AMP LIMITED - Interim / Quarterly Report 2012

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16 August 2012

Manager ASX Market Announcements Australian Securities Exchange Level 4, 20 Bridge Street Sydney NSW 2000

Manager

Market Information Services Section New Zealand Stock Exchange Level 24, NZX Centre, 11 Cable Street Wellington, New Zealand

Announcement No: 25/2012 AMP Limited (ASX/NZX: AMP) (also for release to AMP Group Finance Services Limited (ASX: AQNHA & NZX: AQN010))

Half Year Financial Results

Part One: Appendix 4D Part Two: 1H 12 results show AMP driving earnings growth

Part Three: Investor Presentation Part Four: Investor Report Part Five: Directors‘ Report and Financial Report .

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Public Affairs T 02 9257 6127 E [email protected] W AMP.com.au/media AMP_AU

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

AMP Limited ABN 49 079 354 519

Directors’ Report and Financial Report for the half year ended 30 June 2012

AMP Limited

DIRECTORS’ REPORT

for the half year ended 30 June 2012

Your directors present their report on the consolidated entity consisting of AMP Limited and the entities it controlled at the end of or during the half year ended 30 June 2012.

Directors’ details

The directors of AMP Limited during the half year ended 30 June 2012 and up to the date of this report are shown below. Directors were in office for this entire period.

Peter Mason AM, Chairman – BCom (Hons), MBA, Hon DBus (UNSW), FAICD Craig Dunn, Chief Executive Officer and Managing Director – BCom, FCA Patricia Akopiantz – BA, MBA Richard Allert AO – FCA Catherine Brenner – BEc, LLB, MBA Brian Clark – DSc Paul Fegan – MBA John Palmer ONZM – BAgrSc, FNZID Nora Scheinkestel – LLB (Hons), PhD, FAICD Peter Shergold AC – BA (Hons), MA, PhD, FAICD

Principal activities

AMP is Australia and New Zealand’s leading independent wealth management company, with a retail banking business in Australia and a growing international investment management business. It provides financial advice, products and services and investment opportunities to help people and organisations build financial security.

The company serves more than five million retail customers in Australia and New Zealand and 360 institutional clients in these markets, along with clients in Asia and Europe. AMP also has 5,860 employees, around 940,000 shareholders and $159 billion of assets under management.

AMP Financial Services

AMP Financial Services provides customers in Australia and New Zealand with financial planning and advice, superannuation, retirement income and other investment products for individuals, superannuation services for businesses, income protection, disability and life insurance and selected banking products. These products and services are primarily provided through a network of 4,259 aligned and employed advisers and planners in Australia and New Zealand, as well as through extensive relationships with independent financial advisers.

In June 2012, AMP announced the acquisition of the Cavendish Group’s self-managed superannuation fund (SMSF) administration and investment portfolio administration operations and became Australia’s leading SMSF administrator. Cavendish is Australia’s largest SMSF administrator, with more than 5,000 funds. The acquisition was completed on 3 July 2012.

AMP Bank has approximately 100,000 customers, a mortgage book of $12.0 billion and a deposit book of $8.6 billion.

AMP Capital

AMP Capital is one of Asia Pacific’s largest diversified investment managers, managing around $123 billion in assets for investors. Through a team of in-house investment professionals and a carefully selected global network of investment partners, AMP Capital invests in equities, fixed interest, property, infrastructure, multimanager and multi-asset funds. AMP Capital also manages property and infrastructure assets. AMP Capital has established operations in Australia and New Zealand and a growing international presence with offices in Bahrain, China, Hong Kong, India, Japan, Luxembourg, Singapore, the United Kingdom and the United States.

In March 2012, AMP Capital formed a strategic business and capital alliance with a leading Japanese trust bank, Mitsubishi UFJ Trust and Banking Corporation (MUTB). The strategic business and capital alliance will accelerate AMP Capital’s growth in Asia and significantly expand its distribution footprint in Japan. Under the terms of this strategic business and capital alliance, MUTB acquired a 15 per cent minority interest in AMP Capital Holdings Limited, the parent company of the AMP Capital group of companies for $425m.

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AMP Limited

DIRECTORS’ REPORT for the half year ended 30 June 2012

Review of operations and results

AMP operates in one of the largest and fastest growing wealth management markets in the world. It holds market-leading positions in financial advice and key product categories achieved through high quality, awardwinning products, platforms and investment capabilities and a broad distribution footprint. The company’s scale, efficiency, large and diverse customer base and trusted brand are a competitive set of advantages.

AMP's statutory profit attributable to shareholders of AMP Limited for the half year ended 30 June 2012 was $383 million. The profit attributable to shareholders of AMP Limited for the half year ended 30 June 2011, which included only a three month contribution from the Australian and New Zealand businesses of AXA Asia Pacific which merged with AMP on 30 March 2011, was $349 million.

Basic earnings per share for the half year ended 30 June 2012 on a statutory basis was 13.5 cents per share (1H11 14.4 cents per share).

Underlying profit is the basis on which the board determines the dividend payment and reflects the business performance of AMP. It is AMP’s preferred measure of profitability as it removes merger related costs and some of the impact of investment market volatility. AMP’s underlying profit for the half year ended 30 June 2012 was $491 million (1H11 $459 million) . On an underlying basis, earnings were 17.1 cents per share (1H11 18.6 cents per share).

AMP’s key performance measures were as follows:

underlying profit $491 million was up 9% per cent on 2H 11
growth measures
AMP Financial Services net cashflows of $301 million, up from net cashflows of $94 million in 1H 11; AMP Capital external net cash outflows were $1.35 billion, compared with net cash outflows of $371 million in 1H11, and
AMP Financial Services value of risk new business up 19 per cent on 1H 11 to $112 million
80 per cent of AMP Capital's funds met or exceeded benchmark for the three years to 30 June 2012, and
o underlying return on equity increased 0.6 percentage points to 13.5 per cent in 1H 12 from 2H 11 reflecting the growth in underlying profit, partly offset by a higher capital base.

Total AMP assets under management were $159 billion at 30 June 2012, in line with 31 December 2011.

Differences between underlying profit and statutory profit

The 30 June 2012 underlying profit of $491 million excludes the impact (net of any tax effect) of:

investment income and annuity market value adjustments losses of $11 million
risk product market adjustments gain of $23m
net benefit from one-off and non-recurring items of $10 million
merger and acquisition transaction costs of $2 million
AXA integration costs of $71 million
amortisation of AXA acquired intangible assets of $50 million, and
accounting mismatch losses of $7 million.

A reconciliation between underlying profit and statutory profit is provided in Note 2 of the Financial Report.

Under Australian Accounting Standards, some assets held on behalf of the policyholders (and related tax balances) are recognised in the Financial Report at different values to the values used in the calculation of the liability to policyholders in respect of the same assets. Therefore, movements in these policyholder assets result in accounting mismatches which impact profit attributable to shareholders. These differences have no impact on the operating earnings of the group.

The accounting mismatches arise from policyholder interests in the following:

‘Treasury shares’ (AMP Limited shares held by the statutory funds on behalf of policyholders) – gain of $4 million (1H11: $10 million gain)
Owner occupied properties – loss of $1 million (1H11: $6 million gain)
AMP life insurance statutory funds’ investments in controlled entities – loss of $5 million (1H11: $24 million loss)
AMP life insurance statutory funds’ superannuation products invested with AMP Bank – loss of $5 million (1H11: $1 million loss).

