax assets
(Increase)/Decrease in deferred tax liabilities
Income tax credit
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2022
$m
2021 1
$m
(64)
19
(23)
41
2
19
2
60
–
197
(137)
60
(347)
104
(159)
59
(30)
90
2
66
47
(60)
79
66
90
Notes to the financial statements
for the year ended 31 December 2022
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.
(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 before tax
Tax at the Australian tax rate of 30% (2021: 30%)
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 (expense)/credit
Increase/(Decrease) in deferred tax assets
(Increase)/Decrease in deferred tax liabilities
Income tax credit
1 Information for the year ended 31 December 2021 has been restated to be on a continuing operations basis. Refer to note 5.2.
2022
$m
2021 1
$m
(64)
19
(23)
41
2
19
2
60
–
197
(137)
60
(347)
104
(159)
59
(30)
90
2
66
47
(60)
79
66
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 liabilities
Capitalised software expenses
Transferred to assets held for sale
Other
Total deferred tax asset
Offset to tax
Net deferred tax assets
Analysis of deferred tax liabilities
Unrealised investment gains
Right of use assets
Intangible assets
Unearned revenue
Transferred to liabilities held for sale
Other
Total deferred tax liability
Offset to tax
Net 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
2022
$m
2021
$m
236
–
58
289
169
108
(37)
1
824
(268)
556
121
118
26
18
(14)
4
273
(268)
5
2022
$m
(28)
2022
$m
212
–
1,115
277
32
11
177
29
131
(6)
4
655
(135)
520
30
20
35
28
–
23
136
(135)
1
2021
$m
(43)
2021
$m
155
57
1,053
91
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92
Notes to the financial statements
for the year ended 31 December 2022
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 setting assumptions used to forecast future profitability in order to determine
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 (DTAs). Future profitability may differ from forecasts
which could impact management’s expectations in future periods with respect to the recoverability of DTAs and result
in DTA impairments or reversals of prior DTA impairments.
92
Notes to the financial statements
for the year ended 31 December 2022
1.4
TAXES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Income tax expense
carrying amounts;
unused tax losses; and
–
–
Deferred tax
Tax consolidation
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.
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.
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 setting assumptions used to forecast future profitability in order to determine
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 (DTAs). Future profitability may differ from forecasts
which could impact management’s expectations in future periods with respect to the recoverability of DTAs and result
in DTA impairments or reversals of prior DTA impairments.
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
Bad debts written off
Provision released
Balance at the end of the year
Collective provision
Balance at the beginning of the year
Increase/(Decrease) in provision
Balance at the end of the year
2022
$m
23,929
252
24,181
(2)
(64)
(35)
(101)
24,080
90
–
(1)
(23)
66
26
9
35
2021
$m
21,847
316
22,163
(7)
(83)
(26)
(116)
22,047
107
1
(3)
(15)
90
47
(21)
26
1 Total housing loans include net capitalised costs of $114m (2021: $87m).
2 Total loans and advances of $18,691m (2021: $16,600m) is expected to be received more than 12 months after the reporting date.
93
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94
Notes to the financial statements
for the year ended 31 December 2022
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.
2022
Balance at the beginning of the year
Transferred to Stage 1 (12-months ECL)
Transferred to Stage 2 (lifetime ECL credit impaired)
Transferred to Stage 3 (lifetime ECL credit impaired)
Increased/(Released) provisions during the period
Bad debts written off
Release of provision for practice finance loans
Balance at the end of the year
2021
Balance at the beginning of the year
Transferred to Stage 1 (12-months ECL)
Transferred to Stage 2 (lifetime ECL credit impaired)
Transferred to Stage 3 (lifetime ECL credit impaired)
(Released)/increased provisions during the period
Bad debts written off
Release of provision for practice finance loans
Balance at the end of the year
Stage 1
Stage 2
collective
$m
collective
$m
Stage 3
collective
and individual
$m
18
12
(1)
–
(11)
–
–
18
8
(2)
2
(1)
5
–
–
12
90
(10)
(1)
1
8
(1)
(16)
71
Stage 1
Stage 2
collective
$m
collective
$m
Stage 3
collective
and individual
$m
31
15
–
(1)
(27)
–
–
18
16
(8)
2
(1)
(1)
–
–
8
107
(7)
(2)
2
1
(3)
(8)
90
Total
$m
116
–
–
–
2
(1)
(16)
101
Total
$m
154
–
–
–
(27)
(3)
(8)
116
94
Notes to the financial statements
for the year ended 31 December 2022
The following table provides the changes to expected credit losses (ECLs) relating to loans and advances during the year.
Stage 1
Stage 2
Total
Stage 3
collective
collective
collective
and individual
2022
Balance at the beginning of the year
Transferred to Stage 1 (12-months ECL)
Transferred to Stage 2 (lifetime ECL credit impaired)
Transferred to Stage 3 (lifetime ECL credit impaired)
Increased/(Released) provisions during the period
Bad debts written off
Release of provision for practice finance loans
Balance at the end of the year
2021
Balance at the beginning of the year
Transferred to Stage 1 (12-months ECL)
Transferred to Stage 2 (lifetime ECL credit impaired)
Transferred to Stage 3 (lifetime ECL credit impaired)
(Released)/increased provisions during the period
Bad debts written off
Release of provision for practice finance loans
Balance at the end of the year
$m
18
12
(1)
–
(11)
–
–
18
$m
31
15
–
(1)
(27)
–
–
18
$m
8
(2)
2
(1)
5
–
–
12
$m
16
(8)
2
(1)
(1)
–
–
8
$m
90
(10)
(1)
1
8
(1)
(16)
71
$m
107
(7)
(2)
2
1
(3)
(8)
90
$m
116
–
–
–
2
(1)
(16)
101
$m
154
–
–
–
(27)
(3)
(8)
116
Stage 1
Stage 2
Total
Stage 3
collective
collective
collective
and individual
2.1
LOANS AND ADVANCES CONTINUED
2.1
LOANS AND ADVANCES CONTINUED
(b) Expected credit losses
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.
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.
95
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2
2
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i
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f
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a
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i
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96
Notes to the financial statements
for the year ended 31 December 2022
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.
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
2022
$m
5
255
233
552
2021
$m
13
751
314
334
Total financial assets measured at fair value through profit or loss
1,045
1,412
Financial assets measured at fair value through other comprehensive income
Debt securities 2
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
4,150
4,150
599
599
2,184
2,184
88
88
5,794
3,684
128
133
261
185
108
293
1 $53m of Unlisted managed investment schemes (FY21 $70m) 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.
96
Notes to the financial statements
for the year ended 31 December 2022
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.
2.2
INVESTMENTS IN OTHER FINANCIAL ASSETS AND LIABILITIES
Total financial assets measured at fair value through profit or loss
1,045
1,412
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 other comprehensive income
Other financial assets measured at amortised cost
Total other financial assets measured at amortised cost
Debt securities 2
Debt securities
Total other financial assets
Other financial liabilities
Derivative financial liabilities
Collateral deposits held
Total other financial liabilities
Trust Deed.
2022
$m
5
255
233
552
4,150
4,150
599
599
128
133
261
2021
$m
13
751
314
334
2,184
2,184
88
88
185
108
293
1 $53m of Unlisted managed investment schemes (FY21 $70m) are held by AMP Foundation for charitable purposes in accordance with the AMP Foundation
2 Debt securities measured at fair value through other comprehensive income are assets of AMP Bank.
2.1
LOANS AND ADVANCES CONTINUED
2.2
INVESTMENTS IN OTHER FINANCIAL ASSETS AND LIABILITIES CONTINUED
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.
Financial assets measured at fair value through other comprehensive income
The group classifies debt securities held by AMP Bank under this category.
Financial assets measured at amortised cost – debt securities
Refer to note 2.1 for details.
5,794
3,684
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Financial assets and liabilities 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
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2
2
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i
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i
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f
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m
a
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i
o
n
98
Notes to the financial statements
for the year ended 31 December 2022
2.3
INTANGIBLES
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
networks
$m
Other
intangibles
$m
2022
Balance at the beginning of the year
149
123
Additions through separate acquisitions
Additions through internal development
Reductions through disposal
Transferred to inventories
Amortisation expense
Impairment loss
Transferred to assets held for sale
Balance at the end of the year
–
–
–
–
–
–
(79)
70
–
26
–
–
(43)
(9)
(5)
92
–
–
–
–
–
–
–
–
–
50
20
–
(23)
(5)
(6)
–
–
36
8
–
–
(1)
–
–
–
(7)
–
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)
(4)
123
114
–
–
(24)
–
(90)
–
–
–
119
49
–
(96)
2
(18)
(6)
–
50
11
–
–
–
–
(1)
–
(2)
8
Total
$m
330
20
26
(24)
(5)
(49)
(9)
(91)
198
Total
$m
629
49
51
(160)
2
(202)
(25)
(14)
330
98
Notes to the financial statements
for the year ended 31 December 2022
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
Other
networks
intangibles
$m
$m
2022
Balance at the beginning of the year
149
123
Goodwill
$m
Capitalised
costs
$m
Value of
in-force
business
$m
Distribution
Other
networks
intangibles
–
–
–
–
–
–
(79)
70
–
–
–
–
–
–
(8)
–
26
–
–
(43)
(9)
(5)
92
228
–
51
(40)
–
(93)
(19)
(4)
123
–
–
–
–
–
–
–
–
–
114
–
–
(24)
–
(90)
–
–
–
50
20
–
(23)
(5)
(6)
–
–
36
$m
119
49
–
(96)
2
(18)
(6)
–
50
Total
$m
330
20
26
(24)
(5)
(49)
(9)
(91)
198
Total
$m
629
49
51
(160)
2
(202)
(25)
(14)
330
8
–
–
(1)
–
–
–
(7)
–
$m
11
–
–
–
–
(1)
–
(2)
8
Additions through separate acquisitions
Additions through internal development
Reductions through disposal
Transferred to inventories
Amortisation expense
Impairment loss
Transferred to assets held for sale
Balance at the end of the year
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
2.3
INTANGIBLES
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 represented 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 was initially measured at fair value and was 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.
99
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a
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o
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100
Notes to the financial statements
for the year ended 31 December 2022
2.3
INTANGIBLES CONTINUED
Composition of goodwill
The goodwill of $70m (2021: $149m) 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 (NZWM)
AMP Capital
2022
$m
70
–
70
2021
$m
70
79
149
The annual impairment assessment for NZWM resulted in significant headroom and there was no reasonably possible change to a key
assumption used in the assessment that would result in an impairment at 31 December 2022. AMP Capital goodwill was transferred to assets
held for sale in the Consolidated statement of financial position at 31 December 2022 considering the sale of AMP Capital.
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.
