AMP LIMITED — Interim / Quarterly Report 2007

Aug 22, 2007

AMP Limited ABN 49 079 354 519

Directors’ Report and Financial Report for the half year ended 30 June 2007

AMP LIMITED

DIRECTORS’ REPORT For the half year ended 30 June 2007

Your directors present their report on the consolidated entity consisting of AMP Limited and its controlled entities (AMP) for the half year ended 30 June 2007.

DIRECTORS

The directors of AMP Limited during the half year and up to the date of this report are shown below. Directors were in office for this entire period except where stated otherwise:

Peter Mason AM – Chairman

Andrew Mohl – Managing Director and Chief Executive Officer

John Astbury David Clarke Richard Grellman AM Meredith Hellicar Nora Scheinkestel John Palmer (appointed 24 July 2007)

Review of operations and results

AMP’s strategy of operational excellence continues to drive strong growth and increases in shareholder value.

The company’s distribution platform, tight cost control, greater capital and operational efficiency and development of a more constructive culture have enabled it to capitalise on strong market conditions to deliver value for shareholders.

Profit before accounting mismatches rose 32% to $561 million, compared to $424 million for the previous corresponding period. The net profit after accounting mismatches was $470 million, compared to $347 million for the previous corresponding period.

AMP reported a 27% increase in “underlying profit” to $534 million for the six months to 30 June 2007, compared to $420 million for the six months to 30 June 2006.

Underlying profit is a profitability measure that smoothes out the effect of investment market volatility by using average long-term rates of return to calculate investment income in a period, rather than actual investment income, which can be higher or lower than the average long-term rate. Underlying profit is AMP’s preferred measure of profitability and is the basis for calculation of AMP’s dividends to shareholders.

The result reflected record retail net cashflows, continued falls in cost to income ratios across the business, impressive investment performance and strong growth in assets under management.

The business recorded improvements in its five key performance measures in the first half of 2007:

• Underlying return on equity (RoE) increased to 38.7% from 26.6%.

• Total operating earnings grew by 35% to $460 million.

• Cost to income ratio fell by 3.6 percentage points to a new low of 36.5%. Controllable costs increased by 7% to $439 million.

• Value measures[1] in the AMP Financial Services business improved. Embedded value rose 12% in the half year to $8.2 billion before transfers and the value of new business rose 30% to $215 million on the first half of 2006.

• Investment performance was above target with 76% of assets under management meeting or exceeding their benchmarks in the half year to June. The target is for 75% of AUM to meet or exceed benchmarks.

1 Embedded value and value of new business reported on traditional basis at 3% discount margin.

1

AMP LIMITED

DIRECTORS’ REPORT

For the half year ended 30 June 2007

AMP’s assets under management were $130 billion at 30 June 2007, up 7% from $122 billion at 31 December 2006.

AMP generated total investment gains (before tax) attributable to shareholders, policyholders and other equity interests of $5.5 billion for the half, compared to $4.5 billion for the previous corresponding period.

The company’s original medium term goal, announced in 2005, was to double the value of an investment in AMP between mid 2005 and mid 2010. In August 2006, AMP announced the goal would be achieved by mid 2009.

Following growth of 85% in the two years to June 2007, the goal appears likely to be achieved well in advance of the upgraded assumption.

For this reason, AMP has moved to an evergreen medium term goal to double the value of an investment in AMP every five years.

The value of an investment in AMP is measured by calculating the value of dividends and capital returns paid to shareholders, and increases in enterprise value. Enterprise value is calculated as the median of the major stockbroking analyst valuations of AMP each year.

AMP’s value as defined above has grown from $11.6 billion to $21.4 billion, or by 85%, from June 2005 to June 2007. In the half to June 2007, it grew 19.5% from $17.9 billion to $21.4 billion.

Today, AMP is a low capital intensity, high return, high growth wealth management group. AMP intends to continue to leverage scale benefits to grow volumes, drive unit cost reductions, and manage expected reductions in revenue margins to achieve well above average market growth in shareholder value over the cycle.

Capital management

AMP continues to maintain a strong balance sheet, through an efficient and focused capital management strategy.

Since 2004, this strategy has delivered:

• significant increases in dividends per share, rising from 13 cents in the first half of 2004 to 22c in the first half of 2007

• a total of $2.25 billion in capital returns to shareholders (2005, 2006, 2007)

• and a $500 million reduction in group debt.

In its 2007 capital return, AMP returned $750 million (40 cents per share) on 19 June 2007 to AMP shareholders.

Notwithstanding the reduction in AMP’s capital from the three capital returns to shareholders in 2005, 2006 and 2007, AMP’s balance sheet continued to strengthen over the half-year period from December 2006, with underlying interest cover rising from 15.2 times in 2006 to 18.4 times in the first half of 2007. Gearing on a Standard & Poor’s basis was 8% at 30 June 2007.

AMP directors declared a 2007 interim dividend of 22 cents per share (85% franked), up from 19 cents per share in the first half of 2006. This represents a dividend payout ratio of 77%, below the usual payout ratio of 85%. This reflects the fact that Cobalt Gordian’s earnings were abnormally high for the half and are unlikely to be sustained at this level.

AMP’s capital management strategy is now moving to focus on optimising its capital mix. Future capital management initiatives will be framed against the objective to maintain the Group’s ‘A’ credit rating and are likely to be less frequent, and/or significantly smaller in scale than the capital returns of the past three years.

As a result of the capital return and dividends paid during 2007, partially offset by 2007 profits and movements in reserves and contributed equity, capital and reserves of the group decreased to $1,793 million at 30 June 2007 from $2,412 million at 31 December 2006. .

2

AMP LIMITED DIRECTORS’ REPORT

For the half year ended 30 June 2007

Impact of accounting mismatches on profit

During the half year, the aggregate of accounting mismatches reduced the net profit attributable to AMP Limited shareholders by $91 million compared with $77 million for the six months to 30 June 2006.