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AMP Limited

DIRECTORS’ REPORT

for the half year ended 30 June 2012

Capital management

Equity and reserves of the AMP group attributable to shareholders increased to $7.34 billion at 30 June 2012 from $6.83 billion at 31 December 2011. This increase was due to profits over the period, proceeds from completion of the MUTB strategic business and capital alliance and additional share capital issued under the Dividend Reinvestment Plan.

AMP remains well capitalised, with $2.05 billion in regulatory capital resources above minimum regulatory requirements (MRR) at 30 June 2012 ($1.54 billion at 31 December 2011).

AMP continues to actively manage its capital position in light of continuing market volatility and regulatory changes.

AMP has declared an interim dividend of 12.5 cents per share, franked to 55%. The dividend payout ratio is 73% of underlying profit for the half year ended 30 June 2012. AMP’s dividend policy is to pay out 70 – 80 % of underlying profit, franked to the maximum extent possible.

AMP will continue to offer 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.

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:

In June 2012, AMP entered into contractual arrangements to acquire the SMSF administration and investment portfolio administration operations of the Cavendish Group. Under the contractual arrangements, control of these businesses passed to AMP on 3 July 2012 and, accordingly, this transaction has not been recognised in the 30 June 2012 Financial Report.
On 31 July 2012 a proposal was announced to internalise the management of DUET group (an ASX listed infrastructure investment vehicle managed by a joint venture between AMP Capital and Macquarie Group). Under this proposal, AMP Capital would be entitled to consideration of $41 million to be paid in DUET group stapled securities which AMP Capital would be required to hold until at least 30 June 2013. The proposal is subject to a vote of DUET group unit holders expected to be held in the third quarter of 2012.
On 16 August 2012, AMP announced an interim dividend on ordinary shares of 12.5 cents per share. Details of the announced interim dividend and dividends paid and declared during the half year are disclosed in Note 13 of the Financial Report.

Rounding

In accordance with the Australian Securities and Investments Commission Class Order 98/0100, amounts in this Directors’ Report and the accompanying Financial Report have been rounded off to the nearest million Australian dollars, unless stated otherwise.

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AMP Limited DIRECTORS’ REPORT

for the half year ended 30 June 2012

Auditor’s independence declaration to the directors of AMP Limited

The directors have obtained an independence declaration from the company’s auditor, Ernst & Young for the half year ended 30 June 2012.

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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 2012, 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 Andrew Price Partner 16 August 2012

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AMP Limited DIRECTORS’ REPORT

for the half year ended 30 June 2012

Signed in accordance with a resolution of the directors.

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PETER MASON Chairman

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CRAIG DUNN Managing Director and Chief Executive Officer

Sydney, 16 August 2012

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AMP LIMITED ABN 49 079 354 519 HALF YEAR FINANCIAL REPORT

30 JUNE 2012

INCOME STATEMENT ............................................................................................................................................................................ 1	INCOME STATEMENT ............................................................................................................................................................................ 1
STATEMENT OF COMPREHENSIVE INCOME ....................................................................................................................................... 2
STATEMENT OF FINANCIAL POSITION ................................................................................................................................................. 3
STATEMENT OF CHANGES IN EQUITY ................................................................................................................................................. 4
STATEMENT OF CASH FLOWS ............................................................................................................................................................. 6
NOTES TO THE FINANCIAL STATEMENTS ........................................................................................................................................... 7
1.	BASIS OF PREPARATION AND ACCOUNTING POLICIES ...................................................................................................... 7
2.	SEGMENT INFORMATION ....................................................................................................................................................... 9
3.	INCOME .................................................................................................................................................................................. 13
4.	INVESTMENT GAINS AND (LOSSES) .................................................................................................................................... 14
5.	EXPENSES ............................................................................................................................................................................. 15
6.	INCOME TAX .......................................................................................................................................................................... 16
7.	INVESTMENTS IN FINANCIAL ASSETS AND OTHER FINANCIAL LIABILITIES ................................................................... 18
8.	INVESTMENT PROPERTY ..................................................................................................................................................... 19
9.	PROPERTY, PLANT AND EQUIPMENT ................................................................................................................................. 20
10.	INTANGIBLES ......................................................................................................................................................................... 21
11.	BORROWINGS ....................................................................................................................................................................... 22
12.	SUBORDINATED DEBT .......................................................................................................................................................... 22
13.	DIVIDENDS ............................................................................................................................................................................. 23
14.	CONTRIBUTED EQUITY ......................................................................................................................................................... 24
15.	CHANGES IN COMPOSITION OF THE AMP GROUP ............................................................................................................ 25
16.	CONTINGENT LIABILITIES ..................................................................................................................................................... 25
17.	EVENTS OCCURRING AFTER REPORTING DATE ............................................................................................................... 25
DIRECTORS’ DECLARATION ............................................................................................................................................................... 26
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF AMP LIMITED .................................................................................... 27

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

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

AMP Limited Financial Report

Income statement for the half year ended 30 June 2012

		30 Jun	30 Jun
	Note	2012	2011
		$m	$m
Income and expenses of shareholders, policyholders, external unitholders and non-
controlling interests(1)
Life insurance premium and related revenue	3	1,068	798
Fee revenue	3	1,112	893
Other revenue	3	155	147
Investment gains and (losses)	4	4,700	2,087
Life insurance claims and related expenses	5	(982)	(762)
Operating expenses	5	(1,909)	(1,492)
Finance costs	5	(436)	(444)
Share of profit or (loss) of associates accounted for using the equity method		2	5
Movement in external unitholder liabilities		(296)	(129)
Change in policyholder liabilities
- life insurance contracts		(360)	58
- investment contracts		(2,364)	(823)
Income tax(expense)credit	6	(326)	(6)
Profit		364	332
Profit attributable to shareholders of AMP Limited		383	349
Profit(loss)attributable to non-controllinginterests		(19)	(17)
Profit		364	332

Footnote:

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

	30 Jun	30 Jun
	2012	2011
Earnings per share forprofit attributable to ordinary shareholders of AMP Limited	cents	cents
Basic	13.5	14.4
Diluted	13.4	14.3

AMP Limited Financial Report

Statement of comprehensive income for the half year ended 30 June 2012

	30 Jun	30 Jun
	2012	2011
	$m	$m
Profit	364	332
Other comprehensive income recognised in retained earnings
Defined benefit plans (1)
- actuarial gains and (losses)	8	(52)
- income tax(expense)credit	(2)	15
	6	(37)
Other comprehensive income recognised in reserves
Cash flow hedges (2)
- gains and (losses) in fair value of cash flow hedges	(31)	(12)
- income tax (expense) credit	9	4
- transferred to profit for the year	8	8
- transferred toprofit for theyear - income tax(expense)credit	(2)	(2)
	(16)	(2)
Owner-occupied property revaluation
- gains (losses) in valuation of owner-occupied property	8	(19)
- income tax(expense)credit	-	1
	8	(18)
Exchange difference on translation of foreign operations
- exchangegains(losses)	25	15
	25	15
Revaluation of hedge of net investments
-gains and(losses)in fair value of hedge of net investments	(1)	1
	(1)	1
Total comprehensive income	386	291
Total comprehensive income attributable to shareholders of AMP Limited	405	308
Total comprehensive income(loss)attributable to non-controllinginterests	(19)	(17)
Total comprehensive income	386	291

Footnote

(1) Actuarial gains and (losses) are determined in accordance with AASB119 Employee Benefits. This is not the same as the calculation methods used to determine the funding requirements for the plans.

