2003 was a big year for AMP. It is interesting to watch the journey AMP has made, with the hopes of many small shareholders looking to the big Australian to provide reliable custodianship of their hard-earned dollars.

We start 2003 with the share price at $11.18 and a market capitalisation of about $13 billion. In January 2003, AMP informs the market that it expects a net loss of $900m for 2002 due to weak equity markets, weak operating margins and provision for UK pension mis-selling and other potential liabilities. The market capitalisation falls $3 billion by early February.

In February 2003, Standard & Poor’s placed a negative outlook on a number of AMP entities reflecting the “continued difficult operating environment in the UK”.

In March 2003, AMP paid former CEO Paul Batchelor $2.1m as compensation for his termination the previous year. By end of March 2003, the value of AMP had fallen another $2 billion, with the share price at $7.00.

In April 2003, AMP sold off their New Zealand mortgages and the property finance loan assets. The share price climbs back to $8.73.

In May 2003, AMP bit the bullet and announced a major strategic shift whereby the business would be de-merged into AMP – focusing on Australia and New Zealand, and Henderson (HHG.asx now JHG.asx) focusing on the UK and the Northern Hemisphere. Also, they did a Capital raising of $1.5 billion at $5.50 per share to fund the proposal.

On the 5th May, the shares traded down to the Capital raise price of $5.50, with the market capitalization falling $3.5 billion to $6.5 billion.

In August 2003, National Australia Bank acquired a 5.4% stake in AMP at $6.00, with the AMP trading at $4.75 at the time of the bid. AMP’s response was that the currently proposed re-structure would be more value accretive than the current $6.00 share price.

In October 2003, AMP raises a further $1.2 Billion to fund the redemption of existing Reset Preferred Securities because those securities would no longer count as Tier 1 capital.

In November 2003, NAB announced that it felt that the proposed de-merger did not deliver a clean separation of AMP’s Australia and UK businesses because AMP would continue to own 15% of Henderson.

In December 2003, Henderson was demerged with shareholders getting 1 share in Henderson for each share in AMP, valuing the capital value of the Henderson share at $1.00 notionally. The AMP share price finished the tumultuous year at $5.00, valuing AMP at $9.25 billion, post all the share issues.

From 2004, the AMP share price rose to $10.75c by April 2007, with the general rise in the market pre-GFC, with a market cap at $20 Billion. Post – GFC the share price fell back to $5.50 per share by March 2011.

In March 2011, AMP made a takeover of AXA Asia Pacific in a deal worth $14 Billion. Remember that other iconic Australian institution – National Mutual Life, a company formed in 1869 that was bailed out by AXA after the 1987 crash, with AXA taking a 51% shareholding. French AXA received about $7.2 billion in cash for their shares and the Australian shareholders of AXA were offered .73 AMP shares plus $2.546 cash per AXA share.

The net result was that AMP issued another 695m shares at a notional $5.32c per share ($3.7billion) plus another $2.4 billion in cash.

From 1.15 Billion shares on issue in 2003, by the end of 2011, there were 2.85 Billion shares on issue, for a market cap of $15 Billion.

2018 was a car crash year for AMP, caught in the headlights of the Royal Commission and by the time the smoke cleared they were working out who was driving. Apparently, no-one. David Murray became the nominated driver as he appeared as the only person with a full licence.

AMP peaked at a $20 billion market cap in February 2015 and has trended down to a current market cap of $5.3 Billion.

And now it has come back to the well for another $650m at $1.60, issuing another 406 million shares. In addition, they are offering eligible shareholders the opportunity to purchase $15,000 worth of shares.

The new CEO, Francesco De Ferrari, appointed 2018, is being paid a buyout of incentives from his previous employer worth $7m, and a recovery incentive of $4.4m. Originally, the hurdle share price to receive these incentives was $3.44c, but has since been lowered to $2.45c. In August 2018, when De Ferrari was appointed, the share price was $4.00. It doesn’t seem too logical setting a hurdle rate and then dropping that rate because the share price went down. Sort of defeats the purpose of having a hurdle rate.

The same flexibility hasn’t been extended to AMP advisors. The holy grail of being an AMP adviser was that AMP guaranteed to pay four times the Advisers’ annual revenue, should an adviser wish to sell their business. The facility is known as Buyer Of Last Resort (BOLR). Quoting the AFR: “Prior to the announcement a small AMP practice with $200,000 in recurring revenue was worth as much as $800,000 to an adviser. Following the changes – which include the reduced rate for recurring revenue and no compensation for grandfathered commissions from January 2021  – that practice may now only be worth only $182,000”.

Since 2003 the number of shares on issue has tripled and the price of the shares has fallen 80%, also having sucked another Australian icon, National Mutual into its vortex.

Has it turned a corner? Have they articulated a strategic plan that makes you believe they now understand how to add value today that was not apparent over the last 16 years?  Probably not.