AMP Limited

Good morning everyone and welcome to AMP full year results. I'd welcome you also on this Valentine's Day which is our second Valentine's Day to deliver the results. Before I commence today can I firstly recognise the traditional custodians of the land on which we're holding this meeting which for us is the Gadigal people of the Eora Nation and I'd like to pay my respects to the elders past and present. I also, of course, have with me today Blair Vernon, who is the CFO of the organisation. Right, so what are we going to talk through today? Firstly, I just want to give you a brief overview of the results. Then Blair will do a deep dive into all of the results, including a focus on costs and capital. And then we're going to go further into the Be You results, together with the achievements through 24 and what we're planning to focus on in 25. And of course, we're going to finish with some guidance and allow time for Q&A. If I just look at the overall result, I believe we continue to deliver on financial performance, but also business performance. Underlying profits up over 15% to $236 million. And correspondingly, our earnings per share up 25%, through performance, but also the share buyback. We're delivering on the controllable cost promises despite the sticky inflation, which has been absorbed, and we're going to continue to do that through 2025. Our AUM has increased nearly 11%, albeit a good market, but the flows are improving and increasing in all of our wealth businesses. On top of that, we've executed on an advice transaction that we believe will deliver benefits for all our stakeholders including the advisors that have moved to entirety. With completion of our share by a back of $1.1 billion, we continue our capital program with the announcement of a final dividend of $0.01 frank 20%, taking the full-year dividend to $0.03. If I just look at our businesses overall, as mentioned, our wealth businesses are delivering improving results. platform is showing great attraction in IFAs with a real focus on that core market of super and pensions. Our superannuation investments business is now delivering on price, performance, good insurance, service and pleasingly our reputation is at all time averages and this is leading to really improved flows. New Zealand is a more challenging environment but the business keeps delivering as well as diversifying the revenue base. And when we come to banks, I think we all know it's a more challenging environment for small banks. But we've delivered modest growth in the second half, as indicated, and continue to focus on margin. I'm also very pleased with the execution capability during the year. We've been using AI and have now launched at scale across our contact centre in S&I or in the process of rolling across the other contact centres. We're also delivering some solutions for advisors in terms of meeting prep for clients. Coming to our portfolio, we can see that with the advice transactions, the portfolio continues to simplify. All of our remaining businesses now have clear growth strategies to execute upon. The partnerships have also shown improved growth and performance in 24, removing some of the one-offs that we experienced in the prior year. Just contextually, we can see that we continue to compete in an environment where the dynamics are positive for all of our businesses. There's high household wealth, especially in the more mature demographics, a thriving super environment with increasing focus on retirement needs, where we have been specialising for the last few years. Increasing needs for advice where we can leverage our partnerships as well as the intra-fund capability we have and the new digital proposition that we launched last month. We also now have a solution for those micro and small businesses together with the launch of transaction capability in our new banks. Our shareholders are a key stakeholder, but we also remain focused on our other stakeholders being customers, people and community. Customer satisfaction scores continue to improve across all of our businesses. Our staff engagement has increased another point in 24, and our foundation continues to support the community with not only charitable donations, but also over $13 million committed to impact investments. and we've maintained carbon neutrality for the 12th year in a row. Blair, can I ask you now to talk through the detailed financials?