The accounting mismatches have reduced the net profit after tax of AMP Limited by approximately 16%. They have had no impact on cashflow and value.

The accounting mismatches are a result of:

• gains and losses on ‘treasury shares’ (2007: loss $27 million, 2006: loss $57 million)

• gains and losses on investments in controlled entities of the life statutory funds (2007: loss $68 million, 2006: loss $11 million)

• gains and losses on owner occupied property (2007: no impact, 2006: loss $17 million)

• discounting of deferred tax balances in the valuation of investment contract liabilities (2007: gain $4 million, 2006: gain $8 million).

So that the AMP Limited financial report for half year ended 30 June 2007 can be drawn up in accordance with Australian Accounting Standards and to present a true and fair view of the results of operations, the presentation of the Income statement has been formatted in order to highlight the impact of the accounting mismatches.

Accounting mismatches are one of the significant impacts arising from the implementation of the Australian equivalents to International Financial Reporting Standards (AIFRS).

As detailed in the accounting policies note 1(c) in the Financial Report, accounting mismatches arise because the valuation rules for liabilities to policyholders differ from the valuation rules for certain assets which support those liabilities. The application of the rules to these policyholder assets has an illogical impact on shareholder profit. For example, where policyholder funds own AMP Limited shares, the increase in AMP Limited's share price (rebased for the capital returns) from $9.72 to $10.12 in the 6 months to June 2007 (2006: increase from $7.09 to $8.79) has driven an accounting loss of $27 million (2006: loss of $57 million) in the consolidated result.

The International Accounting Standards Board (IASB) has discussed accounting mismatches at previous meetings. The IASB has confirmed that it would be preferable to eliminate such accounting mismatches, and are reviewing alternative accounting treatments to address the accounting mismatch issue. The current discussions are part of the wider Insurance Contracts project, and as such are not expected to be resolved in the short term.

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 half 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 24 July 2007, AMP Limited Chairman Peter Mason announced the appointment of John Palmer to the AMP Limited Board. The appointment was effective immediately.

• On 23 August 2007, AMP proposed an interim dividend on ordinary shares. Details of the proposed interim dividend and dividends paid and declared during the half year are disclosed in Note 11 of the Financial Report.

• On 23 August 2007, the AMP Board announced that the Chief Executive Officer Andrew Mohl will leave the company towards the end of 2007, with a process now underway to replace him in the role.

3

AMP LIMITED DIRECTORS’ REPORT

For the half year ended 30 June 2007

Auditor’s Independence Declaration to the directors of AMP Limited

The Directors have obtained an independence declaration from our auditor, Ernst & Young, a copy of which is attached to this report and forms part of the Directors’ Report for the half year ended 30 June 2007.

Rounding

In accordance with the Australian Securities and Investments Commission Class Order 98/100, amounts in this Directors’ Report and the accompanying Financial Report have been rounded off to the nearest million Australian dollars, unless stated otherwise.

Signed in accordance with a resolution of the directors.

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PETER MASON CHAIRMAN

ANDREW MOHL MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Sydney, 23 August 2007

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Auditor’s Independence Declaration to the Directors of AMP Limited

In relation to our review of the financial report of AMP Limited for the half year ended 30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

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Ernst & Young

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Andrew Price Partner Sydney 23 August 2007

5

AMP LIMITED

ANALYSIS OF SHAREHOLDER PROFIT

For the half year ended 30 June 2007

This table shows a detailed analysis of the source of net profit after income tax attributable to shareholders of AMP Limited by business unit.	This table shows a detailed analysis of the source of net profit after income tax attributable to shareholders of AMP Limited by business unit.	This table shows a detailed analysis of the source of net profit after income tax attributable to shareholders of AMP Limited by business unit.
	30 Jun	30 Jun
	2007	2006
All amounts are after income tax	$m	$m
AMP Financial Services	323	290
AMP Capital Investors	78	55
Cobalt/Gordian	78	15
Business unit operating earnings	479	360
GroupOffice costs	(19)	(18)
Total operating earnings	460	342
Underlying investment income	90	99
Interest expense on Group debt	(26)	(31)
Cobalt/Gordian fair valueprovision release(1)	10	10
Underlying profit	534	420
Investment income market adjustment	29	1
Profit after income tax before other items	563	421
Employee defined benefit schemes	3	2
Fair value adjustments	(4)	3
Other items	(1)	(2)
Profit attributable to shareholders of AMP Limited before accounting mismatches	561	424
Accountingmismatches(2)	(91)	(77)
Netprofit after accounting mismatches	470	347

Footnote:

(1) The Cobalt/Gordian fair value provision was written down by $10m to $182m reflecting the continued run down in claim liabilities. Pending continued satisfactory run-off of the book, the provision is likely to amortise by $20m per annum for the next four years.

(2) As explained further in Note 1(c) of the Financial Report, accounting mismatches arise because the recognition and measurement rules for certain policyholder assets differ for 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 the Net profit after accounting mismatches and increased volatility in the reported profit.

6

AMP LIMITED ABN 49 079 354 519 HALF YEAR FINANCIAL REPORT 30 JUNE 2007

TABLE OF CONTENTS

INCOME STATEMENT.................................................................................................................................................................................8 BALANCE SHEET ........................................................................................................................................................................................9 STATEMENT OF RECOGNISED INCOME AND EXPENSES ..................................................................................................................10 STATEMENT OF CASH FLOWS ...............................................................................................................................................................11 NOTES TO THE FINANCIAL STATEMENTS ............................................................................................................................................12 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES....................................................................................................................12 2. SEGMENT INFORMATION...................................................................................................................................................................14 3. INCOME.................................................................................................................................................................................................15 4. EXPENSES............................................................................................................................................................................................16 5. INCOME TAX.........................................................................................................................................................................................17 6. EQUITY, DEBT AND PROPERTY SECURITIES AND OTHER FINANCIAL ASSETS.........................................................................19 7. INVESTMENT PROPERTY...................................................................................................................................................................20 8. PROPERTY, PLANT AND EQUIPMENT ..............................................................................................................................................21 9. BORROWINGS......................................................................................................................................................................................22 10. SUBORDINATED DEBT......................................................................................................................................................................23 11. DIVIDENDS .........................................................................................................................................................................................24 12. CONTRIBUTED EQUITY.....................................................................................................................................................................25 13. RESERVES AND RETAINED EARNINGS..........................................................................................................................................26 14. CONTINGENT LIABILITIES ................................................................................................................................................................28 15. EVENTS OCCURRING AFTER REPORTING DATE .........................................................................................................................29 DIRECTORS’ DECLARATION ...................................................................................................................................................................30 INDEPENDENT REVIEW REPORT...........................................................................................................................................................31

