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ASX Announcement
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17 February 2011

Manager Manager Company Announcements Office Market Information Services Section Australian Securities Exchange New Zealand Stock Exchange Level 4, 20 Bridge Street Level 2, NZX Centre, 11 Cable Street Sydney NSW 2000 Wellington New Zealand

Announcement No: 05/11

AMP Limited (ASX/NZX: AMP)

(Also for cross release to AMP Group Finance Services Limited (ASX: AQNHA; NZX: AQN010))

Part 1: AMP delivers fully ear A$760 million underlying profit AMP reports Q4 2010 cashflows and AUM

Part 2: Investor Presentation Part 3: Investor Report Part 4: Appendix 4E

AMP Limited (AMP) ASX Announcement

AMP Limited Level 24, 33 Alfred Street Sydney NSW 2000 Australia ABN 49 079 354 519

AMP Limited ABN 49 079 354 519

Appendix 4E – Preliminary Final Report Year ended 31 December 2010

Content

Results for announcement to the market Commentary on results Financial information as required by Appendix 4E

1 2 4

AMP Limited Appendix 4E – Preliminary Final Report

Results for announcement to the market

for the year ended 31 December 2010

Results for announcement to the market for the year ended 31 December 2010
2010 2009	%
	movement
Financial results $m $m
Revenue from ordinary activities(1) 7,664 10,915 Profit from ordinary activities after tax attributable to members(2) 775 739 Net profit for the period attributable to members(2) 775 739 753 740 Netprofit before accountingmismatches(2)	-30% 5% 5% 2%

Notes

(1) Revenue from ordinary activities includes amounts attributable to shareholders, policyholders and external unitholders. The amount is the aggregate of premium and related revenue of $1,100m (2009: $1,049m), fee revenue of $1,430m (2009: $1,331m), other revenue of $294m (2009: $285m) and net investment gains of $4,840m (2009: $8,250m) as detailed in Note 3 and 4 of the Preliminary Final Report.

(2) As explained further in Note 1(d), accounting mismatches arise because the recognition and measurement rules for certain policyholder assets differ from the recognition and measurement rules for the actual liability to policyholders in respect of the same assets. These mismatches result in policyholder asset movements impacting Profit and increased volatility of the reported profit.

		Franked
	Amount per	amount per
	security	security
Dividends	(cents)	(cents)
Final dividend (franked to 60% at a tax rate of 30%)
- Final dividend	15.00	9.00
The record date to determine entitlements to the final dividend	4-Mar-2011
The date the final dividend is payable	8-Apr-2011

AMP Limited offers a Dividend Reinvestment Plan under which shareholders who have a registered address in, and are residents of, Australia and New Zealand are invited to reinvest part of any dividends receivable in additional shares. The price of the shares issued under the plan is the weighted average price of the AMP shares over a designated period with a 1.5% discount as defined in the plan rules rounded down to the nearest one cent.

	2010	2009
Net tangible assets per ordinary share	A$	A$
Net tangible assets per ordinary share	0.98	0.80

The results and the financial information included within this Preliminary Final Report have been subject to an independent audit by the external auditors.

AMP Limited Appendix 4E – Preliminary Final Report

Commentary on the results

for the year ended 31 December 2010

Review of operations and results

AMP is financially strong, with a low cost ratio and a disciplined, prudent approach to capital management. This business model is characterised by a pre-eminent brand; a relatively low-cost and scalable manufacturing platform; a large aligned planner channel; a broad-based asset management and packaging business; and cost and capital efficiency.

AMP's statutory profit attributable to shareholders of AMP Limited for the year ended 31 December 2010 was $775 million, compared to $739 million for the previous corresponding period. Basic earnings per share for the year ended 31 December 2010 on a statutory basis was 37.9 cents per share (2009: 37.1 cents per share).

Underlying profit is AMP’s preferred measure of profitability as it smoothes investment market volatility. Directors use underlying profit as the primary determinant of dividend decisions. AMP’s underlying profit of $760 million for the year ended 31 December 2010 was reduced two per cent from $772 million for the year ended 31 December 2009 . On an underlying basis, earnings were 36.7 cents per share (2009: 38.3 cents per share).

AMP’s performance for 2010 against its four key performance measures was as follows:

underlying profit $760 million, down two per cent on 2009.
63 per cent of AMP Capital Investors managed funds met or exceeded the benchmark over the 12 months to 31 December 2010.
growth measures (compared to the previous corresponding period):
net cash inflows into AMP Financial Services were $789 million in 2010, compared with $1,661 million over the 12 months to 31 December 2009; net external cash inflows into AMP Capital Investors were $2,618 million in 2010 compared with $1,077 million net outflows over the 12 months to 31 December 2009.
value of risk new business increased $6 million to $108 million.
underlying return on equity decreased by 5.4 percentage points to 26.2 per cent, reflecting AMP’s prudent approach to capital management.

AMP experienced overall investment gains attributable to shareholders, policyholders, external unitholders and non-controlling interests for the year ended 31 December 2010. The vast majority of investment returns are attributable to wealth management products where the shareholders are not directly exposed to changes in asset values.

Total AMP group assets under management were $115 billion at 31 December 2010, an increase of 3 per cent from $112 billion at 31 December 2009.

Differences between underlying profit and statutory profit

The 31 December 2010 underlying profit of $760 million excludes an investment income market adjustment loss of $5 million. The underlying profit also excludes merger and acquisition transaction costs of $16 million, and other items of $2 million loss. Accounting mismatch gains of $22 million and other timing differences gains of $16 million are also excluded from underlying profit. A reconciliation between underlying profit and statutory profit is provided in Note 2(d) of the Preliminary Final Report.

Capital management

Equity and reserves of the AMP group increased to $2,938 million at 31 December 2010 from $2,571 million at 31 December 2009. This was a result of additional share capital issued under the Dividend Reinvestment Plan, profits to 31 December 2010 and other movements in reserves and contributed equity, partially offset by dividends paid up to 31 December 2010.

AMP remains strongly capitalised, with $1,482 million in regulatory capital resources above minimum regulatory requirements (MRR) at 31 December 2010 ($1,242 million at 31 December 2009). This was 2.4 times MRR (2.2 times at 31 December 2009). The MRR coverage ratio varies throughout the year due to a range of factors, including investment market movements, dividend payments and statutory profits.

AMP Limited Appendix 4E – Preliminary Final Report

Commentary on the results

for the year ended 31 December 2010

AMP continues to take a prudent approach to capital management and is biased towards holding some excess capital, particularly in the current environment where there are a number of regulatory capital reviews in progress.

AMP has declared a final dividend of 15 cents per share, franked to 60 per cent. This takes AMP’s dividend payout ratio to 82 per cent of underlying profit for the year ended 31 December 2010 . AMP’s dividend policy is to pay out 75 - 85 per cent of underlying profit and franked to the maximum extent possible. Following the proposed merger between AMP and AXA APH’s Australian and New Zealand operations, it is expected that the franking capacity of the merged group will be less than AMP’s current franking level in the near term, given AXA APH’s current franking position.

AMP offers a dividend reinvestment plan (DRP) for shareholders. AMP will offer a discount of 1.5 per cent to DRP participants. The DRP will not be underwritten and new shares will be issued.

Impact of accounting mismatches on profit

During the year, the aggregate impact of accounting mismatches increased the net profit attributable to the shareholders of AMP Limited by $22 million from $753 million to $775 million. Further details on accounting mismatches are provided in the accounting policies Note 1(d) in the Preliminary Final Report.

The accounting mismatches arise in respect of:

gains and losses on ‘treasury shares’: 2010 gain of $22 million (2009: $26 million loss)
gains and losses on investments in controlled entities of the life statutory funds: 2010 loss of $4 million (2009: $21 million gain)
other accounting mismatches: 2010 gain of $4 million (2009: $4 million gain).

Events occurring after the reporting date

As at the date of this report, the directors are not aware of any matter or circumstance that has arisen since the end of the year that has significantly affected or may significantly affect the operations of the consolidated entity, the results of its operations or its state of affairs, which is not already reflected in this report, other than the following:

on 17 January 2011, AXA APH released an explanatory memorandum setting out information for AXA APH shareholders about a proposed merger of AXA APH’s Australian and New Zealand businesses with AMP. The proposed transaction is a joint proposal with AXA SA under which AXA SA would acquire 100 per cent of AXA APH’s Asian business.

AXA APH’s independent directors have unanimously recommended the proposal to minority shareholders in the absence of a superior proposal. AXA APH shareholders will have the opportunity to vote on the proposal on 2 March 2011. Assuming shareholders vote in favour of the proposal, and subject to court approval, it is expected that the implementation date for the merger will be 30 March 2011. In addition to receiving shareholder and court approvals, the merger also remains subject to various regulatory approvals, including from the Federal Treasurer.

on 17 February 2011, AMP announced a final dividend on ordinary shares of 15 cents per share. Details of the announced final dividend and dividends paid and declared during the financial year are disclosed in Note 17 of the Preliminary Final Report.

AMP Limited Appendix 4E – Preliminary Final Report

Financial information

for the year ended 31 December 2010

INCOME STATEMENT ............................................................................................................................................................................5	INCOME STATEMENT ............................................................................................................................................................................5
STATEMENT OF COMPREHENSIVE INCOME.......................................................................................................................................6
STATEMENT OF FINANCIAL POSITION.................................................................................................................................................7
STATEMENT OF CHANGES IN EQUITY.................................................................................................................................................8
STATEMENT OF CASH FLOWS ...........................................................................................................................................................10
NOTES SUPPORTING THE FINANCIAL INFORMATION......................................................................................................................11
1.	BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES........................................................11
2.	SEGMENT INFORMATION .........................................................................................................................................................24
3.	INCOME ......................................................................................................................................................................................28
4.	INVESTMENT GAINS AND (LOSSES)........................................................................................................................................29
5.	EXPENSES .................................................................................................................................................................................30
6.	INCOME TAX ..............................................................................................................................................................................31
7.	RECEIVABLES............................................................................................................................................................................33
8.	INVENTORIES AND OTHER ASSETS........................................................................................................................................34
9.	INVESTMENTS IN FINANCIAL ASSETS.....................................................................................................................................35
10.	INVESTMENT PROPERTY .........................................................................................................................................................36
11.	PROPERTY, PLANT AND EQUIPMENT .....................................................................................................................................37
12.	INTANGIBLES.............................................................................................................................................................................38
13.	PAYABLES..................................................................................................................................................................................40
14.	PROVISIONS ..............................................................................................................................................................................41
15.	BORROWINGS ...........................................................................................................................................................................42
16.	SUBORDINATED DEBT..............................................................................................................................................................43
17.	DIVIDENDS.................................................................................................................................................................................44
18.	CONTRIBUTED EQUITY.............................................................................................................................................................45
19.	LIFE INSURANCE CONTRACTS ................................................................................................................................................46
20.	OTHER LIFE INSURANCE AND INVESTMENT CONTRACT DISCLOSURES ...........................................................................54
21.	RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION ..................................................................................57
22.	CAPITAL MANAGEMENT ...........................................................................................................................................................71
23.	NOTES TO STATEMENT OF CASH FLOWS..............................................................................................................................72
24.	EARNINGS PER SHARE.............................................................................................................................................................74
25.	SUPERANNUATION FUNDS ......................................................................................................................................................75
26.	SHARE BASED PAYMENTS.......................................................................................................................................................78
27.	GROUP CONTROLLED ENTITY HOLDINGS..............................................................................................................................82
28.	ASSOCIATES..............................................................................................................................................................................89
29.	FORWARD INVESTMENTS, LEASING AND OTHER COMMITMENTS......................................................................................91
30.	CONTINGENT LIABILITIES.........................................................................................................................................................92

AMP Limited Appendix 4E – Preliminary Final Report

Income statement

for the year ended 31 December 2010

		Consolidated	Consolidated
	Note	2010	2009	2010	2009
		$m	$m	$m	$m
Income and expenses of shareholders, policyholders,
external unitholders and non-controlling interests(1)
Life insurance premium and related revenue	3	1,100	1,049	-	-
Fee revenue	3	1,430	1,331	11	11
Other revenue	3	294	285	-	-
Investment gains and (losses)	4	4,840	8,250	376	207
Life insurance claims and related expenses	5	(1,289)	(1,251)	-	-
Operating expenses	5	(2,270)	(2,132)	(11)	(11)
Finance costs	5	(889)	(655)	-	-
Share of profit or (loss) of associates accounted for using the
equity method		6	4	-	-
Movement in external unitholders' liabilities		(284)	(343)	-	-
Change in policyholder liabilities
- life insurance contracts		202	641	-	-
- investment contracts		(2,259)	(5,951)	-	-
Income tax(expense)credit	6	(126)	(505)	16	97
Profit		755	723	392	304
Profit of shareholders of AMP Limited excluding impact of
accounting mismatches		753	740	392	304
Unmatched changes in policyholder liabilities ('accounting
mismatches') due to:(2)
- treasury shares		22	(26)	-	-
- investment in controlled entities of statutory funds		(4)	21	-	-
- other		4	4	-	-
Profit of shareholders of AMP Limited		775	739	392	304
Profit(loss)attributable to non-controllinginterests		(20)	(16)	-	-
Profit		755	723	392	304

Footnote:

(1) Income and expenses include amounts attributable to shareholders' interests, policyholders' interests in the life statutory funds, external unitholders' interests and non-controlling interests. Amounts included in respect of the life statutory funds have a substantial impact on most of the consolidated Income statement lines, especially Investment gains and losses. In general, policyholders' interests in the transactions for the period are attributed to them in the lines Change in policyholder liabilities.

Earnings per ordinary share	Note	cents	cents
Basic before accounting mismatches	24	36.4	36.7
Diluted before accounting mismatches	24	36.2	36.5
Basic after accounting mismatches	24	37.9	37.1
Diluted after accounting mismatches	24	37.7	36.9

AMP Limited Appendix 4E – Preliminary Final Report

Statement of comprehensive income for the year ended 31 December 2010

	Consolidated	Consolidated
	2010	2009		2010	2009
	$m		$m	$m	$m
Profit	755	723		392	304
Other comprehensive income recognised in retained earnings
Defined benefit plans(1)
- actuarial gains and (losses)	(15)		61	-	-
- income tax(expense)/credit	4	(18)		-	-
	(11)		43	-	-
Other comprehensive income recognised in reserves
Cash flow hedges(2)
- gains and (losses) in fair value of cash flow hedges	(12)		45	-	-
- income tax (expense)/credit	4	(14)		-	-
- transferred to profit for the period - gross	32		55	-	-
- transferred toprofit for theperiod - income tax(expense)/ credit	(10)	(17)			-
	14		69	-	-
Owner-occupied property
- gains (losses) in valuation of owner-occupied property	(1)	(29)		-	-
- income tax(expense)/credit	-		2	-	-
	(1)	(27)		-	-
Exchange difference on translation of foreign operations
- exchange gains (losses)	(21)	(65)		-	-
- transferred toprofit for theperiod	-		19	-	-
	(21)	(46)		-	-
Revaluation of hedge of net investments
- gains and (losses) in fair value of hedge of net investments	3		30	-	-
- income tax (expense)/credit	(1)		(9)	-	-
- transferred to profit for the period - gross	(4)		3	-	-
- transferred toprofit for theperiod - income tax(expense)/credit	1		(1)	-	-
	(1)		23	-	-
Total comprehensive income	735	785		392	304
Total comprehensiveprofit(loss)attributable to non-controllinginterests	20		16	-	-
Total comprehensive income	755	801		392	304

Footnote:

(1) Under accounting standards, actuarial gains and losses on AMP’s employer sponsored defined benefit plans are recognised directly in retained earnings. Whilst the defined benefit plans are in a liability position as measured under accounting standards, under the accrued benefits calculation method used to determine employer contributions, the Australian defined benefit plan was in a surplus position at reporting date while the New Zealand defined benefit plan was in a deficit position and needed to make additional contributions of $2m per year as recommended by the plan actuaries.

(2) Cash flow hedge movements are predominantly in respect of interest rate swaps used to manage AMP Bank's interest rate risk on its fixed rate mortgage portfolio which are effectively hedged.

AMP Limited Appendix 4E – Preliminary Final Report

Statement of financial position

as at 31 December 2010

		Consolidated	Consolidated
	Note	2010	2009	2010	2009
		$m	$m	$m	$m
Assets
Cash and cash equivalents		3,158	2,409	2	1
Receivables	7	887	959	99	9
Current tax assets		8	32	-	32
Inventories and other assets	8	312	184	-	-
Investments in financial assets measured at fair value through
profit or loss	9	64,797	65,573	-	-
Investments in financial assets measured at amortised cost	9	10,935	10,650	836	836
Investment property	10	7,122	7,832	-	-
Investments in associates accounted for using the equity method	28	89	116	-	-
Property, plant and equipment	11	452	475	-	-
Deferred tax assets	6	582	654	66	133
Intangibles	12	919	946	-	-
Investments in controlled entities	9	-	-	7,072	7,072
Total assets of shareholders of AMP Limited, policyholders, external
unitholders and non-controlling interests		89,261	89,830	8,075	8,083
Liabilities
Payables	13	1,033	981	1	165
Current tax liabilities		203	40	148	-
Provisions	14	253	280	4	5
Derivative financial liabilities		718	1,120	-	-
Borrowings	15	10,791	11,997	-	-
Subordinated debt	16	345	353	-	-
Deferred tax liabilities	6	620	629	-	-
External unitholders' liabilities		5,892	6,121	-	-
Life insurance contract liabilities	19	17,762	18,380	-	-
Investment contract liabilities	20	48,579	47,239	-	-
Defined benefitplan liability	25	67	56	-	-
Total liabilities of shareholders of AMP Limited, policyholders,
external unitholders and non-controlling interests		86,263	87,196	153	170

Net assets of shareholders of AMP Limited and non-controlling
interests		2,998	2,634	7,922	7,913
Equity
Contributed equity	18	5,051	4,814	5,209	4,957
Reserves		(2,565)	(2,563)	6	2
Retained earnings		452	320	2,707	2,954
Total equity of shareholders of AMP Limited		2,938	2,571	7,922	7,913
Non-controllinginterests		60	63	-	-
Total equity of shareholders of AMP Limited and non-controlling
interests		2,998	2,634	7,922	7,913

AMP Limited Appendix 4E – Preliminary Final Report

Statement of changes in equity

for the year ended 31 December 2010

Consolidated

Consolidated
	Owner Share occupied Foreign Non- Total Equity based Cash flow property currency Hedge of net Demerger Total controlling equity Contributed contribution payment hedge revaluation translation investment loss Retained shareholder interest $m equity reserve(1) reserve(2) reserve(3) reserve(4) reserve(5) reserve(6) reserve(7) earnings equity $m $m $m $m $m $m $m $m $m $m $m Equity attributable to shareholders of AMP Limited
2010 Balance at the beginning of the period Profit Other comprehensive income	4,814 1,019 1 (19) 67 (48) 2 (3,585) 320 2,571 63 2,634 - - - - - - - - 775 775 (20) 755 - - - 14 (1) (21) (1) - (11) (20) - (20)
Total comprehensive income Share based payment expense Share purchases Net sale/(purchase) of 'treasury shares' Dividends paid(8) Dividends paid on 'treasury shares'(8) New capital from shares issued under dividend reinvestment plan Non-controlling interest on sales and acquisitions	- - - 14 (1) (21) (1) - 764 755 (20) 735 - - 23 - - - - - - 23 - 23 - - (16) - - - - - - (16) - (16) (15) - - - - - - - - (15) - (15) - - - - - - - - (639) (639) - (639) - - - - - - - - 7 7 - 7 252 - - - - - - - - 252 - 252 - - - - - - - - - - 17 17
Balance at the end of theperiod	5,051 1,019 8 (5) 66 (69) 1 (3,585) 452 2,938 60 2,998
2009 Balance at the beginning of the period Profit Other comprehensive income	4,481 1,019 (15) (88) 94 (2) (21) (3,585) 154 2,037 80 2,117 - - - - - - - - 739 739 (16) 723 - - - 69 (27) (46) 23 - 43 62 62
Total comprehensive income Share based payment expense Share purchases Net sale/(purchase) of 'treasury shares' Dividends paid(8) Dividends paid on 'treasury shares'(8) New capital from shares issued under dividend reinvestment plan Non-controlling interest on sales and acquisitions	- - - 69 (27) (46) 23 - 782 801 (16) 785 - - 17 - - - - - - 17 - 17 - - (1) - - - - - - (1) - (1) 25 - - - - - - - (22) 3 - 3 - - - - - - - - (601) (601) - (601) - - - - - - - 7 7 - 7 308 - - - - - - - - 308 - 308 - - - - - - - - - - (1) (1)
Balance at the end of theperiod	4,814 1,019 1 (19) 67 (48) 2 (3,585) 320 2,571 63 2,634

AMP Limited Appendix 4E – Preliminary Final Report

Statement of changes in equity (continued) for the year ended 31 December 2010

Parent

Parent
		Share
		based		Total
	Contributed	payment	Retained	shareholder
	equity	reserve(2)	earnings	equity
	$m	$m	$m	$m
31 December 2010
Balance at the beginning of the period	4,957	2	2,954	7,913
Profit	-	-	392	392
Other comprehensive income	-	-	-	-
Total comprehensive income	-	-	392	392
Share based payment expense	-	4	-	4
Share purchases	-	-	-	-
Dividends paid(8)	-	-	(639)	(639)
New capital from shares issued under dividend reinvestment
plan	252	-	-	252
Balance at the end of theperiod	5,209	6	2,707	7,922
31 December 2009
Balance at the beginning of the period	4,649	(3)	3,251	7,897
Profit	-	-	304	304
Other comprehensive income	-	-	-	-
Total comprehensive income	-	-	304	304
Share based payment expense	-	6	-	6
Share purchases	-	(1)	-	(1)
Dividends paid(8)	-	-	(601)	(601)
New capital from shares issued under dividend reinvestment
plan	308	-	-	308
Balance at the end of theperiod	4,957	2	2,954	7,913

Footnote:

(1) The Equity contribution reserve recognises the additional loss on the demerger of AMP’s UK operations in December 2003. The additional loss is the difference between: the pro-forma loss on demerger based upon directors' valuation of the UK operations and the estimated net assets to be demerged, and the market based fair value of the UK operations based upon the share price of the restructured UK operations on listing and the actual net assets of the UK operations on demerger.

(2) The Share based payment reserve represents the cumulative expense recognised in relation to equity settled share based payments less the cost of shares purchased and transferred to share based payments recipients upon vesting.

(3) The Cash flow hedge reserve represents the cumulative impact of changes in the fair value of derivatives designated as cash flow hedges which are effective for hedge accounting. Hedge gains and losses are transferred to the Income statement when they are deemed ineffective or upon realisation of the cash flow.

(4) The Owner-occupied property revaluation reserve represents cumulative valuation gains and losses on owner-occupied property required to be recognised in equity.

(5) Exchange differences arising on translation of foreign controlled entities within the AMP group are recognised in Foreign currency translation reserve. Exchange gains and losses are transferred to the Income statement upon realisation of the investment in the foreign controlled entity.

(6) The Hedge of net investment reserve reflects gains and losses on effective hedges of net investments in foreign operations. Hedge gains and losses are transferred to the Income statement when they are deemed ineffective or upon realisation of the investment in the foreign controlled entity.

(7) The Demerger loss reserve represents the transfer from Shareholders' retained earnings of the total loss on demerger.

(8) Dividends paid includes the dividends paid on 'treasury shares'. Dividends paid on 'treasury shares' are required to be excluded from the consolidated financial statements by adjusting retained earnings.

AMP Limited Appendix 4E – Preliminary Final Report

Statement of cash flows

for the year ended 31 December 2010

		Consolidated	Consolidated
		2010	2009	2010	2009
	Note	$m	$m	$m	$m
Cash flows from operating activities	23
Cash receipts in the course of operations		12,491	11,751	16	4
Interest and other items of a similar nature received		2,041	1,843	2	2
Dividends and distributions received		2,193	1,151	374	200
Cash payments in the course of operations		(13,640)	(12,358)	(8)	(3)
Finance costs		(756)	(552)	-	-
Income tax refunded		135	72	4	254
Cash flows from operating activities		2,464	1,907	388	457
Cash flows from investing activities
Net proceeds from sale of/(payments to acquire):
- investment property		74	306	-	-
- investments in financial assets		(966)	(2,776)	-	-
Loan to controlled entities		-	-	-	(172)
Proceeds from disposal of subsidiaries and other businesses(1)		297	46	-	-
Payments to acquire subsidiaries and other businesses(2)		(19)	(14)	-	-
Cash flows(used in) investing activities		(614)	(2,438)	-	(172)
Cash flows from financing activities
Proceeds from borrowings - non Banking operations		1,264	1,643	-	-
Proceeds from A$ and NZ$ AMP Notes		-	287	-	-
Net movement in deposits from customers		514	473	-	-
Repayment of borrowings - non Banking operations		(1,944)	(1,324)	-	-
Net movement in borrowings - Banking operations		(578)	(220)	-	-
Repayment of subordinated Floating Rate Note		-	(100)	-	-
Repayment of subordinated Guaranteed Set-up Bonds		-	(223)	-	-
Dividendspaid(3)		(380)	(286)	(387)	(293)
Cash flows from(used in) financing activities		(1,124)	250	(387)	(293)
Net increase (decrease) in cash and cash equivalents		726	(281)	1	(8)
Cash and cash equivalents at the beginning of the period		5,112	5,398	1	9
Effect of exchange rate changes on cash and cash equivalents		(14)	(5)	-	-
Cash and cash equivalents at the end of theperiod	23	5,824	5,112	2	1

Footnote:

(1) Proceeds are in respect of disposals of trusts and operating businesses controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group, net of cash disposed of.

(2) Payments are in respect of the acquisition of a financial planning business that did not have a material impact on the composition of the AMP group, net of cash acquired.

(3) Dividends paid is presented net of dividend reinvestment plan and dividends on 'treasury shares'. See Statement of changes in equity for further information.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

1. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated economic entity (the AMP group) comprises AMP Limited (the parent entity), a company limited by shares, and incorporated and domiciled in Australia, and all entities that it controlled during the period and at the reporting date.

(a) Basis of preparation

This Preliminary Final Report has been prepared in accordance with the measurement and recognition criteria of Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB), and the Corporations Act 2001 . The Preliminary Final Report also complies with the measurement and recognition criteria of International Financial Reporting Standards as issued by the International Accounting Standards Board.

The significant accounting policies adopted in the preparation of the Preliminary Final Report are set out below. These policies have been consistently applied to the current year and comparative period, unless otherwise stated.

The AMP group is predominantly a wealth-management business conducting operations through AMP Life Limited (AMP Life), a registered life insurance company, and other entities. As described in Note 1(c) below, the assets and liabilities arising from investment contracts and life insurance contracts are measured predominantly on the basis of fair value. Subject to the exceptions noted in the accounting policies below, other assets and liabilities in this Preliminary Final Report are also measured on a fair value basis.

Assets and liabilities have been presented on the face of the Statement of financial position in decreasing order of liquidity and do not distinguish between current and non-current items. The majority of the assets of the AMP group are investment assets held to back investment contract and life insurance contract liabilities. Although the amount of those assets which may be realised and those liabilities which may be settled within 12 months of the reporting date are not always known, estimates have been provided in Note 20(f) (in respect of the life statutory funds). Details of other amounts expected to be recovered or settled (a) no more than 12 months after the reporting date, and (b) more than 12 months after the reporting date, have been provided in footnotes to the relevant notes.

Significant judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Assumptions made at each reporting date (for example, the calculation of life insurance contracts liabilities, fair value measurements, provisions and impairment testing of intangibles) are based on best estimates at that date. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including reasonable expectations of future events.

Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.

Changes in accounting policy

Since 1 January 2010, the AMP group has adopted a number of Australian Accounting Standards and Interpretations which are mandatory for annual periods beginning on or after 1 January 2010. Adoption of these Standards and Interpretations has not had any material effect on the financial position or performance of the AMP group.

The main standards adopted since 1 January 2010 were the revised AASB 3 ‘ Business Combinations’, amended AASB 127 ‘ Consolidated and Separate Financial Statements’ and AASB 2008-3 ‘A mendments to Australian Accounting Standards arising from AASB 3 and AASB 127’. These revised standards introduce significant changes to accounting for business combinations and consolidation. The major impacts include the requirement for acquisition costs to be expensed at the time they are incurred; and, upon gaining control of an entity, revaluation of any pre-existing interests in that entity to fair value. The changes only impact business combination transactions which occurred on or after 1 January 2010.

Australian Accounting Standards issued but not yet effective/Early adoption of Australian Accounting Standards

A number of new accounting standards have been issued but are not yet effective during 2010. The AMP group has not elected to early adopt any of these new standards or amendments in this Preliminary Final Report. These new standards, when applied in future periods, are not expected to have a material impact on the financial position or performance of the AMP group other than the following:

AASB 9 “ Financial instruments: Classification and measurement ”: This standard makes significant changes to the way that financial assets are classified for the purpose of determining their measurement basis and also to the amounts relating to fair value changes which are to be taken directly to equity. AASB 9 is mandatory for adoption by the AMP group in the year ending 31 December 2013. The financial impact to the AMP group of adopting this standard has not yet been quantified.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Change in presentation of the Statement of financial position

The Statement of financial position has been enhanced so as to give greater prominence to the categories of financial assets as defined by AASB139 ‘Financial instruments: Recognition and measurement’ with consequential changes to the Statement of cash flows and Note 9 Investments in financial assets. The Statement of financial position now presents investments in financial assets by measurement category whereas previously it presented investment assets by asset type. A split of investments in financial assets by measurement category was previously provided in the notes to the financial statements. Comparatives are presented on a basis consistent with the current period presentation.