Thanks, Lex. Turning to the results summary, as Lex mentioned, underlying impact is up over 15% in the year to $236 million. Total revenue was down slightly compared to the prior year, with increases seen in our wealth management businesses, but offset by bank earnings as a result of the margin compression we've previously spoken to. Our cost efficiency focus continues to emerge positively across the business. Variable costs are down 7.5% of the year, mostly attributable to reduced investment management expenses, while controllable costs are down 6.1% to $648 million, delivering ahead of our target of $660 million for the year. Earnings per share are up 25% to $0.09, as Lex mentioned, and pleasingly, the cost of income at a group level fell a further 2.7% to 63.8% for the year. Statutory impact continues to be a simpler reconciliation compared to prior years. Business simplification expenses is the most significant item at $43 million after tax, which is in line with our previously communicated program spend in this area. Other items at $34 million after tax predominantly reflects the already advised $36 million loss resulting from the advice transaction. Year-on-year stat profit is down given the 2023 performance was materially impacted on the upside by the sale of the AP Capital and Super Concepts businesses. Just turning to AUM, as Lex mentioned, up by almost 11% for the FY24 year at the close. Pleasingly, the significant uplifting cash flows in platforms and the improved retention in super and investments have contributed positively relative to FY23. The majority of the overall increases accounted for in market movements, which were significantly positive through the year. Margins in our wealth businesses saw modest decline, largely in line with expectations, and we will discuss further as we turn to each of the individual business units, particularly platforms. Just turning to the business unit overview snapshot, breaking out impact across those reported business units shows continued improvement across our wealth businesses offset by that reduced performance in A&B Bank. The platform's highlight for us was the significantly improved cash flow over the prior year. Super and investments continued to improve retention off the back of that improved offer to clients. Bank profits were impacted by NIM compression, but a strong cost-out response offsets that in part. New Zealand continues to deliver consistently year on year, and our group performance improved year on year, a function of the increased partnership revenue, as well as benefiting from our business simplification program. Now I'll turn to costs in a little more detail. Controllable costs, as I mentioned, were $648 million for the year. Adjusting for the advice sale, our target of FY24 was $660 million. So this outcome, from our perspective, is very positive. Employee costs continue to reduce, reflecting reduced headcount through FY24, but also the run rate effect of the reductions that we talked to late in FY23. Insurance and professional services costs also saw a significant reduction as we further streamlined vendor contracts and also reduced our overall consultant support. Technology costs increased slightly, reflecting both our ongoing investment in business units for growth And at the same time, this area absorbed most of the impact of stranded costs, which we expect to continue to address in the coming year. This absolute reduction in controllable cost is a significant achievement, considering we absorbed approximately $20 million of inflation impacts emerging in our cost base, particularly in the latter half of FY24. Our FY25 controllable cost target is confirmed at $600 million. which will represent a further 7.4% reduction on our FY24 performance. A substantial part of this reduction will be addressing stranded costs within the business arising from the advice transaction. We expect the majority of controllable cost savings to continue to emerge through the group cost sensors, thereby ensuring our business units can maintain a balance of focus on growth. Our business simplification program continues into 2025, with a forecast investment of up to $150 million pre-tax, unchanged from our previous guidance. Consistent with FY24, we anticipate absorbing inflation and other business unit growth-related cost uplifts within this absolute target. Now turning to capital. As previously flagged, the conclusion of our $1.1 billion capital return program in 2024 provided the opportunity to reassess our overall capital position and also our approach to reporting this aspect to the market. Common Equity Tier 1 is our preferred measure for reporting capital moving forward. It comprises shareholder equity but removes DTAs, investments and associates as well as other regulatory adjustments. Total capital resources reduced 5.5% year-on-year, largely reflecting that final transfer of capital return program. Deductions for regulatory adjustments in DTAs are reflected in the table, showing a Group CET1 total capital position of $1.769 billion. Set against our calculated CET1 capital requirements of $1.63 billion, we have an FY24 CET1 capital surplus of $139 million. To complete this, we'll also provide a summary of our capital return program across all three tranches. This highlights the significant reduction that issued shares as a result of the program, with an average buyback price per share of $1.16. As we've done in previous periods, this waterfall shows the movement year on year of our excess CET1 capital. Net of profit uplifts, the predominant feature is, of course, our buyback program completed in 2024, as I've just spoken to. Our