2.4 OTHER ASSETS
Planner registers held for sale
Prepayments
Property, plant and equipment
Total other assets
Current
Non-current
2022
$m
2021
$m
9
30
26
65
35
30
11
66
73
150
71
79
100
Notes to the financial statements
for the year ended 31 December 2022
2.3
INTANGIBLES CONTINUED
2.5
RECEIVABLES
The goodwill of $70m (2021: $149m) arose from historical acquisitions where the AMP group was the acquirer. Goodwill attributable to the
Composition of goodwill
relevant CGUs is presented in the table below.
New Zealand Wealth Management (NZWM)
AMP Capital
The annual impairment assessment for NZWM resulted in significant headroom and there was no reasonably possible change to a key
assumption used in the assessment that would result in an impairment at 31 December 2022. AMP Capital goodwill was transferred to assets
held for sale in the Consolidated statement of financial position at 31 December 2022 considering the sale of AMP Capital.
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.
2.4 OTHER ASSETS
Planner registers held for sale
Prepayments
Property, plant and equipment
Total other assets
Current
Non-current
2022
$m
2021
$m
9
30
26
65
35
30
11
66
73
150
71
79
2022
$m
70
–
70
2021
$m
70
79
149
Investment related receivables
Client register receivables
Collateral receivables
Trade debtors and other receivables
Sublease receivables
Total receivables 1
Current
Non-current
2022
$m
52
52
108
156
60
428
320
108
2021
$m
13
41
47
471
–
572
532
40
1 Receivables are presented net of ECL of $40m (2021: $34m).
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Receivables
Trade debtors, client register, sublease receivables, 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.
2.6
PAYABLES
Accrued expenses
Trade creditors and other payables
Total payables
Current
Non-current
2022
$m
99
135
234
234
–
2021
$m
177
172
349
349
–
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.
101
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2
2
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f
o
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a
t
i
o
n
102
Notes to the financial statements
for the year ended 31 December 2022
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.
2022
Financial assets measured at fair value
Equity securities
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
– Subordinated Debt
Corporate borrowings
Total financial liabilities not measured at fair value
Carrying
amount
$m
Level 1
$m
Level 2
$m
Level 3
$m
Total fair
value
$m
5
–
–
4,405
3,260
1,145
233
552
–
–
100
552
5,195
3,260
1,797
5
–
133
–
138
5
4,405
233
552
5,195
24,080
599
24,679
128
133
64
325
20,737
6,769
201
1,255
28,962
–
–
–
–
–
–
–
–
–
–
–
–
–
23,963
23,963
600
600
–
600
23,963
24,563
128
133
–
261
20,778
6,752
209
1,274
29,013
–
–
64
64
–
–
–
–
–
128
133
64
325
20,778
6,752
209
1,274
29,013
102
Notes to the financial statements
for the year ended 31 December 2022
Total financial assets measured at fair value
5,195
3,260
1,797
value hierarchy.
2022
Equity securities
Debt securities
Financial assets measured at fair value
Unlisted managed investment schemes
Derivative financial assets
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
– Subordinated Debt
Corporate borrowings
Total financial liabilities not measured at fair value
5
233
552
24,080
599
24,679
128
133
64
325
20,737
6,769
201
1,255
28,962
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100
552
5
–
133
–
138
5
4,405
233
552
5,195
–
23,963
23,963
600
600
–
600
23,963
24,563
128
133
–
261
20,778
6,752
209
1,274
29,013
–
–
64
64
–
–
–
–
–
128
133
64
325
20,778
6,752
209
1,274
29,013
2.7
FAIR VALUE INFORMATION
2.7
FAIR VALUE INFORMATION CONTINUED
The following table shows the carrying amount and estimated fair values of financial instruments, including their levels in the fair
Carrying
amount
Level 1
Level 2
Level 3
$m
$m
$m
$m
Total fair
value
$m
4,405
3,260
1,145
2021
Financial assets measured at fair value
Equity securities
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
2,134
314
334
–
–
–
801
263
334
13
–
51
–
64
13
2,935
314
334
3,596
Total financial assets measured at fair value
3,596
2,134
1,398
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
103
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104
Notes to the financial statements
for the year ended 31 December 2022
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
The fair value of equity securities 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.
104
Notes to the financial statements
for the year ended 31 December 2022
AMP’s methodology and assumptions used to estimate the fair value of financial instruments are described below:
Equity securities
The fair value of equity securities 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.
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.
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
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
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).
–
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 2022 financial year. Transfers to and from Level 3 are
shown in the Reconciliation of Level 3 values table later in this note.
Loans
The estimated fair value of loans represents the discounted amount of estimated future cash
Level 3 fair values
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.
Derivative financial
assets and liabilities
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.
Type
Equity securities
Valuation technique
Significant unobservable inputs
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
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
Unlisted managed investment schemes
Financial liabilities
Guarantee liabilities 2
2022
2021
(+)
$m
1
23
(3)
(-)
$m
(1)
(23)
(2)
(+)
$m
1
5
(2)
(-)
$m
(1)
(5)
(3)
1 Reasonably possible changes in price movements of 10% (2021: 10%) have been applied in determining the impact on profit after tax and equity.
2 Reasonably possible changes in equity market movements of 20% (2021: 20%) and bond yield movements of 100bps (2021: 50 bps) have been applied in
determining the impact on profit after tax and equity. The sensitivities disclosed are shown net of the offsetting impacts of derivatives held as economic
hedges of the Guarantee liabilities.
105
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106
Notes to the financial statements
for the year ended 31 December 2022
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/
(losses)
$m
Total
gains/
(losses)
$m
Purchases/
(deposits)
$m
Sales/
(withdrawals)
$m
Net
transfers
in/(out) 1
$m
Balance at
the end of
the year
$m
Total
gains/
(losses) on
assets and
liabilities
held at
reporting
date
$m
2022
Assets classified as Level 3
Equity securities
Unlisted managed investment
schemes
Liabilities classified as Level 3
Guarantee liabilities
2021
Assets classified as Level 3
Equity securities
Unlisted managed investment
schemes
13
51
(85)
7
41
Liabilities classified as Level 3
Guarantee liabilities
(151)
–
–
–
–
1
–
(8)
18
13
(1)
3
33
–
–
–
8
7
–
–
–
8
(1)
–
33
–
64
5
133
(8)
18
–
(64)
13
–
–
–
13
51
–
3
(85)
33
1 Net transfers in of $64m relates to investments in AMP Capital Infrastructure Debt Fund III USD LP and AMP Capital Infrastructure Debt Fund IV USD LP
which were transferred from investments in associates as AMP no longer has significant influence following the sale of the infrastructure debt platform.
Balance
at the
Total
beginning
FX gains/
of the year
(losses)
gains/
Purchases/
Sales/
(losses)
(deposits)
(withdrawals)
Net
transfers
in/(out) 1
Balance at
the end of
the year
$m
$m
$m
$m
$m
$m
$m
Total
gains/
(losses) on
assets and
liabilities
held at
reporting
date
$m
2022
Assets classified as Level 3
Equity securities
Unlisted managed investment
schemes
Liabilities classified as Level 3
Guarantee liabilities
2021
Assets classified as Level 3
Equity securities
Unlisted managed investment
schemes
13
51
(85)
7
41
Liabilities classified as Level 3
Guarantee liabilities
(151)
–
–
–
–
1
–
(8)
18
13
(1)
3
33
–
–
–
8
7
–
–
–
8
(1)
–
33
–
64
5
133
(8)
18
–
(64)
13
–
–
–
13
51
–
3
(85)
33
106
Notes to the financial statements
for the year ended 31 December 2022
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
3.1
CONTRIBUTED EQUITY
Issued capital
3,043,140,026 (2021: 3,266,105,853) ordinary shares fully paid
5,008
10,206
2022
$m
2021
$m
Treasury shares 1
2,126,387 (2021: 2,126,387) treasury shares
Total contributed equity
(6)
(6)
1 Net transfers in of $64m relates to investments in AMP Capital Infrastructure Debt Fund III USD LP and AMP Capital Infrastructure Debt Fund IV USD LP
which were transferred from investments in associates as AMP no longer has significant influence following the sale of the infrastructure debt platform.
3,041,013,639 (2021: 3,263,979,466) ordinary shares fully paid
5,002
10,200
Issued capital
Balance at the beginning of the year
222,965,827 (2021: 170,493,388) shares purchased on-market
Capital reduction 2
Balance at the end of the year
10,206
10,402
(267)
(4,931)
5,008
(196)
–
10,206
1 Held by AMP Foundation.
2 In December of 2022, in accordance with section 258F of the Corporations Act 2001, the Board of Directors resolved to reduce AMP’s share capital by
$4,931m, representing historic permanent losses recognised by the AMP group in prior reporting periods. Those losses arose from businesses in which AMP
no longer operates, including UK demerger losses and losses relating to AMP’s wealth protection and mature businesses which were sold to Resolution
Life in 2020. The adjustment to share capital has the effect of reducing AMP’s contributed equity and retained losses as disclosed on the Consolidated
statement of changes in equity. The adjustment has no impact on the net assets, financial results, cash flows, and regulatory capital of the consolidated
group or the company’s number of shares issued.
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.
107
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108
Notes to the financial statements
for the year ended 31 December 2022
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
AMP Foundation holds AMP Limited shares (treasury 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
– Subordinated debt 2, 3
Corporate entity borrowings 3
– 6.875% GBP Subordinated Guaranteed Bonds
(maturity 2022)
– AMP Notes 3 (first call 2023, maturity 2028) 4
– AMP Subordinated Notes
– AMP Capital Notes 2 5
– CHF Medium Term Notes 6
– Other
2022
Non-
current
$m
Current
$m
Total
$m
Current
$m
2021
Non-
current
$m
Total
$m
19,983
754
20,737
17,656
135
17,791
3,229
3,540
6,769
3,200
3,431
6,631
–
201
201
–
–
–
–
252
–
–
332
146
–
–
–
273
252
–
–
252
–
273
584
146
60
–
250
–
238
–
–
250
–
272
625
–
60
250
250
272
863
–
Total interest-bearing liabilities
23,942
5,020
28,962
21,404
4,713
26,117
1 Deposits comprise at call customer deposits and customer term deposits at variable interest rates with the AMP Bank.
2 AMP Bank subordinated debt was issued on 7 October 2022 and matures on 7 October 2032.
3 The current/non-current classification of corporate entity borrowings and AMP Bank subordinated debt are based on the maturity of the underlying debt
instrument and related principal repayment obligations. The carrying value of corporate entity borrowings and AMP Bank subordinated debt include
interest payable of $8m (2021: $5m) which is expected to be settled within the next 12 months.
4 AMP Note 3 are floating rate subordinated unsecured notes issued on 15 November 2018 and mature on 15 November 2028. Subject to APRA approval, AMP
has the right, but not the obligation, to redeem all or some of the Notes on 15 November 2023, 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.
5 AMP Capital Notes 2 (ASX:AMPPB) were issued on 23 December 2019. Subject to APRA approval, AMP has the right, but not the obligation, to redeem all
or some of the notes on 16 December 2025, or, subject to certain conditions, at a later date. These Notes are perpetual with no maturity date. In certain
circumstances, AMP may be required to convert some or all of the Notes into AMP ordinary shares.
