report04

concise annual

2004 calendar of events

21 January 23 February AMP redeems Reset Preferred Securities (RPS). AMP announces plans to accelerate its debt repayment program. With an improved balance sheet, AMP paid down over $1.2 billion of external debt and reduced debt to around $2 billion. AMP announces a bottom line loss of $5.5 billion following exit from UK operations. Stephen Dunne is appointed Managing Director of AMP Capital Investors. 17 March 20 April AMP Income Securities buyback offer opens offer of $98 plus accrued interest per security. AMP Income Securities buyback closes with stronger than expected acceptances from retail and institutional holders. More than 31,000 holders (79 per cent of the securities) elected to sell back their securities. AMP Financial Services reports $88 million in net cash flows for the first quarter, compared with net outflows of $266 million in the corresponding quarter of 2003. Annual General Meeting held. AMP announces plans to repurchase up to $700 million of offshore bonds as part of the debt reduction programme. The tender was successful with $747 million repurchased. Half-year results. AMP declares a net profit before other items of $412 million for the six months to 30 June 2004, representing a 72 per cent increase in AMPs net profit before other items over the 2003 corresponding period. AMP announces $40 million in fee reductions across Australian superannuation and pension products. 20 August Standard & Poors upgrades AMP Group Holdings to A-. The group was previously rated at BBB+. At the same time, the insurer financial strength and counterparty credit rating for AMP Life Ltd was lifted to AA- from A+. John Astbury is appointed to the AMP Board. Moodys upgrades AMP Group Holdings to A3, previously rated Baa1. At the same time, the insurance financial strength rating for AMP Life was lifted to Aa3 from A1. This financial strength rating recognises a company with excellent financial security.

Contents
2004 financial results at a glance Chairmans report Chief Executive Officers report Business overviews Five-year financial summary Directors report Corporate governance Statement of financial performance Statement of financial position Statement of cash flows Notes to the financial statements Directors declaration Independent audit report Shareholder information Glossary 1 2 4 6 9 10 16 22 24 26 28 55 55 56 57

4 March

5 May

20 May 7 June

18 August

1 September 16 September

Concise Financial Report 2004. The financial statements and disclosures in the Concise Financial Report on pages 22 to 54 have been derived from the AMP Groups 2004 Full Financial Report. A more comprehensive understanding of the AMP Groups financial performance, financial position and financing and investing activities is provided in the Full Financial Report. A copy of the Full Financial Report, including the Auditors Report, is available online at www.amp.com.au/shareholdercentre or by calling the AMP Securities Registry. All amounts are in Australian dollars, unless otherwise specified. AMP Limited ABN 49 079 354 519. Unless otherwise specified, the information in this report is current as at 17 March 2005.

2004 financial results at a glance

In 2004 AMP concentrated on running the business better than it has ever been run before. This resulted in a big turnaround in net cash flows, greater cost efficiencies, a significant reduction in debt and a stronger balance sheet.

Net profit after income tax AMPs solid 2004 profit is largely a result of a more efficient business prospering in a favourable market environment.

$1,200m Asset sales, goodwill, amortisation and other items ($20m) Total operating margins $564m Investment income $503m Interest and similar = expenses ($113m) Net profit after tax before other items $954m

= income tax

Net profit after $934m

Group controllable costs $m

$1,261m

Dividend The board declared a final 2004 dividend of $0.14 per share (75 per cent franked), payable on 26 April 2005.
$m
0.6 With the interim dividend of $0.13, this brings the total 2004 dividend to $0.27 per share.0.5 compares with a This total 2003 dividend of $0.16 per share. 0.4

Dividend $ per share

0.51

G $

$1,071m

1,530

0.47

1,309

$927m

$837m

$813m

1,380

0.46

0.3

03 Loss of 5,542

0.2

0.1

01

01

00

02

03

04

00

02

04

00

01

0.0

02

03

0.16

Key performance indicators

AMPs key performance indicators In last years report we showed AMPs five key performance indicators (KPI) the measures the AMP Board uses to judge the progress of the company. In 2005, the proposed capital return will have a negative impact on earnings per share (EPS). By reducing shareholder capital through the proposed capital return, we will reduce the amount of money we have to invest and earn income on. Therefore, EPS and net profit after tax will not be the best indicators of our underlying performance in 2005. All other KPIs remain the same and a new indicator, investment performance, has been added. Investment performance measures how AMP Capital Investors manages funds on behalf of its clients.

2004 $0.36

2003 $0.44

1. Earnings per share (underlying)

This is the amount of money made by the businesses divided by each AMP share on issue

2. Return on equity (underlying)

This is the amount of money made by the businesses divided by the equity invested in the company

17.7%

18.1%

3. Total operating margins

These are the profits earned by AMPs operating businesses, minus corporate costs

$564m

$508m

4. Value of new business

This is an actuarial calculation of the future value of the new business AMP wrote in the year

$284m

$239m

5. Controllable costs
AMP has a good track record in reducing these costs and will maintain its focus going forward

$813m

$837m

6. Investment performance
This measures the percentage of Australian assets under management which met or exceeded their benchmarks

86%

74%

> amp.com.au > 01

04

0.27

860

Chairmans report

Overview More than 12 months ago, your board of directors recommended dividing AMP into two separate companies to help unlock the underlying value of the company. You overwhelmingly accepted that recommendation with 99.35 per cent of votes cast in favour of the proposal. Our job in 2004 was to make sure that the demerged AMP began to live up to its potential. Weve made a good start, helped by favourable market conditions over the past year. But we know we still have some way to go. Our actions will determine the long term value of this company.
In the shorter term, by its nature, AMP is a company that is strongly linked to the sharemarket. Our profit follows the market cycles, rising in a strong market and falling in a weak market. So while our decisions are driven by long term value, over the past 12 months we have also concentrated on improving the companys efficiency to get the most out of the upside of the cycle, while simultaneously strengthening our defences, so we will be in much better shape to cope with the downside of the cycle. The solid profit generated by the business in 2004 is largely a result of a more efficient business prospering in a favourable market environment. We had stronger cash flows as investor confidence generally rose, and confidence in AMP specifically recovered. The benefit of these increased revenues was magnified by our lower cost base. What weve also done over the past 12 to 18 months is to see to our defences. Weve lowered the risk profile of the business, substantially reduced debt and improved our overall risk management and governance practices. These steps are not obvious in these results but will stand us in good stead in a more difficult market environment. Its pleasing to note that total shareholder returns (TSR) a measure of the growth in our share price plus dividends has also increased significantly over the year, outperforming the Australian Stock Exchange top 200 companies (ASX 200) by 22 percentage points. Meeting the demerger objectives I am pleased to report to you that the objectives your board set in separating AMPs Australasian and UK businesses into two companies have largely been met in the short term. We set out to: > Unlock the underlying value of the company. We thought that each company would do better separately than together and we believe they have. The value of both companies, as measured by their share prices, has increased markedly since they began operating as stand alone entities. Over 2004, the share price of AMP increased by 45 per cent and the share price of the UK business, HHG, increased by 50 per cent. > Enable the Australasian business to flourish, free of the distractions of the past. In 2004, this business has generated a net profit after tax of $934 million as a more focused management drove efficiencies throughout the business and enjoyed the benefits of a strong market environment. > Enable the UK business to be valued on its own merit and facilitate the sale of some or all of its assets at fair market value. There were a number of people who thought we should sell some or all of our UK assets in a trade sale during 2003. We considered that option, but rejected it because we could not get fair value for shareholders at that time. We outlined in the Explanatory Memorandum for the demerger that we thought some asset sales could take place after the demerger, at much better value for shareholders. That now seems to be occurring. > Give shareholders more choice on their investment. By separating the Australasian and UK businesses, shareholders have been able to choose to keep their stakes in either or both companies. > Broaden the investment base of the company. At the time of demerger, your directors believed that there were a number of potential investors who were interested in investing in either the Australasian business or the UK business of AMP, but not both. What we did not anticipate was the interest offshore investors would have in a pure Australasian wealth management business. But since the demerger, we have seen our offshore investors grow from around 13 per cent of our shareholder register to over 22 per cent, helping put a higher value on the company through their demand for our shares. Returning capital to shareholders AMP is now performing strongly, with our businesses generating excess capital and the UK no longer being a drain on that capital. Our capital management priorities have been to: > repay debt and restore our A credit rating > reinvest for profitable growth in our core businesses > return excess capital to shareholders. During 2004, AMP reduced debt by $2.8 billion and regained its A credit rating, at least six months ahead of schedule. AMPs gearing ratio that is, the amount of debt it holds divided by the total amount of its equity plus debt has fallen from 55 per cent to 27 per cent over the year. With strong markets and business performance, and substantially reduced debt levels, AMP is now in a position to return excess capital to our shareholders. We are proposing to return $750 million to you, by giving each of you 40 cents cash for every share you hold. This proposal is subject to your approval as shareholders and will be put to your vote at the Annual General Meeting in May. More detail on this proposal is contained in the Notice of Meeting for the AGM and I encourage you to read those explanatory notes and have your say by voting.

02 > amp.com.au >

Our actions will determine the long term value of this company. Peter Willcox, Chairman, AMP

Redeeming the Income Securities The second leg of our capital plan for 2005 is to reduce some more debt, to maintain our current gearing ratio and our credit rating after the capital return. That is why we are redeeming the outstanding Income Securities at their face value of $100 each, at a total cost of $265 million. If you still hold Income Securities, you will receive a redemption notice by mail outlining the process. You dont have to take any action. You will simply receive a direct credit or cheque for the value of your securities, plus your final interest, on 10 May. Dividend I am pleased that your board of directors has also approved a final 2004 dividend of 14 cents per share. This brings the total dividend for the year to 27 cents per share up 69 per cent on 2003. The final 2004 dividend will be 75 per cent franked. Our dividend policy remains to pay out around 75 per cent of the underlying contribution in ordinary dividends, with 75 per cent franking. The underlying contribution is the business profit without one-off items and with a smoothed investment income that eliminates year on year market volatility. Actions taken during 2004 Board changes We also made some changes to the board during the year. Pat Handley retired at the annual general meeting (AGM) last year and we appointed John Astbury to replace him in September. John has extensive executive experience with a variety of financial services institutions and I consider us fortunate to be able to secure his services for AMP shareholders. Johns resume is outlined in the Directors Report and in the Notice of Meeting. Shareholders will have an opportunity to approve his appointment at the AGM in May. Improving our governance Your board took a number of steps this year to improve the governance of the subsidiary boards within the company. These are the AMP Life board, which is responsible for the AMP Financial Services business, AMP Capital Investors board, the AMP Bank board and the General Insurance companies boards. All these boards now have members of the main AMP Limited Board on them (details of membership are in the Directors Report), and also have external, independent directors on them. Improving our risk management As I mentioned earlier, the board also spent a considerable amount of time on risk management this year. If you want to invest in one company that certainly understands the penalties of poor risk management, then its AMP. We want to make sure that we learn from the painful events of the past to ensure they dont re-occur. Both management and your board spent time assessing the risk management processes and reporting procedures within the group, testing our frameworks and looking for gaps or areas that could be improved.

I believe our risk management is now much more robust than it has been in the past but its not an area we can ever take for granted. Outlook AMP has done well in 2004, thanks both to the efforts of management and staff, and to the impact of improved markets. Many of the changes we have made to the business over the past 12 to 18 months are not really visible in these results. They will be more visible when times are tougher. AMP is a business that should always do well in strong markets. What the management and board of directors have been working on is to make sure we can perform better than our competitors in more difficult market conditions. Thats why our focus has been on reducing our cost base to the lowest sustainable level, significantly cutting the risks in the business, lowering the capital needed to run the business and improving returns for shareholders. The outlook for the business remains favourable, given fair markets. At current levels, with the business continuing to perform strongly, we should be in a position to return more excess capital to shareholders in 2006. AMP remains in an enviable position. It has the pre-eminent wealth management brand in Australasia, market-leading distribution, scale and cost efficiency in product manufacturing, a broadly based investment capability and strong shares in key parts of the financial services market. With these assets, it can and should deliver increasing value to its owners. Your board is determined to make that happen.

Total shareholder returns

AMP ASX 200 AMP market capitalisation $b

$b 14

140

12

120

100

80 31 Dec 03 31 Mar 04 30 Jun 04 30 Sep 04

0 31 Dec 04

> amp.com.au > 03

Chief Executive Officers report

Overview In 2004 we had the opportunity to prove what AMP could achieve, free of the legacies and distractions of the past. We needed to deliver strong underlying performance to regain the confidence of our owners, our customers and the community at large. So we focused intensely on running the business better than its ever been run before cutting costs, growing sales and cash flows, improving the investment performance of the funds we manage for clients and reducing our debt to strengthen our balance sheet. This focus, coupled with the most favourable market environment since 1999, has enabled us to deliver an underlying profit of $671 million, an increase of 10 per cent over the underlying profit of the Australasian business in 2003. The underlying profit smooths out the effect of investment market volatility and is a better indicator of long term profit trends in the business. This is an encouraging start to our job of rebuilding AMP as an icon company.
We know the key to restoring AMPs reputation is sustained high performance over many years, so what weve done over the past 12 months is simply make a good start. What is also significant about our 2004 financial results is the way they highlight the continuing transformation of AMP from a traditional capital-intensive life insurance company to a modern more capital-efficient wealth management company. Its this transformation and the strong performance of the group that has released capital from the business and enabled the board to recommend a return of capital to shareholders in 2005. AMPs transformation AMPs transformation into a modern wealth management company can be seen in the changes in our revenue base, costs and efficiencies, risk and capital profiles. As a life insurance company, we earned revenues from premiums on policies and from providing guarantees on capital invested, thereby carrying significant market risk, particularly in periods of weak markets. Today, our revenues are increasingly driven by fees for services and the value of assets under management. This entails substantially lower risk as no capital guarantee is being provided. Profits from our modern products have grown by about 19 per cent a year over the past four years. At the same time, we have maintained the profit stream on our older style products, which are now closed to new business. Profits from these products have increased by six per cent a year over the same time period. Were driving increased value from new business, by improving our operating efficiency and reducing our cost base. Since 2000, we have taken almost $450 million (or over 35 per cent) in costs out of the Australian and New Zealand businesses. And our cost to income ratio has dropped from 60 per cent to 42 per cent. Accompanying this change has been a significant reduction in the companys risk profile and consequently in the amount of capital it needs to hold against those risks. Our gross risk capital requirements have fallen by 72 per cent between June 2002 and June 2004 (including the impact of the demerger). A stronger earnings base achieved on substantially lower risk is creating a much sounder foundation from which to drive long term shareholder value. 2004 performance The most pleasing aspects of AMPs 2004 results were the financial indicators that showed an upsurge in customer confidence in AMP. This was demonstrated by the rebound in net cash flows, the growth in assets under management (stemming from both increased cash flows and stronger investment markets), and our increased retention of existing business. These financial results were matched by our customer tracking research, which showed marked improvements in customer sentiment toward AMP during the year. AMP Financial Services The work AMP Financial Services (AFS) has done over the past few years to improve its efficiency enabled it to capitalise on this return of confidence, and on the generally better market environment. A management focus on cost control, better claims management and enhanced capital management all contributed to its improved business performance in 2004. Key value measures grew very strongly with a 25 per cent increase in the embedded value of AFS, before transfers, and a 19 per cent increase in the value of new business. The financial strength of AFS enabled it to release $1.7 billion in capital to the parent company during the year, while retaining capital reserves consistent with its targeted AA credit rating. During the year, AFS used its bargaining power with suppliers to negotiate lower fees. It then passed on the savings from these lower fees, and from its own internal cost reductions, to customers. Almost 800,000 customers benefited from fee reductions on our key Australian superannuation and pension products by a total of about $40 million a year. This initiative has put AFS on the front foot in an increasingly competitive market.

04 > amp.com.au >

AMP is well positioned to build on the encouraging results of 2004. Andrew Mohl, CEO, AMP

AMP Capital Investors Our asset management business, AMP Capital Investors, also benefited from improved investment markets in 2004, and from its strong performance in managing funds and assets on behalf of its clients. Investment performance how well AMP Capital Investors manages client funds is a key driver of new business and profitability in this business unit. During 2004, AMP Capital Investors substantially improved its investment performance, to the point where 86 per cent of the Australian assets it managed met or exceeded the industry benchmarks for the year. This was up from 74 per cent in 2003. Cobalt/Gordian Our Cobalt/Gordian business, which manages the general and reinsurance books we have in run-off, also did well, generating operating margins that were ahead of plan, while substantially reducing the liabilities it is managing. This business continues to be tightly managed to maximise profits and increase surplus capital. Group AMPs encouraging business performance in 2004, together with improved investment markets, drove the strong improvement in earnings. A major focus area was to strengthen the groups balance sheet by reducing debt, recognising that at the time of demerger AMP assumed all the debt obligations (over $2.3 billion) from its former UK subsidiaries. The higher than expected operating result in 2003 and the proceeds of the AMP Rights Offer in December 2003 were used to reduce group debt from $4.3 billion at December 2003 to $1.55 billion at December 2004 through three major debt reduction initiatives, completed in the first half of the year. This aggregate debt reduction helped us regain our A credit rating in August 2004. Our underlying return on shareholder equity during the year was just under 18 per cent. The underlying return smooths out the effect of investment market volatility. Without that smoothing, strong investment markets and a $131 million gain on our 10 per cent stake in HHG meant that actual return on equity (RoE) rose to 25.2 per cent. Strategic objectives Our goal remains to be acknowledged as a high performing company. And we will continue to focus on operational excellence running the company better than its ever been run before to achieve that goal and drive shareholder value. We are working to position AMP as the leading provider of quality financial advice, simple, value for money products and superior investment performance in the Australasian market. People and culture Intrinsic to our goal of being acknowledged as a high performing company is having the right people in the right jobs, performing to their potential on the things that matter.

AMP is a large and complex business, with a profound responsibility for managing the retirement savings of millions of Australians and New Zealanders. To live up to that responsibility, we need bright, talented people who are able to handle the fast pace of change that is endemic in our industry, while remaining focused on the delivery of our strategy. And we need them to do that in the right way with humility, fairness and openness; having the courage to deal with reality; treating all stakeholders with dignity and respect; and most importantly, putting the interests of AMPs shareholders and customers above all else. During 2004, we have spent considerable time reviewing and realigning our performance appraisal and remuneration systems to encourage the behaviours and attitudes necessary to deliver our strategy. There is a large weight of research which indicates that the kind of constructive culture we want to foster throughout AMP is strongly aligned with high performance over the long term. Developing this culture and the calibre of our people is a major priority for us, both in 2005 and longer term. Outlook AMP is well positioned to build on the encouraging results of 2004. We operate in an attractive, high growth market the retirement savings market which has projected longer term growth rates well above the economy as a whole. We have strong positions in the fastest growing segments of this market. There is no doubt that this is a very competitive market and we face some challenges in 2005. AFS operating margins will need to grow through the loss mid-year of transitional tax relief that has been in place since July 2000. We are confident of the businesss ability to continue to grow operating margins this year, albeit at a more moderate pace than in 2004. These challenges will not impact on AFSs value measures the value of new business (VNB) and embedded value (EV) and we expect both to grow strongly in 2005, given fair markets. We also expect solid growth in AMP Capital Investors operating margins in 2005. Cobalt/Gordian will continue its focus on achieving a rapid reduction in its book and is expected to begin to release capital to the group office. Initially, this will be in the form of the cancellation of existing loans to the parent (which totalled $237 million in 2004). With improved capital efficiencies and higher operating margins, we expect underlying return on equity (RoE) to rise strongly in 2005. We are proposing a capital return to shareholders of 40 cents a share in June and, as the Chairman outlined, a further capital return is planned for 2006. Whatever the challenges, we believe we have a set of capabilities that give us a strong competitive advantage in the marketplace. These capabilities include our brand, the largest adviser distribution network in the market, market-leading cost efficiency, an increasingly performance-driven culture and a management focus on operational excellence. This is a sound basis to deliver strong value creation for shareholders in 2005 and beyond.
> amp.com.au > 05

AMP Financial Services Business overview

AMP Financial Services performed well in 2004, delivering very strong results with improved efficiencies and better investment markets. Craig Dunn, Managing Director, AMP Financial Services

Overview AMP Financial Services (AFS) improved its profit performance in 2004, as the efficiency gains made by the business over the past two years enabled this business unit to perform well in a strong market environment.

Financial results > Operating margins, up 15% to $475 million. > A $1.7 billion turnaround in net cash flows to $1.2 billion. > Controllable costs down 4% to $553 million. > Value of new business up 19% to $284 million despite reductions in product pricing. > Return on embedded value up to 25.4% from 13.2% in 2003. > Return on invested capital up to 17% from 14.8% in 2003. Key achievements in 2004 > Continued to reduce costs by reviewing external investment management fees and further improving our information technology systems and processes. > Repriced and extended our product range to be more competitive: Reduced fees by 6-10% across our super and retirement income products, delivering $40 million worth of benefits to customers in a way that is sustainable for the business and shareholders. First to market with the launch of the Term Allocated Operating margins Pension product. $m Launched new products and enhanced existing products in investments, risk insurance, retirement incomes and savings and banking. Ensured new SignatureSuper product offering was well accepted in the corporate super market securing a number of large account wins in late 2004. > Improved cash flows with a 19% increase in funds inflows, regaining our top three position in the market.1 > Released $1.7 billion in capital to the parent company, through enhanced capital management and better business and market performances. > Further raised the quality of planning advice by introducing annual practice accreditation for AMP Financial Planners. > Retained our top ranking2 by number of planners in the Australian market and our leading position1 as a superannuation provider. > Upgraded support services to AMP Financial Planning, lifting productivity and providing better service to customers. > Continued to strengthen risk management processes across the business.
83 79 72 73 68 01 00 02 03 04

Key priorities for 2005 > Deliver strong growth in our key measures of value value of new business and embedded value. > Work to capture the number one position in quality advice, with the introduction of simple advice packages for consumers and the most comprehensive planner development programme in Australia. > Enhance and extend our product range by providing simple, value for money products across customer life stages, from first job through to retirement. > Continue to reduce unit costs. > Continue to develop our corporate superannuation business and increase sales of personal products by building relationships with individual plan members.