approach to capital management moving forward is framed by a number of considerations. Naturally, we're looking to manage our balance sheet through the economic cycle with an overriding goal of enhancing shareholder returns. We believe modest leverage is appropriate for a group such as ours, and most importantly, having completed the significant capital return program, we are mindful of reorientating towards growth in our business portfolio. Our revised CT1 capital framework includes our required buffers above regulatory minimums. Our goal is to target stable returns to shareholders while managing for one-off events appropriately. As Lex mentioned, we are declaring the final dividend of $0.01 per share, 20% franked, which will sell FY24 fully a dividend of $0.03 per share. Looking forward, we are targeting a dividend of $0.02 per share per half through FY25 at the same 20% franking rate. We see 2025 as having a number of uncertainties. Hence, we have elected to focus our guidance on FY25 at the present point. Our forward view of dividends is framed against these considerations we note on the slide, seeking to close out legacy matters, realizing upside opportunities as they emerge, and above all, positioning us for growth. Lex and I are now going to talk to further detail across each of our business units. Firstly, turning to platforms. Platform's impact is up almost 90% in the year to $107 million. Net cash flows of $2.8 billion are almost double our FY23 performance, with particularly strong flows in H2. Managed portfolios continue to grow strongly, closing the year with over $19 billion of AUE. The North Guarantee product had a positive impact of $10 million on the FY24 result, reflecting favourable conditions, albeit that was slightly down on FY23. While we continue to invest for growth in this key business unit, the management team have equally maintained a distilling cost focus, including lowering investment management expenses. Average margin was down slightly at 45 basis points, which remains a key area of focus for us. Turning to margin in more detail, the two basis point reduction we reported in FY24 has emerged in our other fees category, mostly the investment management fees component. The key driver of this change is reflected in the bar graph at the bottom of the slide, which essentially highlights the changing mix of our AUM. Growth in management portfolios through the year is at a narrower total margin than our traditional managed funds products. And so the change here is a consequence of growth mix, not a change in our pricing formula per se. Margin in H2 was lower than the average margin of 45 basis points that we report here through the year on this slide. We remain confident the actions already underway by management will see an improvement in this trend as we look into FY25, and we'll address that when we come to our guidance slide. The significant improvement in net cash flow through FY24 is highlighted further in this year-on-year comparison. As we've previously reported, our book has overweight super and pension balances compared to many other platforms, which is reflective of our clear strategic focus on this part of the market. Following the divestment of our advice business, we have baselined our approach to measuring advisors using North. North has a total advisor population of more than 4,000 users. Our primary focus for growth and retention, however, are the 2,188 advisors with greater than one million of FUA on North, and this is a key metric we're seeking to grow. Beyond this, there remains a significant addressable market of advisors who don't yet use North. and we believe would particularly benefit from access to our market-leading retirement solution for their clients. During FY24, we established 99 new distribution agreements with AFSL holders and added over 140 new advisors to the North platform.

We do operate in a market of greater than $4.1 trillion, which continues to grow at pretty good multiples. We are one of the leading players in super and pensions, And we do have a vision to be the place people can come to to gain confidence in retirement. We've demonstrated that we can innovate in this area through our new lifetime solutions, which now have $350 million in assets under management, but just as importantly, $460 million of new assets under management as a result of the launch of these solutions. And we are unique in that we've got solutions across the spectrum. whether it's simplicity for the direct clients or simple needs for advisors' clients, and more complex needs where North caters. We've also built a relationship with Entiety through the advice transaction, and we see growth opportunities for both parties here. And I want to say that advice is in our DNA, and we're proud of the solutions that we continue to co-develop with our advisor partners. In 24, we continued the good work in our platforms business, investing in sales capability and management. We continued to invest in digital capability for both advisors and their clients. We're now starting to bring new practices, advisors and customers to the platform, as Blair indicated. And Lifetime's now used by 85 licensees, with 73% of clients being new to North. and it remains a real opportunity and focus for us through 25. In this year, we need to continue on the journey and keep doing what we're doing. We want to improve and add to the retirement solutions we've already delivered, further digitisation, including tools using AI to assist our advisors, and look further for opportunities to leverage that AI capability. We want to use our investment management capability to improve the margins.