(b) Principles of consolidation

The financial statements consolidate the financial information of controlled entities. Control is determined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

The financial information for controlled entities is prepared for the same reporting date as the parent entity, using consistent accounting policies. Where dissimilar accounting policies may exist, adjustments are made to bring these into line.

AMP Life conducts wealth-management business through separate life statutory funds. Income, expenses, assets and liabilities attributable to policyholders within the life statutory funds are consolidated into the AMP group financial statements, along with those attributable to the shareholders of the parent entity.

The life statutory funds include controlling interests in unit trusts and companies. The total amounts of each underlying asset, liability, income and expense of the controlled entities are recognised in the consolidated financial statements.

When a controlled unit trust is consolidated, the share of the unitholder liability attributable to the AMP group is eliminated but amounts due to external unitholders remain as liabilities in the consolidated Statement of financial position.

The share of the net assets of controlled companies attributable to non-controlling interests is disclosed separately on the Statement of financial position. In the Income statement, the profit or loss of the AMP group is allocated between profit or loss attributable to noncontrolling interests and profit or loss attributable to the parent entity.

Controlled entities acquired are accounted for using the acquisition method of accounting. Information from the financial statements of controlled entities is included from the date the parent entity obtains control until such time as control ceases. Where the AMP group ceases to control an entity, the consolidated financial statements includes the results for the part of the reporting date during which the parent entity had control. All inter-company balances and transactions are eliminated in full, including unrealised profits arising from intragroup transactions.

In the course of normal operating investment activities, the life statutory funds acquire equity interests in entities which, in some cases, result in AMP holding a controlling interest in the investee entity.

Most acquisitions and disposals of controlled entities are in relation to unit trusts with underlying net assets typically comprising investment assets and cash. The consideration for acquisitions or disposals reflects the fair value of the investment assets at the date of the transactions after taking into account non-controlling interests.

Certain controlled entities of the life statutory funds are operating companies which carry out business operations unrelated to the core wealth management operations of the AMP group.

Securitisation vehicles

The banking operation of the AMP group sells mortgage loans to securitisation vehicles (also referred to as special purpose entities) through its loan securitisation program. These securitisation vehicles are controlled by the AMP group and are therefore consolidated.

(c) Accounting for wealth-management and life insurance business

The accounting treatment of certain transactions in this Preliminary Final Report varies depending on the nature of the contract underlying the transactions. The two major contract classifications relevant to the wealth-management and insurance business of the AMP group are investment contracts and life insurance contracts.

The other transactions of the AMP group, not covered by the areas listed above, are predominantly investment management services and banking.

For the purposes of this Preliminary Final Report, holders of investment contracts or life insurance contracts are collectively and individually referred to as policyholders .

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Investment contracts

The majority of the business of AMP Life relates to wealth-management products such as savings, investment-linked and retirement income policies. The nature of this business is that AMP Life receives deposits from policyholders and those funds are invested on behalf of the policyholders. With the exception of fixed retirement income policies, the resulting liability to policyholders is linked to the performance and value of the assets that back those liabilities. For fixed retirement income policies, the resulting liability is linked to the fair value of the fixed retirement income payments and associated management services.

Under Australian Accounting Standards such contracts are defined as life investment contracts and described as investment contracts throughout this Preliminary Final Report.

Life insurance contracts

AMP Life also issues contracts that transfer significant insurance risk from the policyholder, covering death, disability or longevity of the insured. In addition, there are some policies that are similar to investment contracts, but the timing of the vesting of the profit attributable to the policyholders is at the discretion of AMP Life. These policies are referred to as discretionary participating contracts .

Under Australian Accounting Standards, such contracts are defined as life insurance contracts .

Assets backing investment contract and life insurance contract liabilities

These assets are measured on a basis that is consistent with the measurement of the liabilities, to the extent permitted under accounting standards.

Life insurance contract liabilities are measured as described in Note 1(u) and investment contract liabilities are measured at fair value as described in Note 1(t). Assets backing such liabilities are measured at fair value, to the extent permitted under Australian Accounting Standards. Realised and unrealised gains and losses arising from changes in the fair value are recognised in the Income statement, to the extent permitted under Australian Accounting Standards. The accounting policies for individual asset classes, and any restrictions on application of fair value, are described later in Note 1.

All assets that back investment contract and life insurance contract liabilities are included within the life statutory funds and, as such, are separately identifiable.

Assets not backing investment and life insurance contract liabilities

To ensure consistency across the AMP group, and except where specifically stated otherwise, all financial assets and all non-financial assets other than those backing investment or life insurance contract liabilities, are also recognised at fair value through profit or loss to the extent permitted under Australian Accounting Standards. Similarly, adjustments to the value of such assets are recognised in the Income statement when the corresponding Australian Accounting Standards allow such treatment.

(d) Accounting mismatches

Under Australian Accounting Standards, accounting mismatches arise from some of the life statutory funds’ transactions because the recognition and measurement rules for certain policyholder assets differ from the recognition and measurement rules for the liability to policyholders in respect of the same assets. These mismatches result in policyholder asset movements impacting the profit attributable to shareholders and increases volatility of the reported profit. Accounting mismatches primarily arise in respect of gains and losses on:

‘treasury shares’
investments in controlled entities of the life statutory funds
owner-occupied property
AMP Life products invested in AMP Bank assets

‘Treasury shares’

The Australian Securities and Investments Commission (ASIC) has granted relief from restrictions in the Corporations Act 2001 to allow AMP Life to hold and trade shares in AMP Limited as part of the policyholder funds' investment activities. These shares (defined by Australian Accounting Standards as treasury shares ) are held on behalf of policyholders and, as a result, the life statutory funds also recognise a corresponding liability to policyholders.

Under Australian Accounting Standards, the AMP group cannot recognise ‘treasury shares’ in the consolidated Statement of financial position. These assets, plus any corresponding Income statement fair value movement on the assets and dividend income, are eliminated when the life statutory funds are consolidated into the AMP group. The cost of the investment in the shares is deducted from contributed equity.

However, the corresponding investment contract and life insurance contract liabilities, and related Income statement change in the liabilities, remain upon consolidation. At the AMP group consolidated level, this mismatch results in policyholder assets movements impacting the profit attributable to shareholders of AMP Limited.

Investments in controlled entities of the life statutory funds

The majority of the life statutory funds’ investments are held through controlling interests in a number of separate entities and these investments are measured at fair value. These investment assets are held on behalf of policyholders and, as a result, the life statutory funds also recognise a corresponding liability to the policyholder.

Consolidation principles require the underlying net assets of the controlled entities to be recognised in the consolidated financial statements. The value of the underlying assets recognised will not necessarily be the same value as the life statutory funds’ value of those investments in the controlled entities.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Investments in controlled entities of the life statutory funds (continued)

Owner-occupied property

Under Australian Accounting Standards, property owned by the AMP group which is also occupied by the AMP group is considered property, plant and equipment in the consolidated Statement of financial position. Upward revaluations of owner-occupied property are recognised in equity. Downward revaluations are recognised in the Income statement to the extent that they exceed previous upward revaluations of the same property.

However, to the extent any such property is held by the life statutory funds, investment contract and life insurance contract liabilities are required to reflect owner-occupied property at fair value, with movements in those liabilities recognised in the Income statement. This mismatch can result in policyholder asset movements impacting the profit attributable to shareholders of AMP Limited. At the AMP group consolidated level, this mismatch results in policyholder assets movements impacting the profit attributable to shareholders of AMP Limited.

Life statutory funds’ superannuation products invested in AMP Bank assets

AMP Bank assets are measured at amortised cost using the effective interest rate method.

However, to the extent any such assets are funded by policyholder investments through life statutory funds, Australian Accounting Standards require these investments to be measured at fair value within investment contract and life insurance contract liabilities, with movements recognised in the Income statement. This mismatch can result in policyholder asset movements impacting the profit attributable to shareholders of AMP Limited. At the AMP group consolidated level, this mismatch results in policyholder assets movements impacting the profit attributable to shareholders of AMP Limited.

(e) Cash and cash equivalents

Cash and cash equivalents comprise cash on hand that is available on demand and deposits that are held at call with financial institutions. Cash and cash equivalents are measured at fair value, being the principal amount. For the purpose of the Statement of cash flow, cash also includes other highly liquid investments not subject to significant risk of change in value, with short periods to maturity, net of outstanding bank overdrafts. Bank overdrafts are shown within Borrowings in the Statement of financial position.

(f) Receivables

Receivables that back investment contract and life insurance contract liabilities are financial assets and are measured at fair value. Reinsurance and other recoveries are discounted to present value. Receivables that do not back investment contract and life insurance contract liabilities are measured at nominal amounts due, less any allowance for doubtful debts. An allowance for doubtful debts is recognised when collection of the full amount is no longer probable. Bad debts are written off as incurred. Given the short-term nature of most receivables, the recoverable amount approximates fair value.

(g) Inventories

Assets held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services are classified as inventories.

Inventories are measured at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs necessary to make the sale.

(h) Investments in financial assets

Investments in financial assets measured at fair value through profit or loss

Investments in financial assets, other than debt securities held by AMP Bank and its securitisation vehicles, are designated on initial recognition as financial assets measured at fair value through profit or loss. Investments in associates held to back life insurance or life investment contracts are exempt from the requirement to apply equity accounting and have been designated on initial recognition as financial assets measured at fair value through profit or loss.

Investments in financial assets measured at fair value through profit or loss are initially recognised at fair value. Initial fair value is determined as the purchase cost of the asset, exclusive off any transaction costs.

Investments in financial assets measured at fair value through profit or loss are subsequently measured at fair value with any realised and unrealised gains or losses arising from changes in fair value being recognised in the Income statement in the period in which they arise. Subsequent to initial recognition, fair value of investments measured at fair value through profit or loss is determined as follows:

The fair value of equity securities in an active market and listed managed investment schemes reflects the quoted bid price at the reporting date. In the case of equity securities and listed managed investment schemes where there is no active market, a fair value is established using valuation techniques including the use of recent arms length transactions, references to other instruments that are substantially the same, discounted cash flow analysis and option pricing models.
The fair value of listed debt securities reflects the bid price at the reporting date. Listed debt securities that are not frequently traded are valued by discounting estimated recoverable amounts. The fair value of unlisted debt securities is estimated using interest rate yields obtainable on comparable listed investments. The fair value of loans is determined by discounting the estimated recoverable amount using prevailing interest rates.
The fair value of investments in unlisted managed investment schemes is determined on the basis of published redemption prices of those managed investment scheme at the reporting date.
The fair value of derivative financial assets is determined in accordance with the policy set out in Note 1(r).

There is no reduction for realisation costs in determining the fair value of financial assets measured at fair value through profit or loss.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Investments in financial assets measured at amortised cost

All debt securities held by AMP Bank are classified as held to maturity investments. Held to maturity investments are non derivative assets with fixed or determinable payments and fixed maturities that management has the positive intention and ability to hold to maturity. AMP Bank also holds loans, advances and other receivables which arise when AMP Bank provides money directly to a customer with no intention of trading the financial assets.

Investments in debt securities, loans and advances and other receivables held by AMP Bank and the securitised trusts are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset.

These assets are subsequently recognised at amortised cost using the effective interest rate method.

Investments in controlled entities

Investments by the Parent entity in controlled entities are measured at cost (which, in the case of the investment in AMP Group Holdings Limited, was determined as net asset value on demutualisation) less any accumulated impairment losses.

(i) Investments in associates accounted for using the equity method

Associated entities are defined as those entities over which the AMP group has significant influence but there is no capacity to control. Investments in associates, other than those backing investment contract and life insurance contract liabilities are initially measured at cost plus any excess of the fair value of AMP’s share of identifiable assets and liabilities above cost at acquisition date subsequently adjusted for AMP group’s share of post acquisition profit or loss and movements in reserves net of any impairment. AMP group’s share of profit or loss of associates is included in the consolidated Income statement.

(j) Investment property

Investment property is held to earn revenue from rentals and/or for the purposes of capital appreciation. Investment property includes all directly held freehold and leasehold properties but excludes owner-occupied properties. See Note 1(k). There are no property interests held under operating leases accounted for as investment property.

Investment property is initially recognised at cost, including transaction costs. Expenditure capitalised to investment property also comprises capital and refurbishment additions, and during development includes finance costs, related professional fees incurred and other directly attributable costs. Subsequent to initial recognition, investment property is measured at fair value at each reporting date. Fair value represents the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable wiling seller in an arm’s length transaction.

Changes in value of investment property are taken directly to the Income statement and may comprise changes in the fair value of investment property in relation to the revaluation of investment property; and fair value adjustments in relation to:

the straight-lining of fixed rental income,
tenant incentives including rent free periods, landlord and tenant owned fitout contributions, and
capitalised leasing fees.

(k) Property, plant and equipment

Owner-occupied property

Where the whole or a significant portion of a property owned by the AMP group is held for use by the AMP group in the production or supply of goods or services, or for administrative purposes, that property is classified for accounting purposes as owner-occupied property.

Owner-occupied property is initially recognised at cost, including transaction costs. It is subsequently measured at the revalued amount, being its fair value at the date of the revaluation, less any subsequent accumulated depreciation and accumulated impairment losses. Fair value is determined on the same basis as investment property in Note 10.

When a revaluation increases the carrying value of a property, the increase is recognised directly in Other comprehensive income through the owner-occupied property revaluation reserve. However, an increase is recognised in the Income statement to the extent that it reverses a revaluation decrease of the same asset previously recognised in the Income statement. When the carrying value of an asset is decreased as a result of a revaluation, the decrease is recognised in the Income statement. However, any decrease is recognised in the owner-occupied property revaluation reserve to the extent that it reverses a balance existing in the reserve in respect of that asset.

Gains or losses on disposals are determined by comparing proceeds with the carrying amount and are recognised in the Income statement. The balance of the owner-occupied property revaluation reserve, in respect of a property disposed of, is transferred to retained earnings.

Each part of an owner-occupied property, except land, that is significant in relation to the total property is depreciated on a systematic basis over the useful life of the asset, being a period not exceeding 40 years.

Plant and equipment

Plant and equipment is initially measured at cost, including transaction costs. It is subsequently measured at cost less any subsequent accumulated depreciation and accumulated impairment losses. The written down amount approximates fair value.

Each item of plant and equipment is depreciated on a systematic basis over the useful life of the asset of 3–10 years.

Leasehold improvements

Leasehold improvements are recognised as an asset only when it is probable that future economic benefits associated with the asset will flow to AMP group and the cost of the item can be reliably measured.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

(l) Intangible assets

Goodwill

When the sum of the fair value of the consideration transferred, the fair value of any previously held equity interest in the acquiree, and the recognised amount of any non-controlling interest exceeds the fair value of the identifiable assets acquired and liabilities assumed, the excess is recognised as goodwill. Subsequently, goodwill is measured at cost less any accumulated impairment losses.

Goodwill is not subject to amortisation but is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. For the purposes of assessing impairment of goodwill, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount of the assets, including goodwill, an impairment loss is recognised in the Income statement.

Management rights

Rights to receive fees for asset management services acquired either directly or as part of a business combination are recognised as an intangible asset when they can be separately identified and reliably measured and it is probable that the expected benefits will flow to the AMP group. Management rights are initially measured at cost. Management rights have been assessed to have an indefinite useful life where the contractual rights to manage the assets have no fixed term. These management rights are not amortised but are tested for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. Where management rights are subject to contractual terms, the useful life is determined to be the contractual term and the asset is amortised over that period. Such assets are reviewed at each reporting period for indicators of impairment.

Capitalised costs

Costs are capitalised and carried forward only where the costs relate to the creation of an asset with expected future economic benefits which are capable of reliable measurement. Otherwise, all costs are recognised as expenses in the period in which they are incurred. Capitalised costs are amortised over the estimated useful life of the asset, commencing at the time the asset is first put into use or held ready for use (whichever is the earlier). The useful lives of such assets generally do not exceed 5 years, however a useful life of up to 7 years has been applied to some capitalised costs relating to IT systems development projects where AMP group expects benefits to flow over a longer period.

Other intangible assets

Other intangible assets principally comprise acquired customer relationships. These intangible assets are a result of business combinations and are recognised when they can be separately identified, reliably measured and it is probable that the expected benefits will flow to the AMP group. These intangible assets are initially measured at cost and are subsequently amortised over their estimated useful life of the specific asset.

(m) Impairment of assets

Assets measured at fair value, where changes in value are reflected in the Income statement, are not subject to impairment testing. As a result, financial assets, except debt securities held by AMP’s banking operations, and investment properties, are not subject to impairment testing. Other assets such as property, plant and equipment, goodwill, intangibles, investments in associates accounted for using the equity method and debt securities held by AMP's banking operations are subject to impairment testing.

Assets that have indefinite useful lives, such as goodwill, are not subject to amortisation but are tested at least annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised in the Income statement, being the amount by which the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value (including realisation costs) and its value in use.

(n) Taxes

Tax consolidation

AMP Limited and its wholly-owned controlled entities which are Australian domiciled companies comprise a tax-consolidated group of which AMP Limited is the head entity. The implementation date for the tax-consolidated group was 30 June 2003.

Under tax consolidation, AMP Limited, as head entity, assumes the following balances from subsidiaries within the tax-consolidated group:

current tax balances arising from external transactions recognised by entities in the tax-consolidated group, occurring after the implementation date
deferred tax assets arising from unused tax losses and unused tax credits recognised by entities in the tax-consolidated group

A tax funding agreement has been entered into by the head entity and the controlled entities in the tax-consolidated group. Controlled entities in the tax-consolidated group continue to be responsible, by the operation of the tax funding agreement, for funding tax payments required to be made by the head entity arising from underlying transactions of the controlled entities. Controlled entities make (receive) contributions to (from) the head entity for the balances assumed by the head entity, as described above. The contributions are calculated in accordance with the tax funding agreement. The contributions are payable as set out in the agreement and reflect the timing of AMP Limited’s obligations to make payments to the relevant tax authorities.

Assets and liabilities which arise as a result of balances transferred from entities within the tax-consolidated group to the head entity are recognised as related-party balances receivable and payable in the Statement of financial position of AMP Limited. The recoverability of balances arising from the tax funding arrangements is based on the ability of the tax-consolidated group to utilise the amounts recognised by the head entity.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Income tax for investment contracts and life insurance contracts business

The income tax expense recognised in the Income statement arising in AMP Life reflects tax imposed on shareholders as well as policyholders.

Investment contracts and life insurance contracts liabilities are established net in Australia, and gross in New Zealand, of the policyholders’ share of any current tax payable and deferred tax balances of the AMP group.

Arrangements made with some superannuation funds result in AMP Life making payments to the Australian Taxation Office in relation to contributions tax arising in those funds. The amounts paid are recognized as a decrease in investment contract liabilities and not included in income tax expense.

Income Tax expense

Income tax expense is the tax payable on taxable income for the current period based on the income tax rate for each jurisdiction and adjusted for changes in deferred tax assets and liabilities attributable to:

temporary differences between the tax bases of assets and liabilities and their Statement of financial position carrying amounts
• unused tax losses
the impact of changes in the amounts of deferred tax assets and liabilities arising from changes in tax rates or in the manner in which these balances are arranged to be realised.

Adjustments to income tax expense are also made for any differences between the amounts paid or expected to be paid in relation to prior periods and the amounts provided for these periods at the start of the current period.

Any tax impact on income and expense items that are recognised directly in equity is also recognised directly in equity.

Deferred tax

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates which are expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.

The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Deferred tax, including amounts in respect of investment contracts and life insurance contracts, is not discounted to present value.

Goods and services tax

The AMP group operates across a number of tax jurisdictions and offers products and services that may be subject to various forms of goods and services tax (GST) imposed by local tax authorities.

All income, expenses and assets are recognised net of any GST paid, except where they relate to products and services which are input taxed for GST purposes or where the GST incurred is not recoverable from the relevant tax authorities. In such circumstances, the GST paid is recognised as part of the cost of acquisition of the assets or as part of the particular expense.

Receivables and payables are recorded with the amount of GST included. The net amount of GST recoverable from or payable to the tax authorities is included as either a receivable or payable in the Statement of financial position.

Cash flows are reported on a gross basis reflecting any GST paid or collected. The GST component of cash flows arising from investing or financing activities which are recoverable from, or payable to, local tax authorities are classified as Operating cash flows .

(o) Payables

Payables that back investment contract and life insurance contract liabilities are financial liabilities and are measured at fair value. Other payables are measured at the nominal amount payable. Given the short-term nature of most payables, the nominal amount approximates fair value.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

(p) Provisions

Provisions are recognised when:

The AMP group has a present obligation (legal or constructive) as a result of a past event.
It is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.
A reliable estimate can be made of the amount of the obligation.

Where the AMP group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Income statement net of any reimbursement.

If the effect of the time-value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate. This rate reflects the current market assessments of the time-value of money and, where appropriate, the risks specific to the liability.

Employee entitlements

Liabilities arising in respect of salaries and wages, annual leave and any other employee entitlements expected to be settled within 12 months of the reporting date are measured at their nominal amounts. All other employee entitlements are measured at the present value of the estimated future cash outflows to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, discount rates used are based on the interest rates attaching to government securities which have terms to maturity approximating the terms of the related liability.

Restructuring

A restructuring provision is only recognised when it is probable that future costs will be incurred in respect of a fundamental reorganisation or change in focus of the business of the AMP group. A provision is recognised when the AMP group is demonstrably committed to the expenditure and a reliable estimate of the costs involved can be made. The provision is measured as the best estimate of the incremental, direct expenditures to be incurred as a result of the restructure and does not include costs associated with the ongoing activities of the AMP group.

(q) Borrowings and subordinated debt

All borrowings and subordinated debt are financial liabilities and are initially recognised at fair value. In the case of borrowings and subordinated debt which are subsequently measured at amortised cost, initial fair value is calculated net of directly attributable transaction costs. For borrowings and subordinated debt which are subsequently measured at fair value through profit or loss, directly attributable transaction costs are expensed.

Borrowings and subordinated debt, other than those held by controlled entities of the life statutory funds, are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the Income statement over the period of the contract using the effective interest rate method. It is AMP’s policy to hedge currency and interest rate risk arising on issued bonds and subordinated debt. When fair value hedge accounting is applied to borrowings and subordinated debt, the carrying values of borrowings and subordinated debt are adjusted for changes in fair value for the period that the fair value hedge relationship remains effective. See Note 1(r).

Where the borrowings of a controlled unit trust of the life statutory funds are measured at amortised cost for the purpose of determining the unit price of that trust, these borrowings are also measured at amortised cost in this Preliminary Final Report with any difference between the proceeds (net of transaction costs) and the redemption amount recognised in the Income statement over the period of the contract using the effective interest rate method .

(r) Derivative financial assets, derivative financial liabilities and hedging

The AMP group is exposed to changes in interest and foreign exchange rates. To mitigate the risks arising from these exposures, the AMP group uses derivative financial instruments such as cross-currency and interest-rate swaps, forward rate agreements, futures, options and foreign currency contracts. Derivative financial instruments are also used to gain exposure to various markets for asset and liability management purposes.

Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently measured at their fair value. All derivatives are recognised as assets when their fair value is positive, and as liabilities when their fair value is negative.

The method of recognising the movement in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the nature of the item being hedged. The AMP group designates a hedge as either:

a hedge of the fair value of recognised assets or liabilities or a firm commitment (fair value hedge),
a hedge of highly probable forecast transactions (cash flow hedge), or
a hedge of a net investment in a foreign operation (net investment hedge).

AMP group documents the relationship between hedging instruments and hedged items at inception of the transaction, as well as the AMP group’s risk management and strategy for undertaking various hedge transactions. The AMP group also documents its assessment of whether the derivatives used in hedging transactions have been, and will continue to be, highly effective in offsetting changes in fair values or cash flows of hedged items. This assessment is carried out both at hedge inception and on an ongoing basis.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Accounting for hedges

(i) Fair value hedges:
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the Income statement together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
• If a hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item, for which the effective interest method is used, is amortised to the Income statement over the period to maturity.
(ii) Cash flow hedges:
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in equity in the cash flow hedge reserve. The balance of the cash flow hedge reserve in relation to each particular hedge is transferred to the Income statement in the period when the hedged item affects profit or loss.
The gain or loss relating to any ineffective portion of a hedge is recognised immediately in the Income statement.
• Hedge accounting is discontinued when a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting. The cumulative gain or loss existing in equity at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the Income statement.
When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the Income statement.
(iii) Net investment hedges: • Hedges of a net investment in a foreign operation, including a hedge of a monetary item that is accounted for as part of the net investment, are accounted for in a similar way to cash flow hedges. Gains and losses on the hedging instrument relating to the effective portion of the hedge are recognised directly in equity (including related tax impacts) while any gains or losses relating to the ineffective portion of the hedge are recognised in profit or loss. On disposal of the foreign operation, the cumulative value of any such gains or losses recognised directly in equity is transferred to the Income statement.

Derivatives that do not qualify for hedge accounting

Certain derivative financial instruments do not qualify for hedge accounting. Changes in the fair value of any derivative financial instrument that does not qualify for hedge accounting are recognised in the Income statement in the period in which they arise.

Fair value estimation

The fair value of financial instruments traded in active markets (such as publicly traded derivatives) is based on quoted market prices at the reporting date. The quoted market price used for measuring financial assets held by the AMP group is the current bid price; the quoted market price for financial liabilities is the current offer price.

The fair value of financial instruments not traded in an active market (for example over-the-counter derivatives) is determined using valuation techniques. Valuation techniques include net present value techniques, discounted cash-flow methods and comparison to quoted market prices or dealer quotes for similar instruments.

(s) Recognition and derecognition of financial assets and liabilities

Financial assets and financial liabilities are recognised at the date the AMP group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the contractual rights to the cash flows from the financial assets expire, or are transferred. A transfer occurs when substantially all the risks and rewards of ownership of the financial asset are passed to an unrelated third party. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expires.

(t) Investment contract liabilities

An investment contract consists of a financial instrument and an investment management services element, both of which are measured at fair value. With the exception of fixed retirement-income policies, the resulting liability to policyholders is closely linked to the performance and value of the assets (after tax) that back those liabilities. The fair value of such liabilities is therefore the same as the fair value of those assets (after tax) charged to the policyholders with the exception of the impact of the accounting mismatch items. See Note 1(d).

For fixed retirement-income policies, the financial instrument element of the liability is the fair value of the fixed retirement-income payments, being their net present value using a risk-free discount rate. The fair value of the associated management services element is the net present value, using a fair value discount rate, of all expenses associated with the provision of services and any profit margins thereon. The risk-free discount rate is determined by the Appointed Actuary based on the Commonwealth Government bond rate or the inter-bank zero coupon mid swap rates, depending on the nature, structure and terms of the contract liabilities.

(u) Life insurance contract liabilities

The financial reporting methodology used to determine the fair value of life insurance contract liabilities is referred to as Margin on Services (MoS).

Under MoS, the excess of premium received over claims and expenses (the margin) is recognised over the life of the contract in a manner that reflects the pattern of risk accepted from the policyholder (the service ). The movement in life insurance contract liabilities recognised in the Income statement reflects the planned release of this margin.

Life insurance contract liabilities are usually determined using a projection method, whereby estimates of policy cash flows (premiums, benefits, expenses and profit margins to be released in future periods) are projected into the future. The liability is calculated as the net present value of these projected cash flows using best-estimate assumptions about the future. When the benefits under a life insurance contract are linked to the assets backing it, the discount rate applied is based on the expected future earnings rate of those assets. Where the benefits are not linked to the performance of the backing assets, a risk-free discount rate is used. The risk-free discount rate is determined by the Appointed Actuary based on the Commonwealth Government bond rate or the inter-bank zero coupon mid swap rates depending on the nature, structure and terms of the contract liabilities.

An accumulation method may be used if it produces results that are not materially different from those produced by a projection method. A modified accumulation method is used for some discretionary participating business, where the life insurance liability is the accumulation of amounts invested by policyholders, less fees specified in the policy, plus investment earnings and vested benefits, adjusted to allow for the fact that crediting rates are determined by reference to investment income over a period of greater than one year.

The accumulation method may be adjusted to the extent that acquisition expenses are to be recovered from future margins between fees and expenses.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Allocation of operating profit and unvested policyholder benefits

The operating profit arising from discretionary participating contracts is allocated between shareholders and participating policyholders by applying the MoS principles in accordance with the Life Insurance Act 1995 (Life Act).

Once profit is allocated to participating policyholders it can only be distributed to these policyholders. Any distribution of this profit to shareholders is only allowed for overseas business with specific approval of the regulators.

Profit allocated to participating policyholders is recognised in the Income statement as an increase in policy liabilities. Both the element of this profit that has not yet been allocated to specific policyholders (i.e. unvested) and that which has been allocated to specific policyholders by way of bonus distributions (i.e. vested) are included within life insurance contract liabilities.

Bonus distributions to participating policyholders are merely a change in the nature of the liability from unvested to vested and, as such, do not alter the amount of profit attributable to shareholders.