475

Operating margins $m
368 389*

Operating margins $m
103

342

324

58 03

00 (56)

* This graph compares years on a like-for-like basis. Adding a one-off tax benefit to operating margins in 2003, increased the figure to $411 million.
01 01 02 00 02 03 04 04

1 Plan for Life September 2004. 2 Money Management Top 100 Dealer Groups June 2004 Report.

06 > amp.com.au >

49

51

AMP Capital Investors Business overview

In 2004, AMP Capital Investors investment performance improved across all asset classes, generating strong client demand for property, private capital and alternative assets. Stephen Dunne, Managing Director, AMP Capital Investors

Overview AMP Capital Investors performed well in 2004, lifting its investment performance significantly. For this business, investment performance that is, the returns it is able to generate for its clients on the funds and assets it manages is a key driver of cash flows and profitability. In 2004, AMP Capital Investors investment performance improved across all asset classes, generating strong client demand for property, private capital and alternative assets. Funds inflow from Asian investors also exceeded expectations.
Financial results > Investment performance improved bringing an $8 million boost to fee revenues. > Assets under management grew to $78.9 billion from $67.2 billion in 2003, reflecting both stronger investment markets and better external cash flows. > Cost to income ratio remained stable at 63%. > Return on invested capital increased to 30.7% from 27.1% in 2003, driven by growth in operating margins. > Operating margins up 7.4% from 2003 to $73 million, despite the loss of $17 million in revenue from listed property trusts. Key achievements in 2004 > Delivered strong investment returns across all asset classes with 86% of all Australian assets under management (AUM) either meeting or outperforming their respective benchmarks. Our flagship AMP Balanced Growth Fund was among the top quartile performance ranking within the Mercer Pooled Fund Survey1 (i.e. among the top quarter of all the funds ranked). The AMP Capital Sustainable Future Australian Share Fund and Value Plus funds achieved top quartile rankings2. Our Australian share multi-style fund also achieved top quartile ranking3. > Secured steady funds inflow from AMP Financial Services with more than $1 billion in new funds. > Successfully completed two private capital raisings: The Infrastructure Fund of India, a joint initiative with the Asian Development Bank; AMP Capitals energy infrastructure fund (known as DUET) a joint venture with Macquarie Bank. > Attracted over $1.5 billion from Japanese investors into the newly launched global real estate fund. > Successfully launched the AMP Capital China Fund into the retail market attracting over $55 million to the closed-end fund. Key priorities for 2005 > Continue to improve investment performance across all asset classes. > Strengthen distribution relationships with top 10 financial planning groups in Australia. > Identify and develop property and private capital investment opportunities. > Continue to explore strategic business partnerships in order to deliver the most appropriate investment solutions for our clients. > Further strengthen risk management and compliance practices. > Raise our profile as an investment powerhouse within the Asia-Pacific region. > Continue to invest in our people in order to strengthen the capability of the business.

79

83

342

368

68

01

00

02

03

04

00

01

02

324

03

389

72

73

1 Mercer Pooled Fund Survey Balanced Funds, 31 December 2004. 2 Mercer Specialist Equity Survey, 31 December 2004. 3 Mercer Australian Shares Diversified Survey, 31 December 2004.
> amp.com.au > 07

04

475

Operating margins $m

Operating margins $m

O $m

Cobalt/Gordian Business overview

Operating margins were ahead of plan on $51 million, reflecting positive claims and commutations experience.

Overview Cobalt/Gordians major focus is achieving a profitable run-off 1 of AMPs remaining books of general insurance and reinsurance, and releasing capital to shareholders. Capital reserves are managed within APRA2 prudential guidelines. Cobalt also offers a range of insurance and reinsurance services to external clients.

Financial results > Operating margins were ahead of plan on $51 million, reflecting positive claims and commutations experience, although this was lower than in 2003. > Net claims experience of $42 million was generated by settling or reserving claims at values lower than previously reported; this also allowed for a reduction in risk margins. > Commutations savings of $24 million arose from the proactive settlement of reinsurance contracts below reserves. Key achievements in 2004 > Further reduced gross liabilities by $368 million to $1,071 million in 2004 from $1,439 million in 2003. > Capital reserves grew to almost three times the minimum required by APRA in 2004. Cobalt/Gordian is looking at ways to release some of this surplus capital to AMP shareholders.
Operating margins $m
83 79 72 73

Key priorities for 2005 > Investigate and evaluate options for using the capital held more effectively. In 2005, Cobalt/Gordian will review its capital reserve investment strategy for opportunities to enhance returns within agreed levels of risk. > Continue to manage the run-off business to maximise profit and increase surplus capital. > Grow number of external clients and revenue generated from client fees. > Launch new business name Cobalt Solutions Australia Limited to the market, a change that reflects its broader activity in the insurance sector. > Continue to review a strategy for winding-up the portfolios. A number of options will be considered in more depth over 2005.

475

Operating margins $m
389* 368

Operating margins $m
103

120

100

68

342

324

80

58

49

51

60

40

20

00 (56)

01

01

01

02

03

00

02

03

04

00

02

03

04

04

-20

-40

-60

1 Run-off means the administration of insurance portfolios that have been closed to new business. 2 Australian Prudential Regulation Authority is the prudential regulator of the Australian financial services industry.

08 > amp.com.au >

Five year financial summary

YEAR ENDED 31 DECEMBER 2004 $M 2003 $M 2002 $M 2001 $M 2000 $M

Consolidated statement of financial performance1 Gross premium, fee and other revenue Deposits portion of gross premiums Net premium, fee and other revenue Investment gains (losses) Profit (loss) before tax Income tax (expense) credit Outside equity interests (included unattributed life funds until 2003) Net profit (loss) after tax attributable to shareholders

10,878 (8,913) 1,965 8,935 2,118 (486) (698) 934

13,671 (9,733) 3,938 6,989 (7,199)2 25 1,632 (5,542)

18,240 (13,379) 4,861 (7,787) (2,424) 801 727 (896)

19,912 (13,649) 6,263 (1,605) (587) 397 880 690

20,917 (13,874) 7,043 7,157 636 107 409 1,152

Notes: 1 All prior period amounts include UK operations up until the demerger, 12 December 2003. 2 Net loss in 2003 includes loss on demerger of UK operations ($3,585m), restructuring and demerger costs and writedowns.
2004 $M 2003 $M 2002 $M 2001 $M 2000 $M

AS AT 31 DECEMBER

Consolidated statement of financial position Cash at bank and on deposit Investment assets Goodwill Excess of market value over net assets of controlled entities Other assets Total assets Outstanding claims Borrowings and subordinated debt Life insurance policy liabilities Other liabilities Total liabilities Net assets Contributed equity Reserves Shareholders retained profits Total equity attributable to shareholders Unattributed life funds Outside equity interests AMP Reset Preferred Securities other controlled entities Total equity

936 67,042 499 254 2,354 71,085 1,243 4,971 52,828 2,817 61,859 9,226 5,620 (2,051) 586 4,155 5,071 9,226

3,251 60,545 540 255 5,630 70,221 1,644 10,061 47,512 3,114 62,331 7,890 5,533 (2,065) 61 3,529 4,361 7,890

11,358 136,876 945 1,825 6,967 157,971 3,129 12,881 116,245 7,793 140,048 17,923 5,001 871 2,661 8,533 5,494 1,141 2,755 17,923

8,485 152,094 866 2,926 7,719 172,090 3,772 13,212 128,913 8,876 154,773 17,317 4,613 823 4,084 9,520 6,232 1,565 17,317

5,960 158,620 195 3,945 8,427 177,147 5,497 13,457 131,213 10,057 160,224 16,923 4,206 612 3,967 8,785 6,802 1,336 16,923

YEAR ENDED 31 DECEMBER

2004

2003

2002

2001

2000

Other financial data Basic earnings per ordinary share Diluted earnings per ordinary share Dividends per ordinary share Number of ordinary shares Assets under management AUD:GBP (closing rate)

($ per share) ($ per share) ($ per share) (m) ($bn) (currency)

$0.50 $0.50 $0.27 1,860 90 0.4083

($4.00) ($4.00) $0.16 1,845 76 0.4209

($0.79) ($0.79) $0.46 1,159 256 0.3498

$0.62 $0.62 $0.51 1,129 292 0.3517

$1.05 $1.03 $0.47 1,105 291 0.3720

> amp.com.au > 09

Directors report
Your directors present their report on the consolidated entity consisting of AMP Limited and the entities it controlled at the end of or during the year ended 31 December 2004.

Directors details The AMP Limited Board consists of the non-executive chairman, five other non-executive directors and one executive director. Details of each directors qualifications, experience and special responsibilities are set out below: Peter Willcox, Chairman BA (Hons) MA. Age 59 Joined the AMP Limited Board in September 2002, and appointed Chairman in February 2003. Member of the Nomination Committee and Remuneration Committee. Experience: 28 years experience in the international petroleum industry. Former Chief Executive Officer of BHP Petroleum. Previously a Director of BHP Limited, Lend Lease Corporation Limited, Schroders Holdings Australia Limited, James Hardie Industries Limited, North Limited, F H Faulding Limited, Woodside Petroleum Limited, Tejas Gas Corporation (USA) and Hamilton Oil Corporation (USA). Directorships of listed companies held in past 3 years: Director of Mayne Group Limited since October 2002 and Chairman since January 2003. Director of Energy Developments Limited from August 1994 to December 2002. Andrew Mohl, Managing Director and Chief Executive Officer BEc (Hons). Age 49 Appointed Managing Director and CEO of AMP Limited in October 2002. Director of AMP Life Limited since December 1999, Gordian RunOff Limited and AMP Capital Investors Limited since February 2004. Experience: 25 plus years financial services experience, including more than eight years at AMP. Previously Managing Director of AMP Financial Services from 1999 to 2002. Prior to this role, Managing Director of AMP Asset Management, responsible for the units investment of all Australasian retail and wholesale funds. Joined AMP in 1996 as General Manager Retail Distribution, AMP Financial Services, leading the transformation of advice-based distribution and the development of AMPs multi-channel distribution platform. Former ANZ Senior and Chief Economist (1986-1990) and Managing Director ANZ Funds Management (1993-1996). Past Deputy Head of Research at the Reserve Bank of Australia. John Astbury FAICD. Age 60 Appointed to the AMP Limited Board in September 2004. Member of the Audit Committee. Director of AMP Life Limited since November 2004. Experience: Career began in the early 1970s in the United Kingdom, including a number of roles with London Multinational Bank, Chemical Bank and Charterhouse Bank. He moved to Australia in 1986, taking up the role of General Manager, Group Global Treasury with National Australia Bank in Melbourne. Held a number of roles with NAB including Chief General Manager of Institutional Banking and Chief General Manager of Banking Relationships, North. Held the role of Director of Finance, Lend Lease Corporation Limited. Directorships of listed companies held in past 3 years: Director of Woolworths Ltd since January 2004. Director of Insurance Australia Group Ltd (IAG) since July 2000, serving as Chairman of the IAG Audit Committee and Member of the IAG Nomination, Remuneration and Sustainability Committee. Director of MIM Holdings Ltd from July 1998 to June 2003. Other current directorships: Director of CGU-VACC Insurance Limited since January 2003, SGIO Insurance Limited since May 2002, SGIC General Insurance Limited since May 2002, NZI Insurance Australia since January 2003, Swann Insurance (Aust.) Pty Ltd since January 2003 and Chairman of Woolworths Group Superannuation Scheme Pty Ltd since February 2004. Richard Grellman FCA. Age 54 Appointed to the AMP Limited Board in March 2000. Chairman of the Audit Committee and member of the Nomination Committee. Director of AMP Life Limited since November 2001 and Gordian RunOff Limited since May 2004. Experience: 32 years experience in the accounting profession. Partner of KPMG from 1982 to 2000. Member of KPMGs National Board from 1995 to 1997 and National Executive from 1997 to 2000. Independent Financial Expert for AMPs demutualisation and Investigating Accountant for AMPs prospectus and listing in connection with the demutualisation. Directorships of listed companies held in past 3 years: Chairman of Cryosite Limited since December 2002. Director of Atlas Group Holdings Limited since February 2003. Other current directorships: Chairman of the Board and Council of the NSW Motor Accidents Authority since 1994. Director of Mission Australia since 1984 and President and Chairman since 2000. Meredith Hellicar BA, LLM (Hons). Age 51 Appointed to the AMP Limited Board in March 2003. Chairman of the Remuneration Committee. Director of AMP Bank since June 2004. Experience: 20 years senior executive experience in the oil, coal, logistics, legal and financial services industries. Previously Managing Director TNT Logistics Asia, Chief Executive of Corrs Chambers Westgarth and Managing Director of InTech Financial Services Limited. Previous Directorships include NSW Treasury Corporation, AurionGold and the NSW Environment Protection Authority. Directorships of listed companies held in past 3 years: Director of James Hardie Industries NV since May 1992 and Chairman since August 2004. Director of Amalgamated Holdings Limited since October 2003. Director of AurionGold until December 2002.

10 > amp.com.au >

AMP Limited Board From left: Peter Willcox Andrew Mohl John Astbury Richard Grellman Meredith Hellicar Peter Mason Nora Scheinkestel

Other current directorships: Director of Southern Cross Airports Group since 2003 and HIH Claims Support Limited since 2001. Chairman of HLA Envirosciences since 2002 and the Sydney Institute since 1998. Director of Garvan Institute Foundation since March 2002. Peter Mason AM BCom (Hons), MBA. Age 58 Appointed to the AMP Limited Board in October 2003. Member of the Remuneration Committee and the Audit Committee. Experience: Over 30 years experience in investment banking. Previously a Director of the Lloyds Bank investment banking business in Australia and the United Kingdom, Chairman and Chief Executive of Schroders Australia Limited and Group Managing Director of Schroders investment banking business in the Asia Pacific region. Directorships of listed companies held in past 3 years: Director of Mayne Group Limited from August 1992 to February 2005. Other current directorships: Chairman of JP Morgan Chase Bank in Australia since 2001, Ord Minnett Holdings Pty Limited since April 2004 and a member of the Council of the University of New South Wales since 1992. Dr Nora Scheinkestel LLB (Hons), PhD, FAICD. Age 44 Appointed to the AMP Limited Board in September 2003. Chairman of the Nomination Committee and member of the Audit Committee. Director of AMP Capital Investors Limited since February 2004.

Experience: Formerly a senior banking executive in international and project financing. Previously held positions with CRA Limited, Macquarie Bank, Chase AMP and Deutsche Bank where, as head of the Project Finance Unit, she was responsible for the development and financing of major projects in Australasia and South East Asia. Through her consulting practice, Dr Scheinkestel has assisted government, corporate and institutional clients in areas such as corporate governance and project and structured finance. An Associate Professor at the Melbourne Business School at Melbourne University. Previous Directorships include North Limited, IOOF Funds Management, Medical Benefits Fund of Australia Limited and Chairman and Director of various energy and water utilities. Directorships of listed companies held in past 3 years: Director of Newcrest Mining Limited since August 2000. Director of PaperlinX Limited since February 2000. Other current directorships: Chairman of South East Water Limited since July 2002. Company Secretary Prue Milne, Board Executive and Company Secretary BEc., LLM, Grad Dip CSP. Ms Milne joined AMP in June 1998 and was appointed Board Executive and Company Secretary on 4 December 2002. Before joining AMP she was a senior associate at a major law firm.

Attendance at board and committee meetings Details of attendance by directors of AMP Limited at board and committee meetings held during the year ended 31 December 2004 are as follows:
BOARD/ COMMITTEE HELD/ATTENDED AMP LIMITED BOARD MEETINGS A B AUDIT COMMITTEE A B NOMINATION COMMITTEE A B REMUNERATION COMMITTEE A B AD HOC COMMITTEES 1 A B

Peter Willcox Andrew Mohl John Astbury 2 Richard Grellman Meredith Hellicar Peter Mason Nora Scheinkestel

11 11 2 11 11 11 11

11 11 2 10 11 11 10

2 7 4 7

2 7 4 7

6 6 6

6 5 6

6 6 6

6 6 6

7 7 1 2 2 4

7 7 1 2 2 4

Pat Handley 3

Notes: Column A Indicates number of meetings held while the director was a member of the board/committee. Column B Indicates number of those meetings attended. 1 Ad hoc committees of the Board were constituted during the year in relation to the financial results, Board composition and capital related business. 2 John Astbury was appointed to the Board on 1 September 2004. 3 Pat Handley resigned from the Board on 20 May 2004. The Directors also attended other meetings, including management meetings, during the year.

> amp.com.au > 11

Directors Report continued

Principal activities AMP is a leading regional wealth management company with more than 3.4 million customers in Australia and New Zealand and over 3,400 employees. AMP has two major businesses, AMP Financial Services and AMP Capital Investors. AMP Financial Services distributes a range of financial products and services, primarily through the largest financial planning network in the market. Products and services include financial planning advice, superannuation, retirement savings and income, investments, life and general insurance and selected banking products. AMP Capital Investors is one of the largest investment managers in Australia and is the largest in New Zealand. AMP aims to be the leading provider of quality financial advice, simple, value for money products and superior investment performance in Australia and New Zealand. AMP also owns Cobalt/Gordian, which is focused on managing the profitable run-off of AMPs remaining books of general insurance and reinsurance business as well as providing services to external clients. AMP has approximately 960,000 shareholders and manages assets of $90 billion. Review of operations and results Following the demerger of AMPs UK operations in December 2003, AMPs focus has been on operational excellence to deliver shareholder value. This has been widely promoted as AMPs new strategic intent, which is running the business better than its ever been run before. This strategy has had four key focus areas: > reducing unit costs > growing cash flows > outperforming on investments > lowering balance sheet gearing. The result for the year ended 31 December 2004 was a net profit after tax attributable to shareholders of $934 million compared to a loss after tax of $5,542 million for the prior period. Operating profit after tax but before other items was $954 million, compared to $619 million profit excluding the results of the UK and related demerger and restructure costs in the prior period. Significant factors impacting the 2004 result were a strong investment performance as a result of improved investment markets, improved new business volumes and net external cash inflows, reduced costs and a reduction in debt and gearing levels. The group achieved an underlying return on equity of 18 per cent, stable from 2003. However, actual return on equity increased from 18 per cent to 25 per cent as a result of strong investment markets and a $131 million gain on AMPs stake in HHG, AMPs former UK operations. Total operating margins rose by 11 per cent to $564 million underlining the quality and strength of the group. An upturn in investment markets in 2004 had a positive impact on business unit operating margins and investment income. A 23 per cent rise in the Australian All Ordinaries Index assisted AMP in generating total investment gains (before tax) attributable to shareholders, policyholders and other equity interests of $8,935 million for the year ended 31 December 2004 compared to $6,989 million ($5,068 million excluding the UK) for the year ended 31 December 2003. Improved investment markets, higher new business volumes and improved persistency, mortality and morbidity experience together with a reduction in controllable costs, resulted in an increase of 15 per cent in AMP Financial Services operating margins to $475 million for the year ended 31 December 2004.

AMP Capital Investors investment management business increased operating margins by 7 per cent to $73 million as a result of higher performance fees, and transaction fees driven by improved investment performance and the successful execution of a number of structured finance transactions. This was in spite of lower recurring fee income due to the sale of the listed property trusts in the second half of 2003. Total assets under management were $90 billion, up 18 per cent from $76 billion at 31 December 2003 reflecting favourable investment markets and strong external cash flows. These cash flows were boosted by strong sales in the Japanese distribution channel and the Future Directions Funds, and improved support from institutional clients. Total investment gains include an increase of $131 million in the carrying value of AMPs remaining investment in HHG (approximately 10 per cent). The carrying value of $392 million is based on the 31 December 2004 ASX share price. Towards the end of 2004, HHG announced it would return significant capital to shareholders. Group office costs not recovered from business units fell from $34 million ($51 million before the release of $17 million in group office provisions no longer required in 2003) to $33 million for the year to 31 December 2004. This followed the review of group office costs and a 37 per cent reduction in full-time employees from 172 to 108, reflecting the reduced size of the group. Total borrowing costs fell from $687 million to $466 million mainly due to AMPs corporate debt restructure programme and AMP Bankings loan securitisation programme. AMPs financial position strengthened during 2004 as a result of AMPs repayment of $2,760 million corporate debt which included the following:

AMP Reset Preferred Securities redemption > On 14 January 2004, all of the 11.5 million outstanding AMP Reset Preferred Securities were redeemed for cash, at face value ($100) plus accrued distributions, using the proceeds of the AMP Rights Offer completed in December 2003. AMP Income Securities > On 20 April 2004, AMP announced the successful closure of the buy back of AMP Income Securities with more than 31,000 holders, representing 79 per cent of the securities, electing to sell back their securities. The offer closed with stronger-than-expected acceptances received from both retail and institutional holders. > In total, AMP repurchased $975 million of AMP Income Securities leaving a remaining balance of $265 million at 31 December 2004. Other debt repayment > As part of AMPs debt reduction programme, $747 million of offshore bonds were also repurchased in June 2004, offset by $112 million increase due to net foreign exchange movements.
Capital and reserves of the group attributable to shareholders have increased to $4,155 million from $3,529 million at 31 December 2003 mainly as a result of the net operating profit partly offset by the payment of dividends. As a result of corporate restructuring following AMPs demerger in 2003, staff numbers fell from 3,961 at 31 December 2003 to 3,464 at 31 December 2004. Significant changes to the state of affairs Divestments Diversified Utility and Energy Trusts (DUET) In the second half of 2003, AMP set up the Diversified Utility and Energy Trusts (DUET) and, through the life insurance funds, AMP acquired a controlling interest in DUET on behalf of policyholders and shareholders. The trusts own various interests in Australian gas and electricity distribution companies. During the year,

12 > amp.com.au >

AMP sold down its holding in DUET to 21 per cent and also sold half of the management rights. As a consequence AMP no longer controls DUET. At 31 December 2004, the consolidated statement of financial position does not include the individual assets and liabilities of DUET, and the carrying value of AMPs remaining investment is included as an investment in associated entities. The results of DUET were consolidated for the period up to the date AMP ceased to control DUET. Events occurring after the reporting date Proposed dividend Since 31 December 2004, AMP has proposed a final dividend on ordinary shares. See Note 8 of the Financial Report for details. Capital return and debt repayment On 17 February 2005, AMP announced that AMP Limited shareholders will receive a capital return of around $750 million or 40 cents a share in the first half of 2005. AMPs shareholders will have the opportunity to approve the capital return at the Annual General Meeting in May 2005. If approved, payment will be made in mid-June 2005. AMP has applied for a ruling from the Australian Tax Office to treat the capital return as a reduction in the cost base of the shares and not as a taxable dividend. In addition, AMP plans to redeem its outstanding $265 million of Income Securities. Under the terms and conditions contained in the Trust Deed for the Income Securities, AMP may redeem the securities any time after 10 February 2005. The securities will be redeemed on the next coupon payment date of 10 May 2005. The final payment of the face value and interest on the securities will be made on 10 May 2005. The capital return and debt repayment will be funded from surplus capital, which stood at over $2.1 billion at 31 December 2004. As at the date of this report, the directors are not aware of any matter or circumstance that has arisen since the end of the financial year that has significantly affected or may significantly affect the operations of the consolidated entity, the results of its operations or its state of affairs, which is not already reflected in this report. Likely developments Details of likely developments in AMPs businesses are set out elsewhere in this report. In the opinion of the directors, disclosure of further information about likely developments in AMPs businesses is commercially sensitive and would be likely to be detrimental and result in unreasonable prejudice to the company. The environment AMP believes that sound environmental management makes good business sense and creates value for our shareholders, customers, employees and the community. AMPs environment policy was reviewed by the board in January 2005 and is available on AMPs website (for more information on AMPs approach to its social responsibilities, refer to the Corporate Governance Report). 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. As an investor, AMP believes that engagement with companies on environmental issues is an effective way to influence management practices for the benefit of customers and the environment. Remuneration report The remuneration arrangements for AMP directors and senior executives are outlined in Note 10 of the Financial Report. The note meets remuneration reporting requirements of the Corporations Act 2001 and takes into account the requirements of the Australian Governments Corporate Law and Economic Reform Programme (CLERP 9) which applies

to reporting periods beginning on 1 July 2004. While AMP is not yet required to report under the CLERP 9 framework, AMP has taken these new disclosure requirements into account for this financial year. Details of the salaries paid and options granted to the directors and the five highest paid executive officers of the AMP group are disclosed in Note 10 of the Financial Report. These details contain information relating to the executive directors, the five current highest paid executive officers, and former executive officers whose total emoluments in 2004 would have been listed in the top five. Directors interests in AMP Limited shares are also set out in Note 10 of the Financial Report. Options Information relating to the options holdings of the Managing Director and the five highest paid executive officers of the AMP group is shown in Note 10 of the Financial Report. No options were granted or exercised in the year. Indemnification and insurance of directors and officers Under its Constitution, the company has, to the extent permitted by law, agreed to indemnify all officers of AMP (including the directors) for any liability, whether civil or criminal, (including the costs and expenses of defending actions for an actual or alleged liability) which they may incur in their capacity as an officer of the company. No indemnity is given to current or former employees of the AMP group against liability incurred in their capacity as an employee, unless approved by the board. No such indemnities have been provided during or since the end of the financial year. During the financial year, AMP agreed to insure all of the officers (including all directors) of the AMP group against certain liabilities as permitted by the Corporations Act 2001. The insurance policy prohibits disclosure of the nature of the liability, the amount of the premium and the limit of liability. In addition, the company and each of the directors are parties to Deeds of Indemnity and Access, as approved by the board. Those Deeds of Indemnity and Access provide that: > the directors will have access to the books of AMP Limited for their period of office and for seven years after they cease to hold office; > AMP Limited indemnifies the directors to the extent permitted by law; > the indemnity covers liabilities incurred by the directors in their capacity as officers of other AMP group companies; and > AMP Limited will maintain directors and officers insurance cover for the directors to the extent permitted by the law for the period of their office and for seven years after they cease to hold office. 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 of companies during the year ended 31 December 2004, by the Companys auditors, Ernst & Young. The Committee is 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 and did not compromise the auditor independence requirements of the Corporations Act for the following reasons: > all non-audit assignments were approved in accordance with the process set out in the AMP Charter of Audit Independence; > no non-audit assignments were carried out which were specifically excluded by the AMP Charter of Audit Independence; and > the level of fees for non-audit services amounted to 22 per cent of total audit fees (refer to Note 37 of the Full Financial Report for further details).