Registered Office: Level 24, 33 Alfred Street Sydney NSW 2000 Australia

AMP Limited, a company limited by shares, is incorporated and domiciled in Australia

7

AMP Limited Financial Report

Income statement

for the half year ended 30 June 2007

		Consolidated	Consolidated
		30 Jun	30 Jun
	Note	2007	2006
		$m	$m
Income and expenses of policyholders, shareholders and external unitholders(1)
Insurance premium and related revenue	3	460	458
Fee revenue	3	797	636
Other revenue	3	187	120
Investment gains and losses	3	5,512	4,503
Insurance claims and related expenses	4	(561)	(629)
Operating expenses	4	(1,168)	(910)
Finance costs	4	(341)	(308)
Movement in external unitholders' liabilities		(495)	(591)
Change in policyholder liabilities before accounting mismatches
- life insurance contracts(2)		(310)	(316)
- investment contracts(2)		(3,041)	(2,211)
Income tax (expense) credit	5	(479)	(328)
Profit attributable to shareholders of AMP Limited before accounting mismatches		561	424
Unmatched changes in policyholder liabilities (accounting mismatches) due to:(2)
- treasury shares		(27)	(57)
- investments in controlled entities of the life statutory funds		(68)	(11)
- other		4	(9)
Net profit after accounting mismatches		470	347

Footnote:

(1) Income and expenses include amounts of shareholder interests and also policyholder interests in the life statutory funds. 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 before accounting mismatches and Unmatched changes in policyholder liabilities (accounting mismatches).

(2) As explained further in Note 1(c), 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 the Net profit after accounting mismatches and increased volatility of the reported profit.

Earnings per ordinary share	cents	cents
Basic	25.5	18.8
Diluted	25.4	18.8
Basic before accounting mismatches	30.4	23.0
Diluted before accounting mismatches	30.3	22.9

8

AMP Limited Financial Report

Balance sheet as at 30 June 2007

		Consolidated	Consolidated
		30 Jun	31 Dec
	Note	2007	2006
		$m	$m
Assets
Cash and cash equivalents		1,421	1,108
Receivables		1,696	1,535
Equity securities	6	46,697	45,385
Debt securities	6	35,228	32,007
Property securities	6	5,735	5,626
Other financial assets	6	3,914	2,625
Investment property	7	8,168	7,841
Property, plant and equipment	8	526	502
Deferred tax assets	5	393	328
Other assets		248	155
Intangibles		1,007	862
Total assets ofpolicyholders, external unitholders, shareholders and minority interests		105,033	97,974
Liabilities
Payables		1,899	1,555
Current tax liabilities		780	697
Provisions		289	390
Outstanding claims liabilities		620	805
Borrow ings	9	10,756	9,988
Deferred tax liabilities	5	1,917	1,864
Subordinated debt	10	406	435
Other financial liabilities		249	65
Life insurance contract liabilities		21,238	20,974
Investment contract liabilities		51,194	46,668
External unitholders' liabilities		13,795	12,079
Total liabilities ofpolicyholders, external unitholders, shareholders and minority interests		103,143	95,520
Net assets of shareholders and minority interests		1,890	2,454
Equity
Contributed equity	12	3,828	4,067
Reserves	13	(2,479)	(1,983)
Retained earnings	13	444	328
Total equity attributable to shareholders		1,793	2,412
Minority interests		97	42
Total equity of shareholders and minority interests		1,890	2,454

9

AMP Limited Financial Report

Statement of recognised income and expenses

for the half year ended 30 June 2007

Note	30 Jun 30 Jun Consolidated
	2007 2006
	$m $m
Income and expenses (net of tax) recognised directly in equity Ow ner occupied property
- valuation gains taken to equity 13 Cash flow hedge movements 13 Defined benefit fund actuarial gains and losses 13	2 17 7 9 11 15
Exchange differences on translation of foreign operations 13	4 (30)
Total net income (expense) recognised directly in equity Netprofit after accountingmismatches	24 11 470 347
Total recognised income and expenses for the period attributable to shareholders of AMP Limited	494 358

10

AMP Limited Financial Report

Statement of cash flows

for the half year ended 30 June 2007

	Consolidated	Consolidated
	30 Jun	30 Jun
	2007	2006
	$m	$m
Cash flows from operating activities
Cash receipts in the course of operations	7,645	7,386
Interest and other items of a similar nature received	1,184	951
Dividends received	694	501
Distributions received	2,202	930
Cash payments in the course of operations	(6,721)	(6,396)
Finance costs	(370)	(332)
Income tax refunded(paid)	(360)	(185)
Cash flows from(used in) operating activities	4,274	2,855
Cash flows from investing activities
Net proceeds from sale of/(payments to acquire):
- investment property	(263)	(224)
- equity securities	448	(1,472)
- unit trusts	(2,734)	(1,807)
- interest bearing securities	(721)	2,289
- loans	(685)	(80)
- other investments	81	(10)
Payments to acquire controlled and associated companies(1) (2)	(36)	(108)
Cash flows from(used in) investing activities	(3,910)	(1,412)
Cash flows from financing activities
Proceeds from borrow ings - non Banking operations	160	161
Net movement in borrow ings - Banking operations	916	402
Net movement in deposits from customers	(62)	101
Repayment of borrow ings	(4)	(96)
Payment of capital return(3)	(738)	(739)
Dividendspaid(4)	(388)	(288)
Cash flows from(used in) financing activities	(116)	(459)
Net increase (decrease) in cash	248	984
Balance at the beginning of the period	8,870	7,254
Effect of exchange rate changes on cash balances	1	(19)
Balance at the end of the period	9,119	8,219
Footnote:

(1) Cash flows mainly relate to acquisitions and disposals during the year of operating companies controlled by the life statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

(2) Net of cash acquired or disposed.