(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.

AMP Limited Financial Report

Statement of financial position as at 30 June 2012

		30 Jun	31 Dec
	Note	2012	2011
		$m	$m
Assets
Cash and cash equivalents		3,991	4,652
Receivables		2,489	2,221
Current tax assets		12	248
Inventories and other assets		251	276
Investments in financial assets measured at fair value through profit or loss	7	78,796	76,528
Investments in financial assets measured at amortised cost	7	14,076	12,905
Investment properties	8	7,439	7,424
Investments in associates accounted for using the equity method		119	115
Property, plant and equipment	9	475	479
Deferred tax assets	6	1,297	1,095
Intangibles	10	4,310	4,347
Total assets of shareholders of AMP Limited, policyholders, external unitholders and non-
controlling interests		113,255	110,290
Liabilities
Payables		1,537	1,932
Current tax liabilities		274	86
Provisions		575	556
Other financial liabilities	7	2,708	2,604
Borrowings	11	11,948	11,410
Subordinated debt	12	959	949
Deferred tax liabilities	6	1,017	923
External unitholder liabilities		7,122	7,224
Life insurance contract liabilities		24,314	24,399
Investment contract liabilities		55,023	52,940
Defined benefitplan liabilities		338	370
Total liabilities of shareholders of AMP Limited, policyholders, external unitholders and non-
controlling interests		105,815	103,393

Net assets of shareholders of AMP Limited and non-controlling interests		7,440	6,897
Equity (1)
Contributed equity	14	9,233	9,080
Reserves		(2,164)	(2,534)
Retained earnings		271	283
Total equity of shareholders of AMP Limited		7,340	6,829
Non-controllinginterests		100	68
Total equity of shareholders of AMP Limited and non-controlling interests		7,440	6,897

Footnote

(1) Further information on Equity is provided on the Statement of changes in equity on the following page.

AMP Limited Financial Report

Statement of changes in equity

for the half year ended 30 June 2012

	Owner Share- occupied Foreign Non- Total Equity based Cash flow property currency Hedge of net Capital Demerger Total controlling equity Contributed contribution payment hedge revaluation translation investment profits loss Retained shareholder interest $m equity reserve (1) reserve (2) reserve (3) reserve ( 4) reserve ( 5) reserve ( 6) reserve ( 7) reserve ( 8) earnings equity $m $m $m $m $m $m $m $m $m $m $m $m Equity attributable to shareholders of AM P Limited
30 June 2012 Balance at the beginning of the period Profit (Loss) Other comprehensive income	9,080 1,019 35 (17) 74 (64) 4 - (3,585) 283 6,829 68 6,897 - - - - - - - - - 383 383 (19) 364 - - - (16) 8 25 (1) - - 6 22 - 22
Total comprehensive income Share-based payment expense Sale of non-controling interest in controlled entity(7) Net sale/(purchase) of 'treasury shares' Dividends paid(9) Dividends paid on 'treasury shares'(9) New capital from shares issued(10) Non-controlling interest on sales and acquisitions	- - - (16) 8 25 (1) - - 389 405 (19) 386 - - 14 - - - - - - - 14 - 14 - - - - - - - 340 - - 340 - 340 (6) - - - - - - - - (7) (13) - (13) - - - - - - - - - (400) (400) - (400) - - - - - - - - - 6 6 - 6 159 - - - - - - - - - 159 - 159 - - - - - - - - - - - 51 51
Balance at the end of theperiod	9,233 1,019 49 (33) 82 (39) 3 340 (3,585) 271 7,340 100 7,440
30 June 2011
Balance at the beginning of the period Profit (Loss) Other comprehensive income	5,051 1,019 8 (5) 66 (69) 1 - (3,585) 452 2,938 60 2,998 - - - - - - - - - 349 349 (17) 332 - - - (2) (18) 15 1 - - (37) (41) - (41)
Total comprehensive income Share-based payment expense Net sale/(purchase) of 'treasury shares' Dividends paid(9) Dividends paid on 'treasury shares'(9) New capital from shares issued(10) Non-controlling interest on sales and acquisitions	- - - (2) (18) 15 1 - - 312 308 (17) 291 - - 12 - - - - - - - 12 - 12 (101) - - - - - - - - (1) (102) - (102) - - - - - - - - - (314) (314) - (314) - - - - - - - - 4 4 - 4 3,920 - - - - - - - - - 3,920 - 3,920 - - - - - - - - - - - 10 10
Balance at the end of theperiod	8,870 1,019 20 (7) 48 (54) 2 - (3,585) 453 6,766 53 6,819

AMP Limited Financial Report

Statement of changes in equity (continued) for the half year ended 30 June 2012

Footnote:

(1) There has been no movement in the Equity contribution reserve established in 2003 to recognise the additional loss on the demerger of AMP’s UK operations in December 2003. This loss was 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 capital profits reserve represents gains attributable to shareholders of AMP on the sale of minority interests in controlled entities to entities outside the AMP group.
(8) There has been no movement in the Demerger loss reserve established in 2003 to recognise the transfer from shareholders’ retained earnings of the total loss on the demerger of AMP’s UK operations in December 2003.
(9) 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.
(10) Shares issued under dividend reinvestment plan $159m (2011: $118m). Shares issued to minority shareholders of AXA Asia Pacific Holdings Limited in 2011 on the acquisition of the company $3,802m.

AMP Limited Financial Report Statement of cash flows

for the half year ended 30 June 2012

Statement of cash flows for the half year ended 30 June 2012
		30 Jun	30 Jun
		2012	2011
		$m	$m
Cash flows from operating activities (1)
Cash receipts in the course of operations		7,437	7,510
Interest and other items of a similar nature received		1,196	1,211
Dividends and distributions received (2)		332	1,078
Cash payments in the course of operations		(8,399)	(7,640)
Finance costs		(449)	(451)
Income tax refunded /(paid)		(38)	(214)
Cash flows from operating activities		78	1,494
Cash flows from investing activities (1)
Net proceeds from sale of/(payments to acquire):
- investment property		56	20
- investments in financial assets (1)(3)		(1,634)	(2,634)
- operating and intangible assets		(23)	-
Proceeds from disposal of subsidiaries and other businesses net of cash acquired (4)		3	-
Payments to acquire other subsidiaries and other businesses net of cash acquired (4)		(7)	-
Acquisition of AXA Asia Pacific Holdings Limited		-	1,673
Cash flows from(used in) investing activities		(1,605)	(941)
Cash flows from financing activities (1)
Proceeds from borrowings - non Banking operations		611	505
Net movement in deposits from customers		912	508
Repayment of borrowings - non Banking operations		(590)	(856)
Net movement in borrowings - Banking operations		(463)	167
Proceeds from issue of subordinated debt		-	600
Proceeds from the sale of 15% of AMP Capital Holdings Limited		425	-
Dividendspaid (5)		(237)	(192)
Cash flows from(used in) financing activities		658	732
Net increase (decrease) in cash and cash equivalents		(869)	1,285
Cash and cash equivalents at the beginning of the period		8,736	8,168
Effect of exchange rate changes on cash and cash equivalents		11	9
Cash and cash equivalents at the end of theperiod	(1)	7,878	9,462

Footnote:

(1) Cash flows and cash and cash equivalent balances include amounts attributable to shareholders' interests, policyholders' interests in the AMP life insurance entities' statutory funds and controlled entities of those statutory funds, external unitholders' interests and non-controlling interests. Amounts included in respect of the AMP life insurance entities' statutory funds and controlled entities of those statutory funds have a substantial impact on cash flows from operating activities and investing activities and also impact proceeds from and repayments of borrowing - non Banking operations, and cash and cash equivalent balances.