6 CHF 140m Senior Unsecured Fixed Rate Bond was issued on 18 April 2019 and was subsequently increased by CHF 100m on 3 December 2019. On 31 August
2022, CHF 30m of this note was repaid. The remaining balance matures on 18 July 2023. CHF 175m Senior Unsecured Fixed Rate Bond was issued on 3 March
2020 of which CHF 10m was repaid on 31 August 2022. The remaining balance matures on 3 June 2024.
108
Notes to the financial statements
for the year ended 31 December 2022
3.1
CONTRIBUTED EQUITY CONTINUED
3.2
INTEREST-BEARING LIABILITIES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
(b) Changes in liabilities arising from operating and financing activities
Issued capital
Treasury shares
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.
AMP Foundation holds AMP Limited shares (treasury shares). These shares, plus any corresponding Consolidated income statement fair
value movement on the shares and any dividend income, are eliminated on consolidation.
1 January
Cash flows
Other
31 December
2022
$m
26,117
2,753
92
2021
$m
24,916
1,185
16
28,962
26,117
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;
(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.
3.2
INTEREST-BEARING LIABILITIES
(a) Interest-bearing liabilities
Interest-bearing liabilities
AMP Bank
– Deposits 1
– Other
– Subordinated debt 2, 3
Corporate entity borrowings 3
– 6.875% GBP Subordinated Guaranteed Bonds
(maturity 2022)
– AMP Notes 3 (first call 2023, maturity 2028) 4
– AMP Subordinated Notes
– AMP Capital Notes 2 5
– CHF Medium Term Notes 6
– Other
2022
Non-
current
$m
2021
Non-
current
$m
Current
$m
Total
$m
Current
$m
Total
$m
19,983
754
20,737
17,656
135
17,791
3,229
3,540
6,769
3,200
3,431
6,631
–
201
201
–
–
–
–
252
–
–
332
146
–
–
–
273
252
–
–
252
–
273
584
146
60
–
250
–
238
–
–
250
–
272
625
–
60
250
250
272
863
–
Total interest-bearing liabilities
23,942
5,020
28,962
21,404
4,713
26,117
1 Deposits comprise at call customer deposits and customer term deposits at variable interest rates with the AMP Bank.
2 AMP Bank subordinated debt was issued on 7 October 2022 and matures on 7 October 2032.
3 The current/non-current classification of corporate entity borrowings and AMP Bank subordinated debt are based on the maturity of the underlying debt
instrument and related principal repayment obligations. The carrying value of corporate entity borrowings and AMP Bank subordinated debt include
interest payable of $8m (2021: $5m) which is expected to be settled within the next 12 months.
4 AMP Note 3 are floating rate subordinated unsecured notes issued on 15 November 2018 and mature on 15 November 2028. Subject to APRA approval, AMP
has the right, but not the obligation, to redeem all or some of the Notes on 15 November 2023, 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.
5 AMP Capital Notes 2 (ASX:AMPPB) were issued on 23 December 2019. Subject to APRA approval, AMP has the right, but not the obligation, to redeem all
or some of the notes on 16 December 2025, or, subject to certain conditions, at a later date. These Notes are perpetual with no maturity date. In certain
circumstances, AMP may be required to convert some or all of the Notes into AMP ordinary shares.
6 CHF 140m Senior Unsecured Fixed Rate Bond was issued on 18 April 2019 and was subsequently increased by CHF 100m on 3 December 2019. On 31 August
2022, CHF 30m of this note was repaid. The remaining balance matures on 18 July 2023. CHF 175m Senior Unsecured Fixed Rate Bond was issued on 3 March
2020 of which CHF 10m was repaid on 31 August 2022. The remaining balance matures on 3 June 2024.
109
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110
Notes to the financial statements
for the year ended 31 December 2022
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
fixed to floating 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. The AMP group utilises
various hedging instruments to hedge
foreign currency risk arising from
certain investments denominated
in a foreign currency.
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
2022
2021
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
1.0
(5.0)
8.1
(11.5)
2.7
(4.0)
10.4
(10.9)
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 is not included.
10% depreciation of AUD
(63.5)
9.5
0.1
99.1
10% appreciation of AUD
27.5
(34.3)
(0.5)
(81.5)
10% increase in:
Australian equities
International equities
10% decrease in:
Australian equities
International equities
0.3
0.6
(0.5)
(0.5)
0.3
0.6
(0.5)
(0.5)
0.1
0.0
(0.7)
(0.9)
0.1
0.0
(0.7)
(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 or net investment hedges for hedge accounting.
110
Notes to the financial statements
for the year ended 31 December 2022
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
fixed to floating 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. The AMP group utilises
various hedging instruments to hedge
foreign currency risk arising from
certain investments denominated
in a foreign currency.
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.
111
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o
r
m
a
t
i
o
n
112
Notes to the financial statements
for the year ended 31 December 2022
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(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
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 requirements
of the AMP Group Liquidity Risk
Management Policy. This policy
is reviewed and endorsed by the AMP
Group ALCO and approved by the AMP
Limited Board.
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.
Over 5
years
$m
Not
specified
$m
2022
Non-derivative financial liabilities
Payables
Borrowings 1
Lease liabilities
Subordinated debt
Guarantee liabilities
Up to 1
year
$m
234
23,681
68
51
–
1 to 5
years
$m
–
4,292
277
432
–
Derivative financial instruments
Interest rate and cross-currency swaps
302
251
Off-balance sheet items
Credit-related commitments – AMP Bank 2
Buyback arrangement commitments
Investment commitments
3,464
83
–
–
–
–
–
44
438
535
–
–
–
–
–
Total
$m
234
28,017
783
1,018
64
–
–
–
–
64
–
553
–
–
81
3,464
83
81
Total undiscounted financial liabilities and off-balance
sheet items
27,883
5,252
1,017
145
34,297
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.
112
Notes to the financial statements
for the year ended 31 December 2022
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.
2022
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
234
23,681
68
51
–
1 to 5
years
$m
–
4,292
277
432
–
Over 5
years
$m
Not
specified
$m
Total
$m
234
28,017
783
1,018
64
3,464
83
81
–
–
–
–
64
–
–
81
–
44
438
535
–
–
–
–
–
Interest rate and cross-currency swaps
302
251
–
553
Off-balance sheet items
Credit-related commitments – AMP Bank 2
Buyback arrangement commitments
Investment commitments
3,464
83
–
–
–
–
Total undiscounted financial liabilities and off-balance
sheet items
27,883
5,252
1,017
145
34,297
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
(b) Liquidity and refinancing risk continued
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 requirements
of the AMP Group Liquidity Risk
Management Policy. This policy
is reviewed and endorsed by the AMP
Group ALCO and approved by the AMP
Limited Board.
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
–
113
A
M
P
2
0
2
2
A
n
n
u
a
l
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e
p
o
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O
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u
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s
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v
e
w
i
D
i
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c
t
o
r
s
’
r
e
p
o
r
t
Total
$m
349
25,520
160
992
85
256
3,702
734
452
32,250
Over 5
years
$m
Not
specified
$m
–
312
41
807
–
–
–
–
–
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
–
–
483
–
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.
(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.
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.
Exposures
Wholesale credit risk, arising from
corporate investments held in relation
to the management of liquidity.
Credit risk arising from its Australian
banking activities which are limited
to residential mortgage lending and
practice finance loans to AMP advisers.
Management of exposures and use
of derivatives
Wholesale credit risk exposures arising
from corporate investments made in
relation to the management of liquidity
(and related activities, including hedging
financial risks) are managed by Group
Treasury in accordance with the AMP
Group Wholesale Counterparty Credit
Risk Policy. This policy is reviewed and
endorsed by the AMP Group ALCO and
approved by the AMP Limited Board.
Wholesale credit risk exposures arising
from investments made in relation to
the management of liquidity within AMP
Bank (and related activities, including
hedging financial risks) are managed
by Group Treasury in accordance with
the AMP Bank Wholesale Counterparty
Credit Risk Policy. This policy is reviewed
and endorsed by the AMP Bank ALCO
and approved by the AMP Bank Limited
Board. Specific detail relating to the credit
risk management of the AMP Bank loan
portfolio is outlined below.
i
F
n
a
n
c
a
i
l
r
e
p
o
r
t
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
t
i
o
n
114
Notes to the financial statements
for the year ended 31 December 2022
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(c) Credit risk continued
The AMP Group Wholesale Counterparty Credit 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.
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 Group Wholesale Counterparty Credit 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.
114
Notes to the financial statements
for the year ended 31 December 2022
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
3.3
FINANCIAL RISK MANAGEMENT CONTINUED
(c) Credit risk continued
(c) Credit risk continued
The AMP Group Wholesale Counterparty Credit 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.
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 Group Wholesale Counterparty Credit 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
Impaired
Not in arrears in the past six months
90 days past due over the last six months
Past due but not impaired
Accounts in arrears but have not been past 90 days in 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:
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.
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.
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.
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.
Internal risk grade
Internal risk grade description
Broadly corresponds with Standard & Poor ratings of
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
2022
%
New
business
2022
%
Existing
business
2021
%
New
business
2021
%
18
13
20
37
10
1
1
14
11
15
49
8
3
–
17
12
19
36
13
2
1
8
8
15
51
12
6
–
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
$81m (2021: $239m) of loans during the year, of which none (2021: $150m) relates to hardship granted due to COVID-19, that otherwise
would be past due or impaired.
115
A
M
P
2
0
2
2
A
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u
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s
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i
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p
o
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A
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f
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m
a
t
i
o
n
116
Notes to the financial statements
for the year ended 31 December 2022
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 $552m would be reduced by $87m to the
net amount of $465m and derivative liabilities of $128m would be reduced by $87m to the net amount of $41m (2021: 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).
(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 2022 there was $133m (2021: $108m)
of collateral deposits (due to other counterparties) and $108m (2021: $47m) of collateral loans (due from other counterparties) relating
to derivative assets and liabilities.
116
Notes to the financial statements
for the year ended 31 December 2022
(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 $552m would be reduced by $87m to the
net amount of $465m and derivative liabilities of $128m would be reduced by $87m to the net amount of $41m (2021: 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).
(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 2022 there was $133m (2021: $108m)
of collateral deposits (due to other counterparties) and $108m (2021: $47m) 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.
2022
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
2021
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
18,050
337
–
–
553
634
–
–
31
3
19,237
371
–
–
–
–
6
6
Notional
amount
$m
Fair value
assets
$m
Fair value
liabilities
$m
13,123
78
62
828
405
14,496
25
–
–
36
–
61
–
16
1
–
1
18
117
A
M
P
2
0
2
2
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t
i
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n
118
Notes to the financial statements
for the year ended 31 December 2022
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 always hedge its entire exposure to a class of financial
instruments, therefore the carrying amounts below do not always equal the total carrying amounts disclosed in other notes.