> amp.com.au > 13

Directors Report continued

Auditors Independence Declaration to the Directors of AMP Limited We have obtained an independence declaration from our auditors, Ernst & Young, a copy of which is attached to this report. Dividends Details of the dividends paid and declared during the financial year are disclosed in Note 8 of the Financial Report. Rounding In accordance with the Australian Securities and Investments Commission Class Order 98/0100, amounts in this Directors Report and the accompanying Financial Report have been rounded off to the nearest million Australian dollars, unless stated otherwise.

Signed in accordance with a resolution of the directors.

Peter Willcox Chairman

Andrew Mohl Managing Director and Chief Executive Officer Sydney, 17 February 2005

Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

Tel: +612 9248 5555 Fax: +612 9248 5959 DX Sydney Stock Exchange 10172

Auditors Independence Declaration to the Directors of AMP Limited In relation to our audit of the financial report of AMP Limited for the financial year ended 31 December 2004, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

Brian Long Partner, Sydney, 17 February 2005

14 > amp.com.au >

Analysis of shareholder profit

for the year ended 31 December 2004 This table shows a detailed analysis of the source of net profit (loss) after tax attributable to shareholders of AMP Limited by business unit.
2004 $M 2003 $M

ALL AMOUNTS AFTER INCOME TAX

AMP Financial Services1 AMP Capital Investors Cobalt/Gordian Total business unit operating margins Discontinued businesses2 Group office costs Total operating margins Underlying investment income Interest expense on Group debt3,4 Underlying contribution Investment Income market adjustment Profit after income tax before other items Business restructuring Other items Asset sales Valuation adjustments Goodwill amortisation Net profit after income tax

475 73 51 599 (2) (33) 564 220 (113) 671 283 954 2 14 (36) 934

414 68 58 540 2 (34) 508 210 (109) 609 10 619 (69) 20 (38) 168 (38) 662

HHG results and demerger costs Consolidated profit (loss) after income tax

934

(6,204) (5,542)

Notes: 1 AMP Ergo Mortgage and Savings Ltd (AEMS) previously classified as discontinued business has been reclassified and is now included as part of AMP Financial Services. 2003 numbers have been amended to reflect this. 2 Relates to AMP Banking discontinued businesses. 3 In 2003, an interest expense from 1 January 2003 to 12 December 2003 of $51m was incurred by HHG and was recorded in the demerged HHG results. For 2004, the interest expense from this debt is included in Interest expense on Group debt for AMP ($50m). 4 Includes distribution on AMP Reset Preferred Securities of $3m for 2004 (2003: $3m).

> amp.com.au > 15

Corporate governance
Approach to corporate governance AMP has a set of values that recognise our responsibilities to all of our stakeholders, including shareholders, customers, employees, the community and the environment. The board places great importance on the highest standards of governance and continually reviews its governance practices to address AMPs obligations as a responsible corporate citizen. In March 2003, the Australian Stock Exchange (ASX) Corporate Governance Council published its Principles of Good Corporate Governance and Best Practice Recommendations. AMP has adopted the principles and practices, meeting all of the ASX Best Practice Recommendations, with the exception of recommendation 9.4 relating to shareholder approval of equity based remuneration plans. This is primarily because a number of AMP executive equity plans were established prior to the release of the ASX Best Practice Recommendations and did not require shareholder approval under the Corporations Act, 2001 and ASX listing rules. In accordance with the best practice recommendations, AMP has posted copies of our governance practices in the corporate governance section of our website: www.amp.com.au including copies of relevant policies and terms of reference. A copy of the ASX Best Practice Recommendations can be obtained from the ASX website at www.asx.com.au/about/CorporateGovernance_AA2.shtm. Role of the board of directors (ASX Best Practice Recommendation 1.1) Functions of board and management The AMP Board is responsible to its shareholders for the overall governance and performance of the AMP group. The board The AMP Board primarily represents the long-term interests of shareholders by: > providing strategic direction to AMP through constructive engagement with senior management in the development, execution and modification of AMPs strategy > appointing the Managing Director and Chief Executive Officer (CEO), the Chief Financial Officer (CFO) and the Company Secretary and approving succession plans > monitoring the performance of the CEO and approving senior management remuneration policies and practices > reporting to shareholders and ensuring that all regulatory requirements are met > providing advice and counsel to management > ensuring appropriate compliance frameworks and controls are in place > approving policies governing the operations of the AMP group > approving decisions concerning the capital of the AMP group, including capital restructures and significant changes to major financing arrangements > making decisions in relation to initiatives or matters otherwise not dealt with as part of the strategy process (e.g. major acquisitions and withdrawal from existing major lines of business) > monitoring financial results on an ongoing basis > determining dividends and financing of dividend payments > ensuring the boards effectiveness in delivering best practice corporate governance > ensuring AMPs business is conducted ethically and transparently > reviewing strategic risk management including processes for identifying areas of significant business risk, monitoring risk management policies and procedures, overseeing internal controls and reviewing major assumptions used in the calculation of significant risk exposures > listening and responding to shareholders views on the management and direction of the company, and > considering the interests of all stakeholders. Role of management The Chief Executive Officer (CEO) is responsible for the overall management and profit performance of the AMP group. The CEO manages the organisation in accordance with the strategy, plans and policies approved by the board to achieve agreed goals. Board composition and size (ASX Best Practice Recommendations 2.4, 2.5) Independence of directors board composition and commitment The directors determine the size of the board, with reference to the Constitution, which provides that there will be a minimum of three directors and a maximum of 16 directors. The AMP Board is made up of a majority of independent non-executive directors and has only one executive director, the CEO. The chairman of the board is non-executive and independent of the role of the CEO. AMPs Constitution is available on AMPs website. Appointment of directors Nominations of new directors, recommended by the Nomination Committee, are considered by the full board. The Nomination Committee considers a wide base of potential directors, taking into account the range of skills and experience required in relation to the: > current composition of the board > need for independence > strategic direction and progress of AMP, and > geographic spread and diversity of AMPs businesses. From time to time, the Nomination Committee uses external consultants in this practice. The board assesses nominated directors against a range of criteria including experience, professional skills, personal qualities and their capacity to commit themselves to the boards activities. Any appointment is subject to any share qualification requirement of AMPs Constitution (Clause 60). A copy of the Nomination Committee terms of reference is available on AMPs website. Director independence It is important that the board operates independently of executive management. Each of the non-executive directors is considered by the board to be independent of management. This means that they do not have any business interest or other relationship that could materially interfere with the exercise of their independent judgement and their ability to act in the best interests of the company. AMP also includes independent directors on the boards of significant regulated subsidiaries. Chairmans appointment and responsibilities (ASX Best Practice Recommendations 2.2 and 2.3) Independence of directors board composition and commitment The chairman is appointed by the board from the non-executive directors. The chairman: > provides appropriate leadership to the board and AMP > ensures membership of the board is balanced and appropriate for AMPs needs > facilitates board discussions to ensure the core issues facing the organisation are addressed > maintains a regular dialogue and mentor relationship with the CEO > monitors board performance, and > guides and promotes the ongoing effectiveness and development of the board and individual directors.

16 > amp.com.au >

Conduct of board business The AMP Board normally holds around nine formal board meetings each year and will also meet whenever necessary to carry out its responsibilities. When conducting AMP Board business, directors have a duty to question, request information, raise any issue of concern, fully canvass all aspects of any issue confronting AMP and vote on any resolution according to their own judgement. Directors keep confidential: board discussions, deliberations and decisions that are not required to be disclosed publicly. Conflicts of interest Directors are required to continually monitor and disclose any potential conflict of interest that may arise. Directors must: > disclose to the board any actual or potential conflicts of interest that may exist as soon as the situation arises > take necessary and reasonable steps to resolve any conflict of interest within an appropriate period, if required by the board or deemed appropriate by that director, and > comply with the Corporations Act 2001 requirements about disclosing interests and restrictions on voting. Directors discuss with the chairman any proposed board or executive appointments they are considering undertaking and should advise AMP of such appointments to other companies as soon as possible after the appointment is made. The same requirement exists for related party transactions, including financial transactions with AMP. Related party transactions are reported in writing to the Board Executive and the Company Secretary and, where appropriate, raised for consideration at the next board meeting. Access to information Directors are encouraged to access members of senior management at any time to request relevant information. Directors are entitled to seek independent advice on AMP related matters at AMP's expense. Directors must ensure that the costs are reasonable and must inform the chairman before the advice is sought. The advice must be made available to the rest of the board.

CEO and CFO assurance (ASX Best Practice Recommendations 4.1 and 7.2) Integrity in financial reporting Recognise and manage risk The board receives regular reports about the financial condition and operational results of AMP and its controlled entities. The board has received and considered the annual certification from the CEO and the CFO in accordance with ASX Best Practice Recommendations 4.1 and 7.2 and the Corporations Act 2001 stating that: > the companys financial statements present a true and fair view of our financial position and performance and are in accordance with Australian accounting standards, and > the risk management and internal compliance and control systems are sound, appropriate and operating efficiently and effectively in all material respects. Throughout 2004, significant effort was devoted to the ongoing enhancement of the risk management, internal compliance and control systems. Some internal control deficiencies were identified during the year, and in all cases additional tests of procedures or tests of resulting account balances included in the financial statements have confirmed that there has been no material impact on the financial statements. Committees The board has established committees to consider certain issues and functions in further detail. The chairman of each committee reports on any matter of substance at the next full board meeting. All committee papers and minutes are provided to the board. There are currently three standing committees: > Audit Committee > Nomination Committee, and > Remuneration Committee. Other committees may be formed from time to time, as required. Each committee has its own terms of reference, approved by the board and reviewed annually, with additional review when appropriate. The chairman and CEO attend committee meetings where appropriate. The structure and membership of the board and its committees are summarised in the diagram below. The terms of reference for all committees are available on AMPs website.

Committees
AMP Limited Board

Committee Chair Members

Audit Committee
Richard Grellman Peter Mason, John Astbury, Nora Scheinkestel AMPs relationship with the external auditor Integrity of financial statements Business risk management framework, including compliance and internal controls

Nomination Committee
Nora Scheinkestel Peter Willcox, Richard Grellman

Remuneration Committee
Meredith Hellicar Peter Willcox, Peter Mason

Duties

Composition of the board Succession planning of the board Appointment of non-executive directors to subsidiary companies Continuing education Board performance reviews Director remuneration

Effectiveness, integrity and legal compliance of remuneration programmes Annual review and recommendation of CEOs total remuneration package

> amp.com.au > 17

Corporate governance continued

Nomination Committee (ASX Best Practice Recommendations 2.4 and 2.5) Independence of directors board composition and commitment The Nomination Committee supports and advises the AMP Board on board matters including policies, performance, remuneration, composition and succession planning. This includes identifying, evaluating and recommending candidates to the board and providing advice regarding candidates nominated by shareholders. The Nomination Committee also oversees the appointment of non-executive directors to the boards of subsidiary companies. The Nomination Committee is responsible for reviewing the remuneration of non-executive directors on the AMP board and on boards of key operating subsidiary boards. AMP has increased the presence of main board non-executive directors on subsidiaries to increase the non-executive directors knowledge and understanding of the businesses and to enhance the governance of the subsidiary boards. The terms of reference for all committees are available on AMPs website. Board performance assessment (ASX Best Practice Recommendation 8.1) Performance evaluation of the board and its committees, directors and key executives On an annual basis, the chairman facilitates a discussion and evaluation of the boards performance. During 2004, the board conducted a review of its operations, in particular focusing on the company as a whole; the boards role, processes and performance; the boards group dynamics and consideration of other relevant issues. In 2004, the board (excluding the chairman) also conducted a review of the chairmans performance. The board will conduct a formal review of the chairman every two years. Each directors performance is reviewed annually by the chairman and the board including prior to any director standing for re-election at a general meeting of the company. An evaluation of the majority of individual directors was conducted during 2004. All directors will have been evaluated prior to the 2005 Annual General Meeting. The criteria against which performance is assessed includes: uses superior judgement; acts in the best interests of stakeholders; provides strategic insight; is results focused; accepts accountability; is a continuous learner and mentor and works constructively in a team. The performance of each committee is also reviewed. Retirement of directors One-third of the directors are required to retire by rotation at each Annual General Meeting (AGM). The directors to retire at each AGM are those who have been longest in office since their last election. Where directors have served for equal periods, they may agree among themselves or determine by lot who will retire. A director must retire at the third AGM since last elected or re-elected. A director appointed as an additional or casual director by the board will hold office until the next AGM when the director is required to stand for election. This election will be in addition to any rotational retirements. The CEO (who is a director on the board) is not subject to retirement by rotation and is not to be taken into account in determining the retirement by rotation of directors. A director who holds any executive office with AMP (including the CEO) ceases to be a director when they no longer hold their executive office. The tenure of non-executive directors will generally be no longer than nine years. A non-executive director can continue to hold office after a nine-year term only if they are re-elected by shareholders at every subsequent AGM.

Remuneration Committee (ASX Best Practice Recommendations 9.2 and 9.5) Remunerate fairly and responsibly The Remuneration Committee advises the board on the effectiveness, integrity and legal compliance of AMPs remuneration programmes (including share and performance right plans), protocols and practices. Key responsibilities include annually reviewing and recommending to the board the total remuneration package of the CEO, reviewing and approving the remuneration of the CEOs direct reports and the short term incentive plan performance measures and incentive pool amounts. The terms of reference for all committees are available on AMPs website. Directors and executives remuneration Comprehensive information on AMPs remuneration policies and practices is contained in the remuneration report on page 39. The ASX Best Practice Recommendation 9 states that companies should ensure that payment of equity based remuneration for executives is made in accordance with thresholds set in plans approved by shareholders. While AMPs equity based remuneration plans have been designed around appropriate performance benchmarks and shares are acquired on market under those plans, the plans were established between 1998 and 2001, prior to the release of the ASX Best Practice Recommendations, and were not put to shareholders for approval as the plans did not require shareholder approval under the Corporations Act nor under the ASX and NZX listing rules. In this respect, AMP is not in compliance with this recommendation; however, there is no dilution of shareholder capital as our policy is for shares to be purchased on-market under all plans. Audit Committee (ASX Best Practice Recommendations 4.2, 4.3, 4.4, 4.5 and 7.1) Safeguard integrity in financial reporting Recognise and manage risk The Audit Committee assists the board to discharge its corporate governance responsibilities in regard to the: > business relationship with, and the independence of, the external auditor > reliability and appropriateness of disclosure of the financial statements and external related financial communication > maintenance of an effective framework of business risk management, including compliance and internal controls and the assurance provided by internal audit, and > adequacy of AMPs insurance programme, including directors and officers professional indemnity insurance cover. Auditor independence The independence of the external auditor is of particular importance to shareholders and the board. The board has adopted a Charter of Audit Independence that is reviewed regularly to keep it in line with emerging practices domestically and internationally. The key points covered by the Charter include: > rotation of the senior audit partner every five years > annual confirmation by the auditor that it has satisfied all professional regulations relating to auditor independence > quarterly reporting on the levels of audit and non-audit fees, and > specific exclusion of the audit firm from work which may give rise to a conflict. The Charter of Audit Independence is available on AMPs website. In accordance with the Corporations Act 2001 and, based on the advice of the Audit Committee, the directors have satisfied themselves that the provision of non-audit services during the year by the auditors is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

18 > amp.com.au >

Risk management The board has overall responsibility for ensuring that there is a sound system of risk management and internal compliance and control across the business. It also has responsibility for establishing risk management policies and the risk appetite of the AMP group, and ensuring that these are implemented. Specific monitoring and evaluation of the effectiveness of risk management and the internal control environment are delegated to the Audit Committee. The committee approves AMPs accounting policies, reporting practices and production of financial statements and monitors the application of appropriate management controls. It considers internal and external audit reports and reviews the adequacy of AMPs procedures and internal controls in order to monitor financial risks and major operational risks. Risk and compliance processes and reporting procedures provide assurance to the board and Audit Committee that the preparation of the financial statements and the control systems underlying them are adequate. Appropriate risk management structures exist throughout the organisation, including the Group Risk Committee and business unit risk committees. The risk management framework enables the business to identify and assess risks and controls, respond promptly and appropriately and continue to monitor risks and issues as they evolve. Risk and compliance information is reported quarterly to the Audit Committee, or more urgently, if required. During 2004, AMPs risk management structures and procedures were reviewed and in a number of cases enhanced or updated. The risk management systems were also upgraded to include quarterly management certification that appropriate internal controls, policies and procedures are in place. In addition, the internal audit function provides independent and objective assurance to the board that risks are being managed effectively across the group. The Risk Management Policy is available on AMPs website. Compliance Compliance is a key element of risk management. The board is responsible for ensuring that adequate measures are undertaken to manage compliance with the laws, regulations, contracts, industry codes, internal standards and policies applicable to AMPs operations. As required by the Corporations Act 2001, Australian financial services licensed entities have adopted individually tailored conflict of interest policies. Specific responsibility for the monitoring of compliance has been delegated to the Audit Committee. To ensure proper compliance, an improved system of compliance management has been, and continues to be, implemented across AMP businesses covering a broad range of legal requirements, duties and responsibilities. Any compliance issues or incidents are reported quarterly to the Audit Committee, or more urgently, if required. Code of conduct (ASX Best Practice Recommendation 3.1) Promote ethical and responsible decision-making AMP has adopted a code of conduct outlining the standards of personal and corporate behaviour required of all directors, officers and employees. This code reinforces an already strong ethical culture for the benefit of all stakeholders. A copy of the code of conduct is provided to all directors and employees on joining AMP. AMPs code of conduct is available on AMPs website.

Share trading policy AMPs Employee Share Trading Policy applies to directors and employees trading in AMP and other securities. AMPs Employee Share Trading Policy aims to: > protect stakeholders interests at all times > ensure that directors and employees do not use any information they possess for their personal advantage, or to the detriment of AMP; and > ensure that directors and employees comply with insider trading legislation of the various jurisdictions in which transactions may take place. Supplementary to the inside information rule, trading in AMP securities for directors, executives and certain employees is restricted to the following trading windows: > 30-day period beginning on the second day after the release of AMPs half-year results or yearly results > 30-day period beginning on the second day after the AMP Annual General Meeting, and > period commencing on the day after the issue of a prospectus offering AMP securities (or a document containing equivalent information) and ending on the day the offer closes. Outside the formal trading windows, a director or employee may, in the first 10 business days in December each year: > elect to participate in or vary or cease their participation in the AMP Employee Share Acquisition Plan and/or the AMP Executive Short Term Incentive Plan (or any successor or similar plans including any short term incentive bonus), and > apply to receive performance rights under the AMP International Employee Share Ownership Plan. During this limited trading window, a director or employee who is subject to the additional restrictions may not otherwise trade in AMP securities. Breaches of this policy may lead to disciplinary action being taken against the employee, including dismissal in serious cases. The policy is for AMP securities under employee share and incentive plans or the Non-Executive Directors Share Plan to be acquired on market by an external plan company at the times determined by the respective terms of the plan. AMPs Employee Share Trading Policy is available on AMPs website. Communication with shareholders (ASX Best Practice Recommendations 5.1, 5.2 and 6.1) Timely and balanced disclosure AMP is committed to transparency and quality in its communication to shareholders. Our approach to communicating with shareholders and financial markets is set out in AMPs Market Disclosure Policy. Information is communicated to shareholders through the distribution of the Annual Report and other communications as required. All significant information is posted on AMPs website as soon as it is disclosed to the ASX. The guiding principle of the policy is that AMP must immediately notify the market via an announcement to the ASX of any information concerning AMP that a reasonable person would expect to have a material effect on the price or value of AMP securities. A Market Disclosure Committee ensures that company announcements: > are made in a timely manner > are factual > are expressed in a clear and objective manner that allows investors to assess the impact of the information when making investment decisions, and > do not omit material information. Shareholders can elect to receive all communications electronically, as hard copy or not to receive some communication materials by contacting our share registry or visiting the website. AMPs Market Disclosure Policy is available on AMPs website.
> amp.com.au > 19

Corporate governance continued

Annual General Meeting (AGM) (ASX Best Practice Recommendations 6.1 and 6.2) Rights of shareholders All shareholders are encouraged to attend and/or participate in AMPs AGM. The meeting is webcast live or shareholders can attend in person or send a proxy as their representative. Online proxy voting is also available for all shareholders prior to the meeting. Unless indisposed, all directors and senior management attend the meeting, along with the external auditor. Full details of the next AGM are included in the mailing for this Annual Report. Social responsibility (ASX Best Practice Recommendation 8.1) Encourage enhanced performance AMPs purpose in helping people to manage their financial well-being so they can enjoy the future they want is itself an important social responsibility. We also make a positive contribution to the communities in which we operate through lobbying for change within the financial services industry that benefits the community at large, as well as the community investment activities of the AMP Foundation. During 2004, AMPs management clearly defined the companys Social Responsibility Plan, which was endorsed by the board. Our strategy is to identify and act on a small number of issues that are close to our core business where we can make a difference. We will not seek publicity around these activities our actions will speak for us and we will be open and honest around what we are doing and why. AMPs Social Responsibility Plan, summarised below, looks at our social responsibilities from four perspectives and outlines our objectives for each. For AMP, Community relates to the general community in Australia and New Zealand; Marketplace encompasses our planners, customers and suppliers; Workplace is our employees; and Environment is the natural world. The Corporate Responsibility Index (see www.corporate-responsibility.com.au for more information) was used to help develop our strategy and in 2004 we participated in the index to monitor our progress and gain feedback on our social responsibility performance to date.