(2) Dividends and distributions received for 2012 are amounts of cash received mainly from investments held by the AMP life insurance entities' statutory funds and controlled entities of the those statutory funds. Dividends and distributions reinvested in 2012 have been treated as non-cash items. In 2011, Dividends and distributions received and Net proceeds from sale of/ (payments to acquire) investments in financial assets were shown gross of dividends and distributions reinvested during the period.

(3) Net proceeds from sale of/(payment to acquire) investments in financial assets includes loans and advances made (net of repayments) and purchases of financial assets (net of maturities) during the period by AMP Bank.

(4) Payments/receipts to acquire/dispose of other subsidiaries and other businesses did not have a material impact on the composition of the AMP group.

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

Notes to the financial statements

for the half year ended 30 June 2012

1. Basis of preparation and 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

These general purpose financial statements have been prepared in accordance with the Corporations Act 2001 and AASB134 ‘Interim Financial Reporting’.

These half year financial statements do not include all notes of the type normally included within the annual financial statements and therefore cannot be expected to provide as full an understanding of the financial position and financial performance of the AMP group as that given by the annual financial statements. As a result, these statements should be read in conjunction with the 2011 annual financial statements 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.

The principal accounting policies and methods of computation adopted in the preparation of the 2012 half year financial statements are consistent with the accounting policies and methods of computation adopted in the preparation of the 2011 annual financial statements with the exception of the application of new standards as set out below.

The AMP group is a wealth-management business with a retail banking business in Australia and an international investment management business. It conducts operations through registered life insurance companies (AMP life insurance entities) and other entities. Where permitted under accounting standards, the assets and liabilities associated with life insurance contracts and investment contracts are generally measured on a fair value basis and other assets and liabilities are generally measured on a historical cost 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.

Changes in accounting policy

Since 1 January 2012, 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 2012. Adoption of these Standards and Interpretations has not had any material effect on the financial position or performance of the AMP group.

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 2012. The AMP group has not elected to early adopt any of these new standards or amendments in these half year financial statements.

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. Actuals may differ from these estimates.

Change in estimates

AASB 119 Employee Benefits requires employee benefit provisions and defined benefit plan liabilities to be determined by discounting future cash flows using discount rates determined with reference to market yields at the end of the reporting period on high quality corporate bonds or, in countries where there is no deep market in such bonds, using market yields at the end of the period on government bonds.

In re-estimating Australian employee benefit provisions and defined benefit plan liabilities for financial reporting purposes at 30 June 2012, AMP has changed from using market yields on Commonwealth Government bonds to those on State Government bonds. This has resulted in a decrease in the Australian defined benefit plan liabilities of $95m after tax effect. However, this decrease was largely offset by movements in market yields during the period, resulting in a net reduction of $12m after tax effect to the Australian defined benefit plan liabilities due to all changes in discount rates and other market yields. The impact of changes in discount rates on employee benefit provisions was not material.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

1. Basis of preparation and accounting policies (continued)

(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 majority of the AMP life insurance entities’ investments are held through controlling interests in a number of unit trusts and companies.

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.

Consolidation principles require the total amounts of each underlying asset, liability, income and expense of the controlled entities to be 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 as a separate line item 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 non-controlling 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 period during which the parent entity had control.

Changes to the composition of the AMP group during the period are provided in Note 15.

Most other 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.

All inter-company balances and transactions are eliminated in full, including unrealised profits arising from intra-group transactions.

Consolidation impact of investments of the AMP life insurance entities

AMP life insurance entities conduct 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 majority of the AMP life entities’ statutory funds’ investments are held through controlling interests in a number of unit trusts and companies. These investment assets are held on behalf of policyholders and the AMP life entities’ statutory funds recognise a liability to the policyholders. In certain cases, the amount of the net assets of the controlled entities recognised in the consolidated financial statements may not match the valuation of the relevant liability to the policyholder which results in certain policyholder asset movements impacting the profit attributable to shareholders of AMP Limited.

Certain controlled entities of the AMP life insurance entities’ 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) 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 flows, 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.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

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 it is not the function of these departments to earn revenue and any 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

AMP Financial Services

AMP Financial Services provides a range of products and services to customers in Australia and New Zealand. These products and services are primarily distributed through self-employed financial planners and advisers, as well as through extensive relationships with independent financial advisers.

AMP Financial Services is reported as four separate divisions:

– Contemporary wealth management (CWM) – Financial planning services (including owned advice businesses), platform administration, unit-linked superannuation, retirement income and managed investment products business. Superannuation products include personal and employer sponsored plans. CWM includes the North product and platform.

CWM includes AMP Bank, which is a direct Australian bank offering residential mortgages, deposits and transactional banking.

– Contemporary wealth protection (CWP) - Includes personal and group term, disability and income protection insurance products. products can be bundled with a superannuation product or held independently of superannuation.

– Mature - A business comprising products which are mainly in run-off. Closed products include whole of life, endowment, investment linked, investment account, RSA, annuities and personal superannuation.

– AMP Financial Services New Zealand (AFS NZ) - A risk insurance business and mature book (traditional participating business), with a growing wealth management business driven by KiwiSaver.

AMP Capital

AMP Capital is a diversified investment manager, providing investment services for domestic and international customers. Through a team of in-house investment professionals and a carefully selected global network of investment partners, AMP Capital manages investments across major asset classes including equities, fixed interest, property, infrastructure and multi-manager and multi-asset funds. AMP Capital also provides commercial, industrial and retail property management services.

AMP Capital has established operations in Australia and New Zealand and a growing international presence with offices in Bahrain, China, Hong Kong, India, Japan, Luxembourg, Singapore, the United Kingdom and the United States, allowing it to source competitive offshore opportunities.

On 1 March 2012, AMP Capital and Mitsubishi UFJ Trust and Banking Corporation (MUTB) completed the transaction which formed the strategic business and capital alliance between the two parties and resulted in MUTB acquiring a 15% ownership interest in AMP Capital.

30 June 2011 comparatives

AXA Australia and New Zealand businesses were reported as a separate segment in the Financial report for the half year ended 30 June 2011. These businesses were subsequently integrated into AMP Financial Services and AMP Capital segments. Comparatives have been restated to be consistent with the current period segment presentation.