(3) Payment of capital return is presented net of the capital return on "treasury shares".

(4) Dividends paid is presented net of dividends reinvested and dividends on "treasury shares".

11

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The consolidated economic entity (the AMP group) comprises AMP Limited (the parent entity), a company limited by shares, and all entities that it controlled during the half year and at the balance date.

(a) Basis of preparation

This general purpose Financial Report for the half year reporting period ended 30 June 2007, has been prepared in accordance with the requirements of the Corporations Act 2001 and AASB 134 Interim Financial Reporting .

Accounting policies have been consistently applied to the current half year and comparative period, unless otherwise stated. The same accounting policies and methods of computation are followed by this half year Financial Report as compared with the 31 December 2006 annual Financial Report except as described below.

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that this half year Financial Report, comprising the financial statements and the notes thereto, complies with International Financial Reporting Standards, relating to interim financial reports.

This half year Financial Report does not include all notes of the type normally included within the annual Financial Report and therefore cannot be expected to provide as full an understanding of the financial position and financial performance of the consolidated entity as that given by the annual Financial Report.

As a result, this report should be read in conjunction with the 31 December 2006 annual Financial Report of the AMP group and any public announcements made in the period by the AMP group in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.

For the purpose of this Financial Report, the half year has been treated as a discrete reporting period.

The AMP group is predominantly a wealth-management business conducting operations through AMP Life Limited (AMP Life), a registered life insurance entity, and other entities. The assets, liabilities, revenues and expenses arising from investment contracts, life insurance contracts and general insurance contracts are measured predominantly on the basis of fair value.

Where necessary, comparative information has been reclassified to be consistent with current period disclosure.

Changes in accounting policy

Since 1 January 2007, the AMP group has adopted a number of Australian Accounting Standards and Interpretations which were mandatory for annual periods on or after 1 January 2007. Adoption of these Standards and Interpretations have not had any effect on the financial position or performance of the AMP group.

(b) Principles of consolidation

This Financial Report consolidates the financial information of controlled entities. Control is determined as the power to govern the financial and operating policies of an entity or business so as to obtain benefits from its activities. In certain cases an entity or business may be controlled even though the AMP group does not own more than half of the voting power. In these cases control has been determined based on the AMP group’s power to obtain benefits from the entity or business.

The financial information for subsidiaries is prepared for the same reporting period 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. Transactions in respect of policyholder activities within the life statutory funds are consolidated into the AMP group Financial Report, along with all activities 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, revenue 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 Balance sheet.

The share of the net assets of controlled companies attributable to minority interests is disclosed separately on the Balance sheet. In the Income statement, the net profit or loss of the controlled entities relating to minority interests is removed before determining the net profit or loss attributable to shareholders of the parent entity.

Controlled entities that are acquired are accounted for using the purchase method of accounting. Information from the financial reports 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 Report includes the results for the part of the reporting period during which the parent entity had control. All inter-company balances and transactions are eliminated in full, including unrealised profits arising from intra-group transactions.

There have been no acquisitions or disposals of controlled entities or other changes in the composition of the AMP group during the half year, which would require disclosures significant to an understanding of this Financial Report. Those acquisitions and disposals which took place during the half year were largely a result of the investment activities of the life statutory funds.

12

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

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 deemed by accounting standards to be controlled by the AMP group and are therefore consolidated.

(c) Accounting mismatches

Under AIFRS, 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 items. These mismatches result in policyholder asset movements impacting the net profit after income tax attributable to shareholders and increase volatility of the reported profit. Accounting mismatches primarily arise in respect of:

• gains and losses on “treasury shares”

• gains and losses on investments in controlled entities of the life statutory funds

• gains and losses on owner-occupied properties

• discounting of deferred tax balances in the valuation of investment contract liabilities

The International Accounting Standards Board (IASB) has discussed accounting mismatches at previous Board meetings. The IASB has confirmed that “it would be preferable to eliminate such (mismatch) effects” and the IASB is reviewing alternative accounting treatments to address the accounting mismatch issue. These discussions are part of the wider IASB Insurance Contracts (Phase II) project which has a long time frame.

“Treasury shares”

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 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 AIFRS, the AMP group cannot recognise “treasury shares” on the consolidated Balance sheet. 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 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 asset movements reducing the net profit after income tax attributable to shareholders by $27m (2006: $57m).

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 investments in the controlled entities.

However, the corresponding investment contract and 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 asset movements reducing the net profit after income tax attributable to shareholders by $68m (2006: $11m).

Owner-occupied property

Under AIFRS, property owned by the AMP group which is also occupied by the AMP group is considered property, plant and equipment in the consolidated Balance sheet. Upward revaluations on 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 with the AMP 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 results in policyholder asset movements reducing the net profit after income tax attributable to shareholders. There was no impact in the current period (2006: $17m loss).

Discounting of deferred tax balances in the valuation of investment contract liabilities

The calculation of investment contract liabilities for unit linked business includes a deduction for the policyholders’ share of current tax payable and deferred tax balances of the AMP group. Historically, the deferred tax relating to unit linked business was discounted in setting unit prices, where relevant, and therefore in the calculation of investment contract liabilities. AIFRS does not allow discounting of deferred tax for financial reporting purposes and, as a result, there has been an historical mismatch between the deferred tax retained within investment contract liabilities and that reported within the financial statements.