While the CEO has overall responsibility for the delivery of our Social Responsibility Plan, this responsibility reaches much further into AMP, with senior management and many other employees directly involved. Comparison of NZX and ASX Corporate Governance rules As an overseas listed issuer, AMP is deemed to satisfy and comply with the New Zealand Stock Exchange (NZX) listing rules so long as it remains listed on the Australian Stock Exchange (ASX). The only NZX requirements applicable to AMP are to give the NZX the same information and notices it is required to give to the ASX and to include in its annual report this comparison of the material differences between the ASX and NZX corporate governance rules and principles. As a general matter, the Australian equivalent of a number of the NZX corporate governance rules are contained in the Corporations Act rather than the ASX listing rules. Some differences arise between the corporate governance rules of the ASX and NZX because the relevant matters are mandatory under the NZX corporate governance rules but are only best practice recommendations under the ASX corporate governance rules (requiring disclosure of non-compliance in the Annual Report). The following differences may be considered material: > the NZX listing rules require that one-third of the directors and at least two directors are independent. The ASX listing rules contain no equivalent requirement, however, the ASX corporate governance rules recommend that the board of a listed issuer consist of a majority of independent directors. AMPs board is comprised of a majority of independent directors; > the NZX listing rules require the board to make determinations periodically as to the independence of directors and to make appropriate releases to the market. The ASX corporate governance rules require disclosure in the annual report only; and > the ASX principles specifically address additional corporate governance matters in relation to risk management, internal controls and stakeholder interest and require public disclosure of policies and procedures. The NZX principles do not specifically address these matters or require the same level of public disclosure.

AMPs Social Responsibility Plan

Community
Objective

Marketplace

Workplace

Environment

Helping to increase the effectiveness of Australia and New Zealands retirement income systems so that people can better prepare and provide for themselves in retirement. This includes increasing individual saving rates and mandatory saving through superannuation.

Objective

Helping to lift the standard of financial advice available to all Australians and New Zealanders. This includes working to improve how well people understand how to manage their money to prepare for retirement.

Objective

Building community investment programmes that have a positive impact on the community and are aligned to AMPs business.

Building sustainable supply chains that benefit both AMP and the supplier and include social and environmental standards.

Encouraging AMP employees to increase their skills and capabilities so they are more effective both within and outside AMP.

Increasing the efficiency of AMPs operations and reducing its environmental footprint.

Objective

Influencing investee companies to improve their corporate governance, operational, environmental and social practices with the objective of maximising returns to their shareholders.

20 > amp.com.au >

Concise Financial Report

for the year ended 31 December 2004 Contents of this report Statement of financial performance Statement of financial position Statement of cash flows Notes to the financial statements 1 Basis of preparation of the Concise Financial Report 2 2003 demerger of AMPs UK operations 3 Impact of introduction of International Financial Reporting Standards 4 Segment information 5 Revenues from ordinary activities 6 Expenses from ordinary activities 7 Contributed equity 8 Dividends 9 Reserves and retained profits 10 Director and executive disclosures 11 Events occurring after reporting date Directors declaration Independent audit report 23 25 27 28 28 29 32 34 35 36 37 38 39 54 55 55

AMP Concise Financial Report > amp.com.au > 21

Statement of financial performance

Discussion and analysis for the year ended 31 December 2004 Basis of consolidated financial information The 2004 consolidated net profit after tax attributable to the shareholders of AMP Limited is $934m. The 2003 consolidated loss of $5,542m included the results of AMPs demerged UK operations up to 12 December 2003 and the loss on demerger. Refer to Note 2 for details of the pro-forma 2003 comparatives excluding the results of demerged UK operations and the loss on demerger. The statement of financial performance includes consolidated amounts of shareholder interests and policyholder interests and, in 2003, unattributed life funds. Revenue and expense transactions relating to AMPs life insurance funds are attributed to them as Movement in life insurance policy liabilities, which have been deducted in arriving at the shareholders net profit or loss from ordinary activities before income tax. Premium and related revenue AMP experienced a rebound in cash flows in 2004, reflecting both better investment markets and improved confidence in the company. Premium revenue in 2004, which comprises life and general insurance premiums in Australia and New Zealand, rose to $1,097m, an increase of $101m over 2003, excluding demerged UK operations. The aggregate of Fee and other revenue of $868m in 2004 (2003: $861m excluding demerged UK operations) was in line with the 2003 amounts. 2004 includes increased investment management fees from increased funds under management. 2003 included one-off revenues of $110m from the sale of listed property trusts and the divestment of non-core banking business. Investment gains and losses Investment gains and losses comprise the net gains and losses on all investments held by the AMP group, including all the net gains and losses of investments held by AMPs life insurance funds. Total investment gains of $8,935m as shown in Notes 2 and 5 (2003: $5,068m excluding demerged UK operations) reflects: > increased dividend, distribution, interest and rent returns on the higher levels of investments held in all asset categories throughout 2004, compared with 2003 excluding demerged UK operations; and > significant improvement in net realised and unrealised gains and losses due to improved market conditions. Claims and related expenses Claims and related expenses in 2004 comprise life and general insurance claims in Australia and New Zealand of $1,206m representing an increase of $116m over 2003 amounts, excluding demerged UK operations. General insurance claims increased by $300m in 2004. In 2003, general insurance claims were significantly lower due to a favourable impact of the Australian dollar against the underlying foreign currencies on the value of outstanding claims. Movement in life insurance policy liabilities Movement in life insurance policy liabilities includes the revenues and expenses of AMP attributable to AMPs life insurance funds. The movement for 2004 was a net $5,286m increase in the liabilities to policyholders (2003: a net increase of $2,174m excluding demerged UK operations). This reflects the allocation of increased investment gains during the year to investment linked and participating life insurance policyholders. Operating expenses AMPs focus on reducing costs to the lowest sustainable level continued in 2004. The reduction in operating expenses to $1,824m as shown in Note 6 (2003: $2,075m excluding demerged UK operations) reflects the impact of: > continued cost efficiency initiatives and restructuring activities implemented; and > reduced staff costs due to lower employee numbers. The 2003 total expenses of $3,821m included: > operating expenses relating to demerged UK operations up to 12 December 2003; > restructuring costs of $558m after tax relating to the implementation of strategic reform initiatives and the demerger of the UK operations; and > $245m writedown of goodwill relating to demerged UK entities. Borrowing costs Total borrowing costs on corporate debt, AMP Bank debt and debt in controlled entities of AMPs life insurance funds in 2004 of $466m (2003: $687m) include interest on borrowings, interest on subordinated debt and realised and unrealised gains/losses on swaps and foreign exchange contracts. 2003 included $118m in relation to demerged UK operations. The 2004 costs represent the impact of: > lower level of AMP Bank activity following the sale of non-core banking activities $114m costs (2003: $190m); > lower level of corporate borrowings following the corporate debt restructure programme $204m costs (2003: $263m) including the interest on UK borrowings transferred to Australia as part of the demerger. The 2004 amounts include additional costs incurred in the debt restructure of $43m ($30m after tax); and > interest on operational debt of $148m (2003: $116m) in controlled entities of AMPs life insurance funds. Income tax expense (2003: tax credit) The income tax expense (credit) arises on the result for the year and includes the taxation impact on shareholder interests and policyholder interests of all AMPs life insurance funds, in particular, taxation of investment gains made during the year in respect of policyholder interests in the life funds. The increase in tax expense in 2004 is attributable to the large increase in net realised and unrealised gains on investments offset by a reduction in tax credits (re tax losses) generated in 2004. Tax expense in 2003 included the impact of the adoption of tax consolidations a $205m reduction in tax expense. Other equity interests This is the conventional accounting to adjust for the profit attributable to the minority interests in controlled entities. The large credit reflects the net profit of controlled entities in which AMP did not hold 100% ownership; there was a significant increase in 2004 in the overall level of investments in controlled entities which are not 100% owned by AMP. Unattributed life funds 2003 Unattributed life funds relates to the with-profits business of UK life funds. The 2003 movement reflects: > unattributed share of the losses due to UK strategy changes; > investment gains on unattributed life funds; and > utilisation of the unattributed life funds to support bonus distributions to UK policyholders.

22 > amp.com.au > AMP Concise Financial Report

Statement of financial performance for the year ended 31 December 2004

NOTE

2004 $M

2003 1 $M

Revenues and expenses of policyholders, shareholders and other equity interests Premium and related revenue Fee and other revenue Investment gains and losses Claims and related expenses Movement in life insurance policy liabilities2 Operating expenses Borrowing costs Loss on demerger of UK operations Profit (loss) from ordinary activities before income tax Income tax (expense) credit Net profit (loss) from ordinary activities after income tax Remove net profit or loss from ordinary activities after income tax not attributable to shareholders Outside equity interests in other controlled entities Movement in unattributed life funds2 Distribution to AMP Reset Preferred Securities holders Net profit (loss) after income tax attributable to shareholders of AMP Limited Movement in equity contribution reserve Net exchange difference on translating self-sustaining foreign operations Total changes in equity other than those resulting from transactions with owners as owners

5 5 5 6 6 6

1,097 868 8,935 (1,206) (5,286) (1,824) (466) 2,118 (486) 1,632

2,726 1,212 6,989 (5,505) (4,528) (3,821) (687) (3,585) (7,199) 25 (7,174)

(698) 934 12

(214) 1,940 (94) (5,542) 1,019 (906)

946

(5,429)

CENTS PER SHARE

CENTS PER SHARE

Basic earnings (loss) per ordinary share Diluted earnings (loss) per ordinary share

50.4 50.3

(399.9) (399.9)

Notes: 1 The 2003 comparatives include amounts in respect of the UK controlled entities which were demerged on 12 December 2003. A proforma statement of financial performance excluding AMPs demerged UK operations has been provided in Note 2. 2 Revenues and expenses include combined amounts not only of shareholder interests, but also of all life funds. The life funds amounts have a substantial impact on most of the lines, especially investment gains. Generally, policyholders interests in the transactions for the year, including investment gains and losses, are attributed to them in the line Movement in life insurance policy liabilities. In 2003, some of the interests of policyholders in UK life funds were attributable to those policyholders in the line Movement in unattributed life funds.

AMP Concise Financial Report > amp.com.au > 23

Statement of financial position

Discussion and analysis as at 31 December 2004 Basis of consolidated financial information Assets and liabilities include consolidated amounts of shareholder interests and also policyholder interests of all life funds. The majority of the consolidated investment assets relate to AMPs life insurance funds, mainly backing policy liabilities. Policyholders interests are recognised as Life insurance policy liabilities and are determined in accordance with accounting and actuarial standards. In 2003 the AMPs life insurance funds gained a controlling interest in electricity and gas distribution networks through the Diversified Utility and Energy Trusts (DUET). During 2004, AMP sold down its interest in the trusts to 21%, and, as a consequence, it no longer controls DUET. Cash at bank and on deposit In 2003, Group Treasury companies held $2,540m in cash, of which $1,169m was the proceeds of the AMP Rights Offer in December 2003. During the first half of 2004, $1,150m was used to repay the AMP Reset Preferred Securities and $955m to repurchase the majority of the AMP Income Securities. Investments Equity securities, debt securities and property have increased during the year mainly due to the improved market conditions in 2004 which have resulted in increases in both the value of existing investments and increased new business. The increase includes the revaluation by $131m of AMPs remaining investment in HHG (10%) after the demerger. Operating assets Operating assets of $76m (2003: $1,956m) have decreased by $1,880m mainly due to the removal of the operating assets (including buildings and utility network assets) of DUET which ceased to be controlled entities of AMPs life insurance funds during 2004. Deferred tax assets The deferred tax assets comprise timing differences of $262m (2003: $392m) and tax losses of $16m (2003: $19m). Other intangible assets Other intangible assets in 2003 were in the accounts of DUET which ceased to be controlled entities of AMPs life insurance funds during 2004. Excess of market value over net assets (EMVONA) EMVONA of $254m (2003: $255m) relates to investments which are held by life entities in the AMP Group. The EMVONA of controlled entities represents future benefits expected to be derived from the business which are not reflected in the book values of underlying assets and liabilities of the entities. Accounting standards do not require EMVONA to be amortised. AMP Reset Preferred Securities (RPS) On demerger in December 2003, the RPS became a liability of AMP as the directors committed to their redemption for cash. The RPS were repaid on 14 January 2004. Payables Payables of $1,322m have reduced in 2004 predominantly due to the fact that AMP no longer controls DUET at 31 December 2004. Deferred tax liabilities The large increase in deferred tax liabilities reflects the impact of higher unrealised gains in 2004 in AMPs life insurance funds. Borrowings and subordinated debt Total borrowings and subordinated debt fell from $8,911m to $4,971m due to: > the impact of AMPs corporate debt restructure programme; and > the fact that AMP no longer controls DUET at 31 December 2004 (amount of $2,539m in 2003). Borrowings and subordinated debt used to fund corporate activities were $1,553m (2003: $3,163m). Life insurance policy liabilities Life insurance policy liabilities are calculated in accordance with the principles of Margin on Services as prescribed by AASB 1038 Life Insurance Business and Actuarial Standard 1.03, a standard issued under the Australian Life Insurance Act 1995. The movement in policy liabilities primarily reflects the normal allocation to policyholders of investment income for the year, net of expenses. Other equity interests This is the conventional accounting to adjust for the net assets attributable to the minority interests in controlled entities. The increase is due to the higher overall level of investments in controlled entities which are not 100% owned.

24 > amp.com.au > AMP Concise Financial Report

Statement of financial position as at 31 December 2004

NOTE

2004 $M

2003 $M

Assets Cash at bank and on deposit Receivables Equity securities Debt securities Property Other investments Operating assets Deferred tax assets Other assets Goodwill Other intangible assets Excess of market value over net assets of controlled entities Total assets of policyholders, shareholders and other equity interests Liabilities AMP Reset Preferred Securities Payables Current tax liabilities Outstanding claims Provisions Deferred tax liabilities Borrowings Life insurance policy liabilities Subordinated debt Total liabilities of policyholders, shareholders and other equity interests Net assets of shareholders and other equity interests Equity attributable to shareholders Contributed equity Capital reserve Equity contribution reserve Foreign currency translation reserve Shareholders retained profits Demerger loss reserve Total equity attributable to shareholders Other equity Outside equity interests in controlled entities Total other equity Total equity of shareholders and other equity interests

936 1,810 29,748 26,188 10,413 693 76 278 190 499 254 71,085

3,251 1,772 26,222 23,718 9,644 961 1,956 411 244 540 1,247 255 70,221

1,322 116 1,243 351 1,028 4,231 52,828 740 61,859 9,226

1,150 1,802 142 1,644 504 666 6,424 47,512 2,487 62,331 7,890

7 9 9 9 9 9

5,620 510 1,019 5 586 (3,585) 4,155

5,533 510 1,019 (9) 61 (3,585) 3,529

5,071 5,071 9,226

4,361 4,361 7,890

AMP Concise Financial Report > amp.com.au > 25

Statement of cash flows

Discussion and analysis for the year ended 31 December 2004 Basis of consolidated cash flow information All of the operating cash flows and the majority of the investing cash flows presented in the statement of cash flows include cash flows relating to shareholders interests and also the interests of policyholders. The 2003 comparatives include the cash flows of the demerged UK operations. Cash flows from operating activities Net cash inflows from operating activities are $817m (2003: outflow of $4,710m). The majority of the 2003 outflow comprised amounts relating to the demerged UK operations. The net inflows in 2004 compared with 2003 (after excluding demerged UK operations) reflect increased life insurance premiums and related revenue received, lower life insurance claims and related expenses paid and lower operating expenses. Cash flows from investing activities Net cash inflows from investing activities of $860m (2003: $4,677m) reflect investment and funding strategies adopted during the year for both shareholders capital and AMPs life insurance fund assets, generating net inflows from the sale of investments. Cash flows from financing activities There was a net cash outflow from financing activities of $3,071m (2003: outflow of $993m) principally reflecting: > net repayment of borrowings $2,744m (2003: $3,749m including UK); and > dividends paid, net of dividends reinvested was $320m (2003: Nil). In 2003, the Dividend Reinvestment Plan was fully underwritten. The 2003 final dividend and the 2004 interim dividend were both paid in 2004 and were not underwritten.

2004 $M

2003 $M

Cash comprises: Cash on hand Cash on deposit Deposits (included in borrowings) Bank overdrafts (included in borrowings) Short term bills and notes (included in investments) Balance at the end of the year

482 454 (1,858) (55) 6,690 5,713

347 2,904 (1,752) (109) 5,713 7,103

26 > amp.com.au > AMP Concise Financial Report

Statement of cash flows for the year ended 31 December 2004

2004 $M

2003 1 $M

Cash flows from operating activities Cash receipts in the course of operations Interest and other items of a similar nature received Dividends received Cash payments in the course of operations Borrowing costs Income tax (paid) refunded

11,670 1,296 419 (12,065) (531) 28 817

15,469 3,754 978 (24,228) (672) (11) (4,710) 1,894 27,142 10,252 50,757 3,214 539 607 (1,235) (14,333) (8,837) (61,195) (2,133) (1,627) (368) 4,677

Cash flows from shareholder and policyholder investing activities Proceeds from sale of properties Proceeds from sale of equities Proceeds from sale of units in unit trusts Proceeds from sale of interest-bearing securities Proceeds from repayment of loans Proceeds from sale of other investments Proceeds from sale of controlled and associated entities2 Payments to acquire properties Payments to acquire equities Payments to acquire units in unit trusts Payments to acquire interest-bearing securities Loans granted Payments to acquire other investments Payments to acquire controlled and associated entities2

665 6,970 15,805 17,472 844 59 97 (602) (10,295) (12,017) (17,558) (458) (97) (25) 860

Cash flows from (used in) operating activities and shareholder and policyholder investing activities Cash flows from corporate investing activities Proceeds from divestment of non-core banking business3 Cash in UK operations demerged Cash flows from (used in) corporate investing activities Cash flows from financing activities Proceeds from borrowings Proceeds from share issues (net of issue costs and buy back) Repayment of borrowings3 Payment for the redemption of AMP Reset Preferred Securities Payment for AMP Income Securities buy back Dividends paid (net of dividends reinvested)4 Distribution to AMP Reset Preferred Securities holders Cash flows from (used in) financing activities Net increase (decrease) in cash Balance at the beginning of the period Effect of exchange rate changes on cash balances Balance at the end of the period

1,677

(33)

3,523 (6,749) (3,226)

384 (1,023) (1,150) (955) (320) (7) (3,071) (1,394) 7,103 4 5,713

475 2,855 (4,224) (99) (993) (4,252) 13,069 (1,714) 7,103

Notes: 1 The 2003 comparatives include amounts of the UK controlled entities which were demerged on 12 December 2003. 2 Net of cash disposed or acquired. 3 The 2003 proceeds from the divestment of non-core banking business enabled repayment of borrowings of a similar amount. 4 Commencing from the October 2002 interim dividend, the Dividend Reinvestment Plan was underwritten until the end of 2003. The 2003 final dividend and the 2004 interim dividend were both paid in 2004 and were not underwritten.

AMP Concise Financial Report > amp.com.au > 27

Notes to the financial statements

for the year ended 31 December 2004 1. Basis of preparation of the Concise Financial Report The Concise Financial Report has been prepared in accordance with the requirements of the Corporations Act 2001 and Accounting Standard AASB 1039 Concise Financial Reports and applicable Australian Securities and Investments Commission Orders. The AMP Group consists of AMP Limited (AMP) and its controlled entities including life insurance funds of those controlled entities. As a result, both shareholder and policyholder interests in the life insurance funds of controlled entities are consolidated. AMP prepares the consolidated financial statements on the basis of market value and historic cost generally accepted accounting principles. Insurance entities, which represent the material operations of the 2. 2003 demerger of AMPs UK operations The table below compares the 2004 consolidated statement of financial performance to a proforma consolidated statement of financial performance which has been restated to exclude the result of the UK operations and demerger and restructure costs relating to the UK for the year ended 31 December 2003:
CONSOLIDATED 2004 ACTUAL $M 2003 PROFORMA 1,2 $M

AMP Group, adopt the principles of market value accounting whereby changes in market value of assets and liabilities during the year are recognised in the statement of financial performance. Comparative information Where necessary, comparative information has been reclassified to be consistent in disclosure with current period amounts and other disclosures. Changes in accounting policies Accounting policies in this Financial Report are consistent with those of the previous year.

Revenues and expenses of policyholders, shareholders and other equity interests Premium and related revenue Fee and other revenue Investment gains and losses Claims and related expenses Movement in life insurance policy liabilities Operating expenses Borrowing costs Profit from ordinary activities before income tax Income tax expense Net profit from ordinary activities after income tax Remove net profit or loss from ordinary activities after income tax not attributable to shareholders Outside equity interests in other controlled entities Net profit after income tax attributable to shareholders of AMP Limited

1,097 868 8,935 (1,206) (5,286) (1,824) (466) 2,118 (486) 1,632

996 861 5,068 (1,090) (2,174) (2,075) (676) 910 (34) 876

(698) 934

(214) 662

Notes: 1 The 2003 proforma balances include inter-company transactions between AMP Group entities and the UK controlled entities which were demerged in 2003. 2 The proforma consolidated 2003 statement of financial performance includes the revenue and expenses relating to corporate borrowings and funding activities transferred to Australia as part of the restructure prior to the demerger. Expenses relating to the AMP Reset Preferred Securities are not included.