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2012

2. Segment information (continued)

(c) Segment profit

(c) Segment profit
							Total
				Australian			Operating
		CWM	CWP(2)	Mature(2)	AFS NZ(2) AMP Capital(3)		Segments
30 June 2012		$m	$m	$m	$m	$m	$m
Segmentprofit after income tax	(1)	164	134	76	38	45	457
Other segment information (4)
External customer revenue		744	134	76	38	116	1,108
Intersegment revenue(5)		49	-	-	-	107	156
Income tax expense		71	57	33	15	17	193
Depreciation and amortisation		20	2	2	1	5	30
30 June 2011
Segmentprofit after income tax	(1)	171	108	76	33	45	433
Other segment information(4)
External customer revenue		715	108	76	33	112	1,044
Intersegment revenue(5)		46	-	-	-	100	146
Income tax expense		73	46	33	13	16	181
Depreciation and amortisation		15	3	-	-	4	22

Footnote:

(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: merger and acquisition transaction costs, AXA integration costs, recognition of other one-off and non-recurring costs (refer to Note 2(d) for further details). These items do not reflect the underlying operating performance of the operating segments.

v) Accounting mismatches, market adjustments - annuity fair value and risk products and amortisation of AXA acquired intangible assets.

(2) Statutory reporting revenue for Australian Contemporary Wealth Protection, Australian Mature and AMP Financial Services New Zealand 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 segment revenue is reported net of external investment manager fees paid in respect of certain assets under management. AMP Capital segment profit for 2012 is reported net of 15% attributable to MUTB, but other AMP Capital segment information is reported before deductions of minority interests.
(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 Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

2. Segment information (continued)

		30 Jun	30 Jun
		2012	2011
		$m	$m
(d) Reconciliation of segment profit after tax
Australian contemporary wealth management		164	171
Australian contemporary wealth protection		134	108
Australian mature		76	76
New Zealand		38	33
AMP Financial Services		412	388
AMP Capital		45	45
BU operating earnings		457	433
GroupOffice costs		(31)	(26)
Total operating earnings		426	407
Underlying investment income (1)		113	83
Interest expense on corporate debt		(48)	(39)
AMP Limited tax loss recognition		-	8
Underlying Profit		491	459
Market adjustment - investment income (1)		(1)	(3)
Market adjustment - annuity fair value (2)		(10)	16
Market adjustment - risk products	(3)	23	(5)
Other items (4)		10	(17)
Profit after income tax before AXA merger related adjustments		513	450
and accounting mismatches
M&A transaction costs		(2)	(34)
AXA integration costs		(71)	(36)
Amortisation of AXA acquired intangible assets		(50)	(22)
Accountingmismatches (5)		(7)	(9)
Netprofit attributable to shareholders of AMP Limited		383	349

Footnote:

(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 returns is set 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) Market adjustment - annuity fair value relates to the net impact of investment markets on AMP's annuity portfolio.
(3) Market adjustment - risk products relates to the net impact of changes in market economic assumptions (bond yields and CPI) on the valuation of risk insurance liabilities. For AXA, this also included the impact of changes in the market value of equities up until June 2011. Equities were removed from backing the asset allocation in June 2011 following the merger.
(4) In HY12 other items was primarily comprised of (a) $52m in respect of a provision for a proportion of the anticipated costs of implementing regulatory change associated with the Federal Government’s FOFA and Stronger Super legislation. AMP expects the one off cost to the company of implementing the Future of Financial Advice, Stronger Super and other regulatory changes over the next 12 to 18 months to be in the range of $60m to $75m, of which $52m after tax has been provisioned at 30 June 2012. (b) $51m in respect of tax provisions released mainly due to the favourable resolution of Australian Tax Office activity. (c) Loan hedge revaluation gains of $4m. Under Australian Accounting Standards, AMP is required to recognise the movements in fair value of debt, to the extent it is an effective fair value hedge relationship, and associated derivatives. This can give rise to an accounting gain or loss which will reverse over time.
(5) Under Australian Accounting Standards, some assets held on behalf of the policyholders (and related tax balances) are recognised in the Financial statements at different values to the values used in the calculation of the liability to policyholders in respect of the same assets. Therefore, movements in these policyholder assets result in accounting mismatches which impact profit attributable to shareholders. These differences have no impact on the operating earnings of the AMP group.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

2. Segment information (continued)

	30 Jun	30 Jun
	2012	2011
	$m	$m
(e) Reconciliation of segment revenue
Total segment revenue	1,264	1,190
Add revenue excluded from segment revenue
Investment gains and (losses) - shareholders and policyholders (excluding AMP Bank interest
revenue)	4,263	1,681
Revenue of investment entities controlled by the life entities' statutory funds which carry out
business operations unrelated to the core wealth management operations of the AMP group	104	112
Other revenue	51	15
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	820	581
Interest expense related to AMP Bank	354	323
External investment manager and advisor fees paid in respect of certain assets under management	335	169
Remove intersegment revenue	(156)	(146)
Total revenue (1)	7,035	3,925

Footnote:

(1) Revenue as per the Income statement of $7,035m (2011: 3,925m) comprises Premiums and related revenue $1,068m (2011:

$798m), Fee revenue $1,112m (2011: $893m), Other revenue $155m (2011: $147m) and Investment gains and (losses) gains of $4,700m (2011: gains of $2,087m).

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2012

3. Income

	30 Jun	30 Jun
	2012	2011
	$m	$m
(a) Life insurance premium and related revenue
Life insurance contract premium revenue	1,016	761
Reinsurance recoveries	52	37
Total life insurancepremium and related revenue	1,068	798
(b) Fee revenue
Investment management and origination fees	861	717
Financial advisory fees	245	170
Fees from Bankingbusiness	6	6
Total fee revenue (1)	1,112	893
(c) Other revenue
Defined benefit plan income	3	1
Other revenue(2)	152	146
Total other revenue	155	147

Footnote:

(1) Total fee revenue includes 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 $6m (2011: $6m) fees from banking business, 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 entities' statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

4. Investment gains and (losses)

		30 Jun	30 Jun
		2012	2011
		$m	$m
Investment gains and (losses)
Interest		1,198	1,226
Dividends and distributions
- associated entities not equity accounted		74	90
- other entities		1,168	1,242
Rental income		331	335
Net realised and unrealised gains and (losses)	(1)	1,906	(825)
Other investment income		23	19
Total investmentgains and(losses) (2)		4,700	2,087

Footnote:

(1) 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.

(2) Investment gains and losses include amounts attributable to shareholders' interests, policyholders' interests in the life entities' statutory funds, external unitholders' interests and non-controlling interests.