2022
6.875% GBP Subordinated Guaranteed Bonds (maturity 2022)
Medium Term Notes
2021
Carrying amount of
hedged items
Accumulated amount of fair
value adjustments on the
hedged items
Assets
$m
Liabilities
$m
Assets
$m
Liabilities
$m
–
–
–
584
–
–
–
31
Carrying amount of
hedged items
Accumulated amount of fair
value adjustments on the
hedged items
Assets
$m
Liabilities
$m
Assets
$m
Liabilities
$m
6.875% GBP Subordinated Guaranteed Bonds (maturity 2022)
Medium Term Notes
–
–
60
787
17
–
Fair value hedge relationships resulted in the following changes in the values used to recognise hedge ineffectiveness for the year:
Gain on hedging instrument
Loss on hedged items attributable to the hedged risk
(Loss)/Gain after ineffectiveness
2022
$m
11
(14)
(3)
–
34
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 (2021: $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 strategic 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 (2021: $nil) due to the ineffective portion of hedges relating to strategic investments in foreign operations.
The following table sets out the maturity profile of derivative instruments in a hedge relationship.
118
Notes to the financial statements
for the year ended 31 December 2022
(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 always hedge its entire exposure to a class of financial
instruments, therefore the carrying amounts below do not always equal the total carrying amounts disclosed in other notes.
6.875% GBP Subordinated Guaranteed Bonds (maturity 2022)
Medium Term Notes
2022
2021
6.875% GBP Subordinated Guaranteed Bonds (maturity 2022)
Medium Term Notes
Gain on hedging instrument
Loss on hedged items attributable to the hedged risk
(Loss)/Gain after ineffectiveness
Carrying amount of
hedged items
Accumulated amount of fair
value adjustments on the
hedged items
Liabilities
Liabilities
Assets
$m
–
–
Assets
$m
–
–
$m
–
584
$m
60
787
Carrying amount of
hedged items
Accumulated amount of fair
value adjustments on the
hedged items
Liabilities
Assets
Liabilities
Assets
$m
–
–
$m
17
–
2022
$m
11
(14)
(3)
$m
–
31
$m
–
34
2021
$m
53
(48)
5
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 (2021: $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 strategic 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 (2021: $nil) due to the ineffective portion of hedges relating to strategic investments in foreign operations.
The following table sets out the maturity profile of derivative instruments in a hedge relationship.
3.4 DERIVATIVES AND HEDGE ACCOUNTING CONTINUED
3.4 DERIVATIVES AND HEDGE ACCOUNTING CONTINUED
2022
Interest rate swaps
Cross-currency swaps
Cross-currency interest rate swaps
Foreign currency forward contract
2021
Interest rate swaps
Cross-currency swaps
Cross-currency interest rate swaps
Foreign currency forward contract
0 to 3
months
$m
1,547
–
–
256
0 to 3
months
$m
1,096
–
–
405
3 to 12
months
$m
8,141
–
302
378
3 to 12
months
$m
4,010
78
218
–
1 to 5
years
$m
6,455
–
251
–
1 to 5
years
$m
7,474
–
610
–
Over 5
years
$m
1,907
–
–
–
Over 5
years
$m
605
–
–
–
Total
$m
18,050
–
553
634
Total
$m
13,185
78
828
405
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.
119
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120
Notes to the financial statements
for the year ended 31 December 2022
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
2022
$m
4,171
(94)
4,077
(289)
(1,012)
(138)
–
2,638
350
2,988
1,366
699
2,065
923
2021
$m
3,980
(106)
3,874
(344)
(1,607)
(6)
16
1,933
579
2,512
1,316
813
2,129
383
1 Accounting mismatches and other adjustments primarily relate to the net assets of the AMP Foundation and surpluses recognised on any defined benefit plans.
2 Includes $91m of intangibles classified as Assets held for sale on the Consolidated statement of financial position (2021: $14m).
3 Equity investments relate to holdings of associate equity investment where AMP holds a minority interest. As at 31 December 2022, Global Infrastructure Fund
Sponsor ($76m), Global Infrastructure Fund II ($122m), AMP Capital Core Property Fund ($30m) and other equity investments ($14m) are classified as assets held
for sale (2021: Resolution Life NOHC ($509m) and AMP Capital Infrastructure Debt Fund V USD LP ($8m)).
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 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 principal 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
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.
120
Notes to the financial statements
for the year ended 31 December 2022
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
2022
$m
4,171
(94)
4,077
(289)
(1,012)
(138)
–
2,638
350
2,988
1,366
699
2,065
923
2021
$m
3,980
(106)
3,874
(344)
(1,607)
(6)
16
1,933
579
2,512
1,316
813
2,129
383
1 Accounting mismatches and other adjustments primarily relate to the net assets of the AMP Foundation and surpluses recognised on any defined benefit plans.
2 Includes $91m of intangibles classified as Assets held for sale on the Consolidated statement of financial position (2021: $14m).
3 Equity investments relate to holdings of associate equity investment where AMP holds a minority interest. As at 31 December 2022, Global Infrastructure Fund
Sponsor ($76m), Global Infrastructure Fund II ($122m), AMP Capital Core Property Fund ($30m) and other equity investments ($14m) are classified as assets held
for sale (2021: Resolution Life NOHC ($509m) and AMP Capital Infrastructure Debt Fund V USD LP ($8m)).
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.
121
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122
Notes to the financial statements
for the year ended 31 December 2022
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 2022.
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.
122
Notes to the financial statements
for the year ended 31 December 2022
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 2022.
31 December 2020.
Additional recommended
10% to 15% of members’ salaries plus plan
No additional contributions are required
contributions
expenses.
until 31 December 2023, at which point the
requirement will be reassessed.
4.1 DEFINED BENEFIT PLANS CONTINUED
(a) Defined benefit asset
Present value of wholly-funded defined benefit obligations
Less: Fair value of plan assets
Defined benefit asset recognised in the Consolidated statement of financial position
Movement in defined benefit asset
Surplus/(deficit) at the beginning of the year
Plus: Total expenses recognised in the Consolidated income statement
Plus: Employer contributions
Plus: Foreign currency exchange rate changes
Plus: Actuarial (losses)/gains recognised in Other comprehensive income 1
Defined benefit asset recognised at the end of the year
2022
$m
(645)
657
12
3
(1)
10
1
(1)
12
2021
$m
(782)
785
3
(98)
(2)
1
1
101
3
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 $198m gain (2021: $199m gain).
(b) Reconciliation of the movement in the defined benefit asset
Balance at the beginning of the year
Current service cost
Interest (cost)/income
Net actuarial gains/(losses)
Employer contributions
Foreign currency exchange rate changes
Benefits paid
Balance at the end of the year
Defined benefit obligation
Fair value of plan assets
2022
$m
(782)
(1)
(5)
89
–
3
51
2021
$m
(882)
(2)
(2)
62
–
(2)
44
(645)
(782)
2022
$m
785
–
5
(90)
10
(2)
(51)
657
2021
$m
784
–
2
39
1
3
(44)
785
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124
Notes to the financial statements
for the year ended 31 December 2022
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)
2022
$m
240
331
13
73
657
2021
$m
283
397
17
88
785
2022
$m
(248)
(294)
(16)
(87)
(645)
2021
$m
(296)
(356)
(20)
(110)
(782)
2022
$m
2021
$m
2022
$m
(8)
37
(3)
(14)
12
(13)
41
(3)
(22)
3
–
(7)
–
6
(1)
2021
$m
40
27
4
30
101
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
2022
%
5.7
n/a
2021
%
3.0
n/a
2022
%
4.6
n/a
2021
%
2.7
n/a
2022
%
5.8
2.8
2021
%
3.3
2.8
2022
%
4.6
3.0
2021
%
2.7
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
2022
%
2021
%
2022
%
2021
%
2022
%
2021
%
2022
%
2021
%
43
37
9
4
7
42
38
9
4
7
47
38
–
15
–
52
37
–
11
–
19
51
7
9
14
18
54
6
9
13
47
38
–
15
–
52
37
–
11
–
Equity
Fixed interest
Property
Cash
Other
124
Notes to the financial statements
for the year ended 31 December 2022
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)
2022
$m
2021
$m
2022
$m
2022
$m
240
331
13
73
657
2021
$m
283
397
17
88
785
2022
$m
(248)
(294)
(16)
(87)
(645)
2021
$m
(296)
(356)
(20)
(110)
(782)
(8)
37
(3)
(14)
12
2021
$m
40
27
4
30
101
–
(7)
–
6
(1)
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
2022
2021
2022
2021
2022
2021
2022
2021
%
5.7
n/a
%
3.0
n/a
%
4.6
n/a
%
2.7
n/a
%
5.8
2.8
%
4.6
3.0
%
2.7
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
2022
2021
2022
2021
2022
2021
2022
2021
%
43
37
9
4
7
%
42
38
9
4
7
%
47
38
–
15
–
%
52
37
–
11
–
%
19
51
7
9
14
%
47
38
–
15
–
%
52
37
–
11
–
Equity
Fixed interest
Property
Cash
Other
(13)
41
(3)
(22)
3
%
3.3
2.8
%
18
54
6
9
13
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.
2022
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)
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)
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
(+)
$m
(11)
(-)
$m
12
(+)
$m
n/a
(-)
$m
1
(+)
$m
(14)
(-)
$m
15
(+)
$m
n/a
(-)
$m
9
n/a
n/a
n/a
n/a
–
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
12
(11)
1
n/a
14
(13)
8
n/a
n/a
n/a
8
n/a
n/a
1
n/a
n/a
n/a
n/a
6
n/a
n/a
2
n/a
n/a
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
(+)
$m
(15)
n/a
n/a
16
n/a
n/a
(-)
$m
16
n/a
n/a
(15)
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)
–
–
19
n/a
n/a
(-)
$m
21
n/a
n/a
(17)
8
n/a
(+)
$m
n/a
n/a
n/a
11
n/a
4
(-)
$m
13
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.
125
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126
Notes to the financial statements
for the year ended 31 December 2022
4.1 DEFINED BENEFIT PLANS CONTINUED
(g) Expected contributions and maturity profile of the defined benefit obligation
Expected employer contributions
Weighted average duration of the defined benefit obligation (years)
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
$m
6
8
$m
–
7
$m
2
10
$m
–
10
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
The value of the group’s defined benefit obligations are outputs of actuarial models dependent on a number of underlying
assumptions. Management applies judgement in selecting the assumptions used. Key assumptions include:
–
–
–
discount rate;
expected future salary increases;
pension indexation;
– mortality; and
–
life expectancy.