The principles of allocation of the profit arising from discretionary participating business determined under the Life Act and MoS are as follows:

(i) Investment income (net of tax and investment expenses) on retained earnings in respect of discretionary participating business is allocated between policyholders and shareholders in proportion to the balances of policyholders’ and shareholders’ retained earnings, being 80:20.
(ii) Other MoS profits arising from discretionary participating business (excluding the additional tax attributable to shareholders in respect of Australian superannuation business) are allocated 80% to policyholders and 20% to shareholders, with the following exceptions:
The profit arising from New Zealand corporate superannuation business is apportioned such that shareholders are allocated 15% of the profit allocated to policyholders.
The profit arising in respect of Preservation Superannuation Account business is allocated 92.5% to policyholders and 7.5% to shareholders.
(iii) Additional tax on taxable income to shareholders in respect of Australian superannuation business is allocated to shareholders only.
(iv) All profits arising from non-participating business, including net investment returns on shareholder capital and retained earnings in life statutory funds (excluding retained earnings dealt with in (i) above) are allocated to shareholders.

Allocation of expenses within the life statutory funds

All operating expenses relating to the life insurance contract and investment contract activities are apportioned between acquisition, maintenance and investment management expenses. Expenses which are directly attributable to an individual life insurance contract or investment contract or product are allocated directly to a particular expense category, fund, class of business and product line as appropriate.

Where expenses are not directly attributable, they are appropriately apportioned, according to detailed expense analysis, with due regard for the objective in incurring that expense and the outcome achieved. The apportionment basis has been made in accordance with Actuarial Standards and on an equitable basis to the different classes of business in accordance with the Life Act.

The costs apportioned to life insurance contracts are included in the determination of margin described above.

Investment management expenses of the life statutory funds are classified as other operating expenses. See Note 1(bb).

(v) Issued capital

Issued capital in respect of ordinary shares is recognised as the fair value of consideration received by the parent entity. Incremental costs directly attributable to the issue of certain new shares are recognised in equity as a deduction, net of tax, from the proceeds.

(w) Foreign currency transactions

Functional and presentation currency

The consolidated Preliminary Final Report is presented in Australian dollars (the presentation currency). Items included in the financial statements for each of the AMP group entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the parent entity is Australian dollars.

Transactions and balances

Income and expense items denominated in a currency other than the functional currency are translated at the spot exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date, with exchange gains and losses recognised in the Income statement.

Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Translation of controlled entities

Where the functional currency of a controlled entity is not the presentational currency, the transactions and balances of that entity are translated as follows:

Income and expenses are translated at average exchange rates, unless this is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates. In this case, income and expenses are translated at the dates of the transactions.
Assets and liabilities are translated at the closing rate at the reporting date.
All resulting exchange differences are recognised as a separate component of equity in the foreign currency translation reserve.

When a foreign operation is sold, a proportionate share of such exchange differences is recognised in the Income statement as part of the gain or loss on sale.

(x) Insurance premium and related revenue

Life insurance contracts

Life insurance contract premiums are separated into their revenue and deposit components. Premium amounts earned by bearing insurance risks are recognised as revenue. Other premium amounts received, which are in the nature of deposits, are recognised as an increase in life insurance contract liabilities.

Premiums with no due date or fixed amount are recognised on a cash-received basis. Premiums with a regular due date are recognised on an accruals basis. Unpaid premiums are only recognised during the days of grace or where secured by the surrender value of the life insurance contract and are reported as outstanding premiums and classified as receivables in the Statement of financial position.

Investment contracts

There is no premium revenue in respect of investment contracts. Amounts received from policyholders in respect of investment contracts comprise:

origination fees, advice fees and ongoing investment management fees. See Note 1(y).
amounts credited directly to investment contract liabilities. See Note 1(t).

(y) Fee and other revenue

Fees are charged to customers in connection with investment contracts and other financial services contracts. Revenue is recognised as services are provided. In some cases, services are provided at the inception of the contract, while other services are performed over the life of the contract.

An investment contract consists of a financial instrument and an investment-management services element. The payment by the policyholder includes the amount to fund the financial instrument and a fee for the origination of the contract. In many cases, that origination fee is based on amounts paid to financial planners for providing initial advice. The financial instrument is classified as an investment contract and is measured at fair value. See Note 1(t).

The revenue that can be attributed to the origination service is recognised at inception. Any amounts paid to financial planners is also recognised as an expense at that time. See Note 1(bb).

Fees for ongoing investment management services and other services provided are charged on a regular basis, usually daily, and are recognised as the service is provided.

Fees charged for performing a significant act in relation to funds managed by the AMP group are recognised as revenue when that act has been completed.

(z) Investment gains or losses

Dividend and interest income is recognised in the Income statement on an accruals basis when the AMP group obtains control of the right to receive the revenue.

Realised and unrealised gains and losses represent the change in value between the previously reported value and the amount received on sale of the asset as well as changes in the fair value of financial assets and investment property recognised in the period.

Rents raised are on terms in accordance with individual leases, however they are generally due on the first day of each month.

Certain tenant allowances that are classified as lease incentives such as rent-free periods, fit-outs and upfront payments are capitalised and amortised over the term of the lease. The aggregate cost of incentives is recognised as a reduction to revenue from rent over the lease term.

(aa) Insurance claims and related expense

Life insurance contracts

Life insurance contract claims are separated into their expense and withdrawal components. The component that relates to the bearing of risks is treated as an expense. Other claim amounts, which are in the nature of withdrawals, are recognised as a decrease in life insurance contract liabilities.

Claims are recognised when the liability to the policyholder under the life insurance contract has been established or upon notification of the insured event, depending on the type of claim.

Investment contracts

There is no claims expense in respect of investment contracts. Amounts paid to policyholders in respect of investment contracts are withdrawals and are recognised as a decrease in investment contract liabilities. See Note 1(t).

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

(bb) Operating expenses

All operating expenses, other than those allocated to life insurance contracts, are expensed as incurred. See Note 1(u). Expenses of controlled entities of the life statutory funds represent the business costs of those entities and are consolidated into the results of the AMP group.

The majority of investment contracts issued result in payments to external service and advice providers. Where the amount paid equates to a fee charged to policyholders for the provision of advice, the amount is expensed either at inception or over the period of the contract consistent with the basis for recognising the fee revenue on the respective contracts. See Note 1(y).

Operating lease payments are recognised as an expense in the Income statement on a straight-line basis over the lease term or other systematic basis representative of the patterns of the benefits obtained. Operating incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental expense and reduction of the liability.

(cc) Finance costs

Finance costs include:

(i) Borrowing costs:
interest on bank overdrafts, borrowings and subordinated debt
amortisation of discounts or premiums related to borrowings
finance charges in relation to finance leases
(ii) Exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs
(iii) Changes in the fair value of derivative hedges together with any change in the fair value of the hedged asset or liabilities that are designated and qualify as fair value hedges, foreign exchange gains and losses and other financing related amounts. The accounting policy for derivatives is set out in Note 1(r).

Borrowing costs are recognised as expenses when incurred.

(dd) Share-based payments

The AMP group issues performance rights, restricted shares and other equity instruments to employees as a form of equity-settled sharebased compensation. Equity-settled share-based compensation to employees is considered to be an expense in respect of the services received and is recognised in the Income statement over the vesting period of the instrument with a corresponding amount in the sharebased payment reserve within equity.

The expense is based on the fair value of each grant, measured at the date of the grant. For performance rights and similar instruments the fair value is determined by an external valuer. The fair value calculation takes into consideration a number of factors, including the likelihood of achieving market-based vesting conditions such as total shareholder return. The fair value determined at grant date is not altered over the vesting period. Non-market vesting conditions are included in assumptions about the number of instruments that are expected to vest. At each reporting date, the AMP group reviews its estimates of the number of instruments that are expected to vest. Any changes to the original estimates are recognised in the Income statement and the share-based payment reserve, over the remaining vesting period.

Where the terms of an equity-settled share-based payment are modified and the expense increases as a result of the modification, the increase is recognised over the remaining vesting period. When a modification reduces the expense, there is no adjustment and the premodification cost continues to be recognised.

Expenses for awards that do not ultimately vest are reversed in the period in which the instrument lapses, except for awards where vesting is conditional upon a market condition, in which case no reversal is recognised.

When instruments vest, shares are purchased on-market and transferred to the employee. The cost of the purchase is recognised in the share-based payments reserve.

(ee) Superannuation funds

The AMP group operates two superannuation funds that provide benefits for employees and their dependants on resignation, retirement, disability or death of the employee. The funds have both defined contribution and defined benefit sections, refer to Note 25 for further information on the funds.

The contributions paid and payable by AMP group to defined contributions funds are recognised in the Income statement as an operating expense when they fall due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

For the defined-benefit sections of superannuation funds operated by the AMP group, the AMP group recognises the net deficit or surplus position of each fund in the Statement of financial position. The deficit or surplus is measured as the difference between the fair value of the funds’ assets and the discounted defined-benefit obligations of the funds, using a government bond yield as the discount rate. The defined-benefit obligation is calculated annually, with half-yearly reviews, by independent actuaries.

After taking into account any contributions paid into the defined-benefits funds during the period, movements in the net surplus or deficit of each fund, except actuarial gains and losses, are recognised in the Income statement. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions over the period are recognised in full (net of tax), directly in Other comprehensive income.

Contributions paid into defined-benefit funds are recognised as reductions in the deficit.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

(ff) Earnings per share

Basic earnings per share before accounting mismatches is calculated by dividing the consolidated profit attributable to shareholders of AMP Limited before accounting mismatches, by the weighted average number of ordinary shares outstanding during the period. The weighted average number of ‘treasury shares’ held during the period is included in calculating the weighted average number of ordinary shares outstanding.

Basic earnings per share after accounting mismatches is calculated by dividing the consolidated profit attributable to shareholders of AMP Limited after accounting mismatches, by the weighted average number of ordinary shares outstanding during the period excluding the weighted average number of ‘treasury shares’.

Diluted earnings per share before and after accounting mismatches is calculated by dividing the profit used in the determination of basic earnings per share before and after accounting mismatches respectively by the weighted average number of shares outstanding during the period adjusted for potential ordinary shares considered to be dilutive. Potential ordinary shares are contracts such as options and performance rights that may entitle the holder to ordinary shares. These potential ordinary shares are considered dilutive when their conversion into ordinary shares would be likely to cause a reduction in earnings per share. The weighted average number of ‘treasury shares’ held during the period is included in calculating the weighted average number of ordinary shares outstanding for diluted earnings per share before accounting mismatches, but excluded for diluted earnings per share after accounting mismatches.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

2. SEGMENT INFORMATION

(a) Segments - background

Operating segments have been identified based on separate financial information that is regularly reviewed by the chief operating decision maker (CODM). The term CODM refers to the function performed by the Chief Executive Officer and his immediate team, as a team, in assessing performance and determining the allocation of resources. The operating segments are identified according to the nature of profit generated and services provided. Segment information in this Note is reported separately for each operating segment. AMP group evaluates the performance of segments on a post tax operating earnings basis.

Segment information is not reported for activities of AMP group office companies as the function of these departments is not to earn revenue and revenues earned are only incidental to the activities of the AMP group.

Asset segment information has not been disclosed because the balances are not provided to the CODM for the purposes of evaluating segment performance and deciding the allocation of resources to segments.

(b) Description of segments

Australian Contemporary Wealth Management (CWM) – financial planning services, unit linked superannuation, retirement income and managed investment products business including financial planning and advice services and banking operations.

Australian Contemporary Wealth Protection (CWP) – includes personal and group term, disability and income protection insurance products which can be either bundled with a superannuation product or held independently of a superannuation contract.

Australian Mature – a business comprising primarily closed products which are in run-off. Closed products include whole of life, endowment, investment linked, investment account, RSA and annuities.

AMP Financial Services New Zealand (AFS NZ) – a risk insurance business and mature book with a growing unit-linked superannuation and investment business.

AMP Capital Investors (AMPCI) – manages investments across all the major asset classes including equities, fixed interest, infrastructure, property, diversified funds and multi-manager funds. AMPCI also provides commercial, industrial and retail property management services. It provides its investment management services through in-house investment professionals and carefully selected global network of investment partners. In addition to its well established reputation in Australia and New Zealand, AMPCI has a strong and growing international presence with offices in Beijing, London, Mumbai, Singapore, Tokyo and New York, allowing it to source competitive offshore opportunities.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

2. SEGMENT INFORMATION (CONTINUED)

(c) Segment profit

(c) Segment profit
		Australian	Australian
		Contemporary	Contemporary		AMP Financial
		Wealth	Wealth	Australian	Services	AMP Capital	Total Operating
		Management	Protection(2)	Mature(2)	New Zealand(2)	Investors(3)	Segments
31 December 2010		$m	$m	$m	$m	$m	$m
Segment profit after
income tax(1)		303	138	140	58	87	726
Other segment information	(4)
External customer
revenue		1,067	138	140	58	226	1,629
Intersegment revenue(5)		85	-	-	-	172	257
Income tax expense		130	59	60	25	29	303
Depreciation and
amortisation		30	6	-	-	6	42
31 December 2009
Segment profit after
income tax(1)		278	164	151	54	91	738
Other segment information(4)
External customer
revenue		1,009	164	151	54	216	1,594
Intersegment revenue(5)		80	-	-	-	163	243
Income tax expense		119	70	65	23	31	308
Depreciation and
amortisation		15	6	-	-	1	22

(1) Segment profit after income tax differs from profit attributable to shareholders of AMP Limited due to the exclusion of the following items:

i) Group office costs.

ii) Investment return on shareholder assets invested in income producing investment assets.

iii) Interest expense on AMP corporate debt.

iv) The effects of non-recurring items such as: mergers and acquisition transaction costs, recognition of prior year tax deductions offset by one-off and non-recurring costs, Seed Pool valuation adjustmentsbeing items which do not reflect the underlying operating performance of the oeprating segments.

v) Timing differences and accounting mismatches.

(2) Statutory reporting revenue for Australian Contemporary Wealth Protection, Australian Mature and AMP Financial Services NZ businesses includes premium and investment gains and losses. However, for segment reporting, external customer revenue is operating earnings which represents gross revenue less claims, expenses, movement in insurance contract liabilities and tax relating to those segments.
(3) AMP Capital Investors segment revenue is reported net of external investment manager fees paid in respect of certain assets under management. AMP Capital Investors segment profit after income tax excludes Seed Pool valuation adjustments.
(4) Other segment information excludes revenue, expenses and tax relating to assets backing policyholder liabilities.
(5) Intersegment revenue represents operating revenue between segments priced on an arm’s length basis.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

2. SEGMENT INFORMATION (CONTINUED)

	2010	2009
(d) Reconciliation of segmentprofit after tax	$m	$m
Segment profit after income tax (BU Operating Earnings)	726	738
Groupoffice costs	(40)	(37)
Total operating earnings	686	701
Underlying investment income(1)	130	126
Interest expense on corporate debt	(72)	(71)
AMP Limited tax loss recognition	16	16
Underlying profit	760	772
Market adjustment - investment income(1)	(5)	(13)
Merger and acquisition transaction costs	(16)	(10)
Other items (2)	(2)	20
Seed Pool valuation adjustments	-	(30)
Profit after income tax before timing differences	737	739
Timing differences - annuity fair value, risk products and loan hedge revaluations(3)	16	1
Accountingmismatches	22	(1)
Profit attributable to shareholders of AMP Limited	775	739
Analysis of investment gains (losses) attributable to shareholders of AMP Limited
Underlying investment income(1)	130	126
Market adjustment - investment income (1)	(5)	(13)
Investmentgains(losses) attributable to shareholders of AMP Limited	125	113

(1) Underlying investment income consists of investment income on shareholder assets invested in income producing investment assets (as opposed to income producing operating assets) normalised in order to bring greater clarity to the results by eliminating the impact of short-term market volatility on underlying performance. Underlying performance is based on long-term expected returns for each asset class. Market adjustment - investment income is the excess (shortfall) between the underlying investment income and the actual return on shareholder assets invested in income producing investment assets.

(2) Other items principally comprises one-off and non-recurring costs offset by the benefit from the retrospective impact changes in tax legislation.

(3) Timing differences of $16m profit (2009: $1m profit) comprise the net impact of changes in market economic variables (bond yields and CPI) on the valuation of risk insurance liabilities $7m loss (2009: $14m loss), annuity fair value gains $22m

(2009: $20m) and loan hedge revaluations gains of $1m (2009: $5m loss). These losses or gains are expected to reverse over time.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

2. SEGMENT INFORMATION (CONTINUED)

	2010	2009
(e) Reconciliation of segment revenue	$m	$m
Total segment revenue	1,886	1,837
Add revenue excluded from segment revenue
Investment gains and (losses) - shareholders and policyholders (excluding AMP bank interest
revenue)	4,000	7,524
Revenue of investment entities controlled by the life statutory funds which carry out business operations
unrelated to the core wealth management operations of the AMP group	277	262
Other revenue	17	23
Add back expenses netted against segment revenue
Claims, expenses, movement in insurance contract liabilities and tax relating to Australian
Contemporary Wealth Protection, Australian Mature and AFS NZ businesses	764	680
Interest expense related to AMP Bank	705	590
External investment manager fees paid in respect of certain assets under management	272	241
Remove intersegment revenue	(257)	(243)
Total revenue (1)	7,664	10,915

(1) Revenue as per the Income statement of $7,664m (2009: $10,915m) comprises Premiums and related revenue $1,100m (2009:

$1,049m), Fee revenue $1,430m (2009: $1,331m), Other revenue $294m (2009: $285m) and Investment gains and (losses) gain of $4,840m (2009: gains of $8,250m).

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

3. INCOME

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
(a) Life insurance premium and related revenue
Life insurance contract premium revenue	1,051	1,017	-	-
Reinsurance recoveries	49	32	-	-
Total life insurancepremium and related revenue	1,100	1,049	-	-
(b) Fee revenue
Investment management and origination fees	1,252	1,164	-	-
Financial advisory fees	165	151	-	-
Banking business fees	13	16	-	-
Service fees - subsidiaries	-	-	11	11
Total fee revenue (1)	1,430	1,331	11	11
(c) Other revenue
Defined benefit plan income	1	-	-	-
Other revenue (2)	293	285	-	-
Total other revenue	294	285	-	-

Footnote:

(1) Total fee revenues of AMP group (consolidated) include fee income from trust and fiduciary activities that result in the holding or investing of assets on behalf of individuals, trusts, retirement benefit plans, and other institutions, with the exception of $13m (2009: $16m) fees from banking operations, which are fees from financial assets that are not measured at fair value through profit or loss.

(2) Other revenue includes trading revenue of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

4. INVESTMENT GAINS AND (LOSSES)

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Investment gains and (losses)
Interest(1)	2,074	1,835	2	2
Dividends and distributions
- subsidiaries	-	-	374	200
- associated entities	47	62	-	-
- other entities	2,354	1,306	-	-
Rental income	744	764	-	-
Net realised and unrealisedgains and(losses) (2)	(379)	4,283	-	5
Total investmentgains and(losses)	4,840	8,250	376	207

Footnote:

(1) Interest includes interest income from financial assets designated at fair value through profit or loss upon initial recognition, with the exception of $702m (2009: $593m) interest income from held to maturity investments and loans and receivables in banking operations, which are measured at amortised cost.

(2) Net realised and unrealised gains and losses include net gains and losses on financial assets and financial liabilities designated at fair value through profit or loss upon initial recognition.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

5. EXPENSES

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
(a) Life insurance claims and related expenses
Life insurance contract claims and related expenses	(1,241)	(1,203)	-	-
Outwards reinsurance expense	(48)	(48)	-	-
Total life insurance claims and related expenses	(1,289)	(1,251)	-	-
(b) Operating expenses
Commission and advisory fee-for-service expense	(524)	(491)	-	-
Investment management expenses	(202)	(173)	-	-
Fee expense on bankingbusiness	(10)	(12)	-	-
Fee and commission expenses(1)	(736)	(676)	-	-
Wages and salaries	(568)	(576)	(5)	(6)
Contributions to defined contribution plans	(52)	(52)	-	-
Share based payments expense	(23)	(17)	(4)	(3)
Other staff costs	(43)	(46)	(1)	-
Staff and related expenses	(686)	(691)	(10)	(9)
Occupancy and other property related expenses	(76)	(88)	-	-
Direct property expenses(2)	(186)	(191)	-	-
Information technology and communication	(122)	(104)	-	-
Professional fees	(80)	(74)	-	-
Advertising and marketing	(38)	(37)	-	-
Travel and entertainment	(24)	(23)	-	-
Impairment of intangibles	(19)	(3)	-	-
Amortisation of intangibles	(61)	(56)	-	-
Depreciation of property, plant and equipment	(41)	(57)	-	-
Other expenses (3)	(201)	(132)	(1)	(2)
Other operating expenses	(848)	(765)	(1)	(2)

Total operating expenses	(2,270)	(2,132)	(11)	(11)
(c) Finance costs
Interest expense on borrowings and subordinated debt	(789)	(599)	-	-
Other finance costs	(100)	(56)	-	-
Total finance costs	(889)	(655)	-	-

Footnote:

(1) Fee and commission expenses include fee expenses from trust and other fiduciary activities that result in the holding or investing of assets on behalf of individuals, trusts, retirement benefit plans, and other institutions, with the exception of $10m (2009: $12m) fees expense on banking business, which are fees from financial liabilities that are not measured at fair value through profit or loss.

(2) Direct property expenses relate to investment properties which generate rental income.

(3) Other expenses include trading expenses of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

6. INCOME TAX

6. INCOME TAX
	Consolidated			Parent
	2010	2009	2010		2009
	$m	$m	$m		$m
(a) Analysis of income tax (expense) credit
Current tax	(207)	(42)	2		(1)
Increase (decrease) in deferred tax assets	(4)	(307)	17		16
(Increase) decrease in deferred tax liabilities	32	(254)	-		-
Over (under) provided in previous years including amounts attributable to
policyholders	48	98	(3)		82
Effect of change in overseas tax rate	5	-	-		-
Income tax (expense) credit	(126)	(505)	16		97

(b) Relationship between income tax expense and accounting profit

The following table provides a reconciliation of differences between prima facie tax calculated as 30% of the profit before income tax for the period and the actual income tax expense recognised in the Income statement for the period. The income tax expense amount reflects the impact of both income tax attributable to shareholders as well as income tax attributable to policyholders.

In respect of income tax expense attributable to shareholders, the tax rate which applies in both Australia and New Zealand is 30%. There are certain differences between the amounts of income and expenses recognised in the financial statements and the amounts recognised for income tax purposes. During the period the New Zealand government announced a decrease in the company tax rate from 30% to 28% from 1 January 2011.

Income tax attributable to policyholders is based on investment income allocated to policyholders less expenses deductible against that investment income. The impact of the tax is charged against policyholder liabilities. A number of different tax rate regimes apply to policyholders. In Australia, certain classes of policyholder life insurance income and superannuation earnings are taxed at 15%, and certain classes of income on some annuity business are tax-exempt. The rate applicable to New Zealand life insurance business during the period was 30%.

the period was 30%.
	Consolidated			Parent
	2010	2009	2010		2009
	$m	$m	$m		$m
Profit before income tax	881	1,228	376		207
Policyholder tax credit (expense) recognised as part of the change
inpolicyholder liabilities in determining profit before tax.	62	(441)	-		-
Profit before income tax excluding tax charged to
policyholders	943	787	376		207
Prima facie tax at the rate of 30%	(283)	(236)	(113)		(62)
Tax effect of differences between amounts of income and expenses
recognised for accounting and the amounts deductible/taxable in
calculating taxable income:
Shareholder impact of par-business tax treatment	21	37	-		-
Non-deductible expenses	(19)	(11)	(1)		-
Non-taxable income	20	7	-		-
Tax offsets and credits	9	6	-		1
Dividend income from controlled entities	-	-	112		60
Other items	(3)	20	3		-
Over (under) provided in previous years after excluding amounts
attributable to policyholders(1)	43	98	(2)		82
Benefit arising from previously unrecognised tax losses	19	16	17		16
Differences in overseas tax rate	(1)	(1)	-		-
Effect of change in overseas tax rates	6	-	-		-
Income tax (expense) credit attributable to shareholders	(188)	(64)	16		97
Income tax (expense) credit attributable to policyholders	62	(441)	-		-
Income tax(expense) creditper Income statement	(126)	(505)	16		97

Footnote:

(1) The over provision by AMP group recognised in 2010 is principally in relation to the retrospective effect of changes in taxation legislation enacted in 2010. The over provision in 2009 by AMP group and the parent entity, mainly relates to benefits of entering the tax consolidation regime in 2003 not recognised at that time.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

6. INCOME TAX (CONTINUED)

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
(c) Analysis of deferred tax assets
Expenses deductible and income recognisable in future years	106	138	1	1
Unrealised movements on borrowings and derivatives	44	45	-	-
Unrealised investment losses	65	98	-	-
Losses available for offset against future taxable income	331	317	62	128
Other	36	56	3	4
Total deferred tax assets	582	654	66	133
				error
(d) Analysis of deferred tax liabilities
Unrealised investment gains	414	422	-	-
Unrealised movements on borrowings and derivatives	46	42	-	-
Other	160	165	-	-
Total deferred tax liabilities	620	629	-	-
(e) Amounts recognised directly in equity
Deferred income tax (expense) related to items taken directly to equity
during the current period	(2)	(57)	-	-
(f) Unused tax losses and deductible temporary differences not recognised
Revenue losses	129	154	115	139
Capital losses	358	359	358	359

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

7. RECEIVABLES

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Investment income and sales proceeds receivable	211	271	-	-
Life insurance contract premiums receivable	271	284	-	-
Reinsurance and other recoveries receivable	8	4	-	-
Reinsurers' share of life insurance contract liabilities	65	44	-	-
Trade debtors (1)	193	208	4	9
Other receivables
- subsidiaries - tax related amounts	-	-	95	-
Other receivables	139	148	-	-
Total receivables (1)(2)	887	959	99	9

Footnote:

(1) Trade debtors include trade debtors of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

(2) $22m (2009: $4m) of total consolidated receivables is expected to be recovered more than 12 months from reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

8. INVENTORIES AND OTHER ASSETS

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Inventories (1)	275	136	-	-
Prepayments	28	34	-	-
Other assets	9	14	-	-
Total inventories and other assets (2)(3)	312	184	-	-

Footnote:

(1) Inventories include inventories and development properties of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group and financial planning registers held for resale in the ordinary course of business.

(2) $140m (2009: $51m) of inventories and other assets is expected to be recovered more than 12 months from the reporting date.

(3) Inventories and other assets include inventories and other assets of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

9. INVESTMENTS IN FINANCIAL ASSETS

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Investments in financial assets measured at fair value
through profit or loss
Equity securities and listed managed investment schemes	32,130	32,328	-	-
Debt securities	20,631	20,629	-	-
Investments in unlisted managed investment schemes	9,921	10,340	-	-
Derivative financial assets	1,873	2,103	-	-
Other financial assets (1)	242	173	-	-
Total investments in financial assets measured at fair value
through profit or loss(2)	64,797	65,573	-	-
Investments in financial assets measured at amortised cost
Loans and advances - to subsidiaries	-	-	836	836
Loans and advances (3)	10,202	9,815	-	-
Debt securities - held to maturity	733	835	-	-
Total investments in financial assets measured at amortised
cost(4)	10,935	10,650	836	836
Investments in controlled entities	-	-	7,072	7,072

Footnote:

(1) Other financial assets include investments of the life statutory funds and controlled entities of the life statutory funds.

(2) Investments measured at fair value through profit or loss are mainly assets of the life statutory funds and controlled entities of the life statutory funds. The timing of the recovery of these assets will be in a pattern similar to that of policyholder liabilities, refer to Note 20(f).

(3) Loans and advances include securitised assets of $4,953m (2009: $5,859m) after allowing for amortisation of the initial assets securitised. During the year, loans of $980m (2009: $502m) were transfered into securitisation vehicles.

(4) $10,016m (2009: $9,871m) of Total investments in financial assets measured at amortised cost is expected to be recovered more than 12 months from reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

10. INVESTMENT PROPERTY

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Investment property(1)
Directlyheld	7,122	7,832	-	-
Total investmentproperty	7,122	7,832	-	-
Movements in investment property
Balance at the beginning of the period	7,832	9,227	-	-
Additions
- subsequent expenditure recognised in carrying amount	123	176	-	-
Acquisitions (disposal) through business combinations(2)	(835)	421	-	-
Disposals(2)	(197)	(812)	-	-
Net gains (losses) from fair value adjustments	290	(1,113)	-	-
Foreign currency exchange differences	(12)	(67)	-	-
Transfer from inventories	4	-
Transfer(to)inventories	(83)	-	-	-
Balance at the end of theperiod(3)	7,122	7,832	-	-

Footnote:

(1) Investment property includes properties of the life statutory funds and investment entities controlled by the life statutory funds of $7,122m (2009: $7,645m).

(2) Additions (disposals) through business combinations and disposals include transactions of investment entities in which the life statutory funds hold a controlling equity interest.

(3) Investment property of $1,418m (2009: $1,440m) held by controlled entities of the life statutory funds has been provided as security against borrowings of these controlled entities of the life statutory funds.

Valuation of investment property

Investment property is measured at fair value at each reporting date. Fair value represents the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable wiling seller in an arm’s length transaction.