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2012

5. Expenses

		30 Jun	30 Jun
		2012	2011
		$m	$m
(a) Life insurance claims and related expenses
Life insurance contract claims and related expenses		(940)	(730)
Outwards reinsurance expense		(42)	(32)
Total life insurance claims and	related expenses	(982)	(762)
(b) Operating expenses
Commission and advisory fee-for-service expense		(479)	(392)
Investment management expenses		(162)	(116)
Fee expense on bankingbusiness		(3)	(6)
Fee and commission expenses	(1)	(644)	(514)
Wages and salaries		(457)	(376)
Contributions to defined contribution plans		(43)	(29)
Defined benefit fund expense		(1)	(1)
Share-based payments expense		(14)	(13)
Other staff costs		(33)	(55)
Staff and related expenses		(548)	(474)
Occupancy and other property related expenses		(53)	(43)
Direct property expenses(2)		(88)	(86)
Information technology and communication		(131)	(86)
Professional fees		(43)	(77)
Advertising and marketing		(20)	(19)
Travel and entertainment		(18)	(14)
Impairment of intangibles		(14)	(6)
Amortisation of intangibles		(104)	(63)
Depreciation of property, plant and equipment		(19)	(16)
Other expenses		(227)	(94)
Other operating expenses		(717)	(504)

Total operating expenses (3)		(1,909)	(1,492)
(c) Finance costs
Interest expense on borrowings and subordinated debt		(390)	(392)
Other finance costs		(46)	(52)
Total finance costs		(436)	(444)

Footnote:

(1) Fee and commission expenses include (a) Fee expenses from trust and other fiduciary activities including the holding or investing of assets on behalf of individuals, trusts, retirement benefit plans, and other institutions (b) $3m (2011: $6m) fee 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) Total operating expenses include certain trading expenses of investment entities controlled by the life entities' statutory funds which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2012

6. Income tax

	30 Jun	30 Jun
	2012	2011
	$m	$m
(a) Analysis of income tax (expense) credit
Current tax (expense) credit	(391)	(337)
Increase (decrease) in deferred tax assets	106	216
(Increase) decrease in deferred tax liabilities	(85)	112
Over(under) provided inpreviousyears includingamounts attributable topolicyholders	44	3
Income tax(expense) credit	(326)	(6)

(b) Relationship between income tax expense and accounting profit

The following table provides a reconciliation of differences between prima facie tax calculated as 30 per cent of the profit before income tax for the year and the actual income tax expense recognised in the Income statement for the year. 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 is 30 per cent (2011: 30 per cent) in Australia and 28 per cent (2011: 28 per cent) in New Zealand.

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 per cent, and certain classes of income on some annuity business are tax-exempt. The rate applicable to New Zealand life insurance business during the year was 28 per cent (2011: 28 per cent).

		30 Jun	30 Jun
		2012	2011
		$m	$m
Profit before income tax		690	338
Policyholder tax (expense) credit recognised as part of the change in policyholder liabilities in
determining profit before tax		(260)	124
Profit before income tax excluding tax charged topolicyholders		430	462
Prima facie tax at the rate of 30%		(129)	(139)
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		(2)	10
Non-deductible expenses		(29)	(27)
Non-taxable income		8	2
Tax offsets and credits		38	16
Other items		(3)	1
Over (under) provided in previous years after excluding amounts attributable to policyholders	(1)	51	2
Benefit arising from previously unrecognised tax losses		-	3
Differences in overseas tax rate		-	2
Income tax (expense) credit attributable to shareholders		(66)	(130)
Income tax(expense)credit attributable topolicyholders		(260)	124
Income tax(expense) creditper Income statement		(326)	(6)

Footnote:

(1) The over provision in prior years reported in 2012 mainly relates to the release of provisions previously held against the tax treatment of amounts for which additional evidence has been obtained and analysis performed during the period supporting the validity of the original tax treatment.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

6. Income tax (continued)

	30 Jun	31 Dec
	2012	2011
	$m	$m
(c) Analysis of deferred tax assets
Expenses deductible and income recognisable in future years	444	350
Unrealised movements on borrowings and derivatives	68	55
Unrealised investment losses	95	273
Losses available for offset against future taxable income	627	356
Other	63	61
Total deferred tax assets	1,297	1,095
(d) Analysis of deferred tax liabilities
Unrealised investment gains	373	274
Unrealised movements on borrowings and derivatives	82	62
Other	562	587
Total deferred tax liabilities	1,017	923

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

7. Investments in financial assets and other financial liabilities

	30 Jun	31 Dec
	2012	2011
	$m	$m
Investments in financial assets measured at fair value through profit or loss(1)
Equity securities and listed managed investment schemes	32,934	32,223
Debt securities(2)	29,904	29,082
Investments in unlisted managed investment schemes	13,566	12,793
Derivative financial assets	2,180	2,251
Other financial assets(3)	212	179
Total investments in financial assets measured at fair value through profit or loss	78,796	76,528
Investments in financial assets measured at amortised cost
Loans and advances(4)	12,079	11,254
Debt securities - held to maturity	1,997	1,651
Total investments in financial assets measured at amortised cost	14,076	12,905
Other financial liabilities
Derivative financial liabilities	1,289	1,155
Collateral deposits held(5)	1,419	1,449
Total other financial liabilities	2,708	2,604

Footnote

(1) Investments measured at fair value through profit or loss are mainly assets of the life entities' statutory funds and controlled entities of the life entities' statutory funds.

(2) Included within debt securities are assets held to back the liability for collateral deposits held in respect of debt security repurchase arrangements entered into by the life entities' statutory funds and the controlled entities of the life entities' statutory funds.

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

(4) Loans and advances include securitised assets of $4,810m (2011: $4,900m) after allowing for amortisation of the initial assets securitised. During the year, loans of $639m (2011: $1,402m) were transferred into securisation vehicles.

(5) Collateral deposits held represents the obligation to repay collateral held in respect of debt security repurchase arrangements entered into by the life entities' statutory funds and the controlled entities of the life entities' statutory funds.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

8. Investment property

	30 Jun	31 Dec
	2012	2011
	$m	$m
Investment property
Directlyheld	7,439	7,424
Total investmentproperty	7,439	7,424
Movements in investment property half year ended 30 June 2012 (2011 - full year
ended 31 December 2011)
Balance at the beginning of the period	7,424	7,122
Additions - subsequent expenditure recognised in carrying amount	29	85
Acquisitions (disposal) through business combinations(1)	-	11
Disposals	(56)	(21)
Net gains (losses) from fair value adjustments	41	176
Foreign currency exchange differences	1	2
Transfer from inventories	-	49
Balance at the end of theperiod(2)	7,439	7,424

Footnote:

(1) Additions (disposals) through business combinations relate to the assets included on acquisition of AXA APH.

(2) Investment property of $3,680m (2011: $3,701m) held by controlled entities of the life entities' statutory funds has been provided as security against borrowings of these controlled entities of the life entities' 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 willing 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.

	30 Jun	31 Dec
	2012	2011
Primary assumptions used in valuing investmentproperty
Capitalisation rates	5.75%-11.50%	6.00%-10.25%
Market determined,risk adjusted discount rate	9.00%-12.00%	9.00%-13.00%

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2012

9. Property, plant and equipment

	Owner- occupied property (1)	Leasehold improvements	Plant & equipment(2)	Total
30 June 2012	$m	$m	$m	$m
Property, plant and equipment
Gross carrying amount	318	76	370	764
Less: accumulated depreciation and impairment losses	-	(62)	(227)	(289)
Property, plant and equipment at written down value	318	14	143	475
Movements in property, plant and equipment half year
ended 30 June 2012
Balance at the beginning of the period	311	14	154	479
Additions
- through direct acquisitions	-	2	7	9
- subsequent expenditure recognised in carrying amount	1	-	-	1
Disposals through business combinations	-	-	(3)	(3)
Increases(decreases) from revaluations recognised directly in
equity	8	-	-	8
Depreciation expense for theperiod	(2)	(2)	(15)	(19)
Balance at the end of theperiod	318	14	143	475
31 December 2011
Property, plant and equipment
Gross carrying amount	311	74	322	707
Less: accumulated depreciation and impairment losses	-	(60)	(168)	(228)
Property, plant and equipment at written down value	311	14	154	479
Movements in property, plant and equipment - full year
ended 31 December 2011
Balance at the beginning of the period	301	15	136	452
Additions
- through direct acquisitions	-	5	24	29
- subsequent expenditure recognised in carrying amount	4	-	-	4
Acqusitions through business combinations	-	-	22	22
Increases(decreases) from revaluations recognised directly in
equity	9	-	-	9
Depreciation expense for theperiod	(3)	(6)	(28)	(37)
Balance at the end of theperiod	311	14	154	479

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 (2011: $200m).