126
Notes to the financial statements
for the year ended 31 December 2022
(g) Expected contributions and maturity profile of the defined benefit obligation
Expected employer contributions
Weighted average duration of the defined benefit obligation (years)
AMP Plan I
AMP Plan II
Australia
New Zealand
Australia
New Zealand
$m
6
8
$m
–
7
$m
2
10
$m
–
10
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
The value of the group’s defined benefit obligations are outputs of actuarial models dependent on a number of underlying
assumptions. Management applies judgement in selecting the assumptions used. Key assumptions include:
Defined benefit asset
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
Total share-based payments expense
2022
$'000
6,457
4,259
680
2021
$'000
7,854
9,143
2,759
11,396
19,756
1
Non-market performance rights which were forfeited or where performance conditions were not met were reversed during the year.
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
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 Consolidated 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
Consolidated 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 Consolidated 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 Consolidated 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 Consolidated income
statement and corresponding liability. The fair value is determined using appropriate valuation techniques.
127
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128
Notes to the financial statements
for the year ended 31 December 2022
4.2
SHARE-BASED PAYMENTS CONTINUED
(a) Performance rights
The Chief Executive Officer (CEO) and Executive Committee members 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
Long-term Incentive Awards
CEO Sign-on Performance Rights Award
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.
As part of the CEO’s incentive package,
performance rights were awarded on
appointment. The 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) measure.
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.
Years granted
2019, 2021 and 2022.
2021.
Vesting conditions/period
The vesting of performance rights is subject
to the following gateways:
The vesting of the CEO’s sign-on performance
rights is subject to the following gateways:
1. Absolute TSR – measures the CAGR in the
Company’s TSR over the relevant Performance
Period.
2. Relative TSR – 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 an adjusted ASX100 Financials index.
Each component was awarded in three tranches,
of which one has already vested. The board will
test the performance hurdles for the remaining
two tranches on or around the 22 November
2023 and 22 November 2024, respectively. If the
performance hurdles are met, the rights vest and
become exercisable.
Unvested awards are forfeited if the CEO
voluntarily ceases employment or is dismissed
for misconduct.
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.
2. Performance Gateway and Hurdle – The number
of rights that vest under the award will be
determined based on the Compound Annual
Growth Rate (CAGR) or CAGR in the Company’s
TSR relative to CAGR in TSR to the peer group
of ASX100 financial companies (excluding
A-REITs).
The vesting period is typically between three
and three-and-a-half years. A one year restriction
period (holding lock) applies for LTI awards
granted in 2021 and 2022.
If a participant is terminated for cause or gives
notice of resignation before the vesting date, all
unvested rights will lapse or be forfeited, unless
the Board determines otherwise. If a participant’s
employment ends for any other reason, the
unvested awards will remain on foot. For the
2019 and 2022 LTI awards, a pro rata portion
of rights are retained. All unreleased restricted
shares allocated to the participant on vesting will
remain on foot until the end of the restriction
period, unless the participant is terminated for
cause, in which case the awards are forfeited.
Unvested awards
4.2
SHARE-BASED PAYMENTS CONTINUED
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. The following
table shows the factors and range considered in determining the value of the performance rights granted during the last two years.
PERFORMANCE RIGHTS
Closing share price on grant date
Contractual life (years)
Dividend yield (per annum)
Expected volatility of share price
Risk-free interest rate (per annum)
TSR performance hurdle discount
TSR performance rights and share rights fair value
Fair value of performance rights (weighted average)
Expected time to vesting (years)
PERFORMANCE RIGHTS MOVEMENTS
Number of performance rights
Opening balance as at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
Closing balance as at 31 December
2022
2021
$1.01
$1.075–$1.65
4.1
0% – 5%
39%
0.1%
42%
0.3–4.0
0%–5%
42%–44%
0.1%–0.8%
41%–51%
$0.59
$0.55–$0.81
$0.59
3.1
$0.68
1.9-3.0
2022
2021
29,754,528
32,237,828
7,592,943
5,608,588
–
(638,168)
(4,937,153)
(7,453,720)
32,410,318
29,754,528
128
Notes to the financial statements
for the year ended 31 December 2022
(a) Performance rights
The Chief Executive Officer (CEO) and Executive Committee members 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
Years granted
2019, 2021 and 2022.
2021.
Vesting conditions/period
The vesting of performance rights is subject
The vesting of the CEO’s sign-on performance
Long-term Incentive Awards
CEO Sign-on Performance Rights Award
Performance rights give the participant the right
As part of the CEO’s incentive package,
to acquire one fully paid ordinary share in AMP
performance rights were awarded on
Limited upon meeting specific performance
appointment. The performance rights give the
hurdles. They are granted at no cost to the
CEO the right to acquire one fully paid ordinary
participant and carry no dividend or voting
share in AMP Limited (per right) upon meeting
rights until they vest. This award may be settled
specific performance conditions, including
through an equivalent cash payment, at the
hurdles that are subject to an absolute and
discretion of the board.
relative Total Shareholder Return (TSR) measure.
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.
to the following gateways:
rights is subject to the following gateways:
1. Risk and Conduct Gateway – if a participant’s
1. Absolute TSR – measures the CAGR in the
performance and conduct is not in line with
Company’s TSR over the relevant Performance
AMP’s expectations, the board has discretion
Period.
to amend the vesting outcome.
2. Performance Gateway and Hurdle – The number
performance relative to a peer group over the
of rights that vest under the award will be
relevant Performance Period. The comparator
determined based on the Compound Annual
group for the relative TSR performance hurdle
Growth Rate (CAGR) or CAGR in the Company’s
will be an adjusted ASX100 Financials index.
2. Relative TSR – measures the Company’s TSR
TSR relative to CAGR in TSR to the peer group
of ASX100 financial companies (excluding
A-REITs).
Each component was awarded in three tranches,
of which one has already vested. The board will
test the performance hurdles for the remaining
The vesting period is typically between three
two tranches on or around the 22 November
and three-and-a-half years. A one year restriction
2023 and 22 November 2024, respectively. If the
period (holding lock) applies for LTI awards
performance hurdles are met, the rights vest and
granted in 2021 and 2022.
become exercisable.
Unvested awards
If a participant is terminated for cause or gives
Unvested awards are forfeited if the CEO
notice of resignation before the vesting date, all
voluntarily ceases employment or is dismissed
unvested rights will lapse or be forfeited, unless
for misconduct.
the Board determines otherwise. If a participant’s
employment ends for any other reason, the
unvested awards will remain on foot. For the
2019 and 2022 LTI awards, a pro rata portion
of rights are retained. All unreleased restricted
shares allocated to the participant on vesting will
remain on foot until the end of the restriction
period, unless the participant is terminated for
cause, in which case the awards are forfeited.
129
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130
Notes to the financial statements
for the year ended 31 December 2022
4.2
SHARE-BASED PAYMENTS CONTINUED
(b) Share rights
The Chief Executive Officer (CEO), Executive Committee members, and certain executives and employees are provided share rights
as a part of their remuneration arrangements. These arrangements are summarised as follows:
Long-term
Incentive Plan
Short-term
Incentive Plan
Salary
Sacrifice Plan
CEO Sign-on
Share Rights Award
Share rights
Overview
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. All awards
are subject to ongoing employment, compliance with AMP policies and the
board’s discretion.
In 2021, AMP offered the opportunity to salary sacrifice between $1,000–$5,000
over a 12-month period to acquire shares in AMP which includes a matching
contribution on a 2:5 basis.
The Short-term Incentive
(STI) awards typically
have 40% to 60% of
the award deferred
in equity. The vesting
period is between
one to four years
of continued service.
Shares granted under
the share matching
component of the salary
sacrifice plan are subject
to continued service
for two years from
grant date.
Vesting
conditions/
period
LTI awards are subject
to continued service
periods of three to four
years and typically carry
voting and dividend
rights equivalent
to ordinary shares.
Awards granted under
the Deferred Bonus
Equity Plan are split
into two tranches
with continued service
conditions of two and
three years respectively.
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 first and second
tranches, representing
82% of the award, were
vested and released to
the CEO. The remaining
rights may vest in
accordance with the
schedule below:
–
–
14% on
22 November 2023
4% on
22 November 2024
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 2022
(b) Share rights
The Chief Executive Officer (CEO), Executive Committee members, and certain executives and employees are provided share rights
as a part of their remuneration arrangements. These arrangements are summarised as follows:
Long-term
Incentive Plan
Short-term
Incentive Plan
Salary
Sacrifice Plan
CEO Sign-on
Share Rights Award
Overview
Share rights give the participant the right to acquire one fully paid ordinary share
The sign-on share rights
in AMP Limited after a specified service period. They are granted at no cost to the
give the CEO the right
Share rights
participant and carry no dividend or voting rights until they vest. All awards
are subject to ongoing employment, compliance with AMP policies and the
board’s discretion.
In 2021, AMP offered the opportunity to salary sacrifice between $1,000–$5,000
over a 12-month period to acquire shares in AMP which includes a matching
contribution on a 2:5 basis.
Vesting
conditions/
period
LTI awards are subject
The Short-term Incentive
Shares granted under
The first and second
to continued service
(STI) awards typically
the share matching
tranches, representing
periods of three to four
have 40% to 60% of
component of the salary
82% of the award, were
years and typically carry
the award deferred
sacrifice plan are subject
vested and released to
in equity. The vesting
period is between
one to four years
of continued service.
to continued service
for two years from
grant date.
voting and dividend
rights equivalent
to ordinary shares.
Awards granted under
the Deferred Bonus
Equity Plan are split
into two tranches
with continued service
conditions of two and
three years respectively.
Unvested
awards
Unvested awards are forfeited if the participant voluntarily ceases employment or is dismissed for misconduct.
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 CEO. The remaining
rights may vest in
accordance with the
schedule below:
–
14% on
22 November 2023
–
4% on
22 November 2024
4.2
SHARE-BASED PAYMENTS CONTINUED
4.2
SHARE-BASED PAYMENTS CONTINUED
(b) Share rights continued
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.
