AMP LIMITED — Interim / Quarterly Report 2011

Jun 27, 2011

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28 June 2011

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AMP’s profit template & accounting implications post merger with AXA APH

AMP Limited has provided a reporting template for its first half 2011 (1H 11) financial results announcement and details of accounting implications following its merger with AXA APH Limited’s Australian and New Zealand businesses (AXA) which came into effect 30 March 2011.

While AMP will integrate AXA with its AMP Financial Services and AMP Capital Investors business units, AXA’s financial results for the period 1 April to 30 June 2011 will be reported separately at the 1H 11 financial result announcement on 18 August 2011.

Once the AXA and AMP businesses integration is more advanced, further financial information including reporting templates and comparatives will be provided.

AMP’s profit template for its 1H 11 result is below.

AMP has also provided the following information to provide clarity to the market on reporting:

• AMP intends to make a number of reclassifications which will impact AXA’s operating earnings[1] . These reclassifications will move the operating earnings for AXA Financial Planning and Charter Financial Planning from investment experience to AXA’s operating earnings and will allocate AXA employee long term incentive costs to AXA operating earnings.

• Group office costs will include both AMP and AXA group costs. AXA APH’s Appendix 4E for the year ended 31 December 2010 provides details on the Australian and New Zealand share of total AXA APH FY 10 group costs.

• As part of the merger, AMP issued $600 million of subordinated exchangeable notes. The exchangeable notes were issued on 26 March 2011 at 250 bps over the three month bank bill swap rate. The exchangeable notes qualify as Lower Tier 2 capital for regulatory capital purposes.

• The proceeds from the $600 million of subordinated exchangeable notes were used to fund the cash contribution to AXA APH Limited shareholders and to fund half of the integration costs. The remaining integration costs will be funded from existing capital resources.

• Merger synergies will be recognised in business unit operating earnings (both AMP and AXA) and Group office costs. AMP will provide separate synergy disclosures as part of its results announcement on 18 August 2011.

1 As disclosed on page 116 of the Explanatory Memorandum lodged with the ASX 10 January 2011.

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AMP’s profit template & accounting implications post merger with AXA APH/ 2

• M&A transaction costs for 1H 11 are expected to be $30 million and relate primarily to the costs associated with the merger of AXA and include legal, financing and investment banking costs. These M&A transaction costs are not part of the merger integration budget.

• Integration costs started being incurred from 30 March 2011. AMP will provide an update on integration costs as part of its results announcement on 18 August 2011.

• On 30 March 2011, AMP recognised AXA net tangible assets, which includes $1.2 billion of shareholder investment assets which will earn investment income. Underlying investment income will be based on the merged company shareholder investment assets. The underlying investment income rate of return for FY 11 is expected to be 4.25 per cent post tax.

• The difference between the purchase consideration for AXA and its net tangible assets represents AXA intangible assets and goodwill. AXA’s intangible assets are required to be amortised over their expected useful life. Goodwill is not required to be amortised. Further details will be provided at AMP’s 1H 11 profit announcement on 18 August 2011.

• Comparatives in the 1H 11 profit announcement will not be adjusted to include AXA.

AMP profit template 1H 11

AMP profit template 1H 11
A$m	1H 11	1H 10
Australian contemporary wealth management		150
Australian contemporary wealth protection		73
Australian mature		68
New Zealand		32
AMP Financial Services		323
AXA Australia and New Zealand		-
AMP Capital Investors		44
BU operating earnings		367
GroupOffice costs		(20)
Total operating earnings		347
Underlying investment income		64
Interest expense on corporate debt		(36)
AMP Limited tax loss recognition		8
Underlying profit		383
Market adjustment – investment income		(8)
Market adjustment – annuity fair value		5
Market adjustment – risk products		10
Loan hedge revaluations		8
Other items		4
Profit after income tax before AXA merger related adjustments
and accounting mismatches		402
M&A transaction costs		(7)
AXA integration costs		-
Amortisation of AXA acquired intangible assets		-
Accountingmismatches		30
Netprofit attributable to shareholders of AMP limited		425

AMP’s profit template & accounting implications post merger with AXA APH/ 3

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