Human Capital, page-3

I was attempting to look at the business post the sale of the "sold" businesses. Without the benefit of the number of employees who will be transitioning to Resolution with the sale, I have made a high level comparison with Pendal (PDL). At face value it appears that AMP is carrying more human capital than is warranted for the size and nature of the business.

Head office alone has over 1,000 employees which implies that one person is managing five others or if you prefer, for every five employees there is a manager.

As the table below shows, PDL generate six times the profit per employee than does our AMP. The most expeditious opportunity for owners is to undertake a significant and sustained reduction in employee numbers. Even striping out the sold business employees still leaves considerable opportunity for margin and hence profit improvement.

			AMP	PDL
1			30.12.18	30.09.18
2
3	Headcount		6,189	320
4
5	Share Price	$	$2.22	$8.87
6
7	Ords	millions	2,918.0	318.0
8	Mkt Cap	$m	6,478.0	2,820.7
9
10	AUM	$m	258,000	101,000
11	per emp	$m	41.7	315.6
12
13	Revenue	$m	2,858.0	573.90
14	Rev per emp	$	461,787	1,793,428
15
16	NPAT	$m	680.0	201.6
17	NPAT per emp	$	109,872	630,000

There is much discussion on valuation, mostly built on the existing structure. There remains a considerable opportunity for Murray and Co to bring the atrophied AMP into the 21st century through productivity and efficiency and thus generate improving returns.