Fair values of the AMP group’s properties are determined by independent registered valuers who have appropriate registered professional qualifications and recent experience in the location and category of the property being valued.

The fair value appraisals are obtained on a rolling annual basis. The valuation schedule may be altered when a property is either undergoing or being appraised for redevelopment, refurbishment or sale, or is experiencing other changes in assets or tenant profiles which may significantly impact value: or when there have been significant changes in the property market and broader economy such as updates to comparable property sales which may have an impact on the individual asset values. The carrying value of each investment property is assessed at reporting date to ensure there has been no material change to the fair value since the valuation date.

The valuers apply ‘comparable sales analysis’ and the ‘capitalised income approach’ by reference to annual net market income, comparable capitalisation rates and other property-specific adjustments as well as discounted cash flow analysis where the expected net cash flows are discounted to their present value using a market determined risk adjusted discount rate. The fair value of investment property does not reflect future capital expenditure that will improve or enhance the property.

	2010	2009	2010	2009
	$m	$m	$m	$m
Primary assumptions used in valuing investmentproperty
Capitalisation rates	6.25% - 9.75%	6.25% - 9%	-	-
Market determined,risk adjusted discount rate	7% - 10.35%	8.73% - 11%	-	-

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

11. PROPERTY, PLANT AND EQUIPMENT

11. PROPERTY, PLANT AND EQUIPMENT
	Owner-
	occupied	Leasehold	Plant &
Consolidated	property(1)	improvements	equipment(2)	Total
2010	$m	$m	$m	$m
Property, plant and equipment
Gross carrying amount	301	72	300	673
Less: accumulated depreciation and impairment losses	-	(57)	(164)	(221)
Property, plant and equipment at written down value	301	15	136	452
Movements in property, plant and equipment
Balance at the beginning of the period	301	20	154	475
Additions
- through direct acquisitions	-	-	18	18
- subsequent expenditure recognised in carrying amount	4	1	-	5
Disposals through sale of controlled entities	-	-	(3)	(3)
Increases(decreases) from revaluations recognised directly in
equity	(1)	-	-	(1)
Depreciation expense for the period	(3)	(6)	(32)	(41)
Foreign currencyexchange differences	-	-	(1)	(1)
Balance at the end of theperiod	301	15	136	452

	Owner-
	occupied	Leasehold	Plant &
	property (1)	improvements	equipment (2)	Total
2009	$m	$m	$m	$m
Property, plant and equipment
Gross carrying amount	301	71	299	671
Less: accumulated depreciation and impairment losses	-	(51)	(145)	(196)
Property, plant and equipment at written down value	301	20	154	475
Movements in property, plant and equipment
Balance at the beginning of the period	332	24	236	592
Additions
- through direct acquisitions	-	-	34	34
- subsequent expenditure recognised in carrying amount	2	-	-	2
Disposals	-	-	(67)	(67)
Increases(decreases) from revaluations recognised directly in
equity	(29)	-	-	(29)
Depreciation expense for theperiod	(4)	(4)	(49)	(57)
Balance at the end of theperiod	301	20	154	475

Footnote:

(1) Owner-occupied property is measured at fair value; had the asset been measured at historic cost the amortised carrying value would have been $199m (2009: $198m).

(2) Plant and equipment includes operating assets of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

12. INTANGIBLES

Consolidated	Goodwill (1) (2)	Capitalised costs(3)	Management rights	Other intangibles	Total
2010	$m	$m	$m	$m	$m
Intangibles
Gross carrying amount	777	512	22	66	1,377
Less: accumulated amortisation and / or impairment losses	(75)	(350)	(2)	(31)	(458)
Intangibles at written down value	702	162	20	35	919
Movements in intangibles
Balance at the beginning of the period	730	159	20	37	946
Additions (reductions) through acquisitions (disposal) of
controlled entities and other businesses(2)	(9)	-	-	-	(9)
Additions through separate acquisition	-	-	-	3	3
Additions through internal development	-	64	-	-	64
Amortisation expense for the period(4)	-	(51)	-	(10)	(61)
Impairment losses (recognised) or reversed in profit	(19)	-	-	-	(19)
Foreign currency exchange differences	-	-	(1)	-	(1)
Other movements	-	(10)	1	5	(4)
Balance at the end of theperiod	702	162	20	35	919
		Capitalised	Management	Other
	Goodwill (1) (2)	costs(3)	rights	intangibles	Total
2009	$m	$m	$m	$m	$m
Intangibles
Gross carrying amount	786	500	22	63	1,371
Less: accumulated amortisation and / or impairment losses	(56)	(341)	(2)	(26)	(425)
Intangibles at written down value	730	159	20	37	946
Movements in intangibles
Balance at the beginning of the period	759	111	20	49	939
Additions (reductions) through acquisitions (disposal) of
controlled entities and other businesses(2)	(29)	-	-	-	(29)
Additions through internal development	-	118	-	-	118
Disposals	-	-	-	(4)	(4)
Amortisation expense for the period(4)	-	(47)	-	(9)	(56)
Impairment losses (recognised) or reversed in profit	-	(4)	-	1	(3)
Other movements	-	(19)	-	-	(19)
Balance at the end of theperiod	730	159	20	37	946

Footnote:

(1) Total goodwill comprises amounts attributable to shareholders of $517m (2009: $517m) and attributable to policyholders of $185m (2009: $213m)

(2) The disposal of goodwill during 2010 relates to the sale of an operating business of controlled entities of the life statutory funds. Disposal of goodwill during 2009 relates to the deconsolidation of New Zealand retirement property business.

(3) Capitalised costs are required to be amortised over their estimated useful lives as well as being assessed for indicators of impairment at each reporting date.

(4) Amortisation expense for the period is included in Operating expenses in the Income statement.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

12. INTANGIBLES (CONTINUED)

Impairment testing of goodwill

Goodwill includes balances attributable to shareholders and balances attributable to policyholders in investment entities controlled by the life statutory funds.

Goodwill attributable to shareholders

$517m (2009: $517m) of the Goodwill arose from a Life Act Part 9 transfer of life insurance business into the statutory funds of AMP Life. The initial amount recognised represented the value of in force business, the value of new business and the benefits of cost synergies obtained as a result of the integration of the business into AMP Life.

The business acquired included activities conducted in the same business units already operated by AMP. Those business units are Australian Contemporary Wealth Management (CWM), Australian Contemporary Wealth Protection (CWP) and Australian Mature and those business units are identified as the cash generating units for the purpose of assessing goodwill impairment.

Under the transition rules for Australian adoption of International Financial Reporting Standards, the amortised cost value of $517 million at 1 January 2004 was deemed to be the value carried forward and tested annually for impairment. For the purposes of impairment testing, the amount is allocated to the cash generating units as follows:

Australian CWM – goodwill attributable: $387m;
Australian CWP – goodwill attributable: $65m; and
Australian Mature – goodwill attributable: $65m.

There were no other intangible assets with indefinite useful lives allocated to these cash generating units.

The method used for goodwill impairment testing is “fair value less costs to sell”. The recoverable amount is determined considering a combination of estimates of future cash flows, relevant product profit margins and the embedded value. Embedded value is a calculation which represents the economic value of the shareholder capital in the business and the future profits expected to emerge from the business currently in-force expressed in today’s dollars. These indicators are generally taken as features of a life insurance business which taken together would be equivalent to fair value.

Assumptions applied in estimating the embedded value are consistent with the best estimate assumptions used in calculating the policy liabilities of AMP Life except that embedded value includes a risk discount rate. Note 1(u) and Note 19 provide extensive details with respect to the assumptions, management’s approach to determining the values assigned to each key assumption and their consistency with past experience and external sources of information. Note 1(u) discloses that premium and claim amounts are estimated over the expected life of the in-force policies which varies depending on the nature of the product. Note 19 provides details of discontinuance rates used for projections and the fact that future maintenance and investment expenses are based on unit costs derived from budgeted amounts for the following year and increased in future years for expected rates of inflation. The embedded value calculation uses a risk discount rate of the annualised 10 year bond yield of 5.6% in Australia (2009: 5.7%) and 5.7% in New Zealand (2009: 6.2%) with a 3.0% margin (2009: 3.0%).

In each cash-generating unit, the surplus discounted present value of future profits (being embedded value less shareholder capital), is significantly higher than the goodwill held. The impact of the other components of fair value, namely future cash flows, relevant product profit margins net of costs to sell, would have resulted in a further net increase in the surplus.

The conclusion from the testing is that there has been no impairment to the amount of the goodwill recognised and there is no reasonably possible change in key assumptions that could cause the carrying amount to exceed the recoverable amount.

Goodwill attributable to policyholders

The policyholder goodwill has arisen on acquisitions of operating subsidiaries controlled by the life statutory funds, which carry out business operations unrelated to the core wealth management operations of the AMP group. The goodwill represents the future value of cash flows expected to be derived from those operating subsidiaries.

The individual goodwill components are not significant in comparison with the total carrying amount of goodwill attributable to policyholders and therefore impairment testing was carried out on the aggregate carrying amount. Impairment testing resulted in an impairment of $19m recognised during the year ended 31 December 2010 (31 December 2009: $nil) as a result of a decline in projected future cash flows in underlying operating subsidiaries controlled by the life statutory funds. At reporting date, there is no reasonably possible change in key assumptions that could cause the carrying amount to exceed the recoverable amount.

Impairment testing of these goodwill balances is based on each asset’s value in use, calculated as the present value of forecast future cash flows from those assets using discount rates of between 13% and 16.8% (2009: 13% and 17%).

The forecast cash flows used in the impairment testing for operating subsidiaries are based on assumptions as to the level of profitability for each business over the forecast period.

Forecasts for the following 12 months have in each case been extrapolated based on long term revenue growth rates of between 0% and 5%pa (2009: 2-5%pa) . The projected revenues are based on the businesses in their current condition. The assumptions do not include the effects of any future restructuring to which the entity is not yet committed or as a result of future cash outflows by the entity that will improve or enhance the entity’s performance.

Shareholders have no direct exposure to movements in goodwill attributable to policyholders. However, due to the impact of accounting mismatches on investments in controlled entities of the life statutory funds (see Note 1(d)), policyholder asset movements (including goodwill) can impact the net profit after tax attributable to shareholders. Any impact is temporary in nature, reversing no later than the point at which AMP group ceases to control the investments.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

13. PAYABLES

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Investment purchases payable	66	78	-	-
Life insurance and investment contracts in process of settlement	181	172	-	-
Accrued expenses	91	110	-	-
Interest payable	41	68	-	-
Trade creditors	80	94	-	-
Other payables
- subsidiaries - tax related amounts	-	-	-	164
- other entities	574	459	1	1
Totalpayables(1)(2)	1,033	981	1	165

Footnote:

(1) Total payables include payables of investment entities controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

(2) $26m (2009: $42m) of Total payables of the AMP group is expected to be settled more than 12 months from the reporting date and nil (2009: nil) of Total payables of the parent is expected to be settled more than 12 months from reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

14. PROVISIONS

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
(a) Provisions
Employee entitlements	172	190	4	5
Other	81	90	-	-
Totalprovisions	253	280	4	5
		Employee
		entitlements (1)	Other (2)	Total
		$m	$m	$m
(b) Movements in provisions - consolidated
Balance at the beginning of the period		190	90	280
Additions (reductions) through acquisitions (disposal) of
controlled entities		-	(11)	(11)
Additional provisions made during the period		127	84	211
Unused amounts reversed during the period		(4)	(11)	(15)
Provisions used during the period		(140)	(70)	(210)
Foreign exchange movements		(1)	(1)	(2)
Balance at the end of theperiod		172	81	253
		Employee
		entitlements (1)	Other (2)	Total
		$m	$m	$m
(c) Movements in provisions - parent
Balance at the beginning of the period		5	-	5
Additional provisions made during the period		3	-	3
Provisions used duringtheperiod		(4)	-	(4)
Balance at the end of theperiod		4	-	4

Footnote:

(1) Provisions for employee entitlements are in respect of amounts accumulated as a result of employees rendering services up to the reporting date. These entitlements include salaries, wages, bonuses, annual leave and long service leave, but exclude share-based payments. $6m (2009: $6m) is expected to be settled more than 12 months from the reporting date.

(2) Other provisions are in respect of probable outgoings on data quality and integrity projects, settlements, and various other operational provisions. $5m (2009: $1m) is expected to be settled more than 12 months from the reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

15. BORROWINGS

	2010	2009	2010	2009
	$m	$m	$m	$m
Bank overdrafts	-	6	-	-
Bank loans	962	1,694	-	-
Bonds and notes	6,687	7,602	-	-
Deposits(1)	3,082	2,525	-	-
Other borrowings	60	170
Total borrowings(2)	10,791	11,997	-	-

Footnote:

(1) Deposits mainly comprise at call retail cash on deposit and retail term deposits at variable interest rates within the AMP Bank.
(2) Total borrowings comprise amounts to fund:
i) Corporate and other shareholder activities of AMP group of $764m (2009: $1,115m). Of this balance $353m (2009: $815m) is expected to be settled more than 12 months from the reporting date.
ii) AMP Bank and securitisation trusts borrowings $8,369m (2009: $8,417m). Of this balance $3,852m (2009: $3,044m) is expected to be settled more than 12 months from the reporting date. Current borrowings of $4,517m (2009: $5,373m) include
$2,933m (2009: $2,370m) of Deposits that are contractually at call customer savings accounts.

iii) Statutory fund borrowings and borrowings within controlled entities of AMP Life are $1,658m (2009: $2,465m). Of this balance

$1,045m (2009: $1,738m) is expected to be settled more than 12 months from the reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

16. SUBORDINATED DEBT

		Consolidated	Consolidated
		2010	2009	2010	2009
		$m	$m	$m	$m
6.875% GBP Subordinated Guaranteed Bonds (maturity 2022)		56	65	-	-
A$ AMP Notes (first call date 2014, maturity 2019)(1)		202	197	-	-
NZ$ AMP Notes (first call	date 2014, maturity 2019) (1)	87	91	-	-
Total subordinated debt	(2)	345	353	-	-

Footnote:

(1) $202m A$ AMP Notes and $94m NZ$ AMP Notes were issued in 2009. The carrying value at each reporting date includes accrued interest less capitalised borrowing costs (after amortisation) and, in the case of the NZ$ AMP Notes, is converted to Australian dollars at reporting date.

(2) Subordinated debt amounts are to fund corporate activities of AMP group. All of this balance (2009: all) is expected to be settled more than 12 month from the reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

17. DIVIDENDS

		Consolidated	Consolidated	Parent
		2010	2009	2010	2009
		$m	$m	$m	$m
Final dividends paid
2009 final dividend paid in 2010: 16 cents per ordinary share
franked to 50%
(2008 final dividend paid in 2009: 16 cents per ordinary share
franked to 85%)		328	319	328	319
Interim dividends paid
2010: 15 cents per ordinary share franked to 60%
(2009: 14 centsper ordinaryshare franked to 50%)		311	282	311	282
Total dividendspaid(1) (2)		639	601	639	601
Final dividends proposed but not recognised	(2)
2010: 15 centsper ordinaryshare franked to 60%		314	n/a	314	n/a
		Consolidated		Parent
		2010	2009	2010	2009
		$m	$m	$m	$m
Dividend franking account(3)(4)
Franking credits available to shareholders of AMP Limited (at 30%)		123	86	123	86

Footnote:

(1) Total dividends paid includes dividends paid on 'treasury shares'. See Statement of changes in equity for further information regarding the impact of 'treasury shares' on dividends paid and retained earnings.

(2) All dividends are franked at a tax rate of 30%.

(3) The franking credits available to shareholders are based on the balance of the dividend franking account at the reporting date adjusted for:

a) franking credits that will arise from the payment of the current tax liability

b) franking debits that will arise from the payment of dividends recognised as a liability at the year end

c) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at the year end
d) franking credits that the entity may be prevented from distributing in subsequent years.

(4) The company's ability to utilise the franking account credits depends on there being sufficient available profits to declare dividends. The impact of the proposed dividend will be to reduce the balance of the franking credit account by $81m.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

18. CONTRIBUTED EQUITY

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
Movements in issued capital
Balance at the beginning of the period	4,957	4,649	4,957	4,649
45,779,038 (2009: 55,753,874) shares issued under dividend
reinvestment plan (1)	252	308	252	308
Balance at the end of theperiod	5,209	4,957	5,209	4,957
Total issued capital
2,094,424,200(2009: 2,048,645,162)ordinaryshares fully paid	5,209	4,957	5,209	4,957
Movements in 'treasury shares' (2)
Balance at the beginning of the period	(143)	(168)	-	-
(Increase)Decrease due to sales lesspurchases duringtheperiod	(15)	25	-	-
Balance at the end of theperiod	(158)	(143)	-	-
Total contributed equity
2,068,048,750(2009: 2,025,868,826)ordinaryshares fully paid(2)	5,051	4,814	5,209	4,957

Holders of ordinary shares have the right to receive dividends as declared and, in the event of the winding up of the company, to participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up on shares held. Ordinary shares have no par value.

Footnote:

(1) Under the terms of the Dividend Reinvestment Plan (DRP), shareholders may elect to have all or part of their dividend entitlements satisfied by the issue of new shares rather than being paid cash. Shares were issued under the DRP for the 2009 final dividend (paid in April 2010) at $5.98 per share, 2010 interim dividend (paid in October 2010) at $5.01 per share.

(2) Of the ordinary shares on issue, AMP Life Limited (a wholly owned controlled entity) holds 26,375,450 (2009: 22,776,336) shares in AMP Limited on behalf of policyholders. ASIC has granted relief from restrictions in the Corporations Act 2001 to allow AMP Life Limited to hold and trade shares in AMP Limited as part of the policyholder funds' investment activities. The cost of the investment in these 'treasury shares' is reflected as a deduction from total contributed equity.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS

(a) Assumptions and methodology applied in the valuation of life insurance contract liabilities

Life insurance contract liabilities, and hence the net profit from life insurance contracts, are calculated by applying the principles of Margin on Services (MoS). Refer to Note 1(u) for a description of MoS and the methods for calculating life insurance contract liabilities.

The methods and profit carriers used to calculate life insurance contract liabilities for particular policy types are as follows:

Business type	Method	Profit carriers (for business valued
		using projection method)
Conventional	Projection	Bonuses
Investment Account	Modified Accumulation	N/A
Risk	Projection / Accumulation	Expected premiums
Participating Allocated Annuities	Accumulation / Modified Accumulation	N/A
LifeAnnuities	Projection	Annuity payments

Key assumptions used in the calculation of life insurance contract liabilities are as follows:

(i) Risk free discount rates

Except where benefits are contractually linked to the performance of the assets held, a risk-free discount rate based on current observable, objective rates that relate to the nature, structure and term of the future obligations is used. The rates are determined as shown in the following table.

Business Type		Basis	31 December 2010	31 December 2010	31 December 2009	31 December 2009
			Australia	New Zealand	Australia	New Zealand
Retail risk		10 year government	5.6%	6.0%	5.7%	6.2%
		bond rate
Group risk	Outstanding	2 year government bond	5.2%	4.0%	4.6%	4.3%
	claims	rate
Life annuities	Non-CPI	Zero coupon inter-bank	4.9% - 6.3%	3.1% - 6.0%	4.1% - 6.5%	2.7% - 6.6%
		swap curve
	CPI	Commonwealth Indexed	2.8% - 3.0%	2.8%	1.9% - 3.1%	3.0%
		Bond curve+ 20 bps

(ii) Participating business discount rates

Where benefits are contractually linked to the performance of the assets held, as is the case for participating business, a discount rate based on the expected market return on backing assets is used. The assumed earning rates for backing assets for participating business are largely driven by long-term (e.g.10 year) government bond yields. The 10 year government bond yields used at the relevant valuation dates are as noted above.

Assumed earning rates for each asset sector are determined by adding to the bond yield various risk premia which reflect the relative differences in expected future earning rates for different asset sectors. For products backed by mixed portfolio assets, the assumption varies with the proportion of each asset sector backing the product. The risk premia applicable at the valuation date are shown in the table below.

	Local equities	International	Property	Fixed Interest	Cash
		equities
Australia
31 December 2010	3.0%	2.5%	2.0%	0.50%	(0.50%)
31 December 2009	3.0%	2.5%	2.0%	0.25%	(0.50%)
New Zealand
31 December 2010	3.0%	2.5%	2.0%	0.50%	(0.50%)
31 December 2009	3.0%	2.5%	2.0%	0.25%	(0.50%)

These risk premia do not include any allowance for imputation credits as they are explicitly allowed for in deriving net of tax investment earning assumptions.

The averages of the asset mixes assumed for the purpose of setting future investment assumptions for participating business at the valuation date are as shown in the table below. These asset mixes are not necessarily the same as the actual asset mix at the valuation date as they reflect long term assumptions.

	Equities	Property	Fixed interest	Cash
Australia
31 December 2010	30%	11%	39%	20%
31 December 2009	30%	11%	40%	19%
New Zealand
31 December 2010	40%	17%	37%	6%
31 December 2009	40%	17%	37%	6%

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

Where an assumption used is net of tax, the tax on investment income is allowed for at rates appropriate to the class of business and asset sector, including any allowance for imputation credits on equity income. For this purpose, the total return for each asset sector is split between income and capital gains. The actual split has varied at each valuation date as the total return has varied.

(iii) Future participating benefits

For participating business, the total value of future bonuses (and the associated shareholder’s profit margin) included in life insurance contract liabilities is the amount supported by the value of the supporting assets, after allowing for the assumed future experience. The pattern of bonuses and shareholders profit margin assumed to emerge in each future year depends on the assumed relationship between reversionary bonuses (or interest credits) and terminal bonuses. This relationship is set to reflect the philosophy underlying actual bonus declarations.

Actual bonus declarations are determined to reflect, over time, the investment returns of the particular fund and other factors in the emerging experience and management of the business. These factors include:

allowance for an appropriate degree of benefit smoothing
reasonable expectations of policyholders
equity between generations of policyholders applied across different classes and types of business
ongoing solvency and capital adequacy.

Given the many factors involved, the range of bonus structures and rates for participating business is extremely diverse.

Typical supportable bonus rates on major product lines are as follows (31 December 2009 in parentheses).

Reversionary bonus	Bonus on sum insured	Bonus on existing bonuses
Australia	0.7% - 1.1% (0.9% - 1.3%)	1.1% - 1.3% (1.3% - 1.7 %)
New Zealand	0.8% - 1.1% (0.7% - 1.0%)	0.8% - 1.1% (0.7% - 1.0%)

Terminal bonus

The terminal bonus scales are complex and vary by duration, product line, class of business and country.

Crediting rates (investment account)
Australia	2.8% - 8.0% (3.3% - 8.9%)
New Zealand	3.5% - 4.0% (3.3% - 4.2%)

(iv) Future maintenance and investment expenses

Unit maintenance costs are based on budgeted expenses in the year following the reporting date (including GST, as appropriate, and excluding one-off expenses). For future years, these are increased for inflation as described in (v) below. These expenses include fees charged to the life statutory funds by service companies in the AMP group. Unit costs vary by product line and class of business based on an apportionment that is supported by expense analyses.

Future investment expenses are based on the fees currently charged by the asset managers.

(v) Inflation and indexation Benefits and premiums under many regular premium policies are automatically indexed by the published consumer price index (CPI). Assumed future take-up of these indexation options is based on AMP Life’s own experience with the annual CPI rates derived from the difference between long-term government bonds and indexed government bonds.

The assumptions for expense inflation have regard to these rates, recent expense performance, AMP Life’s current plans and the terms of the relevant service company agreement, as appropriate.

The assumed annual inflation and indexation rates at the valuation date are:

			Australia	New Zealand
31	December	2010	2.9% CPI, 3.0% Expenses	3.3% CPI, 3.0% Expenses
31	December	2009	2.8% CPI, 3.0% Expenses	3.4% CPI, 3.0% Expenses

(vi) Bases of taxation The bases of taxation (including deductibility of expenses) are assumed to continue in accordance with legislation current at the valuation date.

(vii) Voluntary discontinuance

Assumptions for the incidence of withdrawals, paid ups and premium dormancy are primarily based on investigations of AMP Life’s own experience over the past three years. These rates are based upon the assessed global rate for each of the individual products (or product groups) and then, where appropriate, further adjusted for duration, smoker status, age attained or short-term market and business effects. Given the variety of influences affecting discontinuance for different product groups, the range of voluntary discontinuance rates across AMP Life is extremely diverse.

Future rates of discontinuance used at 31 December 2010 are unchanged from those assumed at 31 December 2009 except for:

Australia – reduction in lapse rates for Conventional Superannuation.
New Zealand – higher withdrawal rates on lump sum risk and a small reduction in lapse rates for whole of life conventional business.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

Future rates of discontinuance for the major classes of life insurance contracts are assumed to be as shown in the table below.

	31 December	2010	31 December	2009
Business type	Australia	New Zealand	Australia	New	Zealand
Conventional	2.1% - 3.0%	1.3% - 2.5%	2.1% - 4.0%	1.3% - 2.6%
Investment account	n/a	n/a	n/a		n/a
Retail risk	10.5% - 11.0%	10.5% - 12.0%	10.5% - 11.0%	9.5%	- 12.0%
FLS risk business (ultimate rate)	7.5% - 9.0%	n/a	7.5% - 9.0%		n/a

(viii) Surrender values The surrender bases assumed for calculating surrender values are those current at the reporting date. There have been no changes to the bases during the year (or the prior year) that would materially affect the valuation results.

(ix) Mortality and morbidity Standard mortality tables, based on national or industry wide data, are used (e.g. IA95-97 and IM(F)80 in Australia and New Zealand). These are then adjusted by factors that take account of AMP Life’s own experience, primarily over the past three years. For annuity business, adjustment is also made for mortality improvements prior to and after the valuation date.

Rates of mortality assumed at 31 December 2010 are unchanged from those assumed at 31 December 2009 in Australia and New Zealand, except for a 3% reduction for Australian and New Zealand conventional business. Rates of annuitant mortality are unchanged.

Typical mortality assumptions, in aggregate, are as follows:

	Conventional - % of IA95-97	Conventional - % of IA95-97	Term - % of IA95-97	Term - % of IA95-97	FLS Risk - % of IA95-97	FLS Risk - % of IA95-97
Risk products	Male	Female	Male	Female	Male	Female
Australia	75%	75%	63%	63%	63%	63%
New Zealand	73%	73%	63%	63%	63%	63%
Annuities		Male - % of IM80*			Female - % of IF80*
Australia & New Zealand		72%			61%

For disability income business, the claim assumptions are currently based on CIDA85, which is derived from North American experience. It is adjusted for AMP Life’s experience, with the adjustment dependent on age, sex, waiting period, occupation, smoking status and claim duration. Incidence and termination rates are unchanged from those at 31 December 2009.

For trauma cover, standard tables are not available and so assumptions are mostly based on Australian population statistics, with adjustment for smoking status as well as AMP Life’s recent claim experience. Assumptions at 31 December 2010 are unchanged from those used at 31 December 2009.

The Actuarial tables used were as follows:

IA95-97 A mortality table developed by the Institute of Actuaries of Australia based on Australian insured lives experience from 1995–1997.

IM80 / IF80 IM80 and IF80 are mortality tables developed by the Institute of Actuaries and the Faculty of Actuaries based on United Kingdom annuitant lives experience from 1979–1982. The tables refer to male and female lives respectively and incorporate factors that allow for mortality improvements since the date of the investigation.

IM80 and IF80 are these published tables amended for some specific AMP experience.

CIDA85 A disability table developed by the Society of Actuaries based on North American disability income experience from 1973–1979.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

(x) Impact of changes in assumptions Under MoS, for life insurance contracts valuations using the projection method, changes in actuarial assumptions are recognised by adjusting the value of future profit margins in life insurance contract liabilities. Future profit margins are released over future periods.

Changes in actuarial assumptions do not include market related changes in discount rates such as changes in benchmark market yields caused by changes in investment markets and economic conditions. These are reflected in both life insurance contract liabilities and asset values at the reporting date.

The impact on future profit margins of changes in actuarial assumptions from 31 December 2009 to 31 December 2010 in respect of life insurance contracts (excluding new business contracts which are measured using assumptions at reporting date) is as shown in the table below.

	Change in future	Change in life	Change in
	profit margins	insurance	shareholders’
		contract	profit & equity
		liabilities
Assumption change	$m	$m	$m
Non-market related changes to discount rates	14	-	-
Mortality and morbidity	9	-	-
Discontinuance rates	(26)	-	-
Maintenance expenses	(13)	-	-
Other assumptions	27	-	-

In most cases, the overall amount of life insurance contract liabilities and the current period profit are not affected by changes in assumptions.

However, where in the case of a particular related product group, the changes in assumptions at the end of a period eliminate any future profit margins for the related product group, and results in negative future profit margins, this negative balance is recognised as a loss in the current period. If the changes in assumptions in a period are favourable for a product group currently in loss recognition, then the previously recognised losses are reversed in the period.

Changes in maintenance expenses and other assumptions have caused a $1m loss reversal on New Zealand annuities. When split between maintenance expenses and other assumptions in the table above, change for each is less than $1m.

(b) Insurance risk sensitivity analysis – life insurance contracts

For life insurance contracts that are accounted for under MoS, amounts of liabilities, income or expense recognised in the period are unlikely to be sensitive to changes in variables even if those changes may have an impact on future profit margins.