28 > amp.com.au > AMP Concise Financial Report

3. Impact of introduction of International Financial Reporting Standards AMP is required to adopt Australian equivalents to International Financial Reporting Standards (AIFRS) and Urgent Issues Group abstracts at 1 January 2005. Upon adoption of AIFRS, entities are required to restate their comparative financial statements to amounts reflecting the application of AIFRS to that comparative period. Therefore, AMPs consolidated financial statements for the half year ending 30 June 2005 and the year ending 31 December 2005 will be based on AIFRS and will include the comparative AIFRS amounts and disclosures for the 2004 half year and full financial year. This will require adjustments to be made, retrospectively, against opening retained earnings at 1 January 2004. AMP is progressing its work to convert accounting policies and financial reporting processes to AIFRS. AMP established project teams comprising internal resources and expert consultants to analyse the requirements, conduct impact assessments to identify key areas that will affect AMP and oversee the implementation of AIFRS across the AMP Group. An AIFRS steering committee, which reports to the Chief Financial Officer, has responsibility for project oversight and decision making. An AIFRS technical committee advises the steering committee on issue resolution. The project team is working to a detailed timetable for managing the transition and is currently on schedule. The project team will continue to monitor the adoption of AIFRS by AMP. The project team has identified a number of accounting policy changes that are required although some of these are subject to potentially different interpretations within the insurance industry which may give rise to changes once interpretations have developed. Set out below are descriptions of the key differences between the accounting standards adopted by AMP in the preparation of this Financial Report (current accounting standards) and AIFRS based upon AMPs current interpretations of AIFRS. An estimate of the financial impact on AMPs opening retained earnings at 1 January 2004 of these key differences has been provided where the impact is known or is reliably estimable. These are AMPs best estimates as at the date of preparing this Financial Report. However, further changes could arise from potential amendments to AIFRS and interpretations thereof being issued by the standard setters and the International Financial Reporting Interpretations Committee (IFRIC). In particular, the measurement basis of fair value is still being developed within the life insurance industry globally. AMP also understands that the International Accounting Standards Board (IASB) is considering proposals to limit the availability of the fair value measurement option under the financial instruments standard in response to concerns from some international regulators. Although this is not expected to have an impact on AMPs AIFRS adjustments to opening retained earnings at 1 January 2004, it could lead to changes in 2006 or earlier. Accounting by insurance companies Under current accounting standards, all transactions carried out by, and assets and liabilities of, an insurance company including those of the shareholders fund are accounted for under the overall insurance accounting principles set out in the current versions of AASB 1038 Life Insurance Business and AASB 1023 Financial Reporting of General Insurance Activities. Under AIFRS, the accounting treatment is considered for each component of the entitys financial activities and, in the case of assets and liabilities relating to policyholders business, is determined depending on the nature of the contract (either insurance or investment). In some instances, AIFRS causes departure from the matching principle within the current accounting standards for life insurance companies whereby the valuation of the assets, and associated liabilities, held on behalf of policyholders is consistent with the valuation of Life insurance policy liabilities. The main impacts for AMP of this mismatching are discussed within the relevant sections below. The IFRS on the recognition and measurement of insurance contracts is currently being developed by the IASB as part of Phase II of its insurance project. Therefore, until at least 2008, for contracts which classify as insurance under AIFRS, life insurance and general insurance contract liabilities will continue to be accounted for substantially as they are under current accounting standards pending the outcome of Phase II. The main change from current accounting standards is the requirement to use risk-free discount rates unless benefits are contractually linked to asset performance where a market return discount rate can continue to be used. This initial adjustment is expected to reduce opening retained earnings at 1 January 2004 by approximately $20m. Approximately 60% of AMPs Life insurance policyholder liabilities will be classified as investment contract liabilities under AIFRS. The impacts of changes relating to investment contracts are discussed below. All of AMPs general insurance contracts will be classified as insurance contracts. Deferred acquisition costs Under current accounting standards all acquisition costs incurred in relation to acquiring new life insurance business are deferred in the statement of financial position and subsequently recognised over the life of the insurance contract. Under AIFRS, acquisition costs arising in relation to investment contracts are only deferrable to the extent they are incremental and directly attributable to securing the individual contracts. Consequently, upon adoption of AIFRS there is an adjustment to the opening statement of financial position to derecognise the deferred acquisition costs on investment contracts not meeting this definition. This initial adjustment is expected to increase Life insurance policy liabilities and reduce opening retained earnings at 1 January 2004 by approximately $440m. Future non-incremental acquisition costs are expected to be expensed as they are incurred. The measurement and recognition of acquisition costs on insurance contracts is unchanged until such time as new standards are developed for the recognition and measurement of insurance contracts. Defined benefit superannuation funds AMP is the employer sponsor of defined benefit superannuation funds. Under current accounting standards AMP recognises contributions to the funds as an expense but does not recognise any liability or asset in relation to fund deficits or surpluses. Under AIFRS, AMP will recognise in the statement of financial position the net surplus or deficit position of each scheme. The surplus or deficit will be measured as the difference between the fair value of the schemes assets and the discounted defined benefit obligations of the schemes using a government bond yield as the discount rate, rather than the asset return rate adopted currently for disclosure purposes. The initial adjustment to recognise the net deficit of the defined benefit funds is expected to reduce opening retained earnings as at 1 January 2004 by approximately $80m. After the initial adjustment, further movements in the net deficit or surplus of each scheme will be recognised in the statement of financial performance except that part of the movement that represents actuarial gains or losses may be recognised directly in equity. Derivative financial instruments and hedge accounting Under current accounting standards, for other than life insurance companies, costs arising at the time of entering into hedge transactions are brought to account in the statement of financial performance over the lives of the hedge contracts. Borrowings, for other than life insurance companies, are recorded at amortised historic cost.

AMP Concise Financial Report > amp.com.au > 29

Notes to the financial statements continued for the year ended 31 December 2004

3. Impact of introduction of International Financial Reporting Standards continued For life insurance companies, under current accounting standards, costs arising at the time of entering into hedge transactions are recognised in the statement of financial performance at market value. Borrowings for life insurance companies are recorded at market value. Under AIFRS, all derivatives, including those used for balance sheet hedging purposes, are recognised as assets or liabilities at fair value with any movement in fair value between periods recognised in the statement of financial performance. This initial adjustment is expected to increase opening retained earnings at 1 January 2004 by approximately $20m. AIFRS introduces detailed hedge accounting criteria whereby all hedging relationships are required to be documented at the inception of their designation as a hedge and effectiveness testing completed, both prospectively and retrospectively, over the life of the hedge. Where cash flow hedge accounting criteria are met, the movement in the fair value of the derivative financial instruments is recorded in an equity reserve, not in the statement of financial performance, until such time as the hedged item affects the statement of financial performance. Where fair value hedge accounting criteria are met, the underlying hedged item is also recorded at fair value with movements in the fair value of both the hedged item and the hedging instrument recorded in the statement of financial performance. AMP has elected to adopt AASB139 Financial Instruments: Recognition and Measurement as at 1 January 2004; however, AMP does not expect to adopt hedge accounting, where the appropriate criteria are met, until 31 December 2004. Discounting of life insurance deferred tax balances Under current accounting standards, the deferred tax liability in AMP Life is required to be discounted to present value. Life insurance policy liabilities are also measured by reference to discounted deferred tax amounts held on behalf of policyholders. Under AIFRS, deferred tax balances cannot be discounted resulting in an increase in Deferred tax liabilities upon adoption of AIFRS and hence a reduction in opening retained earnings at 1 January 2004. Where the deferred tax liability arises in respect of insurance contracts, a compensating change is made to reduce the value of Life insurance policy liabilities. However, where the deferred tax liability arises in respect of investment contracts there is no corresponding change as, under AIFRS, policy liabilities are required to be valued at fair value which AMP has currently determined must reflect the discounting of deferred tax balances in unit pricing for investment linked business. This results in a mismatch in respect of investment contract business between the valuation of the deferred tax amounts in the statement of financial position and the deferred tax amounts included in the valuation of the liability to policyholders. This initial adjustment is expected to reduce opening retained earnings at 1 January 2004 by approximately $50m. Excess of market value over net assets Under current accounting standards, any excess of the carrying value of a life insurance companys investment in controlled entities over the value of the underlying net assets of those entities is recognised as a separate asset called Excess of market value over net assets (EMVONA). EMVONA comprises acquired goodwill as well as internally generated goodwill. EMVONA is not subject to amortisation. Most of the EMVONA balance in AMPs 2004 financial statements relates to internally generated goodwill on AMPs financial planning controlled entities. Under AIFRS, any EMVONA balances arising from internal valuation increases since the acquisition or establishment of the controlled entity can no longer be recognised. Consequently, upon initial adoption of AIFRS there is expected to be a reduction in opening retained profits at 1 January 2004 to derecognise the entire EMVONA balance of $255m. Goodwill Under current accounting standards, goodwill is recognised as an asset at acquisition and amortised on a straight-line basis over the period from the date of acquisition to the end of the period of time during which the benefits are expected to arise up to a maximum of 20 years. Under AIFRS, goodwill is not amortised but is required to be regularly reviewed for impairment, according to prescribed tests, and any loss in value recognised as an expense at the time the loss in value is identified. On adoption of AIFRS, no impairment is expected to be recognised at 1 January 2004. Investment contract policyholder liabilities Under current accounting standards, Life insurance policy liabilities for investment contracts are measured in accordance with Margin on Services principles. Under AIFRS, Life insurance policy liabilities for investment contracts will be measured in accordance with the standards dealing with financial instruments and revenue. These liabilities will be measured at fair value and the changes in fair value recognised in the statement of financial performance. Except for the Deferred acquisition cost adjustment above, this initial adjustment is not expected to have a material impact on opening retained earnings at 1 January 2004. Investments Under current accounting standards, all investments held by a life insurance company and those integral to general insurance activities are recorded at net market value including an allowance for estimated realisation costs. All other investments are held at the lower of cost and recoverable amount, except for marketable securities held for resale which are recorded at net market value. Under AIFRS, all investments will be recorded at fair value, including shareholder assets (i.e. non-policyholder assets) which AMP will elect to hold at fair value, by reference to the bid price, if available, with no adjustment for realisation costs. To the extent that investments are held on behalf of policyholders, a corresponding change will also be made to the valuation of Life insurance policy liabilities. This initial adjustment is not expected to have a material impact on opening retained earnings at 1 January 2004. Loan securitisation AMPs banking operation, through its loan securitisation programme, sells mortgage loans to securitisation vehicles (also referred to as Special Purpose Entities). Under current accounting standards the majority of securitisation vehicles are not required to be consolidated by AMP. Under AIFRS, a greater number of securitisation vehicles are required to be consolidated. At 1 January 2004, this initial adjustment is expected to result in an increase of approximately $3,600m in assets and liabilities on AMPs statement of financial position. Any impairment of these assets will result in a compensating adjustment to liabilities and is expected to have no impact on profit attributable to the shareholders of AMP. Outside equity interests in controlled entities Under AIFRS, Outside equity interests in controlled unit trusts must be recorded as liabilities. This initial adjustment is expected to reduce opening Net assets of policyholders, shareholders and other equity interests at 1 January 2004 by approximately $4,290m. This initial adjustment is expected to have no impact on the Total equity attributable to shareholders or opening retained earnings at 1 January 2004.

30 > amp.com.au > AMP Concise Financial Report

3. Impact of introduction of International Financial Reporting Standards continued Owner occupied properties A number of properties held on behalf of AMPs policyholders are fully or partially occupied by AMP. Under current accounting standards, all freehold and leasehold properties, including owner occupied properties, are recorded at net market value with any movements between periods recorded in the statement of financial performance. The policyholders interest in the change in the value of these properties is also recorded as movements in policyholder liabilities within the statement of financial performance. Under AIFRS, owner occupied properties, which are fully occupied or substantially occupied by AMP, may be recorded at fair value in the statement of financial position. However, under AIFRS any future investment gains on owner occupied properties will be recorded through reserves, not within the statement of financial performance. This adjustment will create a mismatch as the policyholders interest in these future changes in the fair value of owner occupied properties will continue to be recorded through an increase in Life insurance policy liabilities in the statement of financial performance. Share based payments AMP issues various equity instruments to employees as a form of equity based compensation. Under current accounting standards, no expense is recognised for equity based compensation. Under AIFRS, equity based compensation to employees is recognised as an expense in respect of the services received with an equivalent increase in a reserve within equity. The expense will relate to equity based compensation granted after 7 November 2002 and will be based on the fair value of each grant measured at the date of the grant, taking into consideration a number of factors including share price at grant date and the likelihood of achieving market based performance hurdles such as total shareholder return. The expense will be allocated over the vesting period of each instrument. The fair value determined at grant date will not be altered over the vesting period. However, the expense allocated in subsequent periods is revised for non-market based vesting conditions such as the number of employees estimated to leave before their instruments have vested. When the instruments vest, shares will be purchased on market and transferred to the employee resulting in a reduction in cash with an equivalent decrease to a reserve within equity. Upon adoption of AIFRS, this initial adjustment is expected to result in a reduction in opening retained earnings at 1 January 2004 of approximately $10m with an equivalent increase in a reserve within equity. Taxation Under current accounting standards, tax effect accounting principles are adopted whereby the income tax expense is calculated in respect of the profit before tax as adjusted for permanent differences between taxable and accounting income. The tax effect of timing differences, which arise from items being brought to account in different periods for income tax and accounting purposes, is deferred and carried forward in the statement of financial position as a deferred tax asset or liability. Under AIFRS, a balance sheet approach is adopted to determining deferred tax amounts whereby the carrying amount of assets and liabilities is compared to their tax base, potentially resulting in the recognition of additional deferred tax amounts. Upon adoption of AIFRS, this adjustment is not expected to have a material impact on opening retained earnings at 1 January 2004. Under current accounting standards, deferred tax assets are not brought to account unless realisation of the asset is assured beyond any reasonable doubt, for timing differences, or is virtually certain in the case of tax losses. Under AIFRS, all deferred tax assets are brought to account if realisation of the asset is probable. Upon adoption of AIFRS, this adjustment is not expected to have a material impact on opening retained earnings at 1 January 2004. Treasury shares Under an exemption granted by ASIC, AMPs life insurance funds hold shares in AMP Limited (Treasury shares) on behalf of policyholders. Under current accounting standards, these shares are recorded as an investment at net market value. The policyholders interest in these shares is recorded within Life insurance policy liabilities. Movements in these assets and liabilities are recorded in the statement of financial performance. Under AIFRS, upon consolidation of AMP Life by AMP Limited, these Treasury shares are eliminated from investments and unrealised gains (losses) and dividends revenue are removed from the statement of financial performance. However, the calculation of Life insurance policy liabilities will still include a liability in respect of the policyholders interest in the fair value of these Treasury shares. Therefore, on consolidation this will result in a mismatch as the value of these investments, including unrealised gains and losses, is eliminated; however, the liability to policyholders in respect of their interest in these shares remains. This initial adjustment is expected to reduce net assets at 1 January 2004 by approximately $170m, being the net market value of Treasury shares on adoption of AIFRS. A Treasury Share debit reserve of approximately $270m will be created within Shareholders equity, being the original cost of the Treasury shares, and opening retained earnings will increase by approximately $100m to reverse the loss previously recorded on these Treasury shares since the purchase date. Prudential capital implications AIFRS will have an impact on the assets and equity of the regulated entities within the AMP Group, both of which are relevant to capital adequacy requirements as set by the prudential regulator, the Australian Prudential Regulation Authority (APRA). APRA has advised that it will not make any AIFRS related changes to its prudential framework until it has assessed the full implications of AIFRS, and not before 1 July 2005. Until this time, AMP will continue to comply with, and report under, APRAs current prudential standards.

AMP Concise Financial Report > amp.com.au > 31

Notes to the financial statements continued for the year ended 31 December 2004

4. Segment information
AMP FINANCIAL SERVICES 2004 $M AMP CAPITAL INVESTORS 2004 $M GENERAL INSURANCE 2004 $M OTHER 2004 $M ELIMINATIONS 2004 $M TOTAL 2004 $M

2004 BUSINESS SEGMENTS

External revenue Inter-segment revenue Total revenue from ordinary activities1,2 Profit (loss) from ordinary activities before income tax Income tax (expense) credit Net profit (loss) from ordinary activities after income tax Outside equity interests Net segment profit (loss) after income tax attributable to shareholders of AMP Limited Total assets Total liabilities Depreciation Amortisation Other non cash expenses3 Assets acquired during the year

10,308 71 10,379 2,038 (581)

281 178 459 160 (48)

77 24 101 106 (29)

234 234 (186) 172

(273) (273)

10,900 10,900 2,118 (486)

1,457 (698)

112

77

(14)

1,632 (698)

759 66,478 58,925 70 1 5,289 79

AUSTRALASIA 2004 $M

112 558 146 1

77 2,431 1,357 (7)

OTHER 2004 $M

(14) 2,782 2,595 35

ELIMINATIONS 2004 $M

(1,164) (1,164)

934 71,085 61,859 70 36 5,283 79

TOTAL 2004 $M

GEOGRAPHIC SEGMENTS

Revenue from external sales Total assets Assets acquired during the year

10,840 69,195 79

60 2,129

(239)

10,900 71,085 79

Notes: 1 Segment revenue is the aggregate of Premium and related revenue, Fee and other revenue and Investment gains (losses) as detailed in Note 5. 2 Segment revenue includes operating revenue activity between segments. These transactions are priced on an arms length basis and are eliminated on consolidation. 3 The main item included as other non-cash expenses is Movement in policy liabilities which in 2004 is an increase in liabilities of $5,286m.

32 > amp.com.au > AMP Concise Financial Report

4. Segment information continued

AMP FINANCIAL SERVICES 2003 $M AMP CAPITAL INVESTORS 2003 $M GENERAL INSURANCE 2003 $M OTHER 1 2003 $M UK LIFE SERVICES 2 2003 $M ELIMINATIONS 2003 $M TOTAL 2003 $M

2003 BUSINESS SEGMENTS

External revenue Inter-segment revenue Total revenue from ordinary activities3,4 Profit (loss) from ordinary activities before income tax Income tax (expense) credit Net profit (loss) from ordinary activities after income tax Outside equity interests Net segment profit (loss) after income tax attributable to shareholders of AMP Limited Total assets Total liabilities Depreciation Amortisation Other non-cash expenses5 Assets acquired during the year

6,423 124 6,547

282 180 462

(299) 20 (279)

226 226

4,295 171 4,466

(495) (495)

10,927 10,927

1,151 (97)

118 (41)

(22) 57

(4,282) 75

(4,164) 31

(7,199) 25

1,054 (215)

77

35

(4,207) (93)

(4,133) 1,940

(7,174) 1,632

839 63,642 56,763 60 1 2,167 89

AUSTRALASIA 2003 $M

77 599 129 1 5 1 1
OTHER 2003 $M

35 2,797 1,827 (13)

(4,300) 4,506 4,935 32 (1)

UNITED KINGDOM 2003 $M

(2,193) 23 9 2,378 10

(1,323) (1,323)

(5,542) 70,221 62,331 84 47 4,532 100

TOTAL 2003 $M

GEOGRAPHIC SEGMENTS

ELIMINATIONS 2003 $M

Revenue from external sales Total assets Assets acquired during the year

6,995 67,948 90

(363) 2,418

4,295 10

(145)

10,927 70,221 100

Notes: 1 Other includes $3,585m loss on the 2003 demerger of the UK operations. 2 During 2003, UK Life Services (and the United Kingdom geographic segment) became a discontinued operation of the AMP Group as a result of the demerger scheme. The result for UK Life Services for 2003 is after recognising expenses of $8,630m which includes: (i) $2,268m comprising writedowns of Excess of market value over net assets, writeoffs of Goodwill and increases in policy liabilities; and (ii) $355m restructure costs as a result of the revised business strategy and demerger. The result for UK Life Services does not include the loss to AMP on demerger of the UK operations. 3 Segment revenue is the aggregate of Premium and related revenue, Fee and other revenue and Investment gains (losses) as detailed in Note 5. 4 Segment revenue includes operating revenue activity between segments. These transactions are priced on an arms length basis and are eliminated on consolidation. 5 The main item included as other non-cash expenses is Movement in policy liabilities which in 2003 is an increase in liabilities of $4,528m.

Business segment information AMP Financial Services (AFS) AFS provides financial planning and advice, investment services, superannuation, mortgage and savings products (provided by AMP Bank) and life insurance and risk products in Australia, New Zealand and India. The AFS segment also includes investments of the life insurance funds which have controlling equity interests in trusts and companies which conduct investment activities and operating businesses. The individual assets, liabilities, revenues and expenses of the operating businesses are recognised in the AFS segment. AMP Capital Investors (AMPCI) previously, the Australian operations of Henderson Global Investors. Provides investment management services in Australia, New Zealand and Asia including private capital and property portfolios and socially responsible investments. General Insurance comprises reinsurance and corporate insurance operations in run-off. Other includes the provision of support services to the business units, corporate funding, investment of shareholder capital not allocated to reportable segments. Expenses reflected in Other include restructure costs not allocated to reportable segments, and in 2003 also included demerger costs, and are after making appropriate charges to the business units for support services. UK Life Services prior to demerger of the UK operations in December 2003, the UK group provided savings, investment, insurance, retirement products and financial planning services, investment management services (provided by the UK operations of Henderson Global Investors) including private capital and property portfolios, UK corporate activities and UK general insurance activities.

AMP Concise Financial Report > amp.com.au > 33

Notes to the financial statements continued for the year ended 31 December 2004

5. Revenues from ordinary activities

2004 $M 2003 1 $M

(a) Premium and related revenue Life insurance premium and related revenue received and receivable Less: deposits recognised as an increase in life insurance policy liabilities Life insurance premium and related revenue recognised as revenue General insurance premium and related revenue received and receivable Total premium and related revenue

10,011 (8,913) 1,098 (1) 1,097

12,516 (9,733) 2,783 (57) 2,726

(b) Fee and other revenue Banking business fees Investment management fees Service fees Financial advisory fees Other revenue2 Total fee and other revenue

39 243 5 55 526 868

31 559 4 50 568 1,212

(c) Investment gains (losses) Interest Related parties associated entities Other entities Dividends and distributions Related parties associated entities Other entities Net rents Net realised and unrealised gains (losses)3 Other investment income Total investment gains (losses)

1,335 131 1,506 498 5,312 153 8,935

3,798 142 1,959 699 16 375 6,989

Notes: 1 The 2003 comparatives include amounts in respect of the UK operations which were demerged on 12 December 2003. A proforma statement of financial performance excluding AMPs demerged UK operations has been provided in Note 2. 2 Other revenue includes: 2004: (i) $21m from the sale of investment management rights; and (ii) trading revenue of operating businesses in which AMPs life insurance funds hold a controlling equity interest. The amount in 2004 includes $264m (2003: $211m) for controlled entities of DUET which ceased being controlled entities of AMPs life insurance funds during 2004. 2003: (i) $88m from the proceeds from the sale of the listed property trusts and $22m gain on the divestment of non-core banking business. 3 Net realised and unrealised gains (losses) includes: 2004: (i) $131m increase in market value recognised in respect of the investment in HHG. 2003: (i) $705m writedown of the carrying value of certain UK investments to market value as a result of the revised business strategy and demerger; and (ii) $242m increase in value of the Australian financial planning controlled entities.