During 2006, a decision was made on the advice of the Appointed Actuary, having regard to the equity of policyholders and the circumstances of the investment sectors, to move to a non-discounted approach for deferred tax for those investment sectors where discounting was previously applied.

The removal of the discounting of deferred tax reverses these accounting mismatches recognised in prior periods. This reversal increases net profit after income tax attributable to shareholders by $4m (2006: $8m).

13

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

2. SEGMENT INFORMATION

	AMP	AMP
	Financial	Capital	General		Elimin-
30 June 2007	Services (3)	Investors	Insurance	Other	ations (3)	Total
BUSINESS SEGMENTS	$m	$m	$m	$m	$m	$m
Total revenue(1) (2)	6,769	378	31	376	(598)	6,956
Segment result	856	116	119	(51)	-	1,040
Income tax(expense)credit	(480)	(34)	(26)	61	-	(479)
Profit attributable to shareholders of AMP
Limited before accounting mismatches	376	82	93	10	-	561
Unmatched changes in policyholder liabilities
(accounting mismatches)(3)	(64)	-	-	-	(27)	(91)
Net profit (loss) after accounting mismatches	312	82	93	10	(27)	470

	AMP	AMP
	Financial	Capital	General		Elimin-
30 June 2006	Services (3)	Investors	Insurance	Other	ations (3)	Total
BUSINESS SEGMENTS	$m	$m	$m	$m	$m	$m
Total revenue(1) (2)	5,616	269	45	317	(530)	5,717
Segment result	659	81	32	(20)	-	752
Income tax(expense)credit	(331)	(23)	(2)	28	-	(328)
Profit attributable to shareholders of AMP
Limited before accounting mismatches	328	58	30	8	-	424
Unmatched changes in policyholder liabilities
(accounting mismatches)(3)	(3)	-	-	-	(74)	(77)
Net profit (loss) after accounting mismatches	325	58	30	8	(74)	347

Footnote:

(1) Segment revenue is the aggregate of insurance premium and related revenue, fee revenue and other revenue and investment gains (losses) as detailed in Note 3.

(2) Segment revenue includes operating revenue activity between segments. These transactions are priced on an arm's length basis and are eliminated on consolidation.

(3) The impact of accounting mismatches relating to discounting of deferred tax balances and investments in controlled entities of the life statutory funds is reflected within the AMP Financial Services segment and the remainder of the accounting mismatches reflected as eliminations. See Note 1(c) for further information on accounting mismatches.

Business segment information

AMP Financial Services (AFS) - provides financial planning, investment services, superannuation, mortgage and savings products (provided by AMP Bank) and life insurance products in Australia and New Zealand. The AFS segment also includes investments of the life statutory funds w hich have controlling equity interests in trusts and companies w hich conduct investment activities and operating businesses. The individual assets, liabilities, revenues and expenses of those operating businesses are recognised in the AFS segment.

AMP Capital Investors (AMPCI) - provides investment management services in Australia, New Zealand and Asia including private capital, infrastructure and property portfolios and socially responsible investments.

General Insurance - comprises reinsurance and corporate insurance operations in run-off.

Other - includes the provision of support services to the business units, corporate funding and investment of shareholder capital not allocated to reportable segments.

14

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

3. INCOME

3. INCOME
	Consolidated
	30 Jun	30 Jun
	2007	2006
	$m	$m
(a) Insurance premium and related revenue
Life insurance contract premium and related revenue	456	444
General insurance contractpremium and related revenue	4	14
Total insurance premium and related revenue	460	458
(b) Fee revenue
Investment management and origination fees	712	556
Financial advisory fees	77	72
Banking business fees	7	7
Service fees	1	1
Total fee revenue	797	636
(c) Other revenue
Defined benefit fund income	4	2
Other revenue(1)	183	118
Total other revenue	187	120
(d) Investment gains and losses
Interest	1,010	946
Dividends and distributions
- associated entities	265	149
- other entities	2,766	1,475
Net rents	322	257
Net realised and unrealised gains	1,052	1,665
Other investment income	97	11
Total investment gains	5,512	4,503

Footnote:

(1) The consolidated balances include trading revenues 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.

15

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

4. EXPENSES

4. EXPENSES
	Consolidated
	30 Jun	30 Jun
	2007	2006
	$m	$m
(a) Insurance claims and related expenses
Life insurance contract claims and related expenses	(666)	(626)
General insurance contract claims and related expenses	105	(3)
Total insurance claims and related expenses	(561)	(629)
(b) Operating expenses
Commission expense	(262)	(229)
Investment management expenses	(169)	(83)
Fee expense on bankingbusiness	(6)	(6)
Fees and commission expenses	(437)	(318)
Wages and salaries	(282)	(248)
Contributions to defined contribution funds	(21)	(19)
Defined benefit fund expense	(2)	(1)
Share based payments expense	(6)	(5)
Other staff costs	(26)	(10)
Staff and related expenses	(337)	(283)
Occupancy and property maintenance expenses	(108)	(78)
Information technology and communication	(68)	(62)
Professional fees	(39)	(35)
Advertising and marketing	(17)	(14)
Travel and entertainment	(12)	(10)
Other expenses(1)	(150)	(110)
Other operating expenses	(394)	(309)
Total operating expenses	(1,168)	(910)
(c) Finance costs
Interest expense on borrow ings and subordinated debt	(271)	(238)
Other finance costs	(70)	(70)
Total finance costs	(341)	(308)

Footnote:

(1) The consolidated balances 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.