This table shows information about the sensitivity of life insurance contract liabilities, current shareholder period profit after income tax, and equity, to a number of possible changes in assumptions relating to insurance risk.

Variable	Change in variable	Change in life insurance contract liabilities	Change in life insurance contract liabilities	Change in shareholder profit after income tax, and equity	Change in shareholder profit after income tax, and equity
		Gross of reinsurance $m	Net of reinsurance $m	Gross of reinsurance $m	Net of reinsurance $m
Mortality Annuitant mortality Morbidity – lump sum disablement Morbidity – disability income Discontinuance rates	10% increase in mortality rates 50% increase in the rate of mortality improvement 20% increase in lump sum disablement rates 20% increase in incidence rates & decrease in recovery rates 10% increase in discontinuance rates
		(1)	(1)	1	1
		1	1	(1)	(1)
		-	-	-	-
		11	7	(8)	(5)
		-	-	-	-
Maintenance expenses	10% increase in maintenance expenses	-	-	-	-

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

	Consolidated	Consolidated
	2010	2009	2010	2009
	$m	$m	$m	$m
(c) Analysis of life insurance contract premium and related revenue
Total life insurance contract premiums received and receivable	1,802	1,871	-	-
Less: component recognised as a change in life insurance
contract liabilities	(751)	(854)	-	-
Life insurance contract premium revenue (1)	1,051	1,017	-	-
Reinsurance recoveries	49	32	-	-
Total life insurance contractpremium and related revenue	1,100	1,049	-	-
(d) Analysis of life insurance contract claims and related expenses
Total life insurance contract claims paid and payable	(2,344)	(2,227)	-	-
Less: component recognised as a change in life insurance
contract liabilities	1,103	1,024	-	-
Life insurance contract claims expense	(1,241)	(1,203)	-	-
Outwards reinsurance expense	(48)	(48)	-	-
Total life insurance contract claims and related expenses	(1,289)	(1,251)	-	-
(e) Analysis of life insurance contract operating expenses
Life insurance contract acquisition expenses
- Commission	(56)	(45)	-	-
- Other	(88)	(87)	-	-
Life insurance contract maintenance expenses
- Commission	(91)	(85)	-	-
- Other	(284)	(268)	-	-
Investment management expenses	(39)	(39)	-	-

Footnote:

(1) Life insurance contract premium revenue consists entirely of direct insurance premiums; there is no inward reinsurance component.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

	Consolidated	Consolidated	Parent
	2010	2009	2010	2009
	$m	$m	$m	$m
(f) Life insurance contract liabilities
Life insurance contract liabilities determined using projection method
Best estimate liability
- Value of future life insurance contract benefits	10,765	10,812	-	-
- Value of future expenses	2,697	2,588	-	-
- Value of future premiums	(9,595)	(9,123)	-	-
Value of future profits
- Life insurance contract holder bonuses	2,021	2,150	-	-
- Shareholders’profit margins	2,439	2,373	-	-
Total life insurance contract liabilities determined using the
projection method(1)	8,327	8,800	-	-
Life insurance contract liabilities determined using accumulation method
Best estimate liability
- Value of future life insurance contract benefits	7,664	7,932	-	-
- Value of future acquisition expenses	(9)	(10)	-	-
Total life insurance contract liabilities determined using
accumulation method	7,655	7,922	-	-
Value of declared bonus	338	270	-	-
Unvested life insurance contract holder benefits(1)	1,377	1,344	-	-
Total life insurance contract liabilities before reinsurance	17,697	18,336	-	-
Add: Reinsurers' share of life insurance contract liabilities	65	44	-	-
Total life insurance contract liabilities	17,762	18,380	-	-
Footnote:
(1) For participating business in the statutory funds, part of the assets in excess of the life insurance contract and other liabilities calculated
under MoS are attributed to policyholders. Under the Life Act, this is referred to as policyholder retained profits. For the purpose of reporting
under accounting standards, this amount is referred to as unvested life insurance contract holder benefits and is included within life insurance
contract liabilities even though it is yet to be vested as specific policyholder entitlements.
(g) Reconciliation of changes in life insurance contract liabilities
Total life insurance contract liabilities at the beginning of the period	18,380	19,250	-	-
Change in life insurance contract liabilities recognised in the Income
statement	(202)	(641)	-	-
Premiums recognised as an increase in life insurance contract liabilities	751	854	-	-
Claims recognised as a decrease in life insurance contract liabilities	(1,103)	(1,024)	-	-
Change in reinsurers share of life insurance contract liabilities	21	(10)	-	-
Foreign exchange adjustment	(85)	(49)	-	-
Total life insurance contract liabilities at the end of theperiod	17,762	18,380	-	-

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

(h) Life insurance risk

The life insurance activities of AMP Life involve a number of non-financial risks concerned with the pricing, acceptance and management of the mortality, morbidity and longevity risks accepted from policyholders, often in conjunction with the provision of wealth-management products.

The design of products carrying insurance risk is managed to ensure that policy wording and promotional materials are clear, unambiguous and do not leave AMP Life open to claims from causes that were not anticipated. Product prices are set through a process of financial analysis, including review of previous AMP Life and industry experience and specific product design features. The variability inherent in insurance risk is managed by having a large portfolio of individual risks, underwriting and the use of reinsurance.

Underwriting is managed through a dedicated underwriting department, with formal underwriting limits and appropriate training and development of underwriting staff. Individual policies carrying insurance risk are underwritten on their merits and are generally not issued without having been examined and underwritten individually. Individual policies which are transferred from a group scheme are generally issued without underwriting. Group risk insurance policies meeting certain criteria are underwritten on the merits of the employee group as a whole.

Claims are managed through a dedicated claims management team, with formal claims acceptance limits and appropriate training and development of staff to ensure payment of all genuine claims. Claims experience is assessed regularly and appropriate actuarial reserves are established to reflect up-to-date experience and any anticipated future events. This includes reserves for claims incurred but not yet reported.

AMP Life reinsures (cedes) to specialist reinsurance companies a proportion of its portfolio or certain types of insurance risk. This serves primarily to:

reduce the net liability on large individual risks
obtain greater diversification of insurance risks
provide protection against large losses.

The specialist reinsurance companies are regulated by APRA or industry regulators in other jurisdictions and have strong credit ratings from A+ to AA+ .

Terms and conditions of life insurance contracts

The nature of the terms of the life insurance contracts written by AMP Life is such that certain external variables can be identified on which related cash flows for claim payments depend. The table below provides an overview of the key variables upon which the timing and uncertainty of future cash flows of the various life insurance contracts issued by AMP Life depend.

Type of contract	Detail of contract workings	Nature of compensation for claims	Key variables affecting future cash flows
Non-participating life insurance contracts with fixed and guaranteed terms (term life and disability_and yearly renewable)_	These policies provide guaranteed benefits, which are paid on the death or ill-health, that are fixed and not at the discretion of AMP Life. Premium rates for yearly renewable business are not guaranteed and may be changed at AMP Life’s discretion for the portfolio as a whole.	Benefits, defined by the insurance contract, are not directly affected by the performance of underlying assets or the performance of any associated investment contracts as a whole.	Mortality, morbidity, lapses, expenses and market earning rates on assets backing the liabilities.
Life annuity contracts	In exchange for an initial single premium, these policies provide a guaranteed regular income for the life of the insured.	The amount of the guaranteed regular income is set at inception of the policy including any indexation.	Longevity, expenses and market earning rates on assets backing the liabilities.
Conventional life insurance contracts with discretionary participating benefits (endowment and whole of life)	These policies combine life insurance and savings. The policyholder pays a regular premium and receives the specified sum assured plus any accruing bonuses on death or maturity. The sum insured is specified at inception and guaranteed. Reversionary bonuses are added annually, which once added (vested) are guaranteed. A further terminal bonus may be added on death or maturity.	Operating profit arising from these contracts is allocated 80:20% between the policyholders and shareholder in accordance with the_Life Act_. The amount allocated to policyholders is held as an unvested policy liability until it is distributed to specific policyholders as bonuses.	Market earning rates on assets backing the liabilities, lapses, expenses, and mortality.
Investment account contracts with discretionary participating features	The gross value of premiums received is invested in the investment account with fees and premiums for any associated insurance cover being deducted from the account balance. Interest is credited regularly.	The payment of the account balance is generally guaranteed, although it may be subject to certain penalties on early surrender or limited adjustment in adverse markets. Operating profit arising from these contracts is allocated between the policyholders and shareholders in accordance with the_Life Act_. The amount allocated to policyholders is held as an unvested policy liability until it is distributed to specific policyholders as interest credits.	Fees, lapses, expenses and market earning rates on the assets backing the liabilities.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

19. LIFE INSURANCE CONTRACTS (CONTINUED)

(i) Liquidity risk and future net cash outflows

The table below shows the estimated timing of future net cash outflows resulting from life insurance contract liabilities. This includes estimated future surrenders, death/disability claims and maturity benefits, offset by expected future premiums or contributions and reinsurance recoveries. All values are discounted to the reporting date using the assumed future investment earning rate for each product.

product.
	Up to 1	1 to 5	Over 5
	year	years	years	Total
	$m	$m	$m	$m
2010	903	2,416	5,420	8,739
2009	1,129	3,120	5,741	9,990

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

20. OTHER LIFE INSURANCE AND INVESTMENT CONTRACT DISCLOSURES

	Consolidated	Consolidated
	2010	2009
	$m	$m
(a) Analysis of life insurance and investment contract profit
Components of profit related to life insurance and investment contract
liabilities:
- Planned margins of revenues over expenses released	410	399
- Profits (losses) arising from difference between actual and assumed
experience	18	14
- Capitalised(losses)reversals	1	-
Profit related to life insurance and investment contract liabilities	429	413
Attributable to:
- Life insurance contracts	254	321
- Investment contracts	175	92
Investment earnings on assets in excess of life insurance and
investment contract liabilities	90	62

(b) Life statutory funds

AMP Life conducts investment linked and non-investment linked business. For investment linked business, deposits are received from policyholders, the funds are invested on behalf of the policyholders and the resulting liability to policyholders is linked to the performance and value of the assets that back those liabilities.

The Life Act requires the life insurance business of AMP Life to be conducted within life statutory funds. AMP Life has three statutory funds: No 1 fund includes AMP Life’s Australia and New Zealand non-investment linked business and a minor amount of investment linked business undertaken by AMP Life’s New Zealand branch; No 2 and No 3 funds include all AMP Life’s investment linked business conducted in Australia.

Investments held in the life statutory funds can only be used in accordance with the relevant regulatory restrictions imposed under the Life Act and associated rules and regulations. The main restrictions are that the assets in a life statutory fund can only be used to meet the liabilities and expenses of that life statutory fund, to acquire investments to further the business of the life statutory fund or as distributions provided solvency, capital adequacy and other regulatory requirements are met. See further details about solvency and capital adequacy in Note 20(d).

Australian Accounting Standards require the income, expenses, assets and liabilities in the financial statements of AMP Life to include amounts attributable to policyholders in investment linked and non-investment linked business of the life statutory funds. The following table shows a summary of the balances in the life statutory funds disaggregated between non-investment linked and investment linked business:

business:
		2010			2009
	Non- Investment Linked	Investment Linked	Total Life Statutory Funds	Non- Investment Linked	Investment Linked	Total Life Statutory Funds
	$m	$m	$m	$m	$m	$m
Assets of life statutory funds
Net assets of life statutory funds attributable to policyholders and shareholders	21,927	46,434	68,361	22,310	45,151	67,461
Attributable to policyholders
Life insurance contract liabilities	17,762	-	17,762	18,380	-	18,380
Investment contract liabilities	2,562	46,017	48,579	2,424	44,815	47,239
	20,324	46,017	66,341	20,804	44,815	65,619
Attributable to shareholders	1,603	417	2,020	1,506	336	1,842

The net assets of life statutory funds attributable to shareholders represent the interests of shareholders including funds required to meet regulatory requirements as well as further amounts of shareholder funds in excess of regulatory requirements.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

20. OTHER LIFE INSURANCE AND INVESTMENT CONTRACT DISCLOSURES (CONTINUED)

Impact of the life statutory funds amounts on the AMP group consolidated financial statements

To the extent that investments by the life statutory funds are held through wholly or partly owned controlled entities of the life statutory funds, the balances of those controlled entities are consolidated by AMP Life and therefore become part of the consolidated balances of this AMP group Preliminary Final Report. The consolidated balances include 100% of the underlying investments in financial assets, investment property, and other net operating assets of the controlled entities of the life statutory funds. Most of the controlled entities are unit trusts and the share of the consolidated profit and net assets of those trusts attributable to unitholders other than the AMP Life statutory funds is recognised in the consolidated Income statement as Movement in external unitholders’ liabilities and in the consolidated Statement of financial position as External unitholders’ liabilities.

The following table shows a summary of the consolidated balances of the life statutory funds and the entities controlled by the life statutory funds.

statutory funds.
	Life statutory funds
	consolidated
	2010	2009
	$m	$m
Income statement
Insurance premium and related revenue	1,100	1,049
Fee revenue	862	805
Other revenue	257	238
Investment gains and (losses)	4,053	7,740
Insurance claims and related expenses	(1,289)	(1,251)
Operating expenses including finance costs	(1,970)	(1,828)
Movement in external unitholders' liabilities	(317)	(364)
Change in life insurance contract liabilities	202	641
Change in investment contract liabilities	(2,259)	(5,951)
Income tax (expense) / credit	(144)	(600)
Profit(1)	495	479
Statement of financial position
Assets
Cash and cash equivalents	5,233	3,540
Investments in financial assets measured at fair value through profit or loss	64,399	65,645
Investment property	7,423	7,863
Other assets	1,622	2,038
Total assets of policyholders, shareholders and non-controlling interests	78,677	79,086
Liabilities
Life insurance contract liabilities	17,762	18,380
Investment contract liabilities	48,579	47,239
Other liabilities	3,829	4,962
External unitholders' liabilities	6,386	6,556
Total liabilities of policyholders, shareholders and non-controlling interests	76,556	77,137
Net assets (1)	2,121	1,949

(1) Consolidated profit and consolidated net assets of the life statutory funds and the entities controlled by the life statutory funds include the impact of accounting mismatches adjusted in respect of investments in controlled entities of life statutory funds - see Note 1(d), and the share of profit and net assets of controlled companies attributable to non-controlling interests.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

20. OTHER LIFE INSURANCE AND INVESTMENT CONTRACT DISCLOSURES (CONTINUED)

(c) Capital guarantees

	Consolidated
	2010	2009
	$m	$m
Life insurance contracts with a discretionary participating feature
- Amount of the liabilities that relate to guarantees	13,758	14,082
Investment linked contracts
- Amount of the liabilities subject to investment performance guarantees	1,101	1,158
Other life insurance contracts with a guaranteed termination value
- Current termination value	131	138

(d) Solvency and capital adequacy

Registered life insurance entities are required to hold prudential reserves, over and above their life insurance contract and investment contract liabilities, as a buffer against adverse experience and poor investment returns. These prudential reserving requirements are specified by the Life Act and accompanying Prudential Standards. AMP Life holds additional amounts of reserves to provide a higher level of security for policyholder benefits than would be achieved by holding the statutory minimum.

Under the Life Act, there are two requirements for each life statutory fund:

solvency requirement
• capital adequacy requirement.

Solvency requirement

The solvency requirement is the absolute minimum that must be satisfied for the business to be allowed to continue to operate. Its purpose is to ensure, as far as practicable, that at any time the fund will be able to meet all existing life insurance contract liabilities, investment contract liabilities and other liabilities as they become due.

The Appointed Actuary of AMP Life has confirmed that the available assets of each life statutory fund have exceeded the solvency reserve required at all times during the reporting date. Across all the life statutory funds, the excess assets, expressed as a percentage of the solvency reserve, at 31 December 2010 were 71% (31 December 2009: 76%).

Capital adequacy requirement

The capital adequacy requirement is a separate requirement (usually higher) that must be satisfied for the life entity to be allowed to make distributions to its shareholders and to operate without regulatory intervention. Its purpose is to ensure, as far as practicable, that there is sufficient capital in each life statutory fund for the continued conduct of the life insurance business, including writing new business, in a way which is in the interests of policyholders and in accordance with the Life Act.

The Appointed Actuary of AMP Life has confirmed that the available assets of each life statutory fund have exceeded the capital adequacy reserve required at all times during the reporting period. For this purpose, the capital adequacy reserve is defined as the solvency reserve, plus the difference between the capital adequacy requirement and the solvency requirement. Across all the life statutory funds, the excess assets, expressed as a percentage of the capital adequacy reserve, as at 31 December 2010 was 36% (31 December 2009: 36%).

(e) Actuarial information

Mr Rocco Mangano, as the Appointed Actuary of AMP Life, is satisfied as to the accuracy of the data used in the valuations in the Preliminary Final Report and in the tables in this Note and Note 19.

The liabilities to policyholders (being the sum of the life insurance contract and investment contract liabilities, including any asset or liability arising in respect of the management services element of an investment contract) and solvency reserves have been determined at the reporting date in accordance with the Life Act.

(f) Amounts expected to be recovered or settled no more than 12 months after the reporting

Based on assumptions as to likely withdrawal patterns of the various product groups, it is estimated that approximately $55,577m (2009: $55,856 million) of policy liabilities may be settled more than 12 months from the reporting date.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION

Financial Risk Management

The principal objective of AMP group's Financial Risk Management (FRM) framework is to ensure the existence of a robust structure for identifying, assessing, measuring, managing and escalating risks. The framework operates under the AMP group's risk appetite statement that includes consideration of risk to capital and risk to earnings.

AMP group’s FRM is carried out in accordance with policies set by AMP Limited Board (the Board). These policies are set out in the AMP group’s FRM Policy and provide a structure for managing financial risks including delegations, escalations and reporting. The FRM Policy also outlines AMP group’s FRM objectives and identifies organisational responsibilities for the implementation of the FRM Policy. The FRM Policy provides an overview of each of the key financial risks including the nature of the risks, objectives in seeking to manage the risks, the key policy variables for the management of the risks and the business unit responsibility for managing and reporting the risks.

The Board has ultimate responsibility for risk management and governance, including ensuring that an appropriate risk framework and appetite is in place and that it is operating effectively. This includes approval of the FRM Policy, shareholder capital investment strategy, capital and financing plans, approval of transactions outside the FRM Policy and setting the financial risk appetite. The AMP Limited Audit Committee (AMP AC) also ensures the existence of effective FRM policies and procedures, and oversight of the execution of the FRM Policy. The AMP Life, AMP Capital Investors and AMP Bank Audit Committees are delegated this responsibility for the elements specific to their respective businesses.

Executive committees oversee the management and monitoring of financial risks and capital management. These committees include Group Asset and Liability Committee (Group ALCO) for AMP group, Life ALCO for AMP Life, Bank ALCO for AMP Bank and the Financial Risk and Capital Committee (FRCC) for AMP Capital Investors. The Debt Committee, a sub-committee of Group ALCO, also reviews and monitors debt financing risk across the AMP group. These executive committees report to the respective audit committees and Boards.

AMP group Treasury (AMP Treasury) is responsible for the execution of FRM Policy and capital and financing plans in compliance with Board approved targets and limits. AMP Treasury is also responsible for the execution of the approved investment strategy for AMP shareholder capital, for analysis and reporting of financial risks and capital position to Group ALCO, AMP AC and the Board, and monitoring the compliance with FRM Policy in relation to financial risk management and for identifying and reporting breaches of policy to Group ALCO and the Board.

Internal Audit checks for compliance with the FRM Policy as part of its ongoing audit cycle. Internal Audit is required to review the FRM Policy effectiveness and report to the AMP AC.

The directors and boards of AMP Limited controlled operating entities are required to comply with the Board approved risk appetite. The AMP Limited controlled operating entities are also responsible for approving policyholder asset and liability strategy (in the case of AMP Life) and allocating subsidiary shareholder capital investment and for reporting to the AMP AC, and Group ALCO on financial risks.

The Appointed Actuary is responsible for reporting to the AMP Life Board, AMP AC, Group ALCO, Life ALCO, as well as externally to APRA on the financial condition of AMP Life including solvency, capital adequacy and target surplus. The Appointed Actuary is also responsible for giving advice to AMP Life on distribution of profits, premium rates, charges, policy conditions and reinsurance arrangements. The Life Insurance Act (Life Act) also imposes obligations on the Appointed Actuary to bring to the attention of AMP Life, or in some circumstances, APRA, any matter that the Appointed Actuary believes requires action to avoid prejudice to the interests of policyholders.

Information about the AMP group’s capital management activities, including the relationship with regulatory requirements on the regulated entities, within the AMP group is provided in Note 22.

(a) Risks and mitigation

For the purposes of the FRM Policy, risk management involves decisions made about the allocation of investment assets across asset classes and/or markets and includes the management of risks within these asset classes.

Financial risk in the AMP group is managed by reference to the probability of loss relative to expected income over a one-year time horizon at a 90% confidence level (Profit at Risk). In respect of investments held in the shareholder fund and in the life statutory funds, the loss tolerance over the discretionary investments is set at a low level because AMP has equity market exposure in its businesses (for example through fees on Assets Under Management).

The risk appetite of the AMP group includes an allocation of risk to the Seed Pool. The Seed Pool is designed to assist business growth through the acquisition of assets to seed new funds or investment opportunities. The AMP group seeks to generate future revenues from the subsequent on-sale of these assets to clients through new or existing funds

Financial risks arising in the AMP group include market risk (interest rate risk, currency risk and equity price risk); liquidity and re-financing risk; and credit risk. These risks are managed according to the FRM Policy including through the use of derivative financial instruments such as cross-currency and interest-rate swaps, forward rate agreements, futures, options and foreign currency contracts to hedge risk exposures arising from changes in interest rates and foreign exchange rates.

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to movements in the financial markets. These movements include foreign exchange rates, interest rates, credit spreads, equity prices or property prices. Market risk in the AMP group arises from the management of insurance contracts, investment of shareholder capital including investments in equities, property and interest bearing investments and corporate debt.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(b) Market risk sensitivity analysis

The paragraphs below include sensitivity analysis tables showing how the profit after tax and equity would have been impacted by changes in market risk variables including interest rate risk and currency risk as defined in AASB 7 ‘Financial Instruments: Disclosures’ . They show the direct impact on the profit after tax or equity of a reasonably possible change in factors which affect the carrying value of financial assets and financial liabilities held at the end of the reporting period.

The sensitivity is required to show the impact of a reasonably possible change in market rate (it is not intended to illustrate a remote, worst case or stress test scenario) over the period to the subsequent reporting date. The categories of risks faced and methods used for deriving sensitivity information did not change from previous periods.

There is no market risk relating to any financial instruments of the parent. All comments and analysis in the remainder of this note relate to the AMP consolidated group.

(i) Interest rate risk

Interest rate risk is the risk of an impact on AMP group’s profit after tax and equity from movements in market interest rates, including changes in the absolute levels of interest rates, the shape of the yield curve, the margin between different yield curves and the volatility of interest rates.

Interest rate risk arises from interest bearing financial assets and financial liabilities in various activities of the AMP group. Management of those risks is decentralised according to the activity. Details are as follows:

AMP group’s long-term borrowings and subordinated debt - Interest rate risk arises in relation to long-term borrowings and subordinated debt raised through a combination of Australian dollar, New Zealand dollar, pound sterling and euro denominated fixedrate and floating-rate facilities. The foreign denominated debt is converted to floating-rate Australian dollars through cross-currency swaps. Interest rate risk is managed by entering floating-to-fixed interest-rate swaps, which have the effect of converting borrowings from floating rates to fixed rates. Under the interest-rate swaps, the AMP group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference between fixed contract rates and floating-rate interest amounts calculated by reference to the agreed notional principal amounts.

AMP group policy is to maintain between 40–60% of borrowings and subordinated debt at fixed rates. At the reporting date, 56% (2009: 57%) of the AMP group’s borrowings and subordinated debt were effectively at fixed rates.

AMP Life - As discussed in Note 1(b), AMP Life conducts wealth management and life insurance business through separate life statutory funds. Investment assets of the life statutory funds including interest-bearing financial assets are held to back investment contract liabilities, life insurance contract liabilities, retained profits and capital.

Interest rate risk of AMP Life which impacts shareholders arises in respect of financial assets and liabilities held in the shareholder fund and in the life statutory funds. A risk arises to the extent that there is an economic mismatch between the timing of payments to life policyholders and the duration of the assets held in the life statutory funds to back the policyholder liabilities. Where a liability in respect of investment contracts is directly linked to the value of the assets (where applicable, net of related liabilities) held to back that liability (investment-linked business), there is no residual interest rate exposure which would impact shareholders.

Management of various risks associated with investments undertaken by life statutory funds and the life shareholder fund, such as interest rate risk is, subject to the relevant regulatory requirements governed by the Life Act . AMP Life is required to satisfy solvency requirements, including holding statutory reserves to cater for interest rate risk to the extent that assets are not matched against liabilities.

AMP Life manages interest rate and other market risks pursuant to an asset and liability management policy that has regard to policyholder expectations and risks to the AMP Life Board’s target surplus philosophy for both capital adequacy and solvency as advised by the Appointed Actuary.

AMP Bank - Interest rate risk arises in AMP Bank from mismatches of repricing terms (for example, a three-year fixed rate loan funded with a 90 day term deposit – term risk) and variable rate short-term repricing bases (basis risk). AMP Bank uses natural offsets, interest-rate swaps and basis swaps to hedge the mismatches within exposure limits. AMP Treasury manages the interest rate exposure in AMP Bank by maintaining a position, which is generally neutral, within the limits delegated and approved by the AMP Bank board.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

Interest rate risk sensitivity analysis

This analysis demonstrates the impact of a 100 basis point change in Australian and International interest rates, with all other variables held constant, on profit after tax and equity. It is assumed that all underlying exposures and related hedges are included in the sensitivity analysis, that the 100 basis point change occurs as at the reporting date and that there are concurrent movements in interest rates and parallel shifts in the yield curves. The impact on equity includes both the impact on profit after tax as well as the impact of amounts that would be taken directly to equity in respect of the portion of changes in the fair value of derivatives that qualify as cash flow hedges for hedge accounting. A sensitivity level of 100 basis points is determined considering the range of interest rates applicable to interest bearing financial assets and financial liabilities in the AMP group.

	2010		2009
	Impact on		Impact on
	profit after	Impact on	profit after	Impact on
	tax	equity	tax	equity
	Increase	Increase	Increase	Increase
	(decrease)	(decrease)	(decrease)	(decrease)
Change in variables	$m	$m	$m	$m
+100 basis points	(10)	4	(23)	(4)
-100 basispoints	11	(3)	23	4

(ii) Currency risk

Currency risk is the risk of an impact on AMP group’s profit after tax and equity from movements in foreign exchange rates. Changes in value would occur in respect of translating the AMP group’s capital invested in overseas operations into Australian dollars at reporting date (translation risk) or from foreign exchange rate movements on specific cash flow transactions (transaction risk).

Other than where the impact would be immaterial, all corporate debt is converted to Australian dollars through cross-currency swaps, individual investment assets in shareholder capital (excluding the international equities portfolio attributable to shareholders within the life Statutory Fund No.1 fund) and in the seed pool are hedged, and expected foreign currency receipts and payments are hedged once the value and timing of the expected cash flow is known. AMP group does not hedge the capital invested in overseas operations (other than foreign Seed Pool investments), thereby accepting the foreign currency translation risk on invested capital.

Currency risk sensitivity analysis

This analysis demonstrates the impact of a 10% movement of currency rates against the Australian dollar, with all other variables held constant, on the profit after tax and equity due to changes in fair value of currency sensitive monetary assets and liabilities at the reporting date. It is assumed that the 10% change occurs as at the reporting date. A sensitivity level of 10% is determined considering the range of currency exposures in the AMP group.

	2010		2009
	Impact on profit	Impact on	Impact on profit	Impact on
	after tax	equity	after tax	equity
	Increase	Increase	Increase	Increase
	(decrease)	(decrease)	(decrease)	(decrease)
Change in variables	$m	$m	$m	$m
10% depreciation of AUD	8	8	9	9
10% appreciation of AUD	(8)	(8)	(9)	(9)

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(iii) Equity price risk

Equity price risk is the risk of an impact on AMP group’s profit after tax and equity from movements in equity prices. The AMP group measures equity securities at fair value through profit or loss.

Equity price risk sensitivity analysis

The analysis demonstrates the impact of a 10% movement in Australian and International equities held at the reporting date. This sensitivity analysis has been performed to assess the direct risk of holding equity instruments. Any potential indirect impact on fees from AMP group’s investment linked business is not included. A sensitivity level of 10% is determined considering the widely spread portfolios held by the AMP group and the range of movements in equity markets for the periods.

	2010		2009
	Impact on		Impact on
	profit after	Impact on	profit after	Impact on
	tax	equity	tax	equity
	Increase	Increase	Increase	Increase
	(decrease)	(decrease)	(decrease)	(decrease)
	$m	$m	$m	$m
10% increase in Australian equities	9	9	15	15
10% increase in International equities	8	8	9	9
10% decrease in Australian equities	(9)	(9)	(15)	(15)
10% decrease in International equities	(8)	(8)	(9)	(9)

(c) Liquidity and re-financing risk

Liquidity risk is the risk that the AMP group is not able to meet its debt obligations or other cash outflows as they fall due because of an inability to liquidate assets or obtain adequate funding when required. Refinancing risk, a sub-set of liquidity risk, is the risk that the maturity profile of existing debt is such that it would be difficult to refinance (or rollover) maturing debt, or there is excessive exposure to potentially unfavourable market conditions at any given time.