34 > amp.com.au > AMP Concise Financial Report

6. Expenses from ordinary activities

2004 $M 2003 1 $M

(a) Claims and related expenses Life insurance claims and related expenses paid and payable Less: withdrawals recognised as a reduction in life insurance policy liabilities Life insurance claims and related expenses recognised as an expense General insurance claims and related expenses paid and payable2 Total claims and related expenses (b) Operating expenses 3,4 Advertising and marketing Amortisation of goodwill Writedown of goodwill 5 Bad and doubtful debts expense Fee expense on banking business Information technology and communication External investment management fees Occupancy and property maintenance Professional fees Staff and related expenses Travel and entertainment Other operating expenses 6 Total operating expenses

(10,056) 8,833 (1,223) 17 (1,206)

(20,263) 14,441 (5,822) 317 (5,505)

(22) (36) 3 (13) (109) (89) (139) (62) (877) (19) (461) (1,824)

(52) (47) (330) (4) (19) (336) (102) (372) (278) (1,734) (48) (499) (3,821)

(c) Borrowing costs Interest expense on borrowings and deposits Interest expense on subordinated debt Other borrowing costs Related parties associated entities Other entities Total borrowing costs

(320) (85) (1) (60) (466)

(466) (170) (1) (50) (687)

(d) Specific expenses included within the above categories Rental operating leases Superannuation contributions to defined benefits funds3 Net foreign currency gains Depreciation expense

(9) (24) (1) (70)

(14) (55) 116 (84)

Notes: 1 The 2003 comparatives include amounts in respect of the UK operations which were demerged on 12 December 2003. A pro-forma statement of financial performance excluding AMPs demerged UK operations has been provided in Note 2. 2 General insurance claims and related expenses reflect the run-off of the claims portfolio including release of risk margin and claims handling provisions and the impact of the Australian dollar against the underlying foreign currencies on the value of outstanding claims; the foreign exchange impact on outstanding claims is offset by foreign exchange movements on related foreign currency investments. 3 Operating expenses in 2004 includes $24m (2003: $51m) additional employer contributions made to the AMP Officers Provident Fund to further improve the financial position of the fund. 4 Operating expenses in 2003 includes $558m of restructuring and demerger costs. The costs comprise $197m of Staff and related expenses, $74m Information technology and communication, $112m Professional fees, $146m Occupancy and property maintenance, $21m Advertising and marketing and $8m Other operating expenses. 5 Writedown of goodwill in 2003 includes $245m writedown of goodwill relating to UK controlled entities. 6 Other operating expenses includes trading expenses of operating businesses in which AMPs life insurance funds hold a controlling equity interest. The amount in 2004 includes $155m (2003: $91m) for controlled entities of DUET which ceased being controlled entities of AMPs life insurance funds during 2004.

AMP Concise Financial Report > amp.com.au > 35

Notes to the financial statements continued for the year ended 31 December 2004

7. Contributed equity
2004 $M 2003 $M

(a) Issued and paid up capital 1,860,148,670 (2003: 1,845,277,778) ordinary shares fully paid

5,620

5,533

(b) Movements in contributed equity Balance at the beginning of the period 14,794,374 (2003: 53,532,046) shares issued under Dividend Reinvestment Plan1 Nil (2003: 222,222,222) shares issued under Institutional Placement2 Nil (2003: 103,721,441) shares issued under 2003 Share Purchase Plan2 Nil (2003: 306,149,270) shares issued under Rights Offer3 Nil (2003: 449,345,129) share cancellation re demerger4 Nil (2003: 449,345,129 ) share split re demerger4 144 (2003: 8,720) shares issued to former members of the AMP Society5 76,374 (2003: 175,013) shares issued under employee share plans Nil (2003: 15,000) shares issued on the exercise of employee options Balance at the end of the period

5,533 87 5,620

5,001 335 1,192 494 1,169 (2,658) 5,533

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.
Notes: 1 Under the terms of the Dividend Reinvestment Plan, shareholders may elect to have part of their dividend entitlements satisfied by the issue of new shares rather than being paid in cash. Commencing from the October 2002 interim dividend, the Dividend Reinvestment Plan was underwritten for dividends paid until the end of 2003. The interim dividend in 2003 involved the issue of shares under this plan at $6.80 per share. Issue costs associated with the underwriting of $1m were deducted from the proceeds. The Dividend Reinvestment Plan ceased to be underwritten after the 2003 interim dividend. Shares were issued under the Dividend Reinvestment Plan for the 2004 interim dividend (paid in October 2004) at $6.18 per share and for the 2003 final dividend (paid in April 2004) at $5.62 per share. 2 As part of the capital raising announced on 1 May 2003 to facilitate the revised business strategy and demerger of AMP: (i) shares were placed in 2003 under the Institutional Placement at a price of $5.50 per share. Issue costs associated with the underwriting of $30m were deducted from the proceeds; and (ii) shares were issued in July 2003 to eligible shareholders who participated in the 2003 Share Purchase Plan at a price of $4.82 per share. Issue costs associated with the underwriting of $6m were deducted from the proceeds. 3 These shares were issued in 2003 to eligible shareholders under a Rights Offer. These shares were issued at an average price of $3.87 per share. Issue costs associated with the underwriting of $18m were deducted from the proceeds. 4 These shares were cancelled in 2003 pursuant to the scheme of arrangement used to implement the demerger. The shares cancelled represented approximately 29.19% of AMPs total issued capital (not including the shares issued as part of the Rights Offer). AMP shareholders received HHG shares as consideration for the share capital cancelled. The cancellation was followed by a share split of the remaining AMP shares held by shareholders, so as they ended up with the same number of shares that they held on the record date (19 December 2003). 5 The former members of AMP Society exchanged their membership rights for shares in AMP Limited on demutualisation. 1,043,345,619 (2003: 1,043,345,475) shares have been issued to former members at an issue price of $3.00 per share. Ongoing minor adjustments represent shares issued to former members out of the Capital reserve.

36 > amp.com.au > AMP Concise Financial Report

8. Dividends
2004 $M 2003 $M

Previous year final dividends paid 9 cents per ordinary share franked to 85% at a tax rate of 30% (2003: 20 cents per ordinary share franked to 15% at a tax rate of 30%) Current year interim dividends paid 13 cents per ordinary share franked to 75% at a tax rate of 30% (2003: 7 cents per ordinary share franked to 15% at a tax rate of 30%) Total dividends paid

166

232

241 407

107 339

Current year final dividend proposed but not recognised 14 cents per ordinary share franked to 75% at a tax rate of 30%1,2

260

n/a

2004 $M

2003 $M

Dividend franking account3,4 Franking credits available to shareholders of AMP Limited (at 30%)

172

220

Notes: 1 This dividend has not been recognised as a liability at 31 December 2004. 2 As AMP has consolidated retained losses (consisting of Shareholders retained profits and the Demerger loss reserve), it is required to obtain approval from the Australian Prudential Regulation Authority (APRA) under APRAs prudential standards prior to the payment of dividends. 3 The above available amounts are based on the balance of the dividend franking account at year end adjusted for: (i) franking credits that will arise from the payment of the current tax liability; (ii) franking debits that will arise from the payment of dividends recognised as a liability at the year end; (iii) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year end; and (iv) franking credits that the entity may be prevented from distributing in subsequent years. 4 The companys ability to utilise the franking account credits depends on there being sufficient available profits to declare dividends.

AMP Concise Financial Report > amp.com.au > 37

Notes to the financial statements continued for the year ended 31 December 2004

9. Reserves and retained profits

CONSOLIDATED NOTE 2004 $M 2003 $M

(a) Capital reserve1 Balance at the beginning of the period Movements during the period Balance at the end of the period (b) Equity contribution reserve2 Balance at the beginning of the period Movements during the period Balance at the end of the period (c) Foreign currency translation reserve3 Balance at the beginning of the period Net translation adjustment on self-sustaining foreign operations Transferred to Shareholders retained profits4 Balance at the end of the period

510 510

510 510

1,019 1,019

1,019 1,019

(9) 12 2 5

361 (906) 536 (9)

(d) Shareholders retained profits Balance at the beginning of the period Adjustment arising from the adoption of revised Accounting Standard AASB1044 Provisions, Contingent Liabilities and Contingent Assets Net profit (loss) after tax attributable to shareholders of AMP Limited Transferred to Demerger loss reserve5 Transferred from Foreign currency translation reserve4 Total available for appropriation Dividends paid Balance at the end of the period (e) Demerger loss reserve5 Balance at the beginning of the period Movements during the period Balance at the end of the period

61 934 (2) 993 (407) 586

2,661 232 (5,542) 3,585 (536) 400 (339) 61

(3,585) (3,585)

(3,585) (3,585)

Notes: 1 The Capital reserve is the balance remaining from the amount capitalised in 1998 on the demutualisation of AMP Society after allotting shares to former members under the terms of the demutualisation. Minor adjustments are made from time to time which involve the issue of further shares to former members. 2 The Equity contribution reserve represents the difference between the proforma loss on demerger based upon Directors valuation of the HHG group and the estimated net assets to be demerged, and the market based fair value of HHG based upon the share price of HHG PLC on listing and the actual net assets of the HHG group on demerger. This resulted in an additional loss on demerger. 3 Exchange differences arising on translation of foreign controlled entities within the AMP Group are taken to the Foreign currency translation reserve. 4 In 2003, the balance of the Foreign currency translation reserve relating to the HHG group at the date of demerger was transferred to Shareholders retained profits. 5 The Demerger loss reserve represents the transfer from Shareholders retained profits of the total loss on demerger.

38 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures This Note outlines the remuneration arrangements for AMPs directors and senior executives and provides the disclosures required by new Accounting Standard AASB1046 Director and Executive Disclosures by Disclosing Entities. This Note also meets the remuneration reporting requirements of the Corporations Act 2001 and takes into account the requirements of the Corporate Law and Economic Reform Programme (CLERP 9) which applies to reporting periods commencing from 1 July 2004. While AMP is not required to report under the CLERP 9 framework for the year ended 31 December 2004, AMP has taken these new disclosure requirements into account for this financial year. The disclosures in this Note cover the specified directors (including the managing director and chief executive officer) and the senior executives having the greatest authority for managing the AMP Group (specified executives) which includes the five executives receiving the highest remuneration for the year. Remuneration Committee AMPs remuneration arrangements are reviewed by the Remuneration Committee of the AMP Board. The Remuneration Committee is made up of three non-executive directors: Meredith Hellicar (Chairman), Peter Willcox and Peter Mason. The committee reviews AMPs remuneration strategy making sure remuneration policies and practices match the AMP Groups business objectives. The committee makes recommendations to the AMP Board on the Chief Executive Officers total remuneration package, approves the remuneration for specified executives and all employee equity incentive plans. The committee also reviews the administration of the non-executive directors share plan. (a) Details of managing director and specified executives Managing director Andrew Mohl Specified executives Craig Dunn Stephen Dunne Paul Leaming Peter Hodgett David Cohen Managing Director and Chief Executive Officer Managing Director, AMP Financial Services Managing Director, AMP Capital Investors Chief Financial Officer General Manager, Human Resources and Strategy General Counsel (b) Remuneration structure for the managing director and specified executives Remuneration policy/principles AMPs approach to executive remuneration aims to link executive rewards with the creation of shareholder value. AMPs remuneration philosophy and practices are designed to build and sustain a high performance culture. AMPs remuneration strategy is market competitive, and aims to attract, motivate and retain high performing employees who contribute to the success of our business. Total remuneration AMPs total remuneration strategy provides the flexibility to design individual remuneration packages for the managing director and specified executives based on their importance to the business and their potential to impact business performance. Total remuneration is made up of: > Base salary; > Short term incentives; > Long term incentives; and > Other remuneration e.g. superannuation. Base salary The managing director and specified executives base salary is determined by considering their scope of responsibility, importance to the business, competitiveness in the market and assessed potential. The base salary of an individuals total remuneration is targeted towards the median market rate. While base salaries are reviewed each year, increases to base salaries are not automatic and will only be made where there has been a clear movement in the market rate for the role or an increase in responsibilities. Short term incentive programme Short term incentives (STI) provide the opportunity for the managing director and specified executives to earn incentives based on their performance. Company performance targets are reviewed and approved by the Remuneration Committee and are clearly defined and measurable. Performance is assessed using a combination of quantitative and qualitative measures that take into account the performance of the AMP Group, business unit, division and individual over the past year. These reflect economic drivers and key indicators of business performance, and overall progress in developing key stakeholder relationships.

Former specified executives Managing Director, AMP Capital Investors Jack Ritch (left employment 02 April, 2004) General Manager, Strategy and Development Marc de Cure (left employment 02 January, 2004) General Manager, Office of the CEO Christine McLoughlin (left employment 28 May, 2004)

AMP Concise Financial Report > amp.com.au > 39

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued Long term incentive programme AMPs long term incentive (LTI) programme offers performance rights to the managing director and specified executives who have the potential to influence the overall performance of AMP. This programme aims to reward performance, assist in retention of selected individuals and provide a direct link between the individuals remuneration and the long term performance of AMP. In the past, AMP has offered other LTI programmes to high performing employees to recognise performance and to retain their skills. These included the Executive Option Plan, the Executive Share Ownership Plan restricted shares, and the Executive Share Ownership Plan Executive Short Term Incentive Programme. These programmes are no longer offered to the managing director or specified executives. However, due to the method of calculation of equity based compensation, some of these LTI programmes continue to affect the total remuneration disclosed for some individuals. At risk remuneration Total remuneration for the managing director and specified executives is comprised of at risk and not at risk remuneration. Not at risk remuneration comprises base salary, non-monetary benefits and superannuation. At risk remuneration comprises short term incentives, long term incentives and restructure and employee retention payments. Using these definitions, the target percentage of at risk remuneration for the specified executives in 2004 are shown below.
PERCENTAGE OF THE TOTAL REMUNERATION AT RISK AT THE TARGET LEVEL OF PERFORMANCE

Individuals do not pay to acquire performance rights. Prior to their exercise, performance rights holders do not receive dividends or have other shareholder benefits (including any voting rights), and in particular did not receive HHG shares or rights at the time of the demerger and AMP Rights Offer. The ability to exercise performance rights depends upon the overall performance of AMP during the three year period. At the end of the period, the Remuneration Committee uses data from independent consultants to determine whether the performance hurdles have been achieved. If achieved, the individual has two years from the end of the performance period to exercise their performance rights. Total shareholder return (TSR) is now the single performance measure used for the performance rights granted within the annual long term incentive component of the managing director and specified executives remuneration. TSR is the most widely used performance measure for long term incentive (share and option) plans as it provides a clear comparison to other plans provided by Australian companies of a similar size. TSR can be broadly defined as the change in the value of AMPs share price plus dividends paid over the performance period plus appropriate adjustment for any capital returns, expressed as a percentage. This reflects the increase in value delivered to shareholders over the performance period. Performance rights granted prior to October 2003 also had an earnings per share (EPS) performance measure. Adjustments to performance rights post demerger In order to ensure participants were neither in a better position nor disadvantaged compared with the position they would have been in if the demerger and the AMP Rights Offer had not occurred: > individuals who held performance rights granted before October 2003 received an additional grant of performance rights in March 2004. These additional performance rights are subject to the same performance hurdles and performance period as the existing performance rights after allowing for adjustments made to the EPS based hurdle to ensure that participants were not disadvantaged by the demerger or the AMP Rights Offer; and > individuals who held performance rights granted in October 2003 received an additional grant of performance rights in March 2004. These additional performance rights are subject to the same performance hurdle and performance period as the existing performance rights. Performance rights valuation The fair value of performance rights has been calculated as at the grant date by external consultants using a simulation technique. Fair value has been discounted for the probability of not meeting the TSR performance hurdles and has been further adjusted to reflect the vesting percentage of the 2002 performance rights (and corresponding demerger adjustment grant made in March 2004) which is assessed according to an earnings per share performance hurdle. The value of the award made in any year is amortised over the vesting period.

NAME

Managing director Andrew Mohl Specified executives Craig Dunn Stephen Dunne Paul Leaming Peter Hodgett David Cohen

78% 66% 65% 64% 65% 60%

(c) Details of LTI programmes currently offered to the managing director and specified executives Performance rights Since 2002, AMP has offered performance rights to the managing director and specified executives under the International Employee Share Ownership Plan. A performance right is a contractual promise to allocate a preset number of AMP shares after three years, provided specific performance hurdles are met. If performance rights become exercisable and have not lapsed, the individual will be able to acquire shares in AMP at a nominal exercise price ($1 per tranche of shares acquired).

40 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued The following table summarises the terms and conditions of performance rights held by the managing director and specified executives: Long Term Incentive Plan Offered to Performance period Retesting Exercise period Performance condition % of performance rights to vest 2004 annual grant (made on 6 September 2004). Managing director and specified executives. 1 August 2004 to 31 July 2007. No. Up to two years from the end of the performance period. TSR performance hurdle compared to ASX 100 top 50 companies (industrials) as at 1 August 2004. 0% vest if AMPs TSR is below the 50th percentile of the market comparator group. 50% vest if AMPs TSR is at the 50th percentile of the market comparator group. Between the 50th and 75th percentile, vesting is on a straight-line basis with AMPs ranking against the market comparator group (+2% for each percentile (rounded to the nearest whole percentile) over the 50th percentile of the comparator group). 100% vest if AMPs TSR is in at least the 75th percentile of the market comparator group. Comparator group News Corporation, National Australia Bank, Commonwealth Bank, ANZ, Telstra, Westpac, Westfield Group, Woolworths, Wesfarmers, St George Bank, Coles Myer, Fosters Group, QBE Insurance, Insurance Australia, Rinker, Suncorp-Metway, Tabcorp, Macquarie Bank, General Property Trust, Stockland, Macquarie Infrastructure, Amcor, Brambles Industries, Australian Gas Light Company, Publishing & Broadcasting, Telecom Corporation of NZ, Qantas Airways, CSL, Boral, Orica, Promina, Lend Lease Corporation, Fairfax Holdings, Mirvac, Coca-Cola Amatil, Patrick Corporation, AXA Asia Pacific Holdings, Centro Properties Group, Investa Property Group, Macquarie Goodman Ind. Trust, Transurban Group, James Hardie Industries, Macquarie Airports, ResMed Inc, Toll Holdings, Mayne Group, PaperlinX, Sonic Healthcare, and CSR.

Long Term Incentive Plan Offered to Performance period Retesting Exercise period Performance condition % of performance rights to vest

2003 annual grant (made on 23 October 2003) and related grant (made on 18 March 2004) as demerger adjustment. Managing director and specified executives. 30 August 2003 to 29 August 2006. No. Up to two years from the end of the performance period. TSR performance hurdle compared to ASX 100 top 50 companies (industrials) as at 30 August 2003. 0% vest if AMPs TSR is below the 50th percentile of the market comparator group. 50% vest if AMPs TSR is at the 50th percentile of the market comparator group. Between the 50th and 75th percentile, vesting is on a straight-line basis with AMPs ranking against the market comparator group (+2% for each percentile (rounded to the nearest whole percentile) over the 50th percentile of the comparison group). 100% vest if AMPs TSR is in at least the 75th percentile of the market comparator group.

Comparator group

News Corporation, National Australia Bank, Commonwealth Bank, ANZ, Telstra, Westpac, Westfield Group, Woolworths, Wesfarmers, St George Bank, Coles Myer, Fosters Group, QBE Insurance, Insurance Australia, Rinker, Suncorp-Metway, Tabcorp, Macquarie Bank, General Property Trust, Stockland, Macquarie Infrastructure, Amcor, Brambles Industries, Australian Gas Light Company, Publishing & Broadcasting, Telecom Corporation of NZ, Qantas Airways, CSL, Boral, Orica, Promina, Lend Lease Corporation, Fairfax Holdings, Mirvac, Coca-Cola Amatil, Patrick Corporation, AXA Asia Pacific Holdings, Centro Properties Group, Macquarie Goodman Ind. Trust, Transurban Group, James Hardie Industries, ResMed Inc, Mayne Group, PaperlinX, CSR, Westfield Trust, Westfield America Trust, Foodland, and Southcorp.

AMP Concise Financial Report > amp.com.au > 41

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued Long Term Incentive Plan Offered to Performance period Retesting Exercise period Performance conditions 2002 annual grant (made on 25 November 2002) and related grant (made on 18 March 2004) as demerger adjustment. Managing director and specified executives. 31 August 2002 to 30 August 2005. No. Up to two years from the end of the performance period. 1 TSR performance hurdle compared to S&P/ASX 100 top 50 companies (industrials) as at 31 August 2002 (25% allocation). 2 TSR performance hurdle compared to selected group of international companies in life insurance and wealth management as at August 2002 (50% allocation). 3 Earnings per share growth of 7% over the three years compounded annually (25% allocation). % of performance rights to vest TSR performance hurdle compared to S&P/ASX 100 top 50 companies (industrials) as at 31 August 2002 (25% allocation): 0% vest if AMPs TSR is below the 50th percentile of the market comparator group. 50% vest if AMPs TSR is at the 50th percentile of the market comparator group. Between the 50th and 75th percentile, vesting is on a straight-line basis with AMPs ranking against the market comparator group (+2% for each percentile (rounded to the nearest whole percentile) over the 50th percentile of the comparator group). 100% vest if AMPs TSR is in at least the 75th percentile of the market comparator group. TSR performance hurdle compared to selected group of international companies in life insurance and wealth management (50% allocation): 0% vest if AMPs TSR is below the 50th percentile of the market comparator group. 50% vest if AMPs TSR is at the 50th percentile of the market comparator group. Between the 50th and 75th percentile, vesting is on a straight-line basis with AMPs ranking against the market comparator group (+2% for each percentile (rounded to the nearest whole percentile) over the 50th percentile of the comparator group). 100% vest if AMPs TSR is in at least the 75th percentile of the market comparator group. Earnings per share (EPS) growth (25% allocation):* 0% vest if AMPs EPS growth over the three years averages less than 7% per annum compounded annually. 50% vest if AMPs EPS growth over the three years is 7% per annum compounded annually. Between 7% and 12% EPS growth per annum compounded annually, the performance rights vest on a straight-line basis. 100% vest if AMPs EPS growth over the three years averages 12% per annum or more compounded annually.
*As a result of the demerger, EPS was modified. The modified EPS measure is determined as the weighted average of AMPs compound annual growth in earnings per share for the two year period from 31 December 2001 to 31 December 2003 and AMPs growth in EPS from 31 December 2003 to 31 December 2004 from the proforma EPS for AMP on a demerged basis.

