The Sydney-based AMP Limited (ASX: AMP), established in 1849, is a wealth management company offering solutions and services pertaining to financial advice, life insurance, superannuation, investment management, self-managed superannuation funds (SMSFs), retirement income and investing, to clients across the globe including some of Australia’s leading blue-chip companies. It operates through business segments including AMP Bank, New Zealand Financial Services, Australian Mature, Australia, New Zealand, Australian Wealth Management, AMP Capital and Australian Wealth Protection.
On February 14th, 2019, the company released Full Year Financial Results for FY2018 highlighting resilient growth amidst catalysing challenges.
The one key milestone that AMP announced in October 2018 was the restructuring of its portfolio wherein it entered into an agreement with Resolution Life to sell its Australian and New Zealand wealth protection and mature businesses (AMP Life) and reinsure New Zealand retail wealth protection for total proceeds of around AUD 3.45 billion. The transaction is expected to be completed in 2H FY2019 upon regulatory consents.
As per the figures reported, the statutory net profit stood at AUD 28 million, way down from AUD 848 million in FY 2017 due to advice remediation and subdued performance in wealth protection. The underlying profits for the period stood at AUD 680 million lower than AUD 1040 million in the previous period, driven by well performing AMP Capital and AMP Bank.
The total assets under management (AUM) stood at AUD 258 billion in FY2018, up by AUD 1 billion on FY 2017. The AUM for Australian Wealth Management and AMP Capital declined by 5.5% and 0.3% to AUD 123 billion and AUD 187 billion respectively as compared to FY 2017.
Segment wise, the Australian wealth management business recorded operating earnings of AUD 363 million and net cash outflows of AUD 3.968 billion, contrary to cash inflows of AUD 931 million in FY2017. Also, due to capitalised losses and adverse claims experience in wealth protection, there were operating losses amounting to AUD 3 million in businesses sold to Resolution Life. In addition, the operating earnings for New Zealand wealth management were at AUD 53 million.
Besides, the controllable costs figure stood at AUD 913 million indicating strong performance due to efficient business practices resulting in lower project costs and lower variable remuneration. For the concerned period, AMP also exhibited a robust balance sheet with a healthy capital surplus of AUD 1.65 billion way above the minimum regulatory requirements. As for the shareholders, the final dividend for the FY 2018 was kept at 4 cents per share, franked to 90 per cent on account of 2H FY2018 performance and market uncertainties.
Looking ahead, AMP aims to reposition itself and deliver better performance by prioritising the complex legal separation from the businesses sold to Resolution Life, strengthen risk management, governance and controls for a promising future growth.
AMP has a market capitalisation of AUD 7.17 billion with ~ 2.94 billion outstanding shares. With the close of trading session on February 14th, 2019, the AMP stock was trading at a market price of AUD 2.260, indicating an intra-day loss of 7.377%. Around 38.03 million shares were traded in total. The stock has crashed by 28.86% this year as on 13 February 2019.
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