To ensure that the AMP group has sufficient funds available, in the form of cash, liquid assets, borrowing capacity and un-drawn committed funding facilities to meet its liquidity requirements, AMP Treasury maintains a defined surplus of cash plus projected cash inflows over projected outflows in a going-concern scenario, to cover regulatory requirements and achieve internal management guidelines. To mitigate refinancing risk, the AMP group’s projected cumulative funding resources are required to exceed its projected cumulative funding requirements over specified maturity periods.

The AMP group’s FRM Policy includes a Liquidity Crisis Management Policy. Compliance with this Liquidity Crisis Management Policy includes a requirement that the AMP group has access to funding through committed standby facilities, external bank liquidity facilities, commercial paper and medium-term note programmes.

At 31 December 2010, a number of breaches occurred in relation to external bank loans owing by entities controlled by the life statutory funds. The carrying amount of these loans was $267m (2009: $135m), for which formal waivers from financiers have been obtained for loans of $144m. The financiers of these loans do not have legal recourse beyond the operating subsidiary borrower and there is no direct effect on any other AMP group debt.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

The following table summarises the maturity profiles of AMP group’s undiscounted financial liabilities and off-balance sheet items at the reporting date. The maturity profiles are based on contractual undiscounted repayment obligations. Repayments that are subject to notice are treated as if notice were to be given immediately.

Maturity profiles of undiscounted financial liabilities and off balance sheet items[(1)]

	Up to 1
	Year or	1 to 5	Over 5
	no term	Years	Years	Other(2)	Total
2010	$m	$m	$m	$m	$m
Non-derivative financial liabilities
Payables	(1,007)	(26)	-	-	(1,033)
Borrowings	(5,978)	(6,503)	-	-	(12,481)
Subordinated debt	(36)	(385)	(94)	-	(515)
Investment contract liabilities	(749)	(946)	(1,463)	(46,017)	(49,175)
External unit-holders' liabilities	-	-	-	(5,892)	(5,892)
Derivative financial liabilities
Cross currency swaps
- Outflows	(63)	(1,076)	(123)	-	(1,262)
- Inflows	23	843	62	-	928
Interest rate swaps	(19)	(7)	16	-	(10)
Off balance sheet items
Loan commitments	(1,425)	-	-	-	(1,425)
Total undiscounted financial liabilities and off balance
sheet items(3)	(9,254)	(8,100)	(1,602)	(51,909)	(70,865)
2009
Non-derivative financial liabilities
Payables	(939)	(37)	(5)	-	(981)
Borrowings	(6,072)	(6,411)	(1,706)	-	(14,189)
Subordinated debt	(31)	(404)	(98)	-	(533)
Investment contract liabilities	(579)	(1,166)	(1,467)	(44,815)	(48,027)
External unit-holders' liabilities	-	-	-	(6,121)	(6,121)
Derivative financial liabilities
Cross currency swaps
- Outflows	(308)	(1,442)	(121)	-	(1,871)
- Inflows	205	1,290	74	-	1,569
Interest rate swaps	(46)	(36)	22	-	(60)
Off balance sheet items
Loan commitments	(1,169)	-	-	-	(1,169)
Total undiscounted financial liabilities and off balance
sheet items(3)	(8,939)	(8,206)	(3,301)	(50,936)	(71,382)

Footnote:

(1) The table provides maturity analysis of AMP group financial liabilities including financial liabilities of controlled entities of the life statutory funds and non-linked investment contracts including term annuities.

(2) Investment contract liabilities of $46,107m (2009: $44,815m) are liabilities to policyholders for investment linked business linked to the performance and value of assets that back those liabilities. If all those policyholders claimed their funds, there may be some delays in settling the liability as assets are liquidated, but the shareholder has no direct exposure to any liquidity risk. External unitholders' liabilities all relate to controlled entities of the life statutory funds and would only be paid when the corresponding assets are realised.

(3) Estimated net cash outflow profile of life insurance contract liabilities is disclosed in Note 19(i).

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(d) Credit risk

Credit risk includes both settlement credit exposures and traded credit exposures. Credit default risk is the risk of an adverse impact on results and asset values relative to expectations due to a counterparty failing to meet their contractual commitments in full and on time (obligator’s non-payment of a debt). Traded credit risk is the risk of an adverse impact on results and asset values relative to expectations due to changes in value of a traded financial instrument as a result of changes in credit risk on that instrument.

The FRM Policy sets out the assessment and determination of what constitutes credit risk. The policy has set exposure limits for each counterparty and credit rating. Compliance with this policy is monitored and exposures and breaches are reported to senior management through the FRM Report.

Credit risk management is decentralised in business units within the AMP group; however, credit risk directly impacting shareholder capital is measured and managed by AMP Treasury by aggregating risk from credit exposures taken in business units as detailed below. In addition, group limits are allocated to business units to keep individual credit exposures from aggregating across the group in excess of group limits.

AMP Life - Credit risk on the invested fixed income portfolios in the AMP Life statutory funds is managed by the AMP Capital Investors Risk and Compliance Committee (AMPCI R&C) and reported to the fund managers, within specified credit criteria in the mandate approved by the AMP Life Board. The shareholder portion of credit risk in AMP Life is reported to AMP group ALCO by AMP Treasury.
AMP Capital Investors - Credit risk on fixed income portfolios managed by AMP Capital Investors (AMPCI) (consistent with interest rate and foreign currency risk) is managed by the AMPCI R&C Committee and reported to the fixed income desk. This credit risk arises as part of a broader portfolio of investments under investment mandates with AMP Capital and, when relating directly to shareholder funds, is included in the aggregation by AMP Treasury and reported to AMP group ALCO.
AMP Bank - Credit risk arising in AMP Bank as part of lending activities and management of liquidity is managed as prescribed by AMP Bank’s Risk Management Systems Description (RMSD) and reported to AMP Bank Policy ALCO monthly. Exposures relating directly to shareholder funds are included in the aggregation by AMP Treasury and reported to AMP group ALCO .

(i) Management of credit risk concentration

Concentration of credit risk arises when a number of financial instruments or contracts are entered into with the same counterparty or where a number of counterparties are engaged in similar business activities that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Concentration of credit risk is managed through both aggregate credit rating limits and individual counterparty limits, which are determined predominantly on the basis of the counterparty's credit rating.

At reporting date, there is no specific concentration of credit risk with a single counterparty arising from the use of financial instruments, other than the normal clearing-house exposures associated with dealings through recognised exchanges.

The counterparties to non-exchange traded contracts are limited to companies with investment grade credit (BBB- or greater). The credit risks associated with these counterparties are assessed under the same management policies as applied to direct investments in the AMP group’s portfolio.

Compliance is monitored and exposures and breaches are reported to senior management through the FRM Report.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(ii) Exposure to credit risk

AMP group’s maximum exposure to credit risk on recognised financial assets, without taking account of any collateral or other credit enhancements as at the reporting date was $32,591m (2009: $43,133m). This amount includes (i) secured loans held by banking operations, (ii) financial assets of investment linked business in AMP Life where the liability to policyholders is linked to the performance and value of the assets that back those liabilities and consequently there is no exposure to shareholders, and (iii) other items arising in the course of operations which are managed by the respective business units. AMP Bank also has loan commitments at reporting date of $1,425m (2009: $1,169m).

The exposures on the interest bearing securities and cash equivalents which impact the AMP group’s capital position are managed by AMP Group Treasury within limits set by the AMP Group’s FRM Policy. The following table provides information regarding the credit risk exposures for those items according to the credit rating of the counterparties.

exposures for those items according to the credit rating of the counterparties.
	2010	2009
	$m	$m
AAA	4,582	4,028
AA- to AA+	5,384	5,090
A- to A+	2,558	1,662
BBB- to BBB+	1,732	1,122
BB+ and below	220	240
Total financial assets with credit risk exposure managed byAMP Treasury	14,476	12,142

(iii) Credit risk of the loan portfolio in AMP Bank

AMP Bank is predominantly a lender for residential properties - both owner occupied and for investment. In every case the Bank completes a credit assessment, which includes cost of living allowance and requires valuation of the proposed security property by a qualified independent valuer. About 49% of AMP Bank's residential loan portfolio is securitised and all loans in securitisation vehicles are mortgage insured thereby further mitigating the risk. AMP Bank's Credit Committee and Board oversee trends in lending exposures and compliance with concentration limits as a further basis of limiting lending risk. AMP Bank secures its loan portfolio with mortgages over relevant properties and as a result manages credit risk on its loan portfolio by loan to value ratio (LVR). The LVR is calculated by dividing the total loan amount by the lower of AMP Bank’s approved valuation amount or the purchase price. Loans with LVR greater than 80% are fully mortgage insured. The potential credit exposure to the loan mortgage insurers has been assessed to be minimal due to stable historical relationship with AMP Bank and minimal level of historic claims rejections and reductions. The minimum level credit rating for the loans and lender mortgage insurers is AA- or above under Standards and Poor’s rating. The average LVR of AMP Bank’s loan portfolio for existing and new business is set out in the following table:

	Existing	New	Existing	New
	business	business	business	business
LVR	2010	2010	2009	2009
0 - 50	28%	10%	28%	8%
51 - 60	13%	7%	12%	6%
61 - 70	15%	11%	15%	11%
71 - 80	33%	56%	33%	55%
81 - 90	9%	13%	8%	13%
91 - 95	2%	3%	3%	4%
> 95	-	-	1%	3%

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(iv) Past due but not impaired financial assets of the AMP group

The following table provides an aging analysis of financial assets that are past due as at reporting date but not impaired. No disclosures are required for the parent entity as the parent entity does not have any financial assets that are past due but not impaired at reporting date.

2010	Less than 31 days 31 to 60 days 61 to 90 days More than 91 days Total $m $m $m $m $m Past due but not impaired
Receivables - Reinsurance and other recoveries receivables - Trade debtors - Other receivables Debt securities - Loans and advances	1 - - - 1 6 1 1 6 14 1 - 1 2 4 338 20 14 30 402
Total(1)	346 21 16 38 421

	Less than 31 days 31 to 60 days 61 to 90 days More than 91 days Total $m $m $m $m $m Past due but not impaired
2009
Receivables - Reinsurance and other recoveries receivable - Trade debtors - Other receivables Debt securities - Loans and advances	2 1 - - 3 15 5 - 1 21 4 7 - 2 13 275 18 7 22 322
Total(1)	296 31 7 25 359

Footnote:

(1) For investment-linked business in AMP Life, the liability to policyholders is linked to the performance and value of the assets that back those liabilities. The shareholder has no direct exposure to any credit risk in those assets. Therefore, the tables in this section do not show the past due financial assets backing investment-linked business in AMP Life.

(v) Adjustment for own credit risk in the determination of the fair value of life investment contract policy liabilities

The fair value of non-investment linked investment contract liabilities includes the following allowance for the credit risk that an external party would ascribe to an amount due from AMP Life:

	2010	2009
	$m	$m
Cumulative adjustment	19	15
Change duringtheperiod	4	(32)

The adjustment has been determined as the difference between the fair value recognised and an amount calculated on the same basis using a risk-free interest rate in place of the fair value discount rate.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(vi) Impaired financial assets and impairment assessment

AMP Bank has impaired loans of $4m (2009: $4m) at the reporting date. AMP Bank provides specific provision and collective impairment loan loss provisions against these impaired loans.

The AMP Bank Credit Committee reviews the portfolio for provisioning at least quarterly. The review considers:

Current provisioning amount
Portfolio growth and performance – for both on and off balance sheet exposures
Current arrears position and specific loan provisions
Current and forecast state of economy, interest rate movements etc.

It also makes recommendations to the AMP Bank Board and Audit Committee

(vii) Collective impairment loan loss provision

The collective impairment loan loss provision methodology is a statistically based model that removes subjectivity from the provisioning process and makes the provision reflective of historical loss performance

The model utilises historical losses incurred by AMP Bank and researches external data sources to develop a series of probability of default and loss, given default factors that can be applied to loans and advances in arrears. The model also includes the ability to apply a management overlay if it is deemed that the economic environment is not representative of historical loss performance.

The model is reviewed quarterly and specific factors are formally validated every 6 months and reported to the AMP Bank Audit Committee

(viii) Specific provision

The specific provision is created when there is clear evidence that AMP Bank will suffer a loss with little chance of recovery and the amount of the loss is measurable. This provision is reviewed quarterly and recommendations are made to the AMP Bank Audit Committee.

(ix) Renegotiated loans

Where possible, AMP Bank seeks to restructure loans rather than take possession of collateral. This may involve extending the payment arrangements and the agreement of new loan conditions. Once the terms have been renegotiated, the loan is no longer considered past due. AMP Bank renegotiated the terms of $4m (2009: $2m) of loans during the year, that otherwise would be past due or impaired.

(x) Collateral

AMP Bank uses residential property as collateral against its loans to customers. AMP Bank may take control of the collateral in the event the customer defaults. AMP Bank may decide to sell the properties in the ordinary course of business to recover any outstanding loan balances that the customer owes. AMP Bank may have lenders mortgage insurance which covers for any shortfall upon sale of these properties against the carrying value of the loans.

(e) Derivative financial instruments

Derivative financial instruments are measured at fair value in the Statement of financial position as assets and liabilities. Asset and liability values on individual transactions are only netted if the transactions are with the same counterparty and the cash flows will be settled on a net basis. Changes in values of derivative financial instruments are recognised in the Income statement unless they qualify as effective cash flow hedges or net investment hedges for accounting purposes, as set out in Note 1(r).

(i) Derivative transactions undertaken by life insurance controlled entities as part of life insurance operations

The AMP group uses derivative financial instruments including financial futures, forward foreign exchange contracts, exchange traded and other options and forward rate agreements to hedge the impact of market movements on the value of assets in the investment portfolios, and to effect a change in the asset mix of investment portfolios.

In respect of the risks associated with the use of derivative financial instruments, price risk is controlled by exposure limits, which are subject to monitoring and review. Foreign exchange hedges are monitored on a regular basis to ensure they are effective in the reduction of price risk.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(ii) Derivative transactions undertaken by non life insurance controlled entities

AMP Treasury and AMP Bank use derivative financial instruments to hedge financial risk from movements in interest rates and foreign exchange rates. Swaps, forwards, futures and options in the interest rate and foreign exchange markets may be used. A description of each of these derivatives is given below.

Swaps – a swap transaction obliges the two parties to the contract to exchange a series of cash flows at specified payment or settlement dates. Swap transactions undertaken by the AMP group include interest-rate swaps, which involve the contractual exchange of fixed and floating interest rate payments in a single currency based on a notional amount and a reference rate (For example BBSW), and cross-currency swaps which involve the exchange of interest payments based on two different currency principal balances and reference interest rates, and generally also entail exchange of principal amounts at the start and/or end of the contract.
Forward and futures contracts – these are agreements between two parties establishing a contractual interest rate on a notional principal over a specified period, commencing at a future date. Forward contracts are tailor-made agreements that are transacted between counter parties in the over-the-counter market (OTC), whereas futures are standardised contracts transacted on regulated exchanges.
Options – an option contract gives the option buyer the right, but not the obligation, to buy or sell a specified amount of a given commodity or financial instrument at a specified price during a certain period or on a specific date. The seller of the option contract is obliged to perform if the holder exercises the right contained therein. Options may be traded OTC or on a regulated exchange.

(iii) Risk relating to derivative financial instruments

The market risk of derivatives is managed and controlled as an integral part of the financial risk of the AMP group. The credit risk of derivatives is also managed in the context of the group’s overall credit risk policies.

(f) Accounting for hedges

The accounting treatment of hedge transactions varies according to the nature of the instrument hedged and whether the hedge qualifies for hedge accounting.

Derivative transactions may qualify either as fair value hedges or cash flow hedges or hedges of net investments in foreign operations. The group’s accounting policies for derivatives designated and accounted for as hedging instruments are explained in Note 1(r), where terms used in the following section are also explained.

The AMP group also enters into derivative transactions that provide economic hedges but do not meet the requirements for hedge accounting treatment.

(i) Derivative instruments accounted for as fair value hedges

Fair value hedges are used to protect against changes in the fair value of financial assets and financial liabilities due to movements in exchange rates and interest rates..

During 2010, the AMP group recognised a net loss of $97m (2009: $169m net loss) on hedging instruments. The net gain on hedged items attributable to the hedged risks amounted to $102m (2009:$173m gain)

(ii) Derivative instruments accounted for as cash flow hedges

The AMP group is exposed to variability in future interest cash flows on non-trading assets and liabilities which bear interest at fixed and variable rates. The AMP group uses interest rate swaps and cash flow hedges to mange interest rate risks.

The following schedule shows, as at reporting date,, the periods when the hedged cash flows are expected to occur and when they are expected to affect profit and loss:

	0-1 year	1-2 years	2-3 years	3-4 years	4-5 years
	$m	$m	$m	$m	$m
2010
Cash inflows	105	50	32	7	-
Cash outflows	(115)	(54)	(30)	(6)	-
Net cash inflow/(outflow)	(10)	(4)	2	1	-
2009
Cash inflows	96	57	28	15	7
Cash outflows	(126)	(65)	(30)	(12)	(5)
Net cash inflow/(outflow)	(30)	(8)	(2)	3	2

Nil (2009 Nil) was recognised in the Income statement due to hedge ineffectiveness from cash flow hedges.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(iii) Hedges of net investments in foreign operations

AMP group hedges its exposure to changes in exchange rates on the value of its foreign currency denominated Seed Pool investments. Gains or losses on effective Seed Pool hedges are transferred to equity to offset any gains or losses on translation of the net investment in foreign operations.

AMP group recognised a profit of nil (2009: $1m) due to the ineffective portion of hedges relating to investments in Seed Pool foreign operations.

(g) Fair values

The following table summarises the carrying amounts and fair values of those financial assets and liabilities not presented on the Statement of financial position at fair value. Bid prices are used to estimate the fair value of assets, whereas offer prices are applied for liabilities.

	Carrying	Aggregate	Carrying	Aggregate
	amount	fair value	amount	fair value
	2010	2010	2009	2009
	$m	$m	$m	$m
Financial assets
Debt securities - Held to maturity	733	734	835	843
Loans and advances	10,202	10,206	9,815	9,851
Total financial assets	10,935	10,940	10,650	10,694
Financial liabilities
Bank loans	962	962	1,694	1,694
Bonds and notes	6,687	6,824	7,602	7,702
Deposits	3,082	3,082	2,525	2,525
Subordinated Floating Rate Note	345	378	353	380
Other borrowings	60	60	170	173
Total financial liabilities	11,136	11,306	12,344	12,474

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. Refer to Note 1(r) for fair value estimation methods.

(i) Debt securities

The estimated fair value of loans and interest bearing securities represents the discounted amount of estimated future cash flows expected to be received, based on the maturity profile of the loans and interest bearing securities. As the loans are unlisted, the discount rates applied are based on the yield curve appropriate to the remaining term of the loans.

The loans may be carried at an amount in excess of fair value due to fluctuations on fixed rate loans. As the fluctuations in fair value do not represent a permanent diminution and the carrying amounts of the loans are recorded at recoverable amounts after assessing impairment, it is not appropriate to restate their carrying amount.

(ii) Borrowings

Borrowings comprise domestic commercial paper, drawn liquidity facilities and various floating-rate and medium-term notes. The fair values of borrowings are predominantly hedged by derivative instruments – mainly cross-currency and interest-rate swaps. The estimated fair value of borrowings is determined with reference to quoted market prices. For borrowings where quoted market prices are not available, a discounted cash flow model is used, based on a current yield curve appropriate for the remaining term to maturity.

(iii) Subordinated debt

Subordinated debt comprises listed securities and their fair value is determined with reference to the actual quoted market prices at reporting date. The fair value of subordinated debt is predominantly hedged by derivative instruments – mainly cross-currency and interest-rate swaps

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

(h) Fair value measures

Financial instruments measured at fair value are categorised under a three level hierarchy, reflecting the availability of observable market inputs when estimating the fair value. If different levels of inputs are used to measure a financial instrument's fair value, the classification within the hierarchy is based on the lowest level input that is significant to the fair value measurement. The three levels are:

Level 1: Valued by reference to quoted prices in active markets for identical assets or liabilities. These quoted prices represent actual and regularly occurring market transactions on an arms length basis.

Level 2: Valued using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices), including: quoted prices in active markets for similar assets or liabilities, quoted prices in markets in which there are few transactions for identical or similar assets or liabilities, and other inputs that are not quoted prices but are observable for the asset or liability, for example interest rate yield curves observable at commonly quoted intervals, currency rates, option volatilities, credit risks, and default rates.

Level 3: Valued in whole or in part using valuation techniques or models that are based on unobservable inputs that are neither supported by prices from observable current market transactions in the same instrument nor based on available market data. Unobservable inputs are determined based on the best information available, which might include the AMP group's own data, reflecting the AMP group's own estimates about the assumptions that market participants would use in pricing the asset or liability. Valuation techniques are used to the extent that observable inputs are not available, and include estimates about the timing of cash flows, discount rates, earnings multiples and other inputs.

The following table shows an analysis of financial instruments measured at fair value by each level of the fair value hierarchy:

	Level 1	Level 2	Level 3	Total fair value
2010	$m	$m	$m	$m
Assets
Equity securities and listed managed
investment schemes	31,255	216	659	32,130
Debt securities	-	20,403	228	20,631
Investments in unlisted managed
investment schemes	-	9,580	341	9,921
Derivative financial assets	232	1,641	-	1,873
Other financial assets	72	170	-	242
Total financial assets	31,559	32,010	1,228	64,797
Liabilities
Derivative financial liabilities	50	668	-	718
Investment contract liabilities	-	1,995	46,584	48,579
Total financial liabilities	50	2,663	46,584	49,297
	Level 1	Level 2	Level 3	Total fair value
2009	$m	$m	$m	$m
Assets
Equity securities and listed managed
investment schemes	31,002	635	691	32,328
Debt securities	-	20,283	346	20,629
Investments in unlisted managed
investment schemes	-	9,998	342	10,340
Derivative financial assets	460	1,633	10	2,103
Other financial assets	-	173	-	173
Total financial assets	31,462	32,722	1,389	65,573
Liabilities
Derivative financial liabilities	337	783	-	1,120
Investment contract liabilities	-	1,733	45,506	47,239
Total financial liabilities	337	2,516	45,506	48,359

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

The following table shows a reconciliation of the movement in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the reporting date:

								Total gains and
								losses on
	Balance at				Sales/	Net	Balance at	assets and
	the beginning	FX gains Total gains/		Purchases/	with-	transfers	the end of	liabilities held at
	of the period	or losses	losses	deposits	drawals	in/(out)	the period	reporting date
2010	$m	$m	$m	$m	$m	$m	$m	$m
Assets
Equity securities and
listed managed
investment schemes	691	-	(16)	29	(25)	(20)	659	(16)
Debt securities	346	-	46	26	(178)	(12)	228	46
Investments in
unlisted managed
investment schemes	342	-	(71)	69	(19)	20	341	(71)
Derivative financial
assets	10	-	-	-	-	(10)	-	-
Total financial assets	1,389	-	(41)	124	(222)	(22)	1,228	(41)
Liabilities
Investment contract
liabilities	45,506	(6)	1,342	7,585	(7,843)	-	46,584	1,320
Total financial liabilities	45,506	(6)	1,342	7,585	(7,843)	-	46,584	1,320
2009
Assets
Equity securities and
listed managed
investment schemes	776	-	(95)	40	(36)	6	691	(94)
Debt securities	263	-	2	120	(54)	15	346	2
Investments in
unlisted managed
investment schemes	283	-	(19)	99	(28)	7	342	(18)
Derivative financial
assets	10	-	(1)	1	-	-	10	(1)
Total financial assets	1,332	-	(113)	260	(118)	28	1,389	(111)
Liabilities
Investment contract
liabilities	39,771	-	5,116	6,580	(5,961)	-	45,506	5,076
Total financial liabilities	39,771	-	5,116	6,580	(5,961)	-	45,506	5,076

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

21. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS INFORMATION (CONTINUED)

The following table shows the sensitivity of the fair value of Level 3 instruments to changes in key assumptions:

		Effect of reasonably possible
		alternative assumptions(1)
	Carrying
	amount	(+)	(-)
2010	$m	$m	$m
Assets
Equity securities and listed managed investment schemes	659	20	(20)
Debt securities	228	-	-
Investments in unlisted managed investment schemes	341	-	-
Derivative financial assets	-	-	-
	1,228	20	(20)
Liabilities
Investment contract liabilities	48,579	(10)	10
	48,579	(10)	10
		Effect of reasonably possible
		alternative assumptions(1)
	Carrying
	amount	(+)	(-)
2009	$m	$m	$m
Assets
Equity securities and listed managed investment schemes	691	31	(31)
Debt securities	346	-	-
Investments in unlisted managed investment schemes	342	4	(4)
Derivative financial assets	10	-	-
	1,389	35	(35)
Liabilities
Investment contract liabilities	45,506	(15)	15
	45,506	(15)	15

Footnote:

(1) The sensitivity has been calculated by changing key inputs such as discount rates and earnings multiples by a reasonably possible amount.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

22. CAPITAL MANAGEMENT

The AMP group holds capital to protect customers, creditors and shareholders against unexpected losses to a level that is consistent with AMP’s risk appetite.

The AMP group’s capital resources include ordinary equity and interest-bearing liabilities. The AMP group excludes interest-bearing liabilities of its banking subsidiary, AMP Bank Limited, and controlled investment subsidiaries and trusts from the AMP group capital resources. Included within interest-bearing liabilities are subordinated debt and other instruments that would qualify as regulatory capital under Australian Prudential Regulation Authority (APRA) standards.

The AMP group makes adjustments to the statutory shareholder equity for accounting mismatch items and cash flow hedge reserves. Under Accounting Standards, some assets held on behalf of policyholders (and related tax balances) are included in the accounts at different values to the value used in the calculation of policy liabilities in respect of the same asset. These mismatch items include:

treasury shares (AMP Limited shares held by the statutory funds on behalf of policyholders)
life company statutory funds’ investments in controlled entities
Other - owner-occupied properties and AMP Life statutory funds’ Superannuation products invested in AMP Bank assets.

The table below shows the AMP group’s current capital resources at reporting date:

	2010	2009
	$m	$m
AMP statutory equity attributable to shareholders	2,938	2,571
Accounting mismatch items and cash flow hedge reserves	108	135
AMP shareholder equity	3,046	2,706
Subordinated debt(1)	279	279
Senior debt(1)	607	910
Total AMP capital resources	3,932	3,895

Footnote:

(1) Amounts shown for subordinated debt and senior debt are the amounts to be repaid on maturity. Amounts recognised in the Statement of financial position in respect of these debts are measured at amortised cost using the effective interest rate method.

The AMP group assesses the adequacy of its capital requirements against regulatory capital requirements. The AMP group’s capital management strategy forms part of the AMP group’s broader strategic planning process.

In addition to managing the level of capital resources, the AMP group also attempts to optimise the mix of capital resources to minimise the cost of capital and maximise shareholder value.

A number of the operating entities within the AMP group of companies are regulated. The AMP group of companies includes an authorised deposit-taking institution, a life insurance company and approved superannuation trustee all regulated by APRA. A number of companies also hold Australian Financial Services Licences.

The minimum regulatory capital requirements (MRR) is the amount of capital required by each of AMP’s regulated businesses to meet their capital requirements as set by the appropriate regulator. The main requirements are as follows:

AMP Life Limited – solvency, capital adequacy and management capital requirements as specified under the Life Act and APRA Life Insurance Prudential Standards
AMP Bank Limited – capital requirements as specified under APRA Banking Prudential Standards
AMP Capital Investors Limited – capital and liquidity requirements under its Australian Financial Services Licence

All the AMP group regulated entities have at all times during the current and prior financial year complied with the externally imposed capital requirements to which they are subject.

AMP holds a level of capital above its MRR. At reporting date the regulatory capital resources above MRR were $1,482m (2009: $1,242m), or 2.4 times MRR (2009: 2.2 times). The MRR coverage ratio will vary throughout the year due to investment market movements, dividend payments and the retention of profits.

AMP’s regulated businesses each target a level of capital equal to MRR plus a target surplus.

The AMP Life Statutory Funds target surplus is set by reference to a probability of breaching regulatory capital requirements. This is a two tiered test where the target surplus is set as the greater of the amount required for a:

1% (2009: 0.5%) probability of breaching solvency over one year
10% (2009: 10%) probability of breaching capital adequacy over one year.

AMP Bank’s target surplus reflects an additional 0.75% of risk-weighted assets above the APRA minimum requirements.

AMP Capital Investors’ target surplus is set to cover the seed pool investment risk and operational risks.