16

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

5. INCOME TAX

	Consolidated	Consolidated
	30 Jun	30 Jun
	2007	2006
	$m	$m
(a) Analysis of income tax (expense) credit
Current tax	(506)	(147)
(Decrease) increase in deferred tax assets	70	56
Decrease (increase) in deferred tax liabilities	(34)	(231)
Adjustment due to change in tax rates	(7)	-
Over(under) provided inpreviousyears	(2)	(6)
Income tax(expense) credit	(479)	(328)

(b) Relationship between income tax expense and accounting profit

The table below 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 2007 and 2006 is 30% for Australia and 33% for New Zealand. There are certain differences between the amounts of income and expenses recognised in the Financial Report and the amounts recognised for income tax purposes.

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. Rates applicable to New Zealand life insurance business range between 30–33%.

During the period the New Zealand government announced a change in the company tax rate from 33% to 30% for the 2008/2009 tax year. Deferred tax assets and deferred tax liabilities expected to be realised or settled after the change in tax rate has taken effect, have been remeasured to reflect the announced tax rate.

	Consolidated	Consolidated
	30 Jun	30 Jun
	2007	2006
	$m	$m
Profit before income tax	949	675
Policyholder tax recognised as a charge topolicyholders in determining profit before income tax	(322)	(205)
Profit before income tax excluding tax charged topolicyholders	627	470
Prima facie tax at the rate of 30% (2006: 30%)	(188)	(141)
Tax effect of differences betw een amounts of income and expenses recognised for accounting and
the amounts deductible/(taxable) in calculating taxable income:
Shareholder impact of par-business tax treatment	(9)	(9)
Non-deductible expenses	(27)	(9)
Non-taxable income	10	2
Tax offsets and credits	4	2
Other items	(1)	9
Over (under) provided in previous years after excluding amounts attributable to policyholders	40	9
Benefit arising from previously unrecognised tax losses	23	15
Adjustment due to change in tax rate	(7)	-
Difference in overseas tax rates	(2)	(1)
Income tax expense attributable to shareholders	(157)	(123)
Income tax expense attributable topolicyholders	(322)	(205)
Income tax (expense) credit per Income statement	(479)	(328)

17

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

5. INCOME TAX (continued)

	Consolidated	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
(c) Analysis of deferred tax asset
Expenses deductible and income recognisable in future years	185	173
Unrealised movements on borrow ings and derivatives	55	18
General insurance claims costs	22	24
Losses available for offset against future taxable income	48	36
Other	83	77
Total deferred tax assets	393	328
(d) Analysis of deferred tax liability
Unrealised investment gains	1,776	1,782
Unrealised movements on borrow ings and derivatives	66	29
Other	75	53
Total deferred tax liability	1,917	1,864
(e) Unused tax losses and deductible temporary differences not recognised
Revenue losses	242	257
Capital losses	532	581

18

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

6. EQUITY, DEBT AND PROPERTY SECURITIES AND OTHER FINANCIAL ASSETS

	Consolidated	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Equity securities
Directly held	44,855	43,870
Held via unit trusts	1,842	1,515
Total equity securities	46,697	45,385
Debt securities(1)
Interest bearing securities directly held	19,830	19,250
Interest bearing securities held via unit trusts	6,433	4,416
Secured loans	8,713	7,899
Unsecured loans	220	413
Convertible notes	32	29
Total debt securities(2)	35,228	32,007
Property securities
Held via unit trusts	5,735	5,626
Total property securities	5,735	5,626
Other financial assets
Cash securities held via unit trusts	2,500	1,025
Other financial assets(3)	1,414	1,600
Total other financial assets	3,914	2,625

Footnote:

(1) All debt securities are recorded at fair value, with the exception of $8,169m (2006: $7,592m) of interest bearing securities and secured loans held by banking operations which are recorded at amortised cost.

(2) Total debt securities includes $5,441m (2006: $4,976m) of debt securities in consolidated securitisation vehicles.

(3) The other category includes derivative financial assets and investment held via vehicles such as joint ventures and partnerships.

19

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

7. INVESTMENT PROPERTY

7. INVESTMENT PROPERTY
	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Investment property
Directlyheld	8,168	7,841
Total investment property	8,168	7,841
Movements in investment property
Balance at the beginning of the period	7,841	5,766
Additions
- through direct acquisitions(1)	215	834
- subsequent expenditure recognised in carrying amount	47	223
Acquisitions through business combinations	-	225
Disposals(1)	(376)	(162)
Net gains (losses) from fair value adjustments	439	956
Foreign currencyexchange differences	2	(1)
Balance at the end of the period	8,168	7,841

Footnote:

(1) Additions through direct acquisitions and Disposals include amounts for investment entities in which the life statutory funds hold a controlling equity interest.

20

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2007

8. PROPERTY, PLANT AND EQUIPMENT

8. PROPERTY, PLANT AND EQUIPMENT
	Ow ner-
	Occupied	Leasehold	Plant &
30 June 2007	Property	Improvements	Equipment(1)	Total
	$m	$m	$m	$m
Property, plant and equipment
Gross carrying amount	301	71	321	693
Less: accumulated depreciation and impairment losses	-	(39)	(128)	(167)
Property, plant and equipment at w ritten dow n value	301	32	193	526
Movements in property, plant and equipment
Balance at the beginning of the period	300	30	172	502
Additions
- through direct acquisitions	-	5	17	22
- subsequent expenditure recognised in carrying amount	1	-	-	1
Acquisitions through business combinations	-	-	21	21
Disposals	-	-	(3)	(3)
Increases (decreases) from revaluations and impairment
losses recognised directly in equity	2	-	-	2
Depreciation expense for the period	(2)	(3)	(13)	(18)
Foreign currencyexchange differences	-	-	(1)	(1)
Balance at the end of the period	301	32	193	526
	Ow ner-
	Occupied	Leasehold	Plant &
31 December 2006	Property	Improvements	Equipment(1)	Total
	$m	$m	$m	$m
Property, plant and equipment
Gross carrying amount	300	66	280	646
Less: accumulated depreciation and impairment losses	-	(36)	(108)	(144)
Property, plant and equipment at w ritten dow n value	300	30	172	502
Movements in property, plant and equipment
Balance at the beginning of the period	261	34	41	336
Additions
- through direct acquisitions	-	1	17	18
- subsequent expenditure recognised in carrying amount	4	-	-	4
Acquisitions through business combinations	-	-	143	143
Disposals	-	-	(16)	(16)
Increases (decreases) from revaluations and impairment
losses recognised directly in equity	35	-	-	35
Depreciation expense for theperiod	-	(5)	(13)	(18)
Balance at the end of the period	300	30	172	502

Footnote:

(1) The consolidated balances include 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.