If relevant to the award, 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. The following table shows the factors and range
considered in determining the independent fair value of the share rights granted during the last two years:
SHARE RIGHTS
Closing share price on grant date
Contractual life (years)
Dividend yield (per annum)
Dividend discount
Fair value of performance rights (weighted average)
Expected time to vesting (years)
SHARE RIGHTS MOVEMENTS
Number of share rights
Opening balance as at 1 January
Granted during the year
Exercised during the year
Lapsed during the year
Closing balance as at 31 December
2022
2021
$0.96
$1.07–$1.35
0.9–3.9
0%– 5%
0.3–4.0
0%–5%
0%–13%
0%–13%
$0.88
$1.10
0.0 – 3.1
0.9 – 3.25
2022
2021
15,003,196
16,247,076
7,243,680
5,511,901
(3,296,779)
(5,829,217)
(1,223,618)
(926,564)
17,726,479
15,003,196
131
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i
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a
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132
Notes to the financial statements
for the year ended 31 December 2022
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 Discontinued operations
5.3
5.4
5.5
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
Collimate Capital 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
AWM Services Pty Ltd
ipac Asset Management Limited
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 Ltd
N.M. Superannuation Pty Ltd
NMMT Limited
Australia
Australia
Australia
Australia
Australia
% holdings
Share type
2022
2021
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord
Ord A
Ord
Ord A
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
132
Notes to the financial statements
for the year ended 31 December 2022
5
SECTION
GROUP ENTITIES
5.1 Controlled entities
5.2 Discontinued operations
5.3
5.4
5.5
Investments in associates
Parent entity information
Related party disclosures
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
Significant investments in controlled operating entities are as follows:
Country of
registration
% holdings
Share type
2022
2021
AMP Capital Investors (New Zealand) Limited
New Zealand
Operating entities
Name of entity
AMP Advice Holdings Pty Ltd
AMP Bank Limited
AMP Capital Funds Management Limited
Collimate Capital 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
AWM Services Pty Ltd
ipac Asset Management Limited
Hillross Financial Services Limited
Ipac Group Services Pty Ltd
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
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
5.2 DISCONTINUED OPERATIONS
(a) Sale of AMP Capital
AMP has announced a series of sales transactions which will result in AMP’s divestment of its AMP Capital businesses. AASB 5 Non‑current
Assets Held for Sale and Discontinued Operations (AASB 5) requires the income, expenses and cash flows of these businesses to be separately
disclosed as discontinued operations. For the year ended 31 December 2022, discontinued operations represents the income, expenses and
cash flows of:
–
–
–
–
AMP Capital’s infrastructure debt platform from 1 January 2022 to 11 February 2022;
AMP Capital’s GEFI business from 1 January 2022 to 28 March 2022;
AMP Capital’s real estate and domestic infrastructure equity business through to 31 December 2022; and
AMP Capital’s international infrastructure equity business through to 31 December 2022.
In accordance with AASB 5, the comparative period results have been restated.
The residual assets of AMP Capital, principally its investments in CLAMP, PCCP and related seed and sponsor investments will remain a part
of the AMP group. Accordingly, the related income, expenses and cash flows of these investments are included within continuing operations.
(b) Profit or loss for the period from discontinued operations
The results of AMP Capital’s discontinued businesses included within AMP group’s Consolidated income statement are set out below,
including comparative information.
Following the sale of AMP Capital, certain service arrangements will continue between AMP and those businesses. Where relevant, revenue
and expenses attributable to continuing operations from such arrangements have been presented within continuing operations to reflect the
ongoing nature of such arrangements. The result of the discontinued operations presented below have been adjusted for these arrangements.
Total revenue of discontinued operations
Total expense of discontinued operations
(Loss)/Profit before tax from discontinued operations
Income tax (expense)/credit
(Loss)/Profit for the period from discontinued operations before disposals
Gain on disposal of businesses sold
Income tax expense resulting from the gain on disposal of businesses sold 1
Gain on disposal of businesses sold after tax
Profit for the period from discontinued operations
AMP Wealth Management New Zealand Limited
New Zealand
New Zealand
Other comprehensive (loss)/profit for the period from discontinued operations
Total comprehensive income for the period
1
Income tax expense is net of the utilisation of previously unrecognised capital losses.
(c) Cash flows from/(used in) discontinued operations
2022
$m
422
(423)
(1)
(11)
(12)
413
(10)
403
391
(12)
379
2021
$m
829
(808)
21
6
27
–
–
–
27
27
54
The cash flows from/(used in) discontinued operations for the period, included within the Consolidated statement of cash flows, are set
out below, including comparative information.
Net cash (used in)/from operating activities
Net cash from/(used in) investing activities
Net cash inflows from discontinued operations
2022
$m
(82)
488
406
2021
$m
79
(75)
4
133
A
M
P
2
0
2
2
A
n
n
u
a
l
r
e
p
o
r
t
O
v
e
r
v
e
w
i
i
B
u
s
n
e
s
s
r
e
v
e
w
i
D
i
r
e
c
t
o
r
s
’
r
e
p
o
r
t
i
F
n
a
n
c
a
i
l
r
e
p
o
r
t
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
t
i
o
n
134
Notes to the financial statements
for the year ended 31 December 2022
5.2 DISCONTINUED OPERATIONS CONTINUED
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS:
The presentation of discontinued operations includes gains or losses recognised on the sale of AMP Capital businesses and
incorporates management’s judgements in relation to:
–
–
–
determining whether the relevant group of assets meet the held for sale classification, including judgements applied
in estimating the likely satisfaction of key condition precedents and estimating the timeframe transactions will
complete within from the balance date,
determining the fair value of the assets and liabilities held for sale, including the related impairment considerations, and
assumptions used to estimate purchase price adjustments, earn-outs, the allocation of goodwill, provisions for directly
attributable separation costs yet to be incurred, warranties and indemnities under sale agreements and potential
onerous contracts resulting from the separation.
5.3
INVESTMENTS IN ASSOCIATES
Investments in associates accounted for using the equity method:
Ownership interest
Carrying amount 1
Associate
Principal activity
Place of business
China Life Pension Company 2
Pension Company
China
2022
%
2021
%
19.99
19.99
2022
$m
447
China Life AMP Asset Management
Company Ltd 3
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 LP5
Fund
Fund
Cayman Island
Cayman Island
Luxembourg
ACRT Finance Pty Limited 6
Investment Management
Australia
–
–
–
–
4.74
2.81
1.25
7.72
PCCP, LLC (Pacific Coast Capital
Partners)
Other
Total investments in associates
Investment Management United States
23.87
24.90
n/a
n/a
81
–
–
–
–
170
73
771
2021
$m
416
74
71
119
64
106
157
83
1,090
1 The carrying amount is after recognising $80m (2021: $66m) share of current period profit or loss from its associates accounted for using the equity method.
2 AMP’s 31 December 2021 financial report was qualified with respect to the external auditor’s ability to obtain sufficient, appropriate, third-party audit
evidence about AMP’s share of the net income and consequently the carrying amount of its investment in China Life Pension Company (CLPC) for the year
ended 31 December 2021. On 23 March 2022, subsequent to the issuance of AMP’s 31 December 2021 financial report, CLPC’s audited financial statements
were issued which evidenced that AMP’s share of CLPC’s net income for the year ended 31 December 2021 and consequently the carrying amount of AMP’s
investment in CLPC at that date were supported.
3 The AMP group has significant influence through representation on the entity's board.
4 Global Infrastructure Fund Sponsor and Global Infrastructure Fund II are classified as assets held for sale as at 31 December 2022.
5 This fund has been reclassified to investments in managed investments schemes as AMP no longer has significant influence following the sale of the
infrastructure debt platform.
6 ACRT Finance Pty Limited was sold on 9 December 2022.
134
Notes to the financial statements
for the year ended 31 December 2022
5.2 DISCONTINUED OPERATIONS CONTINUED
5.3
INVESTMENTS IN ASSOCIATES CONTINUED
ACCOUNTING POLICY – RECOGNITION AND MEASUREMENT
Investments in associates
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.
5.4
PARENT ENTITY INFORMATION
(a) Statement of comprehensive income – AMP Limited entity
Dividends and distributions from controlled entities and net gains or losses on financial assets 1
Interest revenue
Service fee revenue
Ownership interest
Carrying amount 1
Share of profit from associates accounted for using the equity method
Other income
Operating expenses
Impairment of investments in controlled entities
Finance costs
Income tax credit 2
Profit/(Loss) for the year
Total comprehensive income/(loss) for the year
1 Dividends and distributions from controlled entities $13m (2021: $169m) is not assessable for tax purposes.
2 Income tax credit includes $nil (2021: $nil) utilisation of previously unrecognised tax losses.
2022
$m
27
1
5
47
87
(9)
(100)
(36)
76
98
98
2021
$m
185
–
14
52
–
(109)
(450)
(37)
43
(302)
(302)
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS:
The presentation of discontinued operations includes gains or losses recognised on the sale of AMP Capital businesses and
incorporates management’s judgements in relation to:
–
determining whether the relevant group of assets meet the held for sale classification, including judgements applied
in estimating the likely satisfaction of key condition precedents and estimating the timeframe transactions will
complete within from the balance date,
–
–
determining the fair value of the assets and liabilities held for sale, including the related impairment considerations, and
assumptions used to estimate purchase price adjustments, earn-outs, the allocation of goodwill, provisions for directly
attributable separation costs yet to be incurred, warranties and indemnities under sale agreements and potential
onerous contracts resulting from the separation.
5.3
INVESTMENTS IN ASSOCIATES
Investments in associates accounted for using the equity method:
Associate
Principal activity
Place of business
China Life Pension Company 2
Pension Company
China
2022
%
2021
%
19.99
19.99
2022
$m
447
China Life AMP Asset Management
Company Ltd 3
Global Infrastructure Fund Sponsor 4
Fund
Global Infrastructure Fund II 4
AMP Capital Infrastructure Debt
Fund IV USD LP5
Fund
Fund
PCCP, LLC (Pacific Coast Capital
Partners)
Other
Total investments in associates
Investment Management
China
14.97
14.97
Cayman Island
Cayman Island
Luxembourg
–
–
–
–
4.74
2.81
1.25
7.72
n/a
n/a
Investment Management United States
23.87
24.90
ACRT Finance Pty Limited 6
Investment Management
Australia
2021
$m
416
74
71
119
64
106
157
83
1,090
81
–
–
–
–
170
73
771
1 The carrying amount is after recognising $80m (2021: $66m) share of current period profit or loss from its associates accounted for using the equity method.
2 AMP’s 31 December 2021 financial report was qualified with respect to the external auditor’s ability to obtain sufficient, appropriate, third-party audit
evidence about AMP’s share of the net income and consequently the carrying amount of its investment in China Life Pension Company (CLPC) for the year
ended 31 December 2021. On 23 March 2022, subsequent to the issuance of AMP’s 31 December 2021 financial report, CLPC’s audited financial statements
were issued which evidenced that AMP’s share of CLPC’s net income for the year ended 31 December 2021 and consequently the carrying amount of AMP’s
investment in CLPC at that date were supported.
3 The AMP group has significant influence through representation on the entity's board.
4 Global Infrastructure Fund Sponsor and Global Infrastructure Fund II are classified as assets held for sale as at 31 December 2022.
5 This fund has been reclassified to investments in managed investments schemes as AMP no longer has significant influence following the sale of the
infrastructure debt platform.
6 ACRT Finance Pty Limited was sold on 9 December 2022.
135
A
M
P
2
0
2
2
A
n
n
u
a
l
r
e
p
o
r
t
O
v
e
r
v
e
w
i
i
B
u
s
n
e
s
s
r
e
v
e
w
i
D
i
r
e
c
t
o
r
s
’
r
e
p
o
r
t
i
F
n
a
n
c
a
i
l
r
e
p
o
r
t
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
t
i
o
n
136
Notes to the financial statements
for the year ended 31 December 2022
5.4
PARENT ENTITY INFORMATION CONTINUED
(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
Interest-bearing liabilities
Current tax liabilities
Provisions
Other financial liabilities
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
2022
$m
2021
$m
1
172
69
350
65
64
160
201
–
63
4,909
5,359
457
500
289
427
500
177
6,812
6,951
874
632
58
2
3
252
272
–
2,093
4,719
1,129
–
66
90
–
250
523
–
2,058
4,893
5,008
10,206
29
12
(330)
4,719
32
14
(5,359)
4,893
1 Receivables and payables include tax-related amounts receivable from subsidiaries $168m (2021: $155m) and payable to subsidiaries $434m (2021: $614m).