Group Office’s target surplus is set to cover investment risks, defined benefit fund mismatch risks and operational risks.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

23. NOTES TO STATEMENT OF CASH FLOWS

23. NOTES TO STATEMENT OF CASH FLOWS
	Consolidated			Parent
	2010	2009	2010		2009
	$m	$m	$m		$m
(a) Reconciliation of the net profit after income tax to cash flows
from operating activities
Net profit after income tax	755	723	391		304
Depreciation of operating assets	41	57	-		-
Amortisation and impairment of intangibles	80	59	-		-
Investment gains and losses and movements in external unitholders
liabilities	1,072	(3,594)	-		-
Dividend and distribution income reinvested	(239)	(253)	-		-
Share based payments	23	17	-		-
Decrease (increase) in receivables, intangibles and other assets	(153)	32	(89)		(9)
(Decrease) increase in net policy liabilities	722	4,859	-		-
(Decrease) increase in income tax balances	250	631	247		58
(Decrease)increase in otherpayables andprovisions	(87)	(624)	(161)		104
Cash flows from(used in) operating activities	2,464	1,907	388		457
(b) Reconciliation of cash
Comprises:
Cash on hand	1,557	1,040	2		1
Cash on deposit	1,601	1,369	-		-
Bank overdrafts (included in Borrowings)	-	(6)	-		-
Short-term bills and notes(included in Debt securities)	2,666	2,709	-		-
Balance at the end of theperiod	5,824	5,112	2		1
(c) Financing arrangements
(i) Overdraft facilities
Bank overdraft facilityavailable	381	321	-		-
(ii) Credit standby facilities
Revolving and standby credit facilities
Available	-	100	-		-
Used	-	-	-		-
Unused	-	100	-		-
(iii) Loan facilities
In addition to facilities arranged through bond and note issues (refer
Notes 15 and 16), financing facilities are provided through bank loans
under normal commercial terms and conditions.
Available	2,407	3,034	-		-
Used	(1,035)	(1,772)	-		-
Unused	1,372	1,263	-		-
(iv) Bond and note funding programs
Available	13,470	14,547	-		-
Used	(7,612)	(8,128)	-		-
Unused	5,858	6,419	-		-

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

23. NOTES TO STATEMENT OF CASH FLOWS (CONTINUED)

Most acquisitions and disposals of controlled entities are in relation to unit trusts with underlying net assets typically comprising investment assets including cash. The consideration for acquisitions or disposals reflects the fair value of the investment assets at the date of the transactions after taking into account minority interests.

Certain controlled entities of the life statutory funds are operating companies which carry out business operations unrelated to the core wealth management operations of the AMP group.

During 2010, AMP group’s interest in the AMP Shopping Centre Fund, a controlled entity of the life statutory funds, was diluted due to an issue of units to the external unitholders by the AMP Shopping centre fund, resulting in AMP group ceasing to control this entity. AMP Shopping Centre Fund has significant assets and liabilities other than investment assets and cash. AMP continued to hold a noncontrolling interest in the AMP Shopping Centre Fund.

The impact of ceasing to control the AMP Shopping Centre Fund was a reduction of the following assets and liabilities in the consolidated Statement of financial position:

Item	Impact in 2010
	$m
Cash and cash equivalents	(18)
Receivables	(21)
Inventories and other assets	(1)
Investments in financial assets measured at fair value through profit or loss	(299)
Investment property	(824)
Payables and provisions	(30)
Derivative financial liabilities	(16)
Borrowings	(375)
External unitholders' liabilities	(742)

There was no consideration received by AMP group on loss of control.

There were no other significant acquisitions or disposals of controlled operating businesses during 2010.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

24. EARNINGS PER SHARE

(a) Classification of equity securities

Ordinary shares have been included in the calculation of basic earnings per share.

In accordance with AASB 133 Earnings per Share , options over unissued ordinary shares and performance rights have been classified as potential ordinary shares and have been considered in the calculation of diluted earnings per share. As all options were out of the money for 2010 and 2009, they have been determined not to be dilutive for those periods. Performance rights have been determined to be dilutive in 2010 and 2009. Although performance rights have been determined to be dilutive in accordance with AASB 133 Earnings per Share , if these instruments vest and are exercised, it is AMP’s policy to buy AMP shares ‘on market’ so there will be no dilutive effect on the value of AMP shares.

Since the end of the financial year and up to the date of the report, no performance rights have been issued, exercised or lapsed. During the same period no options have been issued, exercised or lapsed. There have been no movements in the number of shares on issue.

Of the ordinary shares on issue, AMP Life (a wholly owned controlled entity) holds 26,375,450 (2009: 22,776,336) shares in AMP Limited on behalf of policyholders. ASIC has granted relief from restrictions in the Corporations Act 2001 to allow AMP Life Limited to hold and trade shares in AMP Limited as part of the policyholder funds' investment activities. In determining the weighted average number of ordinary shares used in the calculation of earnings per share after accounting mismatches, a reduction is made for the average number of shares held by AMP Life in AMP Limited during the period.

	Consolidated	Consolidated
	2010	2009
	million shares	million shares
(b) Weighted average number of ordinary shares used
(i) before accounting mismatches
Weighted average number of ordinary shares used in calculation of basic earnings per share	2,070	2,016
Add: potential ordinary shares considered dilutive	12	9
Weighted average number of ordinary shares used in calculation of diluted earnings per share	2,082	2,025
(ii) after accounting mismatches
Weighted average number of ordinary shares used in calculation of basic earnings per share	2,046	1,992
Add: potential ordinary shares considered dilutive	12	9
Weighted average number of ordinaryshares used in calculation of diluted earningsper share	2,058	2,001
	$m	$m
(c) Level of earnings used
Basic before accounting mismatches	753	740
Diluted before accounting mismatches	753	740
Basic after accounting mismatches	775	739
Diluted after accountingmismatches	775	739
	cents	cents
(d) Earnings per share
Basic before accounting mismatches	36.4	36.7
Diluted before accounting mismatches	36.2	36.5
Basic after accounting mismatches	37.9	37.1
Diluted after accountingmismatches	37.7	36.9

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

25. SUPERANNUATION FUNDS

AMP contributes to two funded employer-sponsored superannuation funds that exist to provide benefits for employees and their dependants on resignation, retirement, disability or death of the employee. The funds consist of both defined contribution sections and defined benefit sections.

The defined contribution sections receive fixed contributions from AMP group companies and the group’s legal obligation is limited to these contributions. The defined benefit sections provide members with a choice of lump sum benefits or pension benefits based on years of membership and final salary. New employees are only offered defined contribution style benefits.

The disclosures in this note relate only to the defined benefit sections of the plans.

The following tables summarise the components of the net amount recognised in the consolidated Income statement, the movements in the defined benefit obligation and plan assets, and the net amounts recognised in the consolidated Statement of financial position for the defined benefit funds, determined in accordance with AASB 119 “ Employee benefits ”.

However, for the purposes of recommending contributions to the defined benefit funds, fund actuaries consider the positions of the funds as measured under AAS25 ‘ Financial reporting by superannuation plans’ (Australia) and Professional standard number 2 “ Actuarial reporting for superannuation schemes ” (New Zealand) both of which determines the funds’ liabilities according to different measurement rules than those in AASB 119, largely due to the use of different discount rates in valuing benefits. Refer to Note 25 (g) for impacts on funding the AMP defined benefits funds.

		Consolidated	Consolidated
		2010	2009
		$m	$m
(a) Defined benefit plan income (expense)
Current service cost		(1)	(1)
Interest cost		(18)	(14)
Expected return onplan assets	(1) (2)	20	15
Total defined benefit plan income (expense)		1	-

(b) Movements in defined benefit obligation
Balance at the beginning of the period		(345)	(393)
Current service cost		(1)	(1)
Interest cost		(18)	(14)
Actuarial gains and losses (3)		(4)	44
Foreign currency exchange rate changes		8	-
Benefitspaid		19	19
Balance at the end of the period		(341)	(345)

(c) Movement in fair value of	plan assets
Balance at the beginning of the period		289	273
Expected return on plan assets		20	15
Actuarial gains and losses (3)		(11)	17
Foreign currency exchange rate changes		(8)	-
Employer contributions		3	3
Benefitspaid		(19)	(19)
Balance at the end of the period		274	289

Footnote:

(1) The expected return on plan assets is determined at the beginning of the period, and is based on financial modelling of expected real returns for each of the major asset classes, combined with the price inflation assumption to arrive at a nominal value for expected returns on plan assets.

(2) The actual return on fund assets for the period was a gain of $9m (2009: $32m).

(3) As explained in Note 1(ee), actuarial gains and losses are recognised directly in Other comprehensive income.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

25. SUPERANNUATION FUNDS (CONTINUED)

		Consolidated
		2010	2009
		$m	$m
(d) Defined benefit (liability) asset
Present value of wholly funded defined benefit obligations		(341)	(345)
Less: Fair value ofplan assets		274	289
Defined benefit (liability) asset recognised on the Statement of financial position		(67)	(56)
Movement in defined benefit (liability) asset
(Deficit) surplus at the beginning of the period		(56)	(120)
Plus: Total income (expenses) recognised in income		1	-
Plus: Employer contributions		3	3
Plus: Actuarialgains(losses)recognised in Other comprehensive income	(1)	(15)	61
Defined benefit (liability) asset recognised at the end of the period		(67)	(56)

Footnote:

(1) The cumulative amount of the net actuarial gains recognised in the Statement of comprehensive income is a loss of $15m (2009: $30m gain).

(e) Historical analysis of defined benefit (deficit) surplus

		Consolidated	Consolidated
	2010	2009	2008	2007
	$m	$m	$m	$m
Australian defined benefit (liability) asset
Present value of wholly funded defined benefit obligations	(317)	(312)	(362)	(342)
Less: Fair value ofplan assets	260	267	251	352
Net defined benefit (liability) asset recognised in the
Statement of financialposition	(57)	(45)	(111)	10
Actuarial gains and (losses) arising on plan liabilities	(4)	47	(24)	(35)
Actuarialgains and(losses)arisingonplan assets	(10)	17	(107)	11
New Zealand defined benefit (liability) asset
Present value of wholly funded defined benefit obligations	(24)	(33)	(31)	(45)
Less: Fair value ofplan assets	14	22	22	44
Net defined benefit (liability) asset recognised in the
Statement of financialposition	(10)	(11)	(9)	(1)
Actuarial gains and (losses) arising on plan liabilities	-	(3)	1	1
Actuarialgains and(losses)arisingonplan assets	(1)	-	(7)	(2)

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

25. SUPERANNUATION FUNDS (CONTINUED)

(f) Principal actuarial assumptions

The following table sets out the principal actuarial assumptions used as at the reporting date in measuring the defined benefit obligations of the Australian and New Zealand defined benefit funds:

		Australia	New	Zealand
	2010	2009	2010	2009
Discount rate	5.5%	5.7%	4.2%	4.2%
Expected return on assets (before tax)	7.8%	8.0%	6.3%	6.3%
Expected rate of pension increases	2.5%	2.5%	2.2%	2.3%
Expected rate of salary increases	4.0%	4.0%	n/a	n/a
Proportion of benefits expected to be taken as pensions	60.0%	60.0%	n/a	n/a
Inflation rate	n/a	n/a	2.5%	2.5%

(g) Arrangements for employer contributions for funding defined benefit funds

Funding methods and current recommendations – Australia

The Australian defined benefit fund’s funding policy is intended to fully cover benefits by the time they become payable. The method of funding adopted is the attained age normal method. This funding method aims to spread the cost of future benefits for current members evenly over their future working lifetimes.

The economic assumptions used to determine the current contribution recommendations are the same as the actuarial assumptions in Note 25 (f), except for the discount rate which is assumed to be 8.5% (before tax) for the purposes of determining accrued benefits.

At the dates of the most recent actuarial review of the position of the fund determined under AAS25 and used as the basis for determining fund contributions, the Australian fund had a surplus of $28m (2009: $15m).

Funding methods and current recommendations – New Zealand

The New Zealand defined benefit fund’s funding policy is intended to fully cover benefits by the time they become payable. The main group of benefits is pension rights of retired members and their spouses. The retirement benefits of active members are valued on a simplified actuarial projection basis as they are not material to the valuation of the fund.

At the dates of the most recent actuarial review of the position of the fund for determined under Professional Standard Number 2 and used for determining fund contributions, the New Zealand fund had a deficit of $5m (2009: $6m deficit). AMP has adopted the recommendation of the appointed actuary to make additional contributions of $2m per year until the financial position of the Plan is sufficiently improved.

(h) Allocation of assets

The asset allocations of the defined benefit funds are shown in the following table:

		Australia (1)	New Zealand	(1)
	2010	2009	2010	2009
Equity	61%	57%	63%	66%
Property	10%	18%	12%	13%
Fixed interest	22%	12%	20%	18%
Cash	5%	3%	5%	3%
Alternativegrowth assets	2%	10%	0%	0%

Footnote:

(1) The investment assets of the plans may at times include either direct or indirect investments in AMP Limited shares. These investments are part of normal investment mandates within the plans and are not significant in relation to total plan assets. The plans do not hold any other assets which are occupied or used by AMP group.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

26. SHARE BASED PAYMENTS

(a) Summary of AMP’s share-based payment plans

AMP has a number of employee share-based payment plans. Share-based payments place employees in the position of the shareholder, and in doing so, reward employees for the generation of value to shareholders. Information on plans which AMP currently offers is provided below.

Additionally, details have been provided regarding the Employee and Executive Option Plans. These plans are no longer offered to employees, but are included below as awards made in 2000 have not yet expired. The option plans were discontinued to simplify the range of long-term incentive plans offered to employees.

The following table shows the expense recorded for AMP share-based payment plans during the year:

	Consolidated	Consolidated
	2010	2009
	$'000	$'000
Plans currently offered
Performance rights(1)	14,266	10,025
Restricted shares(1)	8,589	4,950
Employee share acquisitionplan - matchingshares	103	1,864
Total share basedpayments expense	22,958	16,839

Footnote

(1) During 2010, both the 2009 and 2010 long-term incentive awards were granted. No performance rights were granted in the comparative period (2009) due to the pending changes to taxation rules in that year.

(b) Performance rights

Plan description

The CEO and his direct reports, as well as selected senior executives, are required to take their long-term incentives (LTI) awards in the form of performance rights. This is to ensure those executives who are most directly able to influence company performance are appropriately aligned with the interests of shareholders. All other LTI participants are provided with a degree of choice over whether their LTI grant is composed of performance rights, restricted shares or a combination of the two.

A performance right is a right to acquire one fully paid ordinary share in AMP Limited after a three-year performance period, provided a specific performance hurdle is met. Prior to exercise, performance rights holders do not receive dividends or have other shareholder benefits (including any voting rights).

AMP offers share bonus rights to employees in overseas domiciles where it is not possible or tax-efficient to grant performance rights. The terms and conditions of the share bonus rights are identical to the terms and conditions of the performance rights, except settlement is in cash rather than equity instruments.

The performance hurdle

The number of performance rights that vest is determined by a vesting schedule based on the performance of AMP relative to a comparator group of listed Australian companies over a three-year performance period.

The performance measure is AMP’s Total Shareholder Return (TSR) relative the top 50 industrials companies in the S&P/ASX 100 Index (based on market capitalisation rank) as at the start of the performance period. In order for any awards to vest, AMP’s TSR must be at or above the median of the comparator group; for this level of performance 50% of the awards vest. The proportion of awards vesting increases on a straight-line basis until performance at the 75th percentile of the comparator group, at which point the awards vest in full. The performance hurdle was chosen because it requires participants to outperform major ASX listed companies before the awards generate any value.

At the end of the performance period, an independent external consultant provides the PRC with AMP’s TSR ranking against the comparator group. The People and Remuneration Committee (PRC) then determines the number of performance rights that vest, if any, by applying this data to the vesting schedule. If the performance hurdle is not achieved the performance rights lapse immediately without opportunity to re-test performance at a later stage.

Exercising performance rights

If the awards vest, they are automatically exercised on behalf of the participant (i.e. converted to shares) at a nominal cost to the participant of $1 for all performance rights exercised at the one time. Upon exercise participants become entitled to shareholder benefits, including dividends and voting rights. In the event that performance rights are not automatically exercised on the participants’ behalf, the participant has two years from the end of the performance period to exercise vested awards. When performance rights are exercised, the AMP shares needed to satisfy the awards are bought on market through an independent third party, so that there is no dilutionary effect on the value of existing AMP shares.

Treatment of performance rights on ceasing employment

Unvested performance rights will lapse when an executive resigns from AMP. All performance rights, whether vested or unvested, will also lapse on termination due to misconduct or inadequate performance. In some other cases, such as retirement and redundancy, performance rights continue to be held subject to the same performance hurdle and performance period.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

26. SHARE-BASED PAYMENTS (CONTINUED)

Plan valuation

The fair value of performance rights has been calculated as at the grant date, by external consultants using a simulation technique known as a Monte Carlo simulation. Fair value has been discounted for the probability of not meeting the TSR performance hurdles.

In determining the share-based payments expense, the number of instruments expected to vest has been adjusted to reflect the number of employees expected to remain with AMP until the end of the performance period.

For the purposes of the valuation it is assumed performance rights are exercised as soon they have vested. Assumptions regarding the dividend yield and volatility have been estimated based on AMP’s actual historic dividend yield and volatility over an appropriate period.

During 2010, both the 2009 and 2010 long-term incentive awards were granted. No performance rights were granted in the comparative period (2009) due to the pending changes to taxation rules in that year. The following table shows the factors which were considered in determining the independent fair value of the performance rights granted during 2010:

Grant Date	Share Price	Contractual Life	Dividend Yield	Volatility	Risk-free rate	Performance hurdle discount	Fair value
08/09/2010	$ 5.04	2.9years	5.2%	39%	4.5%	50%	$2.50
12/03/2010	$ 6.13	2.4years	5.3%	39%	4.9%	42%	$3.53
20/03/2009	$ 4.37	4.9years	6.2%	36%	2.9%	54%	$2.03

The following table shows the movements during the period of all performance rights:

				Balance at	Exercised	Granted	Lapsed	Balance at
			Exercise	1 Jan	during the	during the	during the	31 Dec
Grant date	Exerciseperiod		price	2010	year(1)	year	year	2010(2)
01/09/2005	31/07/2008	- 31/07/2010	Nil	68,694	56,442	-	12,252	-
05/09/2007	01/08/2010	- 31/07/2012	Nil	2,442,507	-	-	2,442,507	-
21/09/2007	01/08/2010	- 31/07/2012	Nil	68,448	-	-	68,448	-
06/06/2008	01/01/2011	- 31/12/2012	Nil	102,914	-	-	-	102,914
19/09/2008	01/08/2011	- 31/07/2013	Nil	4,342,537	-	-	212,578	4,129,959
20/03/2009	01/08/2011	- 31/07/2013	Nil	18,116	-	-	-	18,116
12/03/2010	01/08/2012	- 31/07/2014	Nil	-	-	4,983,363	31,483	4,951,880
08/09/2010	01/08/2013	- 31/08/2015	Nil	-	-	4,148,304	-	4,148,304
Total				7,043,216	56,442	9,131,667	2,767,268	13,351,173

Footnote:

(1) The weighted average share price at the time of exercise of these performance rights was $5.89.

(2) The weighted average remaining contractual life of performance rights outstanding at the end of the period is 2.2 years.

From the end of the financial year and up to the date of this report, no performance rights have been issued, no performance rights have been exercised, and no performance rights have lapsed. Of the performance rights outstanding at the end of the period, none have vested or become exercisable.

AMP Limited Appendix 4E – Preliminary Final Report

for the year ended 31 December 2010

Notes supporting the financial information

26. SHARE-BASED PAYMENTS (CONTINUED)

(c) Restricted shares

Plan description

A ‘restricted share’ is an ordinary AMP share that has a holding lock in place until the three-year vesting period ends. During this time, the holder is eligible for dividends, but is unable to sell, transfer or hedge their award.

The purpose of the restricted shares is to recognise and retain high performing employees who contribute significantly to AMP’s overall business success.

As this program is designed as a means of recognising and retaining employees, no performance hurdles apply, other than continued service for the duration of the three-year holding lock. If the individual resigns from AMP (or employment terminated for misconduct or inadequate performance) during the holding period, the shares are forfeited.

In cases such as retirement and redundancy, the individual retains their restricted shares; however the holding lock remains in place until the end of the three-year vesting period. Restricted shares are bought on market and granted at no cost to employees.

Plan valuation

The fair value of restricted shares has been determined using the share price of AMP ordinary shares on the grant date. As employees holding restricted shares are entitled to dividend payments, no adjustment has been made to the fair value in respect of future dividend payments. In determining the share-based payments expense for the period, the number of instruments expected to vest has been adjusted to reflect the number of employees expected to remain with AMP until the end of the vesting period.

During 2010, both the 2009 and 2010 long-term incentive awards were granted. No restricted shares were granted in the comparative period (2009) due to the pending changes to taxation rules in that year. The following table shows the number of restricted shares (including any share bonus rights in lieu of restricted shares) that were granted during 2010 and the fair value of restricted shares as at the grant date.

Grant date	Number granted	Weighted average fair value
8/09/2010	1,379,931	4.97
28/05/2010	160,264	5.65
28/05/2010	35,211	5.13
12/03/2010	1,876,018	6.04
20/03/2009	9,524	4.37

AMP offers share bonus rights to employees in overseas domiciles where it was not possible or tax-efficient to grant restricted shares. The terms and conditions of the share bonus rights are identical to the terms and conditions of the restricted shares except the share bonus rights are not entitled to dividends and settlement is in cash rather than equity instruments.

(d) Employee Share Acquisition Plan

Plan description

From time to time, AMP has provided employees and executives with the opportunity to become shareholders in AMP through the Employee Share Acquisition Plan (ESAP), typically by way of salary sacrificing their fixed remuneration or STI to acquire shares. Depending on the terms of the particular award, participants may be entitled to receive matching shares for shares acquired under the ESAP (e.g. the 2009 awards provided one free share for every 10 shares acquired via salary sacrifice). Additionally, AMP can provide employees with free shares under the ESAP. Where the awards are acquired at no cost to the participant, service-based conditions must be met for the participant to receive their full entitlement. There are no performance hurdles applying to the plan as it is primarily designed to encourage employee share ownership.

The plan was suspended mid-way through 2009 in Australia due to the changes to the taxation treatment of employee share plan awards. The plan continues to operate in New Zealand.

If applicable, matching shares are bought on market through an independent third party.

Participants who cease to be employed within the AMP group within the three-year holding period may lose their entitlement to some or all of their matching shares or free shares, depending on the reason for leaving the company. To receive the maximum entitlement, participants must be employed by AMP for the whole three-year period.

Plan valuation

All awards made during 2010 and the 2009 comparative year were offers to salary sacrifice to acquire shares with matching shares awarded on a 1-for-10 basis after a three-year vesting period. Each matching share has been valued by external consultants as the face value of an AMP ordinary share at grant date less the present value of the expected dividends (to which the participant is not entitled until the end of the vesting period). The number of matching shares expected to be granted is estimated based on the average number of shares held in the ESAP by each employee at the beginning of each year. In determining the share-based payments expense for the period, the number of matching shares expected to be granted has been adjusted to reflect the number of employees expected to remain with AMP until the end of the three-year vesting period.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

26. SHARE-BASED PAYMENTS (CONTINUED)

The following table shows the number of matching shares expected to be granted based on the shares purchased by employees under the ESAP during the current period and the comparative period and the fair value of matching shares as at the grant date.

Grant date	Estimated number of matching shares to be granted1	Weighted average fair value
2010 – various	762	$4.90
2009 – various	57,029	$3.99

(e) Employee and Executive Option Plan

Plan description

In the past, employees and executives were granted options to purchase AMP shares, subject to various performance hurdles.

However, options have not been offered since 2002. The last performance period for options under this plan was completed in 2007.

The table below shows options that vested up to 2007 in the plan and remain unexercised.

			Balance at	Exercised	Granted	Lapsed	Balance at
		Exercise	1 Jan	during the	during the	during the	31 Dec
Grant date	Exerciseperiod	price(1)	2010	year	year	year	2010
Executive Option Plan
19/02/2000	19/02/2003-18/02/2010	$9.91	30,000	-	-	30,000	-
Employee Option Plan
01/01/2000	01/01/2003-31/12/2009	$11.90	204,432	-	-	204,432	-
30/06/2000	30/06/2003-29/06/2010	$11.57	967,560	-	-	967,560	-
28/10/2000	28/10/2003-27/10/2010	$12.29	11,406	-	-	11,406	-
09/12/2000	09/12/2003-08/12/2010	$13.65	10,000	-	-	10,000	-
21/07/2001	21/07/2004-20/07/2011	$14.75	486,880	-	-	55,425	431,455
15/12/2001	15/12/2004-14/12/2011	$12.89	1,294	-	-	-	1,294
Total			1,711,572	-	-	1,278,823	432,749

Footnote:

(1) The exercise prices shown in this column became effective on 17 May 2007. To compensate for the impact of the 2007 capital return of 40 cent per share the exercise prices of outstanding options were reduced by 40 cents per share in accordance with ASX listing rules.

(2) The weighted average remaining contractual life of options outstanding at the end of the period is 1.3 years.

The current exercise prices of outstanding options are generally above the current market price of AMP shares.

Since the end of the financial year and up to 17 February 2011, 14,000 employee options have lapsed and no options have been exercised. The total number of options on issue at 17 February 2011 is 418,749 .

2006 and 2007 capital return

In accordance with the ASX Listing Rules and the rules of the plan, the exercise prices of outstanding options were reduced by 40 cents per option following the 2006 and 2007 capital returns of 40 cents per share to shareholders. The terms and conditions of the options were not altered as a result of the capital returns as the reduction in exercise prices occurred under their original terms.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS

Details of significant investments in controlled entities are as follows:

	COUNTRY OF			% Holdings	% Holdings
NAME OF ENTITY	INCORPORATION	Share type	Footnote	2010	2009
140 St Georges Terrace Pty Limited	Australia	Ord		100	100
255 George Street Investment A Pty Ltd	Australia	Ord		100	100
255 George Street Investment B Pty Ltd	Australia	Ord		100	100
35 Ocean Keys Pty Limited	Australia	Ord		100	100
Abbey Capital Real Estate Pty Limited	Australia	Ord		100	100
ACPP Industrial Pty Ltd	Australia	Ord		100	100
ACPP Office Pty Ltd	Australia	Ord		100	100
ACPP Retail Pty Ltd	Australia	Ord		100	100
Aged Care Investment Services No. 1 Pty Limited (formerly PHF No. 1	Australia	Ord
Management Pty Limited)				100	100
Aged Care Investment Services No. 2 Pty Limited (formerly PHF No. 1	Australia	Ord		100	100
Pty Limited)
Allmarg Corporation Limited	NZ	Ord, Pref		100	100
AMP (UK) Finance Services Plc	UK	Ord		100	100
AMP ASAL Pty Ltd	Australia	Ord		100	100
AMP Australian Financial Services Holdings Limited	Australia	Ord		100	100
AMP Bank Limited	Australia	Ord		100	100
AMP Capital Advisors India Private Limited	India	Ord		100	100
AMP Capital AB Holdings Pty Limited	Australia	Ord		100	100
AMP Capital Bayfair Pty Limited	Australia	Ord		100	100
AMP Capital Finance Limited	Australia	Ord		100	100
AMP Capital Finance Mauritius Limited	Australia	Ord	(2)	-	63
AMP Capital Global Property Securities Pty Limited	Australia	Ord		100	100
AMP Capital Holdings Limited	Australia	Ord		100	100
AMP Capital (International Finance No. 1) SA	Luxembourg	Ord, MRPS		100	100
AMP Capital (International Finance No. 2) SA	Luxembourg	Ord, MRPS		100	100
AMP Capital Investments Limited	NZ	Ord A & B, Pref	(2)	-	100
AMP Capital Investments No. 2 Limited	NZ	Ord A & B, Pref		100	100
AMP Capital Investments No. 8 Limited	NZ	Ord A & B, Pref		100	100
AMP Capital Investments No 11 Limited	NZ	Ord A & B		100	100
AMP Capital Investments No. 14 Limited	NZ	Ord A & B		100	100
AMP Capital Investors Advisory (Beijing) Limited	Republic of China	Ord		100	100
AMP Capital Investors (Hong Kong) Limited	Hong Kong	Ord	(1)	100	-
AMP Capital Investors (Luxembourg) S.à r.l. [formerly AMP Capital	Luxembourg	Ord		100	100
Redding Investors Luxembourg Limited]
AMP Capital Investors (Luxembourg No. 3) S.à r.l.	Luxembourg	Ord		100	100
AMP Capital Investors (Luxembourg No. 4) S.à r.l.	Luxembourg	Ord		100	100
AMP Capital Investors (Luxembourg No. 5) S.à r.l.	Luxembourg	Ord	(1)	100	-
AMP Capital Investors (Luxembourg No. 6) S.à r.l.	Luxembourg	Ord	(1)	100	-
AMP Capital Investors (New Zealand) Limited	NZ	Ord		100	100
AMP Capital Investors (Property Funds Management Jersey) Limited	Jersey	Ord		100	100
AMP Capital Investors (Singapore) Pte Ltd	Singapore	Ord		100	100
AMP Capital Investors (Singapore) REIT Management Limited	Singapore	Ord		100	100

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS (CONTINUED)