42 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued Comparator group S&P/ASX 100 top 50 companies (industrials) as at 31 August 2002: News Corporation, National Australia Bank, Commonwealth Bank, ANZ, Telstra, Westpac, Westfield Group, Woolworths, Wesfarmers, St George Bank, Coles Myer, Fosters Group, QBE Insurance, Insurance Australia, Suncorp-Metway, Tabcorp, Macquarie Bank, General Property Trust, Stockland, Amcor, Brambles Industries, Australian Gas Light Company, Publishing & Broadcasting, Telecom Corporation of NZ, Qantas Airways, CSL, Boral, Orica, Lend Lease Corporation, Fairfax Holdings, Mirvac, Coca-Cola Amatil, Patrick Corporation, AXA Asia Pacific Holdings, James Hardie Industries, Toll Holdings, Mayne Group, CSR, Macquarie Infrastructure Group, Westfield Trust, Westfield America Trust, Southcorp, News Corporation (DP), Singapore Telecommunications, Harvey Norman, Leighton Holdings, Lion Nathan, Aristocrat Leisure, and Bank of Western Australia. AXA Asia Pacific, AGF, AXA, Allianz, Irish Life, Generali, RAS, Aegon, Tower Limited, Skandia, Baloise, Swiss Life, Zurich Financial Services, Britannic Group, CGNU, Friends Provident, Legal & General, Old Mutual, Prudential, and Royal & Sun Alliance.

Selected group of international companies in life insurance and wealth management:

Long Term Incentive Plan Offered to Performance period Retesting Exercise period Performance condition, % of performance rights to vest and comparator group

2002 off cycle grant (made on 22 February 2003) and related grant (made on 18 March 2004) as demerger adjustment. Mr Cohen who was appointed after the annual executive allocation of LTI. 22 February 2003 to 21 February 2006. No. Up to two years from the end of the performance period. The performance condition, % of performance rights to vest and comparator groups are the same as for the 2002 annual grant as detailed in the previous table.

AMP Concise Financial Report > amp.com.au > 43

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued Employee Share Acquisition Plan Under the Employee Share Acquisition Plan (ESAP), the managing director and specified executives may elect to receive part of their base salary and any bonuses in the form of AMP shares. This plan is available to all AMP employees. There are no performance hurdles applied to this plan as participants salary sacrifice to acquire these shares. As an additional incentive to acquire shares, participants are entitled to receive (for no cash consideration) one matching share for every 10 shares acquired (up to a maximum of 100 matching shares in any 12 month period). To receive the matching shares, shares held must be held in the plan for a minimum of three years. Participants who cease to be employed within the AMP Group within the three year holding period may lose their entitlement to some or all of their matching shares, depending on the circumstances. To compensate participants for the effect of the demerger and the AMP Rights Offer on the value of the matching shares, the number of matching shares that participants may receive for ESAP shares acquired before the demerger was increased. For every 10 of these pre demerger ESAP shares held in the plan as at 23 December 2003, each participant may receive 1.2255 matching shares, with the resulting number to be rounded up to the next highest whole number (up to a maximum of 123 matching shares in any 12 month period). Matching shares valuation Under ESAP, participating employees receive matching shares at the end of a specified vesting period. During this vesting period, the employee has no right to the matching shares and does not receive the dividends. Each matching share has been valued by external consultants as the face value of an AMP ordinary share at grant date less the present value of the expected dividends (not received). The value of the award made in any year is amortised evenly over the vesting period. (d) Details of LTI programmes no longer offered to the managing director and specified executives Executive Share Ownership Plan restricted shares While restricted shares are no longer offered, details are summarised below as one specified executive continues to hold restricted shares under the plan. A restricted share is an ordinary AMP share offered to selected employees under the Executive Share Ownership Plan. As this programme was used as a means of retaining and aligning the relevant executives with shareholder interests, a three year holding period was imposed on these shares. If the individual resigned from AMP during the holding period, the shares were forfeited. In the case of retrenchment, the individual retained their restricted shares. No performance hurdles apply to this programme, and there is no cash consideration for these shares. Restricted shares valuation The fair value of restricted shares has been determined using the share price of AMP ordinary shares on the grant date. The value of the award made in any year is amortised evenly over the vesting period. Executive Share Ownership Plan Executive Short Term Incentive Programme While the Executive Short Term Incentive Programme is no longer offered, it is summarised below as the managing director and participating specified executives still hold shares under the three year holding lock, and may receive matching shares in the future. AMP invited selected executives to nominate up to 25% of any 2002 and 2003 short term incentive (STI) bonus to be received in AMP shares. In addition, selected senior executives were required to take 30% of their 2002 and 2003 short term incentive bonus as shares. As executives salary sacrificed their bonus for AMP shares, no performance hurdles apply after the bonus has been granted. A three year holding lock is imposed on these shares. Participants who cease to be employed by AMP within the three year holding period may lose their entitlement to receive some or all of their matching shares, depending on the circumstances in which their employment ceases. For shares acquired in March 2004 as part of the 2003 STI programme, each participant has a maximum entitlement of one matching share (for no cash consideration) for each share held in the plan for three years. For shares acquired in March 2003 as part of the 2002 STI programme, each participant has a maximum entitlement of 1.2255 matching shares (for no cash consideration) for each share held in the plan for three years, with the resulting number to be rounded up to the next highest whole number. This is because each participants original entitlement to matching shares on a one-for-one basis was increased by 22.55% to compensate for the effect of the demerger and the AMP Rights Offer on the value of matching shares. Matching shares valuation Under the Executive Short Term Incentive Programme, participating executives receive matching shares at the end of a specified vesting period. During this vesting period, the executive has no right to the matching shares and does not receive the dividends. Each matching share has been valued by external consultants as the face value of an AMP ordinary share at grant date less the present value of the expected dividends (not received). The value of the award made in any year is amortised evenly over the vesting period. Executive Option Plan In the past, the managing director and specified executives received options to purchase AMP shares under the Executive Option Plan (executive options). The value of options currently disclosed as part of the individuals equity based compensation were granted on 22 January 2000, 19 February 2000, 30 June 2000, 21 July 2001 and 23 March 2002. Options were not offered in 2003 or 2004. Options are held for three years before being exercisable. Under certain circumstances, employees have up to seven years to exercise their options. For executive options, performance hurdles apply to most tranches. As long as any applicable performance hurdle is met, in most cases options may be exercised between three and 10 years after the date they are granted (subject to Remuneration Committee discretion). Performance hurdles are based on AMPs TSR over a specified performance period (of between three and five years). AMP is ranked against a peer comparator group made up of the top 50 companies in the ASX All Industrials Index as at a specified date. If AMPs TSR ranking for a given performance period is in the bottom 25% of the comparator group, none of the executive options in the relevant tranche will meet the performance hurdle. If AMPs TSR ranking is at 25%, 20% of the options will meet the performance hurdle. If AMPs TSR ranking is at or in the top 35%, all of the options will meet the performance hurdle. If AMPs TSR ranking is between those two levels, a proportionate number of the options in the relevant tranche (of between 20% and 100%) will meet the performance hurdle. Performance hurdles for all executive options granted before June 2000 have been met. Prior to their exercise, option holders do not receive dividends or have other shareholder benefits (including any voting rights). Performance hurdles have not been met for options granted on or after 30 June 2000. As a result of the demerger and the AMP Rights Offer, the exercise prices of options were reduced to the amounts specified in Note 35 of the Full Financial Report. The exercise prices of all options have been significantly above the market price of AMP shares since the demerger. Options valuation The fair value of options has been calculated by external consultants as at the grant date using a simulation technique. The fair value has been discounted for the probability of not meeting the performance hurdle. The value of the award made in any year is amortised evenly over the vesting period.

44 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued (e) Individual details for the managing director Summary of employment contract Details of the managing directors contract of employment is as follows:
EXECUTIVE CONTRACT COMPONENTS DETAILS

Length of contract Base salary Short term incentive (STI)

Fixed term contract of five years duration. Commencing 7 October 2002. Will be reviewed by the AMP Board, with the first review to take place around February 2005, and subsequent reviews to take place annually. Mr Mohls annual STI target award is 100% of base salary, with a maximum of 200% of base salary. Any STI payments awarded to Mr Mohl will be paid in cash. The Remuneration Committee recommends quantitative and qualitative STI objectives, and performance against those objectives, to the AMP Board for approval. Mr Mohls annual LTI target award is 150% of base salary. The Remuneration Committee makes recommendations on Mr Mohls LTI grants to the AMP Board for approval. Mr Mohl receives superannuation contributions equal to 9% of the Superannuation Maximum Contribution Base. Mr Mohl may cease his employment with AMP by giving AMP six months written notice of termination. AMP must give two months written notice and provide a payment equivalent to the base salary over the period of: (a) 22 months if the termination is on or before 7 October 2005; or (b) 16 months if the termination date is between 8 October 2005 and 7 October 2006 (inclusive); or (c) 10 months if the termination date is between 8 October 2006 and 7 October 2007 (inclusive). AMP will reimburse Mr Mohl for taxation, legal and/or financial planning advice. AMP will also reimburse reasonable travel and out of pocket expenses incurred in connection with Mr Mohls employment with AMP.

Long term incentive (LTI) Superannuation Resignation Termination on notice by AMP

Other

Managing directors remuneration The table below shows the remuneration details of the managing director.
PRIMARY BENEFITS POST EMPLOYMENT EQUITY COMPENSATION VALUE OF VALUE OF MATCHING OPTIONS AND SHARES AND PERFORMANCE RESTRICTED 5 RIGHTS SHARES 6 $000 $000 OTHER RESTRUCTURE AND EMPLOYEE RETENTION PAYMENTS 7 $000 TOTAL

BASE SALARY 1 $000

SHORT TERM INCENTIVE 2 $000

NONMONETARY BENEFITS 3 $000

SUPERANNUATION CONTRIBUTIONS 4 $000

SUBTOTAL $000

$000

Andrew Mohl 2004 2003

1,350 1,497

2,160 1,950

19 51

11 11

3,540 3,509

911 631

231 270

1,500 750

6,182 5,160

Notes: 1 A 10% reduction in base remuneration was effective from 23 December 2003 following the demerger. 2 Following payment of his 2003 short term incentive, Mr Mohl acquired AMP shares on market to the value of 30% of his payment. The shares are generally subject to restrictions on transfer for three years from the date of allocation. Subject to Mr Mohls contractual arrangements, Mr Mohl will also receive for no additional payment a cash payment equal to the market value of one AMP share for every share that is held if he remains employed within the AMP Group until the third anniversary of the date of acquisition of shares (matching shares). For Mr Mohl the 30% component was $585,000. This programme has ceased and this element of STI is no longer offered. 3 As per Mr Mohls contractual arrangements, non-monetary benefits to Mr Mohl consist of legal fees, taxation and financial planning advice. 4 Mr Mohl receives superannuation contributions equal to 9% of the superannuation maximum contribution base, this being the minimum level of employer contributions required in accordance with superannuation law. 5 The valuation of performance rights and options has been described in section (c) of this Note. The value of performance rights and options amortised in 2003 has changed due to the introduction of the new Accounting Standard AASB 1046. In accordance with AASB 1046, the value has been calculated at the grant date and does not reflect the fact that some options and performance rights are unlikely to vest. 6 The valuation of matching shares and restricted shares has been described in section (d) of this Note. The valuation of matching shares is a new requirement as a result of the introduction of the new Accounting Standard AASB 1046. 7 Restructure and employee retention arrangements were paid to key employees who were either critical to the proposal to demerge, or were considered critical to business as usual activities in those parts of AMPs businesses which were significantly impacted by the demerger. The first payment, equal to one-third of total eligible payments, and subject to performance requirements, was made on the successful completion of the demerger in December 2003, with the remaining two-thirds paid during the first six months of 2004.

AMP Concise Financial Report > amp.com.au > 45

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued Managing directors performance rights holdings The table below summarises the movements in holdings of performance rights granted to the managing director. None of the managing directors performance rights are vested and exercisable at the date of this report.
FAIR VALUE PER PERFORMANCE RIGHT 3

NAME

GRANT DATE

HOLDING AT 1 JAN 2004

GRANTED

VESTED

EXERCISED

LAPSED

HOLDING AT 31 DEC 2004

Andrew Mohl

25 Nov 021 23 Oct 032 18 Mar 04 18 Mar 04 06 Sep 04

92,278 400,000 492,278

20,809 80,318 340,337 441,464

92,278 400,000 20,809 80,318 340,337 933,742

$1.65 $2.78 $3.55

Notes: 1 Grant reflected the responsibilities of Mr Mohls role as managing director of AMP Financial Services. 2 Grant reflected Mr Mohls increased responsibilities as managing director and chief executive officer during both 2002 and 2003. 3 For details on how performance rights values are determined, see section (c) of this Note.

Managing directors options holdings The table below summarises the movements in holdings of options granted to the managing director. None of the managing directors options are vested and exercisable at the date of this report.
NAME HOLDING AT 1 JAN 2004 GRANTED VESTED EXERCISED LAPSED HOLDING AT 31 DEC 2004

Andrew Mohl

350,000

350,000

Managing directors shareholdings in AMP Limited The table below summarises the movements in holdings of shares in AMP Limited held by the managing director and his personally related entities.
HOLDING AT 1 JAN 2004 GRANTED AS REMUNERATION DURING THE PERIOD RECEIVED ON EXERCISE OF PERFORMANCE RIGHTS OR OPTIONS OTHER CHANGES 1 HOLDING AT 31 DEC 2004

NAME

Andrew Mohl

307,165

103,244

410,409

Note: 1 Other changes represent purchases and sales made during the period. Purchases made during the period include those shares purchased and held under the Executive Share Ownership Plan Executive Short Term Incentive Programme. For further details on the terms and conditions of this Plan, see section (d) of this Note.

46 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued (f) Individual details for specified executives Summary of specified executives employment contracts Details of the specified executives contract of employment is as follows:
CONTRACT COMPONENTS DETAILS

Length of contract Base salary Short term incentive (STI) Long term incentive (LTI) Superannuation Resignation Termination on notice by AMP Termination for serious misconduct Other

Open-ended. Base salary is subject to Remuneration Committee approval. The STI target is 75% of base salary, with a maximum of 150%. Actual STI payments are subject to approval by the Remuneration Committee. Eligibility to participate in LTI programmes is determined by the managing director and approved by the Remuneration Committee. AMP contributes a percentage of base salary, generally 10.5%, to superannuation. Refer to specified executives remuneration table for individual details. If the executive chooses to leave AMP, they are required to give six months notice. Termination provisions for executives require AMP to give 12 months notice, or make a cash payment in lieu of notice (except in the case of termination for misconduct). AMP may terminate an executives contract if an executive is guilty of serious misconduct or other serious breaches. Upon termination for serious misconduct, any performance rights, options or unvested shares may be forfeited. AMP will reimburse up to $7,500 annually for taxation, legal and/or financial planning advice. AMP will also reimburse reasonable travel and out of pocket expenses incurred in connection with the executives employment with AMP.

The levels of base salary, STI and LTI are reviewed annually and determined in line with the principles outlined in section (b) of this Note.

AMP Concise Financial Report > amp.com.au > 47

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued Specified executives remuneration The table below shows the remuneration details of the current and former senior executives having the greatest authority for managing the AMP Group (specified executives) which includes the five executives receiving the highest remuneration for the year.
PRIMARY BENEFITS POST EMPLOYMENT EQUITY COMPENSATION VALUE OF OPTIONS AND PERFORMANCE RIGHTS9 $000 VALUE OF MATCHING SHARES AND RESTRICTED SHARES10 $000 OTHER RESTRUCTURE AND EMPLOYEE RETENTION PAYMENTS11 $000 TOTAL

SPECIFIED EXECUTIVES

BASE SALARY $000

SHORT TERM INCENTIVE $000

NONMONETARY BENEFITS $000

SUPERANNUATION CONTRIBUTIONS $000

SUBTOTAL $000

SIGN ON AND TERMINATION PAYMENTS $000

$000

Craig Dunn1,2,3 2004 2003 Stephen Dunne 2004 2003 Paul Leaming1,2,3,4 2004 2003 Peter Hodgett1,2,3 2004 2003 David Cohen1,2,5 2004 2003

608 674 444 350 585 649 428 474 405 426

729 784 570 250 702 661 513 374 486 556

7 7 54 7

140 148 106 63 135 127 146 128 94 98

1,484 1,606 1,120 663 1,429 1,491 1,094 976 985 1,080

516 430 152 150 335 260 269 233 207 92

148 169 61 17 48 98 36

338 169 175 88 325 163 238 119 225 113

150

2,486 2,374 1,447 901 2,150 1,931 1,649 1,426 1,453 1,435

FORMER SPECIFIED EXECUTIVES

Jack Ritch1,6 2004 92 2003 399 Marc de Cure7 2004 4 2003 700 Christine McLoughlin1,8 2004 183 2003 499 Total 2004 2003 2,749 5,248

75 600 575 513 3,075 5,436

21 344

10 135 1 129 19 96 651 1,369

177 1,134 5 1,404 202 1,108 6,496 12,397

50 186 81 366 127 218 1,737 2,398

6 16 226 2 77 301 814

200 100 175 250 250 1,751 2,055

1,280 1,720 1,490 4,490 150

1,713 1,436 1,806 2,171 2,071 1,653 14,775 17,814

Notes: In line with disclosure requirements, the totals for year ended 31 December 2003 relate to individuals disclosed in the 2003 annual report and so do not equal the sum of amounts disclosed for individuals specified above. 1 With the exception of Mr Dunne (who was appointed to the role of MD, AMP Capital Investors in 2004) and Mr de Cure who ceased employment on 2 January 2004, a 10% reduction in base salary was effective from 23 December 2003. 2 For certain executives (excluding Mr Dunne, Mr Ritch and Mr de Cure), 30% of their 2003 short term incentive payment was taken in the form of restricted AMP shares under the AMP Executive Share Ownership Plan. The price at which the shares were acquired by the executives was based on the average market price of the shares at the time they were acquired. The shares are generally subject to restrictions on transfer for three years from the date of allocation. Subject to the terms of the plan, each participating executive will also receive for no additional payment one share for every share that is held in the plan if the executive remains employed within the AMP Group until the third anniversary of the date of acquisition of shares under the plan (matching shares). 3 As per contractual entitlements, non-monetary benefits consist of up to $7,500 reimbursement for tax, legal and financial planning advice. 4 Non-monetary benefits to Mr Leaming in 2003 consisted of expatriate allowances related to service in the UK from March 2003 to June 2003. 5 Mr Cohen commenced employment with AMP on 20 January 2003. A sign-on fee of $150,000 was paid in two instalments. 6 Mr Ritch retired on 2 April 2004. In accordance with the provisions of the trust deed and rules of the AMP Officers Provident Fund, Mr Ritch applied for and was approved payment of a company retirement allowance of $1.28 million in lieu of a portion of his superannuation benefit. 7 Mr de Cure ceased employment with AMP on 2 January 2004, and a termination payment of $1.72 million was paid in relation to his cessation of employment under the terms of his contract. 8 Ms McLoughlins role was made redundant from AMP on 28 May 2004, and a termination payment of $1.49 million was paid in relation to her cessation of employment under the terms of her contract. 9 The valuation of performance rights and options have been described in sections (c) and (d) of this Note. The value of performance rights and options amortised in 2003 has changed due to the introduction of the new Accounting Standard AASB 1046. In accordance with AASB 1046, the value has been calculated at the grant date and does not reflect the fact that some options and performance rights are unlikely to vest. 10 The valuation of matching shares and restricted shares has been described in section (d) of this Note. The valuation of matching shares is a new requirement as a result of the introduction of the new Accounting Standard AASB 1046. 11 Restructure and employee retention arrangements were paid to key employees who were either critical to the proposal to demerge, or were considered critical to business as usual activities to those parts of AMPs businesses which were significantly impacted by the demerger. The first payment, equal to one-third of total eligible payments, and subject to performance requirements, was made on the successful completion of the demerger in December 2003, with the remaining two-thirds paid during the first six months of 2004. Employees who resigned forfeited unpaid amounts.

48 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued Specified executives performance rights holdings The table below summarises the holdings of performance rights granted to the specified executives. None of the specified executives performance rights are vested and exercisable at the date of this report.
SPECIFIED EXECUTIVES GRANT DATE HOLDING AT 1 JAN 2004 GRANTED VESTED EXERCISED LAPSED HOLDING AT 31 DEC 2004 FAIR VALUE PER PERFORMANCE RIGHT 1

Craig Dunn

25 Nov 02 23 Oct 03 18 Mar 04 18 Mar 04 06 Sep 04

47,277 134,768 182,045

10,661 27,061 122,522 160,244 3,538 6,981 79,832 90,351 10,267 23,770 103,236 137,273 7,504 18,284 74,005 99,793 8,292 17,187 74,874 100,353

47,277 134,768 10,661 27,061 122,522 342,289 15,689 34,768 3,538 6,981 79,832 140,808 45,526 118,377 10,267 23,770 103,236 301,176 33,277 91,059 7,504 18,284 74,005 224,129 36,771 85,596 8,292 17,187 74,874 222,720

$1.65 $2.78 $3.55

Stephen Dunne

25 Nov 02 23 Oct 03 18 Mar 04 18 Mar 04 06 Sep 04

15,689 34,768 50,457

$1.65 $2.78 $3.55

Paul Leaming

25 Nov 02 23 Oct 03 18 Mar 04 18 Mar 04 06 Sep 04

45,526 118,377 163,903

$1.65 $2.78 $3.55

Peter Hodgett

25 Nov 02 23 Oct 03 18 Mar 04 18 Mar 04 06 Sep 04

33,277 91,059 124,336

$1.65 $2.78 $3.55

David Cohen

22 Feb 03 23 Oct 03 18 Mar 04 18 Mar 04 06 Sep 04

36,771 85,596 122,367

$2.48 $2.78 $3.55

FORMER SPECIFIED EXECUTIVES

Jack Ritch

25 Nov 02 18 Mar 04

15,759 15,759

3,554 3,554 7,898 17,187 25,085

15,759 15,759 49,028 49,028 35,020 35,020

3,554 3,554 85,596 7,898 17,187 110,681

$1.65

Marc de Cure

25 Nov 02

49,028 49,028

Christine McLoughlin

25 Nov 02 23 Oct 03 18 Mar 04 18 Mar 04

35,020 85,596 120,616

$1.65 $2.78

Note: 1 For details on how performance rights values are determined, see section (c) of this Note.
AMP Concise Financial Report > amp.com.au > 49

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued Specified executives options holdings The table below summarises the holdings of options granted to the specified executives. None of the specified executives options are vested and exercisable at the date of this report.
SPECIFIED EXECUTIVES HOLDING AT 1 JAN 2004 GRANTED VESTED EXERCISED LAPSED HOLDING AT 31 DEC 2004

Craig Dunn Stephen Dunne Paul Leaming Peter Hodgett David Cohen
FORMER SPECIFIED EXECUTIVES

210,000 82,500 110,000 120,000

210,000 82,500 110,000 120,000

Jack Ritch Marc de Cure Christine McLoughlin

157,000 450,000 135,000

450,000 135,000

157,000

Specified executives shareholdings in AMP Limited The table below summarises the movements in holdings of shares in AMP Limited held by the specified executives and their personally related entities.
HOLDING AT 1 JAN 2004 GRANTED AS REMUNERATION DURING THE PERIOD RECEIVED ON EXERCISE OF PERFORMANCE RIGHTS OR OPTIONS OTHER CHANGES 1 HOLDING AT 31 DEC 2004 2

SPECIFIED EXECUTIVES

Craig Dunn3 Stephen Dunne Paul Leaming Peter Hodgett David Cohen
FORMER SPECIFIED EXECUTIVES

56,197 525 12,219 51,402 388

42,268 32,281 28,830 29,150

98,465 525 44,500 80,232 29,538

Jack Ritch Marc de Cure Christine McLoughlin

8,830 63,452 25,044

23,752

8,830 63,452 48,796

Notes: 1 Other changes represent individuals purchases and sales made during the period. Purchases made during the period include those shares purchased and held under the Employee Share Acquisition Plan and the Executive Share Ownership Plan Executive Short Term Incentive Programme. For further details on the terms and conditions of these plans, see sections (c) and (d) of this Note. 2 Holdings for the former specified executives are as at the date they ceased employment with AMP. Mr Ritchs cessation date was 2 April 2004, Mr de Cures cessation date was 2 January 2004 and Ms McLoughlins cessation date was 28 May 2004. 3 The AMP Limited shareholdings of Mr Dunn include 10,000 restricted shares granted on 28 March 2002. For further details on the terms and conditions of restricted shares, see section (d) of this Note.