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

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

10. Intangibles

		Capital-	Manag-	Value of	Distrib
	Goodwill	ised	ement	in-force	-ution	Other
	(1)	costs	rights	business	networks	intangibles	Total
30 June 2012	$m	$m	$m	$m	$m	$m	$m
Intangibles
Gross carrying amount	2,927	614	17	1,191	169	159	5,077
Less: accumulated amortisation and/or
impairment losses	(118)	(429)	(1)	(127)	(18)	(74)	(767)
Intangibles at written down value	2,809	185	16	1,064	151	85	4,310
Movements in intangibles half year
ended 30 June 2012
Balance at the beginning of the period	2,815	171	15	1,114	128	104	4,347
Additions (reductions) through acquisitions
(disposal) of controlled entities(2)	8	-	-	-	8	-	16
Additions through separate acquisition	-	-	-	-	23	-	23
Additions through internal development	-	43	-	-	-	-	43
Disposals	-	-	-	-	-	(2)	(2)
Amortisation expense for the period (3)	-	(29)	-	(50)	(8)	(17)	(104)
Impairment losses(4)	(14)	-	-	-	-	-	(14)
Other movements	-	-	1	-	-	-	1
Balance at the end of theperiod	2,809	185	16	1,064	151	85	4,310
31 December 2011
Intangibles
Gross carrying amount	2,919	571	16	1,191	138	161	4,996
Less: accumulated amortisation and/or
impairment losses	(104)	(400)	(1)	(77)	(10)	(57)	(649)
Intangibles at written down value	2,815	171	15	1,114	128	104	4,347
Movements in intangibles - full year
ended 31 December 2011
Balance at the beginning of the period	702	162	20	-	-	35	919
Additions (reductions) through acquisitions
(disposal) of controlled entities and other
businesses (2)	2,140	-	-	1,191	95	94	3,520
Additions through separate acquisition	2	-	-	-	43	1	46
Additions through internal development	-	61	-	-	-	-	61
Disposals	-	-	(5)			-	(5)
Amortisation expense for the period (3)	-	(50)	-	(77)	(10)	(26)	(163)
Impairment losses(4)	(29)	-	-	-	-	-	(29)
Other movements	-	(2)	-	-	-	-	(2)
Balance at the end of theperiod	2,815	171	15	1,114	128	104	4,347

Footnote:

(1) Total goodwill comprises amounts attributable to shareholders of $2,667m (2011: $2,659m) and attributable to policyholders of $142m (2011: $156m).

(2) Additions arose from the purchase of the remaining 50% share of AMP Capital Brookfield Pty Limited. 2011 additions arose from the acquisition of AXA Asia Pacific Holdings Limited.

(3) Amortisation expense for the year is included in Operating expenses in the Income statement.

(4) Impairment of goodwill relates to goodwill of controlled entities of the life entities' statutory funds, which carry out business operations unrelated to the core wealth management operations of the AMP group.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

11. Borrowings

	30 Jun	31 Dec
	2012	2011
	$m	$m
Bank overdrafts	2	4
Bank loans	782	850
Bonds and notes	5,971	6,228
Deposits(1)	5,130	4,271
Other borrowings	63	57
Total borrowings (2)	11,948	11,410

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 $700m (2011: $594m). Of this balance $700m (2011: $204m) is expected to be settled more than 12 months from the reporting date.
ii) AMP Bank and securitisation trusts borrowings $9,760m (2011: $9,277m). Of this balance $4,190m (2011: $4,204m) is expected to be settled more than 12 months from the reporting date.
iii) Statutory fund borrowings and borrowings within controlled entities of AMP Life are $1,474m (2011: $1,539m). Of this balance $1,182m (2011: $1,182m) is expected to be settled more than 12 months from the reporting date.

iv) AMP Capital borrowing from Mitsubishi UFJ Trust and Banking Corporation (MUTB) $14m (2011: Nil) as part of the MUTB strategic business and capital alliance. All of this balance is expected to be settled more than 12 months from the reporting date.

12. Subordinated debt

	30 Jun	31 Dec
	2012	2011
	$m	$m
6.875% GBP Subordinated Guaranteed Bonds (maturity 2022)	67	63
Floating Rate Subordinated Unsecured Notes (first call date 2016, maturity 2021) (1)	600	599
A$ AMP Notes (first call date 2014, maturity 2019) (2)	202	199
NZ$AMP Notes(first call date 2014,maturity2019) (2)	90	88
Total subordinated debt (3)	959	949

Footnote:

(1) In the event that AMP does not call the subordinated debt at the first call date the note holders have the right to exchange the notes for AMP shares at a small discount to volume weighted average price at that time.

(2) In the event that AMP does not call the subordinated debt at the first call date the note holders have the right to an interest margin 150% higher than that at issue.
(3) Subordinated debt amounts are to fund corporate activities of AMP group. All of this balance (2011: all) is expected to be settled more than 12 months from the reporting date.

AMP Limited Financial Report

Notes to the financial statements for the half year ended 30 June 2012

13. Dividends

	30 Jun	30 June
	2012	2011
	$m	$m
Final dividends paid
2011 final dividend paid in 2012: 14 cents per ordinary share franked to 50%
(2010 final dividendpaid in 2011: 15 centsper ordinaryshare franked to 60%)	400	314
Total dividendspaid(1) (2)	400	314
Interim dividends proposed but not recognised (2)
2012: 12.5 cents per ordinary share franked to 55%
(2011: 15.0 centsper ordinaryshare franked to 30%)	362	422

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 per cent.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

14. Contributed equity

	30 Jun	31 Dec
	2012	2011
	$m	$m
Movements in issued capital
Balance at the beginning of the year	9,297	5,209
nil (2011: 695,262,564) shares issued for acquisition of AXA Asia Pacific Holdings Limited(1)	-	3,802
40,258,396(2011: 64,986,020)shares issued under dividend reinvestmentplan(2)	159	286
Balance at the end of theperiod	9,456	9,297
Total issued capital
2,894,931,180(2011: 2,854,672,784)ordinaryshares fully paid	9,456	9,297
Movements in 'treasury shares' - half year ended 30 June 2012 (2011 - full year ended 31
December 2011)(3)(4)
Balance at the beginning of the year	(217)	(158)
(Increase) arising from acquisition of AXA Asia Pacific Holdings Limited	-	(10)
(Increase)decrease due topurchases less sales duringtheyear	(6)	(49)
Balance at the end of theperiod	(223)	(217)
Total treasury shares
46,059,818(2011: 40,653,518)treasuryshares	(223)	(217)
Total contributed equity
2,848,871,362(2011: 2,814,019,266)ordinaryshares fully paid	9,233	9,080

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. Fully paid ordinary shares carry the right to one vote per share. Ordinary shares have no par value.