21

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

9. BORROWINGS

9. BORROWINGS
	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Bank overdrafts	6	109
Bank loans	367	237
Bonds and notes(1)	8,343	7,608
Deposits(2)	1,991	2,030
Other loans	49	4
Total borrowings(3) (4)	10,756	9,988

Footnote:

(1) The AMP group uses interest rate swaps and cross currency swaps to manage interest rate and currency risk inherent in certain debt issues. The group continued to achieve hedge accounting for the current period resulting in the carrying value of bonds and notes being $70m lower (2006: $60m lower) reflecting cumulative changes in fair value of the underlying hedged item for the period that the effective hedge relationships were in place.

(2) Deposits is mainly comprised of at call cash on deposit and term deposits at variable interest rates within the AMP group's banking operations.

• (3) Borrowings includes amounts to fund:

• i) AMP Bank and operating businesses in which the life statutory funds hold a controlling equity interest – borrowings of $9,910m (2006: $9,083m).

ii) Corporate activities of AMP – borrowings of $846m (2006: $905m).

(4) Total borrowings include $5,407m (2006: $5,031m) of debt in consolidated securitisation vehicles.

22

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

10. SUBORDINATED DEBT

10. SUBORDINATED DEBT
	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Subordinated Floating Rate Note (3 month BBSW + 0.56% maturing in April 2009)	100	100
7.125% GBP Subordinated Guaranteed Step-Up Bonds (maturing 2019)	229	247
6.875% GBP Subordinated Guaranteed Bonds (maturing 2022)	77	88
Total subordinated debt(1) (2)	406	435

Footnote:

(1) The AMP group uses interest rate swaps and cross currency swaps to manage interest rate and currency risk inherent in certain debt issues. The group continued to achieve hedge accounting for the current period resulting in the carrying value of subordinated debt being $21m lower (2006: $10m lower) reflecting cumulative changes in fair value of the underlying hedged item for the period that the effective hedge relationships were in place.

• (2) Subordinated debt includes amounts to fund:

i) AMP Bank – subordinated debt of $100m (2006: $100m).

ii) Corporate activities of AMP – subordinated debt of $306m (2006: $335m).

23

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

11. DIVIDENDS

11. DIVIDENDS
	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Final dividends paid
2006 paid in 2007: 21 cents per ordinary share franked to 85%
(2005 paid in 2006: 18 cents per ordinary share franked to 75%)	394	337
Interim dividends paid
2006: 19 centsper ordinaryshare franked to 85%	n/a	356
Total dividends paid(1) (2)	394	693
Interim dividend proposed but not recognised
2007: 22 centsper ordinaryshare franked to 85%(3)	412	n/a

Footnote:

(1) Total dividends paid includes dividends paid on "treasury shares". See Note 13 for further information regarding the impact of "treasury shares" on dividends paid and retained profits.

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

(3) As AMP has consolidated negative retained earnings (consisting of retained earnings and the Demerger loss reserve), it is required to obtain approval from APRA under APRA's prudential standards prior to the payment of dividends.

APRA approval has been granted for the payment of the 2007 interim dividend proposed.

24

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

12. CONTRIBUTED EQUITY

12. CONTRIBUTED EQUITY
	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Movements in issued capital
Balance at the beginning of the period	4,253	4,959
Transfer of Capital Reserve to Issued Capital(1)	509	-
Reduction in share capital through Capital return(2)	(750)	(750)
nil (2006: 4,957,739) shares issued under Dividend Reinvestment Plan(3)	-	44
1,301(2006: 1,829)shares issued to former members of the AMP Society(4)	-	-
Balance at the end of the period	4,012	4,253
Total issued capital
1,874,852,876 (2006: 1,874,851,575) ordinary shares fully paid	4,012	4,253
Movements in "treasury shares"(5)
Balance at the beginning of the period	(186)	(210)
Decrease (increase) in cost of "treasury shares" due to sales and purchases	(10)	13
Decrease in cost of "treasuryshares" due to capital return	12	11
Balance at the end of the period	(184)	(186)
Total contributed equity
1,848,071,942 (2006: 1,847,637,683) ordinary shares fully paid(5)	3,828	4,067

Ordinary shares have the right to receive dividends as declared and, in the event of the w inding 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) During the period the entire balance of the Capital reserve was transferred to Issued capital in accordance with section 23 of ATO Class Ruling 2007/30. The amount transferred was subsequently used to fund part of the capital return made during the period (see footnote (2) below).

• (2) On 15 February 2007, AMP announced a proposed capital return of 40 cents per share to the shareholders of AMP Limited. The capital return was approved by shareholders at the annual general meeting on 17 May 2007. The record date for determining entitlement to the capital return was 25 May 2007 and payment was made on 18 June 2007.

On 16 February 2006, AMP announced a proposed capital return of 40 cents per share to the shareholders of AMP Limited. The capital return was approved by shareholders at the annual general meeting on 18 May 2006. The record date for determining entitlement to the capital return was 25 May 2006 and payment was made on 19 June 2006.

• (3) Under the terms of the Dividend Reinvestment Plan (DRP), shareholders may elect to have part of their dividend entitlements satisfied in shares rather than being paid in cash. Shares were issued under the DRP for the 2005 final dividend (paid in April 2006) at $8.78 per share. No shares were issued in relation to the 2006 interim and final dividends. Shares were purchased on market and transferred to DRP participants.