	COUNTRY OF			% Holdings	% Holdings
NAME OF ENTITY	INCORPORATION	Share type	Footnote	2010	2009
AMP Capital Investors (UK) Limited	UK	Ord		100	100
AMP Capital Investors (US) Limited	USA	Ord	(1)	100	-
AMP Capital Investors International Holdings Limited	Australia	Ord		100	100
AMP Capital Investors Property Japan KK	Japan	Ord	(1)	100	-
AMP Capital Investors Japan KK	Japan	Ord		100	100
AMP Capital Investors KK [formerly Gemini Advisors Securities	Japan	Ord		100	100
Investment Company KK]
AMP Capital Investors Limited	Australia	Ord		100	100
AMP Capital Investors Real Estate Pty Limited (formerly AMP Real	Australia	Ord		100	100
Estate Pty Ltd)
AMP Capital Lifestyle Limited	Australia	Ord		100	100
AMP Capital Office and Industrial Pty Limited	Australia	Ord		100	100
AMP Capital Office and Industrial (Singapore) Pte Limited	Singapore	Ord		100	100
AMP Capital Offshore Investments Limited	NZ	Ord	(2)	-	100
AMP Capital Palms Pty Limited	Australia	Ord		100	100
AMP Capital Property Nominees Ltd	Australia	Ord		100	100
AMP Capital Shopping Centres Pty Limited	Australia	Ord		100	100
AMP CMBS No. 1 Pty Limited	Australia	Ord		100	100
AMP CMBS No. 2 Pty Limited	Australia	Ord		100	100
AMP Crossroads Pty Limited	Australia	Ord		100	100
AMP Custodial Investments No. 1 Limited	NZ	Ord A & B, Pref	(2)	-	100
AMP Custodian Services (NZ) Limited	NZ	Ord		100	100
AMP Davidson Road Pty Limited	Australia	Ord		100	100
AMP Finance Limited	Australia	Ord		100	100
AMP Finance Services Limited	Australia	Ord		100	100
AMP Financial Investment Group Holdings Limited	Australia	Ord		100	100
AMP Financial Planning Pty Limited	Australia	Ord		100	100
AMP Financial Services Holdings Limited	Australia	Ord		100	100
AMP GBS Limited	Australia	Fixed		100	100
AMP GDPF Pty Limited	Australia	Ord		100	100
AMP GI Distribution Pty Limited	Australia	Ord		100	100
AMP Global Property Investments Pty Ltd	Australia	Ord		100	100
AMP Group Finance Services Limited	Australia	Ord		100	100
AMP Group Holdings Limited	Australia	Ord		100	100
AMP Group Services Limited	Australia	Ord		100	100
AMP Holdings Limited	Australia	Ord A, Ord B,		100	100
		Red Pref B Class
AMP Insurance Investment Holdings Pty Limited	Australia	Ord		100	100
AMP Investment Management (NZ) Limited	NZ	Ord		100	100
AMP Investment Services No. 2 Pty Limited	Australia	Ord		100	100
AMP Investment Services Pty Limited	Australia	Ord		100	100
AMP Investments Chile Limitada	Chile	Ord		100	100
AMP Lending Services Limited	Australia	Ord		100	100
AMP Life Limited	Australia	Ord		100	100
AMP Life (NZ) Investment Holdings Limited	NZ	Ord		100	100
AMP Life (NZ) Investment Limited	NZ	Ord		100	100
AMP Macquarie Holding Pty Limited	Australia	Ord		100	100
AMP Macquarie Pty Limited	Australia	Ord		100	100
AMP NZ Carpark Limited	NZ	Ord		100	100
AMP Pacific Fair Pty Limited	Australia	Ord		100	100

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS (CONTINUED)

	COUNTRY OF			% Holdings	% Holdings
NAME OF ENTITY	INCORPORATION	Share type	Footnote	2010	2009
AMP Personal Investment Services Limited	Australia	Ord		100	100
AMP Planner Register Company Pty Limited	Australia	Ord		100	100
AMP Private Capital Funds Holdings Limited	NZ	Ord, Pref		100	100
AMP Private Capital New Zealand Limited	NZ	Ord		100	100
AMP Private Capital No. 2 Pty Limited	Australia	Ord		100	100
AMP Private Capital Pty Limited	Australia	Ord		100	100
AMP Private Investments Pty Limited	Australia	Ord		100	100
AMP Private Wealth Management Pty Limited	Australia	Ord		100	100
AMP Property Investments (Qld) Pty Ltd	Australia	Ord		100	100
AMP Remuneration Reward Plans Nominees Pty. Limited	Australia	Ord		100	100
AMP Riverside Plaza Pty Limited	Australia	Ord		100	100
AMP Royal Randwick Pty Limited	Australia	Ord		100	100
AMP Services (NZ) Limited	NZ	Ord		100	100
AMP Services Holdings Limited	Australia	Ord		100	100
AMP Services Limited	Australia	Ord		100	100
AMP SMSF Holding Co Limited	Australia	Ord	(1)	100	-
AMP Superannuation (NZ) Limited	NZ	Ord		100	100
AMP Superannuation Limited	Australia	Ord		100	100
AMP Warringah Mall Pty Ltd	Australia	Ord		100	100
AMP/ERGO Mortgage and Savings Limited	NZ	Ord		100	100
Arrive Wealth Management Limited	Australia	Ord		100	100
Arrow Systems Pty Limited	Australia	Ord		100	100
Arthur Ellis & Co. Limited	NZ	Ord		100	100
Arthur Ellis Limited	NZ	Ord	(2)	-	100
Auburn Mega Mall Pty Limited	Australia	Ord		100	100
Australian Mutual Provident Society Pty Limited	Australia	Ord		100	100
Australian Securities Administration Limited	Australia	Ord		100	100
AWOF New Zealand Office Pty Limited	Australia	Ord		100	100
CBD Financial Planning Pty Limited	Australia	Ord	(1)	100	-
Collins Place No. 2 Pty Ltd	Australia	Ord		100	100
Collins Place Pty Limited	Australia	Ord		100	100
Donaghys Australia Pty Limited	NZ	Ord		50	50
Donaghys Industries Limited	NZ	Ord		50	50
Donaghys International Limited	NZ	Ord		50	50
Donaghys Limited	NZ	Ord, Pref		50	50
Donaghys Pty Limited	NZ	Ord		50	50
ERGO Personal Financial Services Limited	NZ	Ord	(2)	-	100
Focus Property Services Pty Limited	Australia	Ord	(3)	98	98
Glendenning Pty Limited	Australia	Ord		100	100
Hillross Alliances Limited	Australia	Ord		100	100
Hillross Financial Services Limited	Australia	Ord		100	100
Hillross Innisfail Pty Limited	Australia	Ord	(1)	100	-
Hillross Wealth Management Centre Canberra Pty Limited	Australia	Ord		50	50
Hillross Wealth Management Centre Melbourne Pty Limited	Australia	Ord		100	100
Honeysuckle 231 Pty Limited	Australia	Ord	(3)	60	60
Hospital Car Parking Limited	NZ	Ord		100	100
Hospital Car Parking Holdings Limited	NZ	Ord		100	100
INSSA Pty Limited	Australia	Ord		100	100
Inversiones Mineras Los Andes Limitada	Chile	Ord		100	100
Jeminex Ltd	Australia	Ord		51	51

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS (CONTINUED)

	COUNTRY OF			% Holdings	% Holdings
NAME OF ENTITY	INCORPORATION	Share type	Footnote	2010	2009
Kent Street Pty Limited	Australia	Ord		100	100
Kiwi Kat Limited	NZ	Ord	(1)	70	-
Knox City Shopping Centre Investments (No. 2) Pty Limited	Australia	Ord		100	100
Kramar Holdings Pty Limited	Australia	Ord	(3)	78	78
Marrickville Metro Shopping Centre Pty Limited	Australia	Ord		100	100
Mowla Pty. Ltd.	Australia	Ord		100	100
Omega (Australia) Pty Limited	Australia	Ord		100	100
PHFT Finance Pty Limited	Australia	Ord		100	100
PremierOne Mortgage Advice Pty Limited	Australia	Ord		100	100
Principal Healthcare Finance No. 2 Pty Limited	Australia	Ord		100	100
Principal Healthcare Finance Pty Limited	Australia	Ord		100	100
Principal Healthcare Holdings Pty Limited	Australia	Ord		100	100
Priority One Agency Services Pty Ltd	Australia	Ord		100	100
Priority One Financial Services Limited	Australia	Ord		100	100
Quay Mining (No. 2) Limited	Bermuda	Ord, Red Pref		100	100
Quay Mining Pty Limited	Australia	Ord		100	100
Roost 2007 Limited	NZ	Ord		100	100
Scrabster Bay Pty Limited	Australia	Ord		100	100
Shanghai AMP Property Co Ltd	Republic of China	Ord	(2), (3)	-	81
SPP No. 1 (Alexandra Canal) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Cowes) Pty Limited	Australia	Ord		86	86
SPP No. 1 (H) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Mona Vale) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Mornington) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Newcastle) Pty Limited	Australia	Ord		86	86
SPP No. 1 (North Melbourne) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Pakenham) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Point Cook) Pty Limited	Australia	Ord		86	86
SPP No. 1 (Q Stores) pty Limited	Australia	Ord		86	86
SPP No. 1 (Rosebery) Pty Limited	Australia	Ord		86	86
SPP No. 1 Holdings Pty Limited	Australia	Ord		86	86
SPP No. I (Hawthorn) Pty Limited	Australia	Ord		86	86
SPP No. I (Mt. Waverley Financing) Pty Limited	Australia	Ord		86	86
SPP No. I (Mt. Waverley) Pty Limited	Australia	Ord		86	86
SPP No. I (Port Melbourne) Pty Limited	Australia	Ord		86	86
SPP No. 3A Investments Pty Limited	Australia	Ord		100	100
Sugarland Shopping Centre Pty Limited	Australia	Ord		100	100
Sunshine West Development Pty Limited	Australia	Ord		75	75
Sunshine West Income Pty Limited	Australia	Ord		100	100
The India Infrastructure Fund LLC	Mauritius	Red Pref		100	100
TOA Pty Ltd	Australia	Ord		100	100
United Equipment Holdings Pty Limited	Australia	Ord	(3)	53	60
Waterfront Place (No. 2) Pty. Ltd.	Australia	Ord		100	100
Waterfront Place(No. 3)Pty. Ltd.	Australia	Ord		100	100

Footnote:

(1) Controlling interest acquired in 2010.

(2) Controlling interest disposed in 2010.

(3) Not audited by Ernst & Young.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS (CONTINUED)

Details of significant investments in controlled trusts are as follows:

Details of significant investments in controlled trusts are as follows:
TRUSTS AND OTHER ENTITIES	COUNTRY OF		% Holdings
NAME OF ENTITY	REGISTRATION	Footnote	2010	2009
140 St Georges Terrace Trust	Australia		100	100
35 Ocean Keys Trust	Australia	(2)	-	75
ACPP Holding Trust	Australia		100	100
ACPP Industrial Trust	Australia		100	100
ACPP Office Trust	Australia		100	100
ACPP Retail Trust	Australia		100	100
Active Quant Share Fund	Australia		73	71
AHGI Martineau Fund	Australia		100	100
AHGI Martineau Galleries Fund	Australia		100	100
AMP Capital Asia ex-Japan Fund	Australia		92	90
AMP Capital Asian Equity Growth Fund	Australia		94	81
AMP Capital Business Space REIT	Singapore		100	100
AMP Capital Commodities Fund	Australia	(2)	-	100
AMP Capital Core Plus Strategies Fund	Australia		-	78
AMP Capital Corporate Bond Fund	Australia		93	81
AMP Capital Credit Strategies	Australia		90	94
AMP Capital Global Infrastructure Securities Fund (Hedged)	Australia	(1)	100	-
AMP Capital Global Tactical Asset Allocation Fund	Australia		98	97
AMP Capital Investors Australian Equity Long Short Fund	Australia		100	100
AMP Capital Investors China Strategic Growth Fund	Australia		100	100
AMP Capital Investors Infrastructure Fund 1	Australia		100	100
AMP Capital Sustainable External Alpha Fund	Australia		100	100
AMP Capital Lifestyle Trust	Australia		100	100
AMP Capital Macro Strategies Fund	Australia		78	84
AMP Capital Mature Life Fund A	Australia		100	100
AMP Capital Mature Life Fund B	Australia		100	100
AMP Capital New Balanced Conservative Fund	Australia	(2)	-	100
AMP Capital Palms Trust	Australia	(2)	-	75
AMP Liverpool Trust X	Australia	(2)	-	75
AMP Macquarie Holdings Trust	Australia		90	90
AMP Macquarie Trust	Australia		90	90
AMP Pacific Fair Trust	Australia		90	90
AMP Private Capital Trust No.4	Australia		100	100
AMP Private Capital Trust No.9	Australia		100	100
AMP Shopping Centre Fund	Australia	(2)	-	75
AMP UK Shopping Centre Fund	Australia		100	100
AMP US Property Trust	Australia	(2)	-	100
AMP Wholesale Office Fund	Australia	(3)	46	65
AMP Capital Pacific Fair and Macquarie Shopping Centre Fund	Australia		90	90
(previously AMP Wholesale Shopping Centre Trust No 2)
Aggressive Enhanced Index Fund	Australia	(1)	100	-
Asian Giants Infrastructure Fund	China		-	63
Australian Pacific Airports Fund	Australia		66	66
AWOF New Zealand Office Trust	NZ	(3)	46	65
Bayfair Trust (NZ)	NZ	(2)	-	75
Balanced Enhanced Index Fund	Australia		99	98
Bourke Place Trust	Australia		57	57
Casey Central Trust	Australia	(2)	-	75
Cautious Enhanced Index Fund	Australia	(1)	100	-
Conservative Enhanced Index Fund	Australia		96	86
Crossroads Trust	Australia		100	100
Davidson Road Trust	Australia		100	100
EFM Infrastructure Fund 1	Australia		97	97

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS (CONTINUED)

TRUSTS AND OTHER ENTITIES	COUNTRY OF		% Holdings	% Holdings
NAME OF ENTITY	REGISTRATION	Footnote	2010	2009
EFM Australian Share Fund 1	Australia		97	97
EFM Australian Share Fund 2	Australia		99	99
EFM Australian Share Fund 3	Australia		98	98
EFM Australian Share Fund 4	Australia		95	96
EFM Australian Share Fund 5	Australia	(2)	-	96
EFM Australian Share Fund 6	Australia		99	99
EFM Australian Share Fund 7	Australia		98	98
EFM Diversified Fund 6	Australia	(2)	-	91
EFM Fixed Interest Fund 2	Australia		97	97
EFM Fixed Interest Fund 3	Australia		97	98
EFM Fixed Interest Fund 4	Australia		94	94
EFM International Share Fund 1	Australia	(2)	-	98
EFM International Share Fund 3	Australia		97	97
EFM International Share Fund 4	Australia	(2)	-	99
EFM International Share Fund 5	Australia		97	96
EFM International Share Fund 6	Australia	(2)	-	99
EFM International Share Fund 7	Australia		92	96
EFM Listed Property Fund 1	Australia		96	96
Enhanced Index International Share Fund	Australia		82	86
Enhanced Index Share Fund	Australia		84	86
FD Australian Share Fund 1	Australia		97	97
FD Australian Share Fund 2	Australia	(2)	-	94
FD Australian Share Fund 3	Australia		93	93
FD Global Property Securities Fund 1	Australia		94	94
FD Infrastructure Trust	Australia		100	100
FD International Bond Fund 3	Australia		96	89
FD International Share Fund 1	Australia		95	92
FD International Share Fund 2	Australia	(2)	-	84
FD International Share Fund 3	Australia		99	99
FD International Share Fund 4	Australia		96	97
Floating Rate Income Fund	Australia		98	84
Future Directions Asia ex-Japan Fund	Australia		82	73
Future Directions Australian Bond Fund	Australia		98	94
Future Directions Australian Share Fund	Australia		94	90
Future Directions Australian Small Companies Fund	Australia		94	87
Future Directions Balanced Fund	Australia		98	97
Future Directions Conservative Fund	Australia		94	93
Future Directions Core International Share Fund 2	Australia		72	65
Future Directions Credit Opportunities Fund	Australia		100	100
Future Directions Enhanced index Australian Share Fund	Australia		100	100
Future Directions Enhanced Index Global Property Securities Fund	Australia		100	100
Future Directions Enhanced Index International Bond Fund	Australia		82	91
Future Directions Enhanced Index International Share Fund	Australia		96	72
Future Directions Geared Australian Share Fund	Australia		91	91
Future Directions Growth Fund	Australia		95	93
Future Directions Hedged Core International Share Fund	Australia		76	59
Future Directions High Growth Fund	Australia		94	93
Future Directions Inflation Linked Bond Fund	Australia		100	100
Future Directions Infrastructure Fund	Australia		100	96
Future Directions International Bond Fund	Australia		96	94
Future Directions International Share Fund	Australia		92	70
Future Directions Moderate Conservative Fund	Australia		93	93
Future Directions Opportunistic Fund	Australia		100	96

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

27. GROUP CONTROLLED ENTITY HOLDINGS (CONTINUED)

TRUSTS AND OTHER ENTITIES	COUNTRY OF		% Holdings	% Holdings
NAME OF ENTITY	REGISTRATION	Footnote	2010	2009
Future Directions Private Equity Fund 1a	Australia		100	100
Future Directions Private Equity Fund 1b	Australia	(1)	100	-
Future Directions Private Equity Fund 2a	Australia	(1)	100	-
Future Directions Private Equity Fund 2b	Australia	(1)	100	-
Future Directions Private Equity Fund 3a	Australia	(1)	100	-
Future Directions Private Equity Fund 3b	Australia	(1)	100	-
Future Directions Property (Feeder) Fund	Australia		98	95
Future Directions Total Return Fund	Australia		99	95
Goldman Sachs Specialised Investments - S&P GSCI Light Energy E92 Profile	Australia	(1)	100	-
Glendenning Trust	Australia		100	100
Global Credit Strategies Fund	Australia		87	97
Global Listed Infrastructure Fund Pool	Australia	(1)	100	-
Global Growth Opportunities Fund	Australia		96	94
International Bond Fund	Australia		93	94
Kent Street Investment Trust	Australia		100	100
Kent Street Unit Trust	Australia		100	100
Listed Property Trusts Fund	Australia	(2)	-	63
Loftus Street Trust	Australia	(3)	46	65
New Balanced Fund	Australia		100	100
Macquarie Balanced Growth Fund	Australia		68	68
Managed Treasury Fund	Australia		77	77
Moderately Aggressive Enhanced Index Fund	Australia	(1)	100	-
Moderately Conservative Index Fund	Australia	(1)	100	-
Monash House Trust	Australia		100	100
Ocean Keys Holding Trust	Australia	(2)	-	75
Ocean Keys Trust	Australia	(2)	-	75
Principal Healthcare Holding Trust	Australia		100	100
Private Equity Fund IIIA	Australia		94	94
Private Equity Fund IIIB	Australia		94	94
Progress 2004 - 2 Trust	Australia		100	100
Progress 2005 - 1 Trust	Australia		100	100
Progress 2005 - 2 Trust	Australia		100	100
Progress 2006 - 1 Trust	Australia		100	100
Progress 2007 - 1 G	Australia		100	100
Progress 2008 - 1 R	Australia		100	100
Progress 2009 - 1 Trust	Australia		100	100
Progress 2010 - 1 Trust	Australia		100	-
Progress Warehouse Trust No 1	Australia		100	100
Progress Warehouse Trust No 2	Australia		100	100
Responsible Investment Leaders Conservative Fund	Australia		92	91
Responsible Investment Leaders Growth Fund	Australia		96	96
Responsible Investment Leaders High Growth Fund	Australia		100	100
Riverside Plaza Trust	Australia		100	100
Royal Randwick Trust	Australia	(2)	-	75
Select Property Portfolio No. 1	Australia		86	86
Student Housing Accommodation Growth Trust 2	Australia	(1)	100	-
Sydney Cove Trust	Australia		100	100
The Pinnacle Fund	Australia		99	99
Warringah Mall Trust	Australia		67	92
Wholesale Australian Bond Fund	Australia		92	92

Footnote:

(1) Controlling interest acquired in 2010.

(2) Controlling interest disposed in 2010.

(3) Not more than 50% holding, but consolidated because AMP retains control over the operating functions.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

28. ASSOCIATES

(a) Investments in associates accounted for using the equity method

				Ownership
		Principal	2010	2009	2010	2009	Country of
		activities	$m	$m	%	%	incorporation
AIMS AMP Capital Industrial REIT	(3)(4)	Industrial property
		trust	61	51	16	16	Singapore
AIMS AMP Capital Industrial REIT		Property management
Management Ltd			4	4	50	50	Singapore
MacarthurCook Investment Managers		Investment
(Asia) Limited		management	4	4	50	50	Singapore
AMPCI Macquarie Infrastructure Fund
Management No 1 (Stapled), and AMPCI Macquarie Infrastructure Fund		Investment management	3	3	50	50	Australia
Management No 2 (Stapled)
AMP Capital Brookfields Limited		Investment
		management	8	5	50	50	Australia
Super CEO Pty Limited (1)		Investment
		management	8	-	49	-	Australia
Summerset Group Holdings Limited (2)		Retirement property
		company	-	48	-	50	New Zealand
Other			1	1
Total investments in associates accounted for using the equity method			89	116

(1) Became an associate entity during 2010.

(2) Ceased being an associate during 2010.

(3) The value of AMP's investment in AIMS AMP Capital Industrial REIT based on published quoted prices as at 31 December 2010 is $53m (31 December 2009: $40m).

(4) The combination of the 16% investment in MI-REIT and the joint control of the manager companies is considered to represent significant influence by AMP.

(5) The reporting date for all significant associated entities is 31 December.

	Dec	Dec
Aggregated financial information extracted from the financial statements of associates	2010	2009
accounted for using the equity method	$m	$m
Assets	595	1,137
Liabilities	187	477
Revenues	49	68
Expenses - including tax	34	56
Profit/(loss)	15	12
Share of contingent liabilities incurred in relation to associates accounted for using the equity
method	nil	nil

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

28. ASSOCIATES (CONTINUED)

(b) Investments in associates held by the life statutory funds measured at fair value through profit or loss[(1)]

	PRINCIPAL ACTIVITY (3)	Footnote	Ownership interest 31 Dec 31 Dec	Ownership interest 31 Dec 31 Dec	Carrying amount 31 Dec 31 Dec	Carrying amount 31 Dec 31 Dec
			2010	2009	2010	2009
			%	%	$m	$m
COMPANIES~~(2)~~
NAME OF COMPANY
Diversified Commercial Backed	Investment in mortgage
Mortgage Securities Pty Ltd	securities		43%	43%	97	115
Gove Aluminium Finance	Aluminium smelting		30%	30%	125	173
Others(each less than $20m)				Various	12	61
Total investments held by the life statutory funds in associated
companies					234	349
UNIT TRUSTS ~~(2)~~
NAME OF TRUST
AIF Strategic Equity	Investment trusts		32%	23%	126	88
AIF Equity Units	Investment trusts		46%	36%	101	91
AMP Capital China Growth Fund	Investment trusts		37%	34%	101	115
AMP Equity Trust	Investment trusts		41%	36%	230	253
AMP Property Portfolio	Investment trusts		38%	38%	261	281
AMP Shopping Centre Fund	Investment trusts	(4)	46%	-	725	-
AMP Small Companies Trust (Class C)	Investment trusts		46%	37%	118	98
AMP World Index Fund	Investment trusts		46%	31%	67	88
Darling Park Property Trust	Investment trusts		50%	50%	223	208
Global Property Securities Fund	Investment trusts		23%	37%	381	499
Infrastructure Equity Fund	Investment trusts		28%	29%	113	114
Marrickville Metro Trust	Investment trusts		50%	50%	78	74
Property Income Fund (previously	Investment trusts
Property Income Fund Class A)			38%	27%	215	199
Responsible Investments Leader	Investment trusts
Balanced Fund			28%	30%	236	234
Southland Trust	Investment trusts	(5)	-	50%	-	524
Strategic Infrastructure Trust Europe 1	Investment trusts		27%	37%	59	71
Strategic Infrastructure Trust Europe 2			27%	37%	58	71
Sustainable Futures Australia Share	Investment trusts
Fund			45%	47%	589	665
Tea Tree Plaza Trust	Investment trusts	(5)	-	50%	-	246
Value Plus Australia Share Fund	Investment trusts		23%	25%	61	87
Others(each less than$50m)	Investment trusts		Various		284	282
Total investments held by the life statutory funds in associated
trusts					4,026	4,288

Footnote:

(1) Investments in associated entities that back investment contract and life insurance contract liabilities are treated as financial assets and are measured at fair value. Refer to Note 1(h).

(2) The reporting date for all significant associated entities is 31 December.

(3) In the course of normal operating investment activities, the life statutory fund holds investments in various operating businesses. Investments in associated entities reflect investments where the life statutory fund hold between a 20% and 50% equity interest.

(4) Trust became an associated entity during 2010.

(5) Trust ceased being an associated entity during 2010.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

29. FORWARD INVESTMENTS, LEASING AND OTHER COMMITMENTS

		Consolidated	Consolidated
		2010	2009	2010	2009
		$m	$m	$m	$m
Forward investments - callable at any time
Uncalled capital on shares in relation to:(1)
- associated entities		46	6	-	-
- other entities		17	73	-	-
Uncalled capital on units in relation to:	(1)
- associated unit trusts		17	20	-	-
- other unit trusts		3	32	-	-
Total forward investments		83	131	-	-
Operating lease commitments (non	cancellable)
Due within one year		45	44	-	-
Due within one year to five years		117	141	-	-
Due later than fiveyears		21	30	-	-
Total operating lease commitments		183	215	-	-
Other commitments(2)
Due within one year		2	10	-	-
Due within one year to five years		1	-	-	-
Due later than fiveyears		-	-	-	-
Total other commitments		3	10	-	-

Footnote:

(1) Uncalled capital represents a commitment to make further capital contributions for shares, units in trusts and certain private capital investments held within the life statutory funds.

(2) Amounts disclosed exclude loan commitments of AMP Bank which are set out in Note 21(c).

On 29 November 2010, AMP Limited entered into contractual arrangements with AXA Asia Pacific Holdings Limited (AXA APH) and its ultimate parent, AXA SA, to acquire the Australian and New Zealand businesses of AXA APH, subject to certain conditions including the minority shareholders voting in favour of the proposal and receipt of necessary court and regulatory approvals. If each of the conditions are satisfied or waived, AMP Limited is committed to issue approximately 695 million new shares and pay up to $455 million in cash to acquire the Australian and New Zealand businesses of AXA APH.

AMP Limited Appendix 4E – Preliminary Final Report

Notes supporting the financial information

for the year ended 31 December 2010

30. CONTINGENT LIABILITIES

The AMP group and the parent entity from time to time may incur obligations arising from litigation or various types of contracts entered into in the normal course of business including guarantees issued by the parent for performance obligations to controlled entities in the AMP group.

The parent entity has entered into deeds to provide capital maintenance and liquidity support to AMP Bank Limited. At the reporting date the likelihood of any outflow in settlement of these obligations is considered to be remote.

Where it is determined that the disclosure of information in relation to a contingent liability can be expected to prejudice seriously the position of the AMP group (or its insurers) in a dispute, accounting standards allow AMP group not to disclose such information and it is AMP group’s policy that such information is not to be disclosed in this note.

At the reporting date there were no other material contingent liabilities where the probability of any outflow in settlement was greater than remote.

AI assistant

AMP LIMITED — Annual Report 2010

64379_rns_2011-02-16_f76e0154-595f-46cf-9e40-726a877b6894.pdf

AMP Limited (ASX/NZX: AMP)

(Also for cross release to AMP Group Finance Services Limited (ASX: AQNHA; NZX: AQN010))

AMP Limited ABN 49 079 354 519

Appendix 4E – Preliminary Final Report Year ended 31 December 2010

Content

Results for announcement to the market

Notes

Commentary on the results

Review of operations and results

Differences between underlying profit and statutory profit

Capital management

Commentary on the results

Impact of accounting mismatches on profit

Events occurring after the reporting date

Financial information

TABLE OF CONTENTS

Income statement

Footnote:

Footnote:

Statement of financial position

Statement of changes in equity

Consolidated

Parent

Footnote:

Statement of cash flows

Footnote:

1. BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of preparation

Significant judgements, estimates and assumptions

Changes in accounting policy

Australian Accounting Standards issued but not yet effective/Early adoption of Australian Accounting Standards

Notes supporting the financial information

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

(b) Principles of consolidation

Securitisation vehicles

(c) Accounting for wealth-management and life insurance business

Notes supporting the financial information

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Investment contracts

Life insurance contracts

Assets backing investment contract and life insurance contract liabilities

Assets not backing investment and life insurance contract liabilities

(d) Accounting mismatches

‘Treasury shares’

Investments in controlled entities of the life statutory funds

Notes supporting the financial information

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Investments in controlled entities of the life statutory funds (continued)

Owner-occupied property

Life statutory funds’ superannuation products invested in AMP Bank assets

(e) Cash and cash equivalents

(f) Receivables

(g) Inventories

(h) Investments in financial assets

Investments in financial assets measured at fair value through profit or loss

Notes supporting the financial information

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

Investments in financial assets measured at amortised cost

Investments in controlled entities

(i) Investments in associates accounted for using the equity method

(j) Investment property

(k) Property, plant and equipment

Owner-occupied property

Plant and equipment

Leasehold improvements

Notes supporting the financial information

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

(l) Intangible assets

Goodwill

Management rights

Capitalised costs

Other intangible assets

(m) Impairment of assets

(n) Taxes

Tax consolidation

Notes supporting the financial information

1. BASIS OF PREPARATION AND ACCOUNTING POLICIES (CONTINUED)

AMP LIMITED Annual Report 2010