AMP demerger to incur $325m impairments

Following a review of its balance sheet and ahead of the planner demerger with its private markets business, AMP expects additional post-tax impairment charges of approximately $325 million in its FY21 financial results.

In an announcement to the Australian Securities Exchange (ASX), the firm said the chargers were mainly non-cash.

It was part of a 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.

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The impairments would bring forward a range of expenses which was required by accounting standards.

The impairments were expected to have an impact on capital of approximately $220 million and would be recognised as a significant item against statutory profit in AMP’s FY21 financial results, but would not impact FY 21 underlying net profit after tax.

Full list of charges

Pre-tax ($m)

Post-tax ($m)

Partial impairment of deferred tax assets

100

100

Write-down of intangibles

135

95

Onerous lease contracts

110

75

Other impairments and adjustments

80

55

Total

425

325

Source: AMP

AMP had previously announced FY21 provisions for post-completion adjustments from the sale of its life insurance and mature business ($65 million) and remediation of superannuation matters (approximately $45 million).

The firm maintained it continued to have a sound capital position with a proforma 30 June, 2021, surplus of approximately $440 million, reflecting the actual 30 June, 2021, position adjusted for the Resolution Life divestment proceeds, real estate alignment capital, superannuation remediation, impairments being announced today and the improved utilisation of hybrid capital instruments. 

AMP would update investors on strategy and financials at its investor day on 30 November, 2021.

Alexis George, AMP chief executive, said: “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.”




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