• (4) The former members of AMP Society exchanged their membership rights for shares in AMP Limited on demutualisation. 1,043,356,372 (2006: 1,043,355,071) shares have been issued since demutualisation to former members at an issue price of $3.00 per share.

• (5) Of the ordinary shares on issue, AMP Life Limited (a wholly owned controlled entity) holds 26,780,934 (2006: 27,213,892) 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.

25

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

13. RESERVES AND RETAINED EARNINGS

13. RESERVES AND RETAINED EARNINGS
	Consolidated
	30 Jun	31 Dec
	2007	2006
	$m	$m
Capital reserve(1)
Balance at the beginning of the period	509	510
Transfer of Capital reserve to Issued capital(1)	(509)	-
Other movements(1)	-	(1)
Balance at the end of the period	-	509
Equity contribution reserve(2)
Balance at the beginning of the period	1,019	1,019
Movements duringtheperiod	-	-
Balance at the end of the period	1,019	1,019
Share based payments reserve(3)
Balance at the beginning of the period	8	19
Expense during the period	6	10
Sharepurchases	(6)	(21)
Balance at the end of the period	8	8
Cash flow hedges reserve(4)
Balance at the beginning of the period	18	3
Gains from changes in fair value	7	15
Balance at the end of the period	25	18
Ow ner-occupied property revaluation reserve(5)
Balance at the beginning of the period	61	26
Revaluations duringtheperiod	2	35
Balance at the end of the period	63	61
Foreign currency translation reserve(6)
Balance at the beginning of the period	(13)	6
Net translation adjustment on self sustainingforeign operations	4	(19)
Balance at the end of the period	(9)	(13)
Demerger loss reserve(7)
Balance at the beginning of the period	(3,585)	(3,585)
Movements duringtheperiod	-	-
Balance at the end of the period	(3,585)	(3,585)
Total reserves	(2,479)	(1,983)

26

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

13. RESERVES AND RETAINED EARNINGS (continued)

13. RESERVES AND RETAINED EARNINGS (continued)
		Consolidated
		30 Jun	31 Dec
	Note	2007	2006
		$m	$m
Retained earnings
Balance at the beginning of the period		328	63
Net profit (loss) after tax attributable to shareholders of AMP Limited		470	915
Defined benefit fund actuarial gains and losses		11	28
Gain (loss) on sale of "treasury shares" recognised directly in retained earnings		23	5
Dividends paid(8)	11	(394)	(693)
Less: dividendspaid on "treasuryshares"(8)		6	10
Balance at the end of the period		444	328

Footnote:

• (1) During the period the entire balance of the capital reserve was transferred to Issued capital in accordance with section 23 of ATO Class Ruling 2007/30. The amount transferred was subsequently used to fund part of the Capital return made during the period.The Capital reserve was the balance remaining from the amount capitalised in 1998 on the demutualisation of AMP Society after allotting shares to former members under the terms of the demutualisation. Minor adjustments were made from time to time which involved the issue of further shares to former members.

• (2) 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.

(3) The Share based payments 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.

(4) The Cash flow hedges reserve represents the cumulative impact of changes in the fair value of derivatives designated as cash flow hedges.

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

(6) Exchange differences arising on translation of foreign controlled entities within the AMP group are taken to the Foreign currency translation reserve.

(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.

27

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

14. CONTINGENT LIABILITIES

As at the date of this report, there have been no material changes in contingent liabilities since those reported in the 2006 Annual Financial Report except that the litigation relating to the sale of Stanbroke Pastoral Pty Ltd was settled in March 2007. There was no material financial impact from the settlement.

28

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2007

15. EVENTS OCCURRING AFTER REPORTING DATE

At the date of this report, the directors are not aware of any matter or circumstance that has arisen since the end of the period which 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 24 July 2007, AMP Limited Chairman Peter Mason announced the appointment of John Palmer to the AMP Limited Board. The appointment was effective immediately.

On 23 August 2007, AMP proposed an interim dividend on ordinary shares.

On 23 August 2007, the AMP Board announced that the Chief Executive Officer Andrew Mohl will leave the company towards the end of 2007, with a process now underway to replace him in the role.

29

AMP Limited Financial Report

Directors’ declaration for the half year ended 30 June 2007

In accordance with a resolution of the directors of AMP Limited, the directors declare that:

• (a) The financial statements and the notes to the financial statements comply with the accounting standards;

• (b) The financial statements and notes give a true and fair view of the financial position and performance of the consolidated entity for the half year ended 30 June 2007; and

• (c) In the directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

==> picture [190 x 50] intentionally omitted <==

PETER MASON CHAIRMAN

==> picture [132 x 62] intentionally omitted <==

ANDREW MOHL

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Sydney, 23 August 2007

30

==> picture [593 x 121] intentionally omitted <==

Independent review report to members of AMP Limited

We have reviewed the accompanying half year financial report of AMP Limited and the entities it controlled during the period, which comprises the balance sheet as at 30 June 2007, and the income statement, statement of recognised income and expenses and cash flow statement for the period ended on that date, other selected explanatory notes and the directors’ declaration.

Directors’ Responsibility for the half year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the half year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal controls relevant to the preparation and fair presentation of the half year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 30 June 2007 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 and other mandatory financial reporting requirements in Australia. As the auditor of AMP Limited and the entities it controlled during the half year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included by reference in the Directors’ Report.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of AMP Limited and the entities it controlled during the period, is not in accordance with:

• (a) the Corporations Act 2001 , including:

• (i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2007 and of its performance for the half year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 ; and

(b) other mandatory financial reporting requirements in Australia.

==> picture [138 x 42] intentionally omitted <==

Ernst & Young

==> picture [83 x 57] intentionally omitted <==

Andrew Price Partner Sydney 23 August 2007

31

Liability limited by a scheme approved under Professional Standards Legislation