2 Deferred tax assets include amounts recognised for losses available for offset against future taxable income $nil (2021: $nil).
3 The AMP Limited entity is the issuer of AMP Capital Notes 2 and AMP Notes 3. Further information on these is provided in note 3.2.
4 Changes in retained earnings comprise $98m profit (2021: $302m loss) for the year less share capital reduction of $4,931m pursuant to section 258F of the
Corporations Act 2001.
(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.
136
Notes to the financial statements
for the year ended 31 December 2022
5.4
PARENT ENTITY INFORMATION CONTINUED
5.5
RELATED PARTY DISCLOSURES
(b) Statement of financial position – AMP Limited entity
2022
$m
2021
$m
(a) Key management personnel
Compensation of key management personnel
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
Interest-bearing liabilities
Current tax liabilities
Provisions
Other financial liabilities
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
Short-term benefits
Post-employment benefits
Share-based payments
Other long-term benefits
Termination benefits
Total
2022
$'000
10,069
378
3,577
55
291
14,370
2021
$'000
12,671
339
11,947
217
2,777
27,951
Compensation of the group’s key management personnel includes salaries, non-cash benefits and contributions to the post-employment
benefits. 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.
6,812
6,951
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 four
key management personnel and their related parties. Details of these loans are:
Balance as at the beginning of the year
Net advances
Balance as at the end of the year
Interest charged
2022
$'000
3,605
560
4,165
114
2021
$'000
3,751
1,474
5,225
69
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.
4,909
5,359
1
172
69
350
65
457
500
289
874
632
58
2
3
252
272
–
2,093
4,719
29
12
(330)
4,719
64
160
201
–
63
427
500
177
1,129
–
66
90
–
250
523
–
2,058
4,893
32
14
(5,359)
4,893
5,008
10,206
1 Receivables and payables include tax-related amounts receivable from subsidiaries $168m (2021: $155m) and payable to subsidiaries $434m (2021: $614m).
2 Deferred tax assets include amounts recognised for losses available for offset against future taxable income $nil (2021: $nil).
3 The AMP Limited entity is the issuer of AMP Capital Notes 2 and AMP Notes 3. Further information on these is provided in note 3.2.
4 Changes in retained earnings comprise $98m profit (2021: $302m loss) for the year less share capital reduction of $4,931m pursuant to section 258F of the
Corporations Act 2001.
(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.
137
A
M
P
2
0
2
2
A
n
n
u
a
l
r
e
p
o
r
t
O
v
e
r
v
e
w
i
i
B
u
s
n
e
s
s
r
e
v
e
w
i
D
i
r
e
c
t
o
r
s
’
r
e
p
o
r
t
i
F
n
a
n
c
a
i
l
r
e
p
o
r
t
A
d
d
i
t
i
o
n
a
l
i
n
f
o
r
m
a
t
i
o
n
138
Notes to the financial statements
for the year ended 31 December 2022
5.5
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 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 5.3 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.
138
Notes to the financial statements
for the year ended 31 December 2022
5.5
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.
The group provides investment management and banking services under general service level agreements with other associates as well
Transactions with other associates
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 5.3 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.
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 Auditor’s 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 profit/(loss) after income tax
Depreciation of operating assets
Amortisation and impairment of intangibles
Investment gains
Dividend and distribution income received
Share-based payments
Decrease in receivables, intangibles and other assets
Decrease in guarantee liabilities
Increase/(Decrease) in income tax balances
Increase in deposits, other payables and provisions
Net cash provided by 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
2022
$m
387
57
52
(466)
71
(16)
60
(21)
88
2,354
2,566
2022
$m
1,816
215
133
2,164
2021
$m
(254)
62
227
(187)
121
14
174
(66)
(18)
1,605
1,678
2021
$m
2,916
21
107
3,044
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.
139
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140
Notes to the financial statements
for the year ended 31 December 2022
6.2 COMMITMENTS
(a) Investment commitments
At 31 December 2022, AMP Capital Finance Limited, a controlled entity of AMP Limited, had uncalled investment commitments of $81m
(2021: $452m) 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 remain unspecified. On 3 February 2023, investment commitments of $55m were
transferred to DigitalBridge (DB) with the completion of the sale transaction to DB.
(b) AMP Bank credit-related commitments
At 31 December 2022, AMP Bank had credit-related commitments of $3,464m (2021: $3,702m), 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 2022 and the movements during the year.
Balance at the beginning of the year
Additions 1
Derecognitions and transfers to sublease receivables 2
Impairment expense
Depreciation expense
Foreign currency exchange rate changes and other
Transferred to assets held for sale
Balance at the end of the year
2022
$m
96
469
(90)
(30)
(47)
1
(3)
396
2021
$m
174
1
(21)
(12)
(45)
2
(3)
96
1 The additions primarily represent the commencement of AMP's Quay Quarter Tower (QQT) lease offset by $58m of onerous lease provisions recognised
during 2021.
2 This includes a sublease receivable of $60m transferred to receivables as disclosed in note 2.5.
(b) Lease liabilities
The following table details the carrying amount of lease liabilities at 31 December 2022 and the movements during the year.
Balance at the beginning of the year
Additions 1
Derecognitions
Interest expense
Payments made
Foreign currency exchange rate changes and other
Transferred to liabilities held for sale
Balance at the end of the year
2022
$m
135
517
(40)
25
(65)
–
(3)
569
2021
$m
211
–
(26)
7
(56)
2
(3)
135
1 Additions during the period are primarily related to Quay Quarter Tower lease agreement.
The AMP group paid $8m (2021: $4m) in relation to short-term leases and $nil (2021: $nil) in relation to variable lease payments. The total
cash outflow for leases in 2022 was $73m (2021: $60m).
140
Notes to the financial statements
for the year ended 31 December 2022
6.2 COMMITMENTS
(a) Investment commitments
At 31 December 2022, AMP Capital Finance Limited, a controlled entity of AMP Limited, had uncalled investment commitments of $81m
(2021: $452m) 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 remain unspecified. On 3 February 2023, investment commitments of $55m were
transferred to DigitalBridge (DB) with the completion of the sale transaction to DB.
(b) AMP Bank credit-related commitments
At 31 December 2022, AMP Bank had credit-related commitments of $3,464m (2021: $3,702m), 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 2022 and the movements during the year.
1 The additions primarily represent the commencement of AMP's Quay Quarter Tower (QQT) lease offset by $58m of onerous lease provisions recognised
during 2021.
2 This includes a sublease receivable of $60m transferred to receivables as disclosed in note 2.5.
(b) Lease liabilities
The following table details the carrying amount of lease liabilities at 31 December 2022 and the movements during the year.
Balance at the beginning of the year
Additions 1
Derecognitions and transfers to sublease receivables 2
Impairment expense
Depreciation expense
Foreign currency exchange rate changes and other
Transferred to assets held for sale
Balance at the end of the year
Balance at the beginning of the year
Additions 1
Derecognitions
Interest expense
Payments made
Foreign currency exchange rate changes and other
Transferred to liabilities held for sale
Balance at the end of the year
2022
$m
96
469
(90)
(30)
(47)
1
(3)
396
2022
$m
135
517
(40)
25
(65)
–
(3)
569
2021
$m
174
1
(21)
(12)
(45)
2
(3)
96
2021
$m
211
–
(26)
7
(56)
2
(3)
135
1 Additions during the period are primarily related to Quay Quarter Tower lease agreement.
The AMP group paid $8m (2021: $4m) in relation to short-term leases and $nil (2021: $nil) in relation to variable lease payments. The total
cash outflow for leases in 2022 was $73m (2021: $60m).
6.3
RIGHT OF USE ASSETS AND LEASE LIABILITIES CONTINUED
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.
141
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142
Notes to the financial statements
for the year ended 31 December 2022
6.4
PROVISIONS AND CONTINGENT LIABILITIES
(a) Provisions
Client remediation
Buyback arrangements
Compliance and regulatory 1
Obligations relating to corporate reorganisation
Other 2
Total provisions
2022
$m
2021
$m
14
7
41
91
144
297
87
20
57
138
286
588
Client
remediation
$m
Buyback
arrangements
$m
Compliance
and
regulatory 1
$m
Obligations
relating to
corporate
reorganisation
$m
Other 2
$m
Total
$m
(b) Movements in provisions
Balance at the beginning of the year
Additional provisions made/(released) during
the year
Provisions used during the year
Transferred to liabilities held for sale
Balance at the end of the year
87
9
(82)
–
14
20
(8)
(5)
–
7
57
138
286
588
84
(100)
–
41
40
(84)
(3)
91
(84)
(58)
–
144
41
(329)
(3)
297
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. $nil (2021:$8m) is expected to be settled more than 12 months from the reporting date.
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.
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 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 adversely prejudice the
position of the AMP group (or its insurers) in a dispute, accounting standards allow AMP to not disclose such information. It is AMP’s policy
that such information is not disclosed in this note.
142
Notes to the financial statements
for the year ended 31 December 2022
(a) Provisions
Client remediation
Buyback arrangements
Compliance and regulatory 1
Other 2
Total provisions
Obligations relating to corporate reorganisation
2022
$m
2021
$m
14
7
41
91
144
297
87
20
57
138
286
588
remediation
arrangements
regulatory 1
reorganisation
Client
Buyback
$m
$m
Compliance
and
$m
Obligations
relating to
corporate
$m
Other 2
$m
Total
$m
(b) Movements in provisions
Balance at the beginning of the year
Additional provisions made/(released) during
the year
Provisions used during the year
Transferred to liabilities held for sale
Balance at the end of the year
87
9
(82)
–
14
20
(8)
(5)
–
7
57
138
286
588
84
(100)
–
41
40
(84)
(3)
91
(84)
(58)
–
144
41
(329)
(3)
297
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. $nil (2021:$8m) is expected to be settled more than 12 months from the reporting date.
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.
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 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 adversely prejudice the
position of the AMP group (or its insurers) in a dispute, accounting standards allow AMP to not disclose such information. It is AMP’s policy
that such information is not disclosed in this note.
6.4
PROVISIONS AND CONTINGENT LIABILITIES
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
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, AUSTRAC and the ATO, 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, for example, to the imposition of penalties, disagreement with management’s position on judgemental matters
including provisions and tax positions, 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 regularly undertakes internal reviews, as part of ongoing monitoring and supervision activities, 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. These provisions are judgemental and the actual compensation could vary from the amounts provided.
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 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. The trial of the proceeding
was held during the course of October and November 2022, and the Court has reserved its decision.
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.
