Chanaka Gunasekera: AMP has had a tough year and the Royal Commission obviously is the major instigator of that. Their earnings at the underlying levels have been down. That was primarily impacted by their wealth protection which is their life insurance business. They are also undertaking new risk management processes which is going to cost them $50 million as well in the next few years. And so, that's impacted their statutory profits. Their statutory profits were much lower, over 70 per cent lower from the prior corresponding period. They were some of the reasons.

AMP reported for this half and this half only had two months of the aftermath of the Royal Commission - May and June. They reported that their fund flows were lower, particularly in May. So, that's a worry for investors. But it's hard to extrapolate from two months. And these are the months that normally cyclically there would be stronger fund flows. So, the fact they were lower is a worry. They still haven't got a long-term CEO and obviously, David Murray has just joined as Chair. So, we'll have to see how this strategy pans out. And I guess, we'll have a better idea in the next six months, particularly on fund flows. And that's a key thing, I think, because we want to know what reputational damage is being done. We know there's been a material reputational damage. We want to know how that's impacted investors' views towards – particularly, retirees' views towards AMP. The other thing is whether financial advisors want to join AMP. Now, they gained 140 but lost about 280. So, they had a net fall of about 140. Now, they have been losing advisors since about 2014. It peaked over 4,000. Now, it's below 3,000.

So, what should shareholders expect? I think there's going to be a lot of volatility in its share price given the uncertainty. Now, there are some catalysts in the near term. Obviously, they have been identified as one of the organisations that have been asked to appear at the next round of hearings which is currently underway. That round of hearings is on superannuation. So, that could be another – some other things that come out of these hearings. Then also, on September 30th, that's when the Royal Commission will publish its interim reports. That could be another catalyst for the share price.

With respect to dividends, I mean, they reduced their dividend to $0.10 and franked it by 50 per cent. Now, that's below their long-term dividend payout ratio of between 70 per cent to 90 per cent of the underlying net profit. Now, we expect that they will be sort of at the lower end of that payout ratio for a little while primarily to preserve capital given the potential fallout from the Royal Commission. So, the dividends will be impacted I would suspect.

IOOF reported reasonable results. I think the feature of IOOF's results was their cost management. Their cost management was very good. However, they were impacted by gross margin compression. Now, both AMP and IOOF are facing gross margin compression. Now, our concern is that they won't be able to replicate that cost management in the future given that they are probably going to have more cost flowing from the Royal Commission, more compliance-related costs.