50 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued (g) Details of specified directors Specified directors Peter Willcox John Astbury Richard Grellman Meredith Hellicar Peter Mason Nora Scheinkestel Former specified director Pat Handley Chairman Non-Executive Director (appointed 1 September 2004) Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director Non-Executive Director (resigned 20 May 2004) During 2004, directors were paid a base fee for service on the AMP Board. Additional fees were paid to the chairman of each of the Audit, Nomination and Remuneration Committees. Individual directors were paid fees for additional duties associated with membership of Due Diligence Committees of major projects (or other special purpose committees) on a per day basis, and for membership of any AMP subsidiary boards. A long term equity programme involving fee sacrifice has been established for directors. The Nomination Committee reviews the fees paid to non-executive directors of subsidiary companies of AMP. As the focus of the board is on the long term direction and wellbeing of AMP, there is no direct link between directors remuneration and the short term results of the AMP Group. However, AMPs long term performance relative to other large corporations is considered, among other factors, in setting the fee pool which is periodically proposed to shareholders at Annual General Meetings for approval. The current aggregate fee pool of $1,635,000 was approved by shareholders in 2004, representing a decrease of approximately 35% from the previous pool of $2,500,000. Approximately 26% of directors remuneration is taken in the form of AMP shares which are held until retirement under the terms of the AMP Non-Executive Directors Share Plan. Board fees are not paid to Mr Mohl since the responsibilities of board membership are considered in determining remuneration provided as part of his normal employment conditions. No non-executive director has been granted options or performance rights.

Andrew Mohl, the managing director and chief executive officer, is also considered a specified director as defined in AASB 1046. Disclosures regarding Mr Mohl are provided earlier in this Note. (h) Remuneration structure for the specified directors (excluding Mr Mohl) Fees paid to members of the AMP Board are based on advice from AMPs remuneration specialists and external remuneration advisers appointed by the Nomination Committee. This takes into consideration the level of fees paid to board members of other Australian corporations of a similar size, the complexity of AMPs operations and the responsibilities and workload requirements of board members.

AMP Concise Financial Report > amp.com.au > 51

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued (i) Individual details for specified directors Specified directors remuneration The table below summarises the remuneration details of the specified directors.
PRIMARY BENEFITS AMP BOARD AND COMMITTEE FEES/BASE SALARY $000 POST EMPLOYMENT EQUITY COMPENSATION OTHER TOTAL VALUE OF VALUE OF MATCHING OPTIONS AND SHARES AND SUPERPERFORMANCE RESTRICTED ANNUATION RIGHTS SHARES $000 $000 $000

EXECUTIVE DIRECTOR

FEES FOR OTHER GROUP BOARDS AND COMMITTEES $000

ADDITIONAL BOARD DUTIES9 $000

SHORTTERM INCENTIVE $000

NONMONETARY BENEFITS $000

TERMINATION BENEFITS $000

OTHER BENEFIT10 $000

$000

Andrew Mohl 2004 2003

NON-EXECUTIVE DIRECTORS

1,350 1,497

2,160 1,950

19 51

11 11

911 631

231 270

1,500 750

6,182 5,160

Peter Willcox 2004 2003 John Astbury1 2004 2003 Richard Grellman3 2004 2003 Pat Handley2 2004 2003 Meredith Hellicar 2004 2003 Peter Mason 2004 2003 Nora Scheinkestel 2004 2003 Total directors 2004 2003

324 370 36 120 127 42 92 116 94 108 24 116 40

84 705 41 126 95 187 418

50 37 5

30 34 4 18 20 5 20 12 9 10 2 15 4

6 3 2 6 3 2 4 6 5 6 1 6 2

360 407 50 214 241 61 248 152 113 124 27 178 46

2,212 2,614

149 442

92

2,160 1,950

19 51

105 119

911 631

231 270

2,038

1,534 773

7,321 8,980

Notes: Six directors left the board during 2003. In line with disclosure requirements, the totals for year ended 31 December 2003 relate to directors disclosed in the 2003 annual report and so do not equal the sum of amounts disclosed for directors specified above. 1 John Astbury was appointed as a non-executive director of AMP Limited on 1 September 2004. 2 Pat Handley retired as a non-executive director of AMP Limited on 20 May 2004. 3 Richard Grellman has a retirement allowance agreement which provides cash benefits in the event of death or retirement from the board. This benefit was frozen at March 2003. 4 Fees were paid to John Astbury as director of AMP Life Limited. 5 Fees were paid to Richard Grellman as director of AMP Life Limited, Gordian RunOff Limited, AMPG (1992) Ltd and TGI Australia Limited. 6 Fees were paid to Pat Handley as director of AMP Bank Limited. 7 Fees were paid to Meredith Hellicar as director of AMP Bank Limited. 8 Fees were paid to Nora Scheinkestel as director of AMP Capital Investors Limited. 9 Includes fees paid for additional duties as a member of Due Diligence or other ad hoc committees. 10 Related to allowances in respect of incidental expenses related to the business of the company.

52 > amp.com.au > AMP Concise Financial Report

10. Director and executive disclosures continued Specified directors shareholdings in AMP Limited The table below summarises the movements in holdings of shares in AMP Limited held by the specified directors and their personally related entities.
HOLDING AT 1 JAN 2004 GRANTED AS REMUNERATION DURING THE PERIOD RECEIVED ON EXERCISE OF PERFORMANCE RIGHTS OR OPTIONS OTHER CHANGES 1 HOLDING AT 31 DEC 2004 2

SPECIFIED DIRECTOR

Peter Willcox John Astbury Richard Grellman Meredith Hellicar Peter Mason Nora Scheinkestel
FORMER SPECIFIED DIRECTOR

56,113 10,000 14,431 18,847 26,441 14,182

25,168 1,076 4,978 5,515 5,325 12,146

81,281 11,076 19,409 24,362 31,766 26,328

Pat Handley

7,332

2,389

9,721

Notes: 1 Other changes represent individuals purchases and sales made during the period. Purchases made during the period include those shares purchased and held under the AMP non-executive directors share plan. For further details on the terms and conditions of this plan, see section (h) of this Note. 2 For the former specified director, the final holdings are shown as at the date of retirement.

(j) Relationship between remuneration and the performance of AMP AMPs remuneration policy aims to link the remuneration of the managing director and specified executives to AMPs long term and short term performance. The remuneration of the managing director and specified executives is linked to AMPs long term performance through the use of performance rights. All performance rights issued to the managing director and specified executives have total shareholder return (TSR) performance hurdles which ensure that the performance rights only become exercisable upon achievement of competitively set TSR targets. Instruments previously used to link the remuneration of the managing director and specified executives to AMPs long term performance include restricted shares and options. For further details on restricted shares and options, see part (d) of this Note. The remuneration of the managing director and specified executives is linked to AMPs short term performance through the short term incentive (STI) programme. Individuals may be granted an annual cash bonus which is assessed using a combination of quantitative and qualitative measures which includes the performance of AMP over the past year. AMPs remuneration policy/principles also aim to link the remuneration of non-executive directors to AMPs long term performance. As the focus of the board is on the long term direction and wellbeing of AMP, there is no direct link between the non executive directors remuneration and the short term results of the AMP Group. The remuneration of the non-executive directors is linked to AMPs long term performance through the use of the AMP non-executive directors share plan. Non-executive directors are required to allocate approximately 26% of their fees for service on the AMP Limited Board to purchase shares in AMP. Non-executive directors shares purchased under this plan are restricted from being disposed of for 10 years from the date of purchase. The tables below show the TSR performance of AMP and the ASX 100 over both the past five years and over 2004.

180 160 140

5 year total returns for AMP and ASX 100

AMP ASX 100

TSR rebased to 31/12/99

120 100 80 60 40 20 0 December 99 December 00 December 01 December 02 Financial year end

AMP Concise Financial Report > amp.com.au > 53

December 03

December 04

Notes to the financial statements continued for the year ended 31 December 2004

10. Director and executive disclosures continued

160 150 140

2004 total returns for AMP and ASX 100

AMP ASX 100

TSR rebased to 1/01/04

130 120 110 100 90 80 70 60 Jan 04 Feb 04 Mar 04 Apr 04 May 04 Jun 04 Jul 04 Aug 04 Sep 04 Oct 04 Nov 04 Dec 04

2004 Financial year

For the period from 1 January 2004 to 31 December 2004, the total return to AMP Limited shareholders (as measured by the change in share price plus dividends paid) was approximately 49%. 11. Events occurring after reporting date At the date of this report, the directors are not aware of any matter or circumstance that has arisen since the end of the financial year which has significantly affected or may significantly affect the operations of the consolidated entity, the results of its operations or its state of affairs, which is not already reflected in this report other than the following. Since 31 December 2004, AMP has proposed a final dividend on ordinary shares. See Note 8 for details. On 17 February 2005, AMP announced that AMP Limited shareholders will receive a capital return of around $750 million or 40 cents a share in the first half of 2005. AMPs shareholders will have the opportunity to approve the capital return at the Annual General Meeting in May 2005. If approved, payment will be made in mid-June 2005. AMP has applied for a ruling from the Australian Taxation Office to treat the capital return as a reduction in the cost base of the shares and not as a taxable dividend. In addition, AMP plans to redeem its outstanding $265m of Income Securities. Under the terms and conditions contained in the Trust Deed for the Income Securities, AMP may redeem the securities any time after 10 February 2005. The securities will be redeemed on the next coupon payment date of 10 May 2005. The final payment of the face value and interest on the securities will be made on 10 May 2005. The capital return and debt repayment will be funded from surplus capital, which stood at over $2.1 billion at 31 December 2004.

54 > amp.com.au > AMP Concise Financial Report

Directors declaration
for the year ended 31 December 2004 In accordance with a resolution of the Directors of AMP Limited, we state that in the opinion of the Directors: (a) the Concise Financial Report of the consolidated entity is in accordance with Accounting Standard AASB 1039 Concise Financial Reports; and (b) the financial statements and specific disclosures included in this Concise Financial Report have been derived from the Full Financial Report for the year ended 31 December 2004.

Peter Willcox Chairman

Andrew Mohl Managing Director and Chief Executive Officer Sydney, 17 February 2005

Independent audit report

for the year ended 31 December 2004 Independent audit report to members of AMP Limited Scope The concise financial report and directors responsibility The concise financial report comprises the statement of financial position, statement of financial performance, statement of cash flows and accompanying notes to the financial statements for the consolidated entity for the year ended 31 December 2004. The consolidated entity comprises both AMP Limited (the company) and the entities it controlled during the year. The directors of the company are responsible for preparing a concise financial report that complies with Accounting Standard AASB 1039 Concise Financial Reports, in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the concise financial report. Audit approach We conducted an independent audit on the concise financial report in order to express an opinion on it to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the concise financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected. We performed procedures to assess whether in all material respects the concise financial report is presented fairly in accordance with Accounting Standard AASB 1039 Concise Financial Reports. We formed our audit opinion on the basis of these procedures, which included: > testing that the information in the concise financial report is consistent with the full financial report; and > examining, on a test basis, information to provide evidence supporting the amounts, discussion and analysis, and other disclosures in the concise financial report that were not directly derived from the full financial report. We have also performed an independent audit of the full financial report of the company for the year ended 31 December 2004. Our audit report on the full financial report was signed on 17 February 2005, and was not subject to any qualification. For a better understanding of our approach to the audit of the full financial report, this report should be read in conjunction with our audit report on the full financial report. Independence We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001. We have given to the directors of the company a written Auditors Independence Declaration, a copy of which is included in the Directors Report. In addition to our statutory audit work of the full and concise financial reports, we were engaged to undertake other non-audit services. The provision of these services has not impaired our independence. Audit opinion In our opinion, the concise financial report of AMP Limited complies with Accounting Standard AASB 1039 Concise Financial Reports.

Ernst & Young

Brian Long Partner Sydney, 17 February 2005

AMP Concise Financial Report > amp.com.au > 55

Shareholder information
Distribution of shareholdings at 4 March 2005
RANGE NUMBER OF HOLDERS UNITS % OF ISSUED CAPITAL

1 1,000 1,001 5,000 5,001 10,000 10,001 100,000 100,001 and over Total
The total number of shareholders holding less than a marketable parcel of 69 shares is 43,826

774,527 173,373 11,758 5,356 278 965,292

295,254,077 332,630,263 83,175,581 115,156,160 1,033,935,979 1,860,152,060

15.87 17.88 4.47 6.20 55.58 100

Twenty largest shareholders as at 4 March 2005

ORDINARY SHARES % OF ISSUED CAPITAL

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

JP Morgan Nominees Australia Limited Westpac Custodian Nominees Limited National Nominees Limited Citicorp Nominees Pty Limited ANZ Nominees Limited Cogent Nominees Pty Limited Queensland Investment Corporation AMP Life Limited Westpac Financial Services Limited HSBC Custody Nominees (Australia) Limited IAG Nominees Pty Limited Bond Street Custodians Limited Australian Foundation Investment Company Limited RBC Global Services Australia Nominees Pty Limited Government Superannuation Office Argo Investments Limited Suncorp Custodian Services Pty Limited PSS Board Victorian Workcover Authority Westpac Life Insurance Services Limited

226,772,724 217,887,654 162,038,928 114,957,759 60,752,129 30,104,510 28,083,140 23,618,615 15,955,986 14,581,185 7,491,679 6,624,907 6,611,313 6,224,661 5,900,816 5,875,587 5,020,530 4,080,480 4,063,121 4,061,683 950,707,407 1,860,152,060

12.19 11.71 8.71 6.18 3.27 1.62 1.51 1.27 0.86 0.78 0.4 0.36 0.36 0.33 0.32 0.32 0.27 0.22 0.22 0.22 51.11 100.00

Top 20 total Total shares Substantial shareholders The Company has received no substantial shareholding notices.

Total number of holders of ordinary shares and their voting rights As at 4 March 2005, the share capital of AMP Limited consisted of 1,860,152,060 ordinary shares held by 965,292 shareholders. The voting rights attaching to the shares are that each registered holder of shares present in person (or by proxy, attorney or representative) at a meeting of shareholders has one vote on a vote taken by a show of hands, and one vote for each fully paid share held on a vote taken on a poll. Total number of options over unissued shares and option holders As at 4 March 2005, AMP Limited had on issue 9,833,764 options over unissued ordinary shares in AMP Limited held by 3,474 option holders. Stock exchange listings AMP Limited is listed on the Australian Stock Exchange and on the New Zealand Stock Exchange. Restricted securities There are no restricted securities on issue. Buy-back There is no current on-market buy-back.

56 > amp.com.au >

Glossary
Amortisation of goodwill
A technique for writing off goodwill over a period where benefits are expected to be received up to a maximum of 20 years.

Earnings per share (EPS)

Earnings per share (EPS) is one measure of performance of a publicly listed company. Basic earnings per share is calculated by dividing the net profit (loss) attributable to ordinary shareholders for a financial year by the weighted average number of shares of the company outstanding during that financial year. Underlying earnings per share is calculated by dividing the underlying contribution by the weighted average number of shares of the company outstanding during that financial year.

MoS accounting
Margin on Services or MoS accounting is the required method of financial reporting for all Australian life insurance companies and life insurance subsidiaries. This accounting method recognises that the profit generated by life insurance products materialises over the lifetime of that product, which can be decades.

Return on embedded value

Embedded value is an actuarial calculation of the economic value of shareholder capital in the business and profits expected to emerge form the 'in force' business. Return on embedded value is the expected return plus value added, divided by embedded value at the beginning of the period.

Subordinated debt
Debt that can be claimed in the event of a winding up, after the claims of secured creditors and policyholders have been met.

Assets under management

This is a collective term to describe all the assets that AMP manages on behalf of customers, policyholders and shareholders.

Total shareholder return (TSR)

Is a widely used measure of annual returns to shareholders. It combines movements in share price with other ways shareholders receive returns such as dividends and capital returns.

Benchmark
An index or other market measurement used by fund managers as a yardstick to assess the relative performance of an investment portfolio.

Net cashflows
These are product cash inflows from customers and policyholders, minus the outflows to customers and policyholders.

Return on equity (RoE)

Shows the return the company has made for shareholders. This represents AMPs after tax profits before other items divided by the average shareholder equity for the period.

Underlying contribution
Underlying contribution includes the operating profits of the business plus investment income based on average long term rates of return less debt costs. This takes out the impact of investment market volatility on shareholder capital so that the underlying trend is clearer. Actual investment income can be higher or lower than the long term rate from year to year.

Borrowing costs
The interest and other related costs associated with arranging, servicing and maintaining corporate and operational debt programmes.

Operating expenses
Expenses associated with AMPs ordinary business activities.

EMVONA
Excess of Market Value Over Net Assets is an accounting term specifically used in the life insurance industry representing the difference between the net assets and the market value of a controlled entity of the life insurance company.

Operating margins
Operating margins are the net profit after tax but before other items from AMPs business operations, but excludes investment income on funds held as capital within those business operations and borrowing costs.

Closed book
A book of business with no new customers.

Underlying return on equity This is a measure of a companys capital efficiency. It is calculated as underlying contribution divided by the average shareholder equity for the period.

Commutation
A settlement agreement reached between two or more parties that effectively terminates the obligation under an insurance/ reinsurance contract.

Embedded value
An actuarial calculation of the economic value of shareholder capital in the business and profits expected to emerge from the in force business.

Return on business unit equity (RoBUE)

Shows the returns each business unit contributes to shareholders in relation to the investment by AMP. This represents the business units after tax profits divided by the tangible capital resources invested in the business.

Value of new business (VNB)

This is a measure of the current value of business written today by AMP Financial Services. It is the current value of future profits from business sold by AMP during the year. It puts a value today on profits we expect to make on this business in future years.

Persistency
This is a measure of customer retention. It is the proportion of assets under management from policies that remain with us each year rather than being paid out (for example, on surrender or maturity).

Contingent liabilities
A situation existing at balance date where a potential future claim may occur but where the liability is not sufficiently probable or reliably measurable to warrant recognition at balance date.

Franked dividends
Dividends on shares with franking credits attached. The franking credits represent the income tax paid by a company that can be used as a tax rebate by Australian shareholders receiving that dividend.

Performance right
This is a form of executive remuneration designed to reward long term performance. Performance rights are a contractual promise to deliver a preset number of AMP shares, within a preset number of years after the date the performance right is granted, as long as specific performance hurdles are met.

Return on invested capital (RoIC)

Similar to RoBUE (above), it is the return that shareholders have earned on the capital invested in our business (including goodwill from any acquisitions). It is calculated by dividing total capital into underlying operating profit after tax. We improve RoIC by increasing the earnings and reducing the amount of capital we hold. It is a useful way of comparing companies in terms of management efficiency and viability of products.

Vesting
Remuneration term defining the period when a financial benefit becomes the property of the recipient. A more comprehensive glossary of terms can be found on the AMP website: www.amp.com.au/ shareholdercentre

Controllable costs
These are the business costs of a business unit or the AMP Group. They include management and project expenses but exclude variable distribution expenses, investment management fees and interest on corporate debt.

Goodwill (an intangible asset)

This is an accounting term to describe the premium paid on the acquisition of a business or commercial right in excess of the fair value of tangible net assets acquired. It represents the intangible value of an established reputation of a business.

Regulatory capital requirements

AMP is required to hold a prudent margin over and above policy liabilities as a buffer against adverse experience and poor investment returns. The minimum level of capital that AMP must hold for this purpose is set by the Australian Prudential Regulation Authority (APRA).

Cost to income ratio

This is a business efficiency ratio that expresses the controllable costs of a business unit or the group as a percentage of the income of that business unit or the AMP Group. It is calculated as controllable costs divided by gross margin (being total operating margins and underlying investment income before tax plus controllable costs).

In force business
How we classify the current policies that we have on our books.

Revenue
Is our income as a business.

Run-off
AMPs General Insurance portfolio is a closed book of business focused on managing the maturation of its existing book of business.

Mature, or closed, book

This term refers to a book or books of AMP products that are no longer actively sold or that have been closed to new sales while the book runs off for example, whole-of-life insurance policies and government endowment mortgages.

Restructuring costs
These are the costs associated with implementing AMPs reform agenda. These costs include staff redundancy payments, and other retention payments, provisions for onerous contracts, lease payments and professional fees.

Shareholder capital resources

This is an indication of the financial resources available to the company. It covers share capital, reserves and retained profits attributable to ordinary shareholders plus external corporate debt.

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Need help? Contact the AMP Securities Registry Australia AMP Securities Registry Reply Paid 2980, Melbourne Vic 8060 Phone 1300 654 442 1300 301 721 Fax New Zealand AMP Securities Registry P O Box 91543, Auckland Mail Centre Phone 0800 448 062 Fax 09 488 8787 United Kingdom AMP Securities Registry PO Box 82, The Pavilions Bridgwater Road, Bristol BS99 7NH Phone 0800 783 3315 Fax 0870 703 6119 Other countries AMP Securities Registry GPO Box 2980, Melbourne Vic 3001, Australia Phone +613 9415 4051 Fax +612 8234 5002 Email ampservices@computershare.com.au Internet www.amp.com.au/shareholdercentre Registered Office of AMP Limited Level 24, 33 Alfred Street Sydney NSW 2000 Australia +612 9257 5000 Phone Fax +612 9257 7178 AMP is incorporated and domiciled in Australia Board Executive and Company Secretary Prue Milne

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