143
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144
Notes to the financial statements
for the year ended 31 December 2022
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 filed a defence to the proceedings. A hearing to determine the
quantum of penalties to be paid by the AMP defendants was held in December 2022, and the Court has reserved its decision. AMP’s best
estimate of the likely penalties to be paid has been provided for as at 31 December 2022. The provision is judgemental and the actual
penalty could vary from the amount provided.
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 assurance and operational 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. Resolution Life has notified a number of potential breaches of these covenants. 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.
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.
144
Notes to the financial statements
for the year ended 31 December 2022
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 filed a defence to the proceedings. A hearing to determine the
quantum of penalties to be paid by the AMP defendants was held in December 2022, and the Court has reserved its decision. AMP’s best
estimate of the likely penalties to be paid has been provided for as at 31 December 2022. The provision is judgemental and the actual
penalty could vary from the amount provided.
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 assurance and operational 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. Resolution Life has notified a number of potential breaches of these covenants. 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.
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.
6.4
PROVISIONS AND CONTINGENT LIABILITIES CONTINUED
6.5 AUDITOR’S REMUNERATION
Audit services
– Group
– Controlled entities
Audit related services
Statutory assurance services 1
Other assurance services – audit related 2
Total audit related services remuneration
Non-audit services
– Other assurance services – non-audit related 3
– Taxation compliance services
– Other services 4
Total non-audit services remuneration
Total auditor’s remuneration 5
2022
$'000
2,426
2,455
607
1,384
6,872
1,234
367
746
2,347
9,219
2021
$'000
1,691
3,074
285
1,219
6,269
1,602
503
1,109
3,214
9,483
1 Statutory assurance services relate to AFSL audits and certain APRA reporting assurance required to be performed by the statutory auditor.
2 Other assurance services – audit related primarily relate to compliance plan audits, sustainability audit, other APRA compliance reporting, derivative risk
statement assurance, internal control reviews.
3 Other assurance services – non-audit related primarily relates to the services associated with the demerger and sale of AMP Capital businesses.
4 Other services include transaction support, risk management reviews, benchmarking services.
5 Total amount excludes audit related fees and non-audit fees paid or payable for Trusts and Funds not consolidated into the group. Total fees excluded are
$6,320k (2021: $7,872k) of which $226k (2021: $346k) is for non-audit services.
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146
Notes to the financial statements
for the year ended 31 December 2022
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 2022. These have not had a material effect
on the financial position or performance of the AMP group.
(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
On 3 February 2022, AMP announced the completion of the sale of AMP Capital’s international infrastructure equity business to DigitalBridge
Investment Holdco, LLC.
On 16 February 2023, AMP declared a final dividend of 2.5 cents per share, representing $76m based on the number of shares outstanding
as at 31 December 2022.
As at the date of this report, the directors are not aware of any other matters or circumstances other than those described in the report
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.
146
Notes to the financial statements
for the year ended 31 December 2022
Directors’ declaration
for the year ended 31 December 2022
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 2022. These have not had a material effect
on the financial position or performance of the AMP group.
(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
On 3 February 2022, AMP announced the completion of the sale of AMP Capital’s international infrastructure equity business to DigitalBridge
On 16 February 2023, AMP declared a final dividend of 2.5 cents per share, representing $76m based on the number of shares outstanding
Investment Holdco, LLC.
as at 31 December 2022.
As at the date of this report, the directors are not aware of any other matters or circumstances other than those described in the report
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 the AMP Limited consolidated entity for the financial year
ended 31 December 2022 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 the AMP Limited consolidated entity for the financial year ended 31 December 2022 include an
explicit and unreserved statement of compliance with the International Financial Reporting Standards, as set out in ‘About this report –
(a) Understanding the AMP financial report’ section of the Notes to the financial statements; 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, 16 February 2023
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148
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 2022
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 2022, 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 2022 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
As disclosed in section 5.3 of the notes to the financial statements, the Company’s investment in China Life Pension Company (CLPC),
a foreign associate accounted for using the equity method, is carried at $447 million on the consolidated statement of financial position
at 31 December 2022. The Company’s share of CLPC’s post-tax net income of $47 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 at 31 December 2022 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. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.
Our opinion on the financial report for the year ended 31 December 2021 was similarly qualified. In the audit for the year ending
31 December 2022, we were able to obtain sufficient appropriate evidence to support the Company’s share of CLPC’s net income that
was recorded in 2021 and consequently the carrying amount of the Company’s investment in CLPC as at 31 December 2021 to the extent
it was impacted by this amount.
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
148
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 2022
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 2022, 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 2022 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
As disclosed in section 5.3 of the notes to the financial statements, the Company’s investment in China Life Pension Company (CLPC),
a foreign associate accounted for using the equity method, is carried at $447 million on the consolidated statement of financial position
at 31 December 2022. The Company’s share of CLPC’s post-tax net income of $47 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 at 31 December 2022 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. Consequently, we were unable to determine whether any adjustments to these amounts were necessary.
Our opinion on the financial report for the year ended 31 December 2021 was similarly qualified. In the audit for the year ending
31 December 2022, we were able to obtain sufficient appropriate evidence to support the Company’s share of CLPC’s net income that
was recorded in 2021 and consequently the carrying amount of the Company’s investment in CLPC as at 31 December 2021 to the extent
it was impacted by this amount.
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, the Group has loans and advances at
31 December 2022, against which provisions for expected credit
losses are required to be recorded 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.
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.
Our audit procedures included the following:
– We assessed the methodology of the Group’s expected
credit loss model and its underlying methodology against
the requirements of AASB 9.
– We assessed the following for exposures evaluated
on a collective basis and associated overlays:
–
–
significant modelling and forward-looking
macroeconomic assumptions;
the basis for and data used to determine the provision
at 31 December 2022; and
– we involved our actuarial specialists to test the
mathematical accuracy of the model and to assess
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 also assessed the adequacy of the disclosures in the
notes to the financial statements.
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150
Independent auditor’s report
to the Shareholders of AMP Limited
PROVISIONS, IMPAIRMENT & CONTINGENT LIABILITIES
Financial report reference: 6.3 Right of use assets and lease liabilities, 6.4 Provisions and contingent liabilities
Why significant
How our audit addressed the matter
As disclosed in section 6.3 and 6.4, the Group has recorded
provisions, impairment charges and disclosed contingent
liabilities as follows:
–
–
–
–
provisions for client remediation and compliance matters;
impairment of right of use 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.
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 and impairment charges, which included
benchmarking vacancy periods and rental estimates and the
assessment of the reasonableness of useful lives.
These were considered key audit matters due to the judgment
required to determine reasonable estimates.
–
For those matters where the Group determined that either
a present obligation as a result of a past event did not exist,
or where a sufficiently reliable estimate of the amount of the
obligation could not be made and for which no provisions
have been recognised, we assessed the basis for the
conclusions.
– We also assessed the adequacy of the disclosures in the
notes to the financial statements.
Key areas of judgment included:
–
the decision as to whether to recognise a provision and/or
disclose a contingent liability, including whether there was
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 and
impairment charges, including:
–
–
the estimates of compensation amounts and costs
required to complete the remediation programs and
vacancy periods, discount rate and sub-lease rental
estimate increases for onerous lease provisions and
right of use impairment.
150
Independent auditor’s report
to the Shareholders of AMP Limited
Independent auditor’s report
to the Shareholders of AMP Limited
PROVISIONS, IMPAIRMENT & CONTINGENT LIABILITIES
Financial report reference: 6.3 Right of use assets and lease liabilities, 6.4 Provisions and contingent liabilities
TAXATION
Financial report reference: Section 1.4: Taxes
Why significant
How our audit addressed the matter
Why significant
How our audit addressed the matter
As disclosed in section 6.3 and 6.4, the Group has recorded
Our audit procedures included the following:
–
–
–
–
provisions, impairment charges and disclosed contingent
liabilities as follows:
provisions for client remediation and compliance matters;
impairment of right of use 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.
These were considered key audit matters due to the judgment
required to determine 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 was
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 and
impairment charges, including:
–
the estimates of compensation amounts and costs
required to complete the remediation programs and
–
vacancy periods, discount rate and sub-lease rental
estimate increases for onerous lease provisions and
right of use impairment.
– 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 and impairment charges, 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 did not exist,
or where a sufficiently reliable estimate of the amount of the
obligation could not be made and for which no provisions
have been recognised, we assessed the basis for the
conclusions.
– We also assessed the adequacy of the disclosures in the
notes to the financial statements.
As presented in the consolidated statement of financial position
and Section 1.4, the Group has significant tax balances as
at 31 December 2022, being a current tax asset of $76 million,
a current tax liability of $57 million, a deferred tax asset of $556
million, and a deferred tax liability of $5 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 also assessed the adequacy of the disclosures in the
notes to the financial statements.
INFORMATION TECHNOLOGY (IT) SYSTEMS AND CONTROLS OVER FINANCIAL REPORTING
Why significant
How our audit addressed the matter
–
–
–
–
A significant part of 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 IT 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 required to ensure that IT applications process
business data as expected and that changes are made in
an appropriate manner.
A fundamental component of these IT systems and controls
is ensuring that risks relating to inappropriate user access
management, unauthorised program changes and IT
operating protocols are addressed.
During our audit planning, we identified User Access
Management including IT privileged access controls for
applications that are critical to financial reporting is of
a heightened risk and therefore this is considered to be
a key audit matter.
– We involved our IT specialists to assist with audit procedures
over IT systems and controls.
– We assessed the design and tested the operating
effectiveness of the Group’s IT controls, including those
related to user access management, change and operating
management and data integrity.
– Where we identified design and/or operating deficiencies
in the IT control environment, our procedures included the
following:
– we assessed the integrity and reliability of the systems
and data related to financial reporting; and
– where automated procedures were supported by
systems with identified deficiencies, we assessed
compensating or mitigating controls that were not
reliant on the IT control environment. This involved
varying the nature, timing and extent of audit
procedures performed.
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152
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 2022
Annual Report other than the financial report and our auditor’s report thereon.
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, actions taken to eliminate threats or safeguards applied.
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.
152
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
The directors are responsible for the other information. The other information comprises the information included in the Company’s 2022
Annual Report other than the financial report and our auditor’s report thereon.
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the directors’ report for the year ended 31 December 2022.
In our opinion, the Remuneration Report of AMP for the year ended 31 December 2022, 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
16 February 2023
153
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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, actions taken to eliminate threats or safeguards applied.
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.
154
Securityholder information
Distribution of AMP Capital Notes 2 holdings as at 6 February 2023
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
2,406
322
25
31
1
842,851
669,239
184,288
804,765
248,857
30.65
24.34
6.70
29.26
9.05
2,785
2,750,000
100.00
As at 6 February 2023, the total number of shareholders holding less than a marketable parcel of five AMP Capital Notes is three.
Twenty largest AMP Capital Notes 2 holders as at 6 February 2023
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
BNP PARIBAS NOMINEES PTY LTD
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