Footnote:

(1) Shares issued in 2011 to minority shareholders of AXA Asia Pacific Holdings Limited for the acquisition of its business recognised at fair value of $3,803m less deduction for costs of issue $1m.

(2) 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 2011 final dividend (paid in April 2012) at $3.94 per share.

(3) Of the ordinary shares on issue by AMP Limited, AMP's life insurance entities hold 44,307,550 (2011: 38,901,250) shares on behalf of policyholders. ASIC has granted relief from restrictions in the Corporations Act 2001 to allow AMP's life insurance entities 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.

(4) Of the ordinary shares 1,752,268 (2011: 1,752,268) are held by a controlled entity of AXA Asia Pacific Holdings Limited.

AMP Limited Financial Report

Notes to the financial statements

for the half year ended 30 June 2012

15. Changes in composition of the AMP group

On 1 March 2012, AMP group completed its sale of 15% of the issued capital of AMP Capital Holdings Limited, a controlled entity, to Mitsubishi UFJ Trust and Banking Corporation (MUTB). A gain to shareholders of AMP Limited of $340m after tax effect has been recognised directly in the Capital profits reserve within equity with respect to this transaction. For the period 1 March 2012 to 30 June 2012, 15% of the consolidated profits of AMP Capital Holdings Limited and its controlled entities has been attributed to the MUTB noncontrolling interest.

There were no other material acquisitions or disposals of operating entities during the half-year ended 30 June 2012.

During the half-year ended 30 June 2011, AMP Group acquired AXA Asia Pacific Holdings Limited (AXA APH) and its controlled entities and subsequently disposed of AXA APH’s Asian subsidiaries and interests in joint ventures with AllianceBernstein. The result for the halfyear ended 30 June 2012 includes the financial effect of ownership of the remainder of AXA APH for the full six months, whereas the result for the half-year ended 30 June 2011 includes the financial effect of this ownership for the period 30 March 2011 to 30 June 2011.

16. Contingent liabilities

As at the date of this report there have been no material changes in contingent liabilities since those reported in the 2011 Annual Financial Report.

17. Events occurring after reporting date

As at the date of this report, the directors are not aware of any matter or circumstance that has arisen since the reporting date that has significantly affected or may significantly affect the entity’s operations in future years; the results of those operations in future years; or the entity’s state of affairs in future years which is not already reflected in this report, other than the following:

In June 2012, AMP entered into contractual arrangements to acquire the SMSF administration and investment portfolio administration operations of the Cavendish Group. Under the contractual arrangements, control of these businesses passed to AMP on 3 July 2012 and, accordingly, this transaction has not been recognised in the 30 June 2012 Financial Report.
On 31 July 2012 a proposal was announced to internalise the management of DUET group (an ASX listed infrastructure investment vehicle managed by a joint venture between AMP Capital and Macquarie Group). Under this proposal, AMP Capital would be entitled to consideration of $41 million to be paid in DUET group stapled securities which AMP Capital would be required to hold until at least 30 June 2013. The proposal is subject to a vote of DUET group unit holders expected to be held in the third quarter of 2012.
On 16 August 2012, AMP announced an interim dividend on ordinary shares of 12.5 cents per share. Details of the announced interim dividend and dividends paid and declared during the half year are disclosed in Note 13 of the Financial Report.

Directors’ declaration

for the half year ended 30 June 2012

In accordance with a resolution of the directors of AMP Limited, we state for the purposes of Section 303(4) of the Corporations Act 2001 that, in the opinion of the directors:

(a) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable; and
(b) the financial statements and notes are in accordance with the Corporations Act 2001, including Section 304 (compliance with accounting standards) and Section 305 (true and fair view)

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Peter Mason Chairman

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Craig Dunn Chief Executive Officer and Managing Director

Sydney, 16 August 2012

To the members of AMP Limited

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Report on the Half-Year Financial Report

We have reviewed the accompanying half-yearfinancial report of AMP Limited, which comprises the
statement of financial position as at 30 June 2012, income statement and statement of comprehensive
income, statement of changes in equity and statement of cash flows for the half-year ended on that date,
notes comprising a summary of significant accounting policies and other explanatory information, and the
directors’ declaration of the consolidated entity comprising the company and the entities it controlled at
the half-year end or from time to time during the half-year.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

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 a 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 2012 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 . 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-yearfinancial 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 in the Directors’ Report.

Liability limited by a scheme approved
under Professional Standards Legislation

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of AMP Limited is not in accordance with the Corporations Act 2001 , including:

a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the half-year ended on that date; and
b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

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Ernst & Young

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Andrew Price
Partner
Sydney
16 August 2012

AI assistant

AMP LIMITED — Interim / Quarterly Report 2012

64379_rns_2012-08-15_a1e7e6fc-172b-462d-817d-0764b0b56e33.pdf

Half Year Financial Results

DIRECTORS’ REPORT

Directors’ details

Principal activities

AMP Financial Services

AMP Capital

Review of operations and results

Differences between underlying profit and statutory profit

DIRECTORS’ REPORT

Capital management

Events occurring after the reporting date

Rounding

Auditor’s independence declaration to the directors of AMP Limited

Auditor’s Independence Declaration to the Directors of AMP Limited

AMP LIMITED ABN 49 079 354 519 HALF YEAR FINANCIAL REPORT

30 JUNE 2012

TABLE OF CONTENTS

Footnote:

Footnote

Footnote

Statement of changes in equity

Footnote:

Footnote:

Notes to the financial statements

1. Basis of preparation and accounting policies

(a) Basis of preparation

Changes in accounting policy

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

Significant judgements, estimates and assumptions

Change in estimates

Notes to the financial statements

1. Basis of preparation and accounting policies (continued)

(b) Principles of consolidation

Consolidation impact of investments of the AMP life insurance entities

Securitisation vehicles

(c) Cash and cash equivalents

Notes to the financial statements

2. Segment information

(a) Segments - background

(b) Description of segments

AMP Financial Services

AMP Capital

30 June 2011 comparatives

2. Segment information (continued)

(c) Segment profit

Footnote:

Notes to the financial statements

2. Segment information (continued)

Footnote:

Notes to the financial statements

2. Segment information (continued)

Footnote:

3. Income

Footnote:

Notes to the financial statements

4. Investment gains and (losses)

Footnote:

5. Expenses

Footnote:

6. Income tax

(b) Relationship between income tax expense and accounting profit

Footnote:

Notes to the financial statements

6. Income tax (continued)

Notes to the financial statements

7. Investments in financial assets and other financial liabilities

Footnote

Notes to the financial statements

8. Investment property

Footnote:

Valuation of investment property

9. Property, plant and equipment

Footnote:

Notes to the financial statements

10. Intangibles

Footnote:

Notes to the financial statements

AMP LIMITED Interim / Quarterly Report 2012