Wealth giant AMP has announced it expects to take a $325 million hit to profits in its full-year financial results, following a review of its balance sheet ahead of its AMP Capital demerger.
AMP is scheduled to demerge and separately list AMP Capital’s private markets business next year, which will include its unlisted infrastructure and property management businesses, under new branding. The demerger is part of AMP’s strategy to simplify operations to focus on domestic wealth management, super and banking.
The charges, which are mainly non-cash, reflect a comprehensive review of the balance sheet which included the partial impairment of deferred tax assets, a write-down of intangibles, onerous lease contracts arising from lower future accommodation requirements and other impairments and adjustments, including a review of advice assets. AMP said the impairments bring forward a range of expenses as required by accounting standards.
The impairments are expected to have an impact on capital of approximately $220 million and will be recognised as a significant item against statutory profit in the FY21 financial results, although will not impact underlying net profit after tax.
The charges include:
AMP previously announced FY21 provisions for post-completion adjustments from the sale of its life insurance and mature business and remediation of superannuation matters totalling approximately $110 million.
AMP said it also continues to have a sound capital position with a proforma 30 June surplus of approximately $440m, reflecting its position adjusted for proceeds from its Resolution Life divestment, real estate alignment capital, superannuation remediation, impairments above and the improved utilisation of hybrid capital instruments.
Alexis George, AMP Chief Executive Officer commented: “As we have developed our strategies for the post-demerger businesses of AMP and Private Markets we have reviewed our balance sheet to ensure that assets recorded are in line with the future strategic direction. The charges are mainly non-cash and related to legacy issues, and our action will ensure that both businesses are in a stronger position to take advantage of opportunities in the future.”