Wealth giant AMP has announced it expects $325 million of impairment charges from its devalued brand name, reduced rental space and review of financial advice services, ahead of the demerger of AMP Capital’s private markets business.
AMP announced on Friday morning the expected post-tax impairment charges include $100 million for deferred tax assets, $95 million for intangibles including the devalued brand name and $75 million for the changes to the group’s office space.
AMP has announced $325m impairment charges. Credit:
While the impairment charges are not expected to impact AMP’s FY21 underlying net profit after tax, one market watcher who did not want to be named said it was possible AMP could announce additional impairments as the demerger approaches. AMP’s share price fell by 3.35 per cent in early afternoon trade to $1.01 per share.
AMP chief executive Alexis George said the impairments came from a balance sheet review to ensure assets are recorded in line with “the future strategic direction” of the company.
“The charges are mainly non-cash and related to legacy issues, and our action will ensure that both businesses are in a stronger position to take advantage of opportunities in the future,” Ms George said.
AMP is scheduled to demerge and separately list AMP Capital’s private markets business next year, which will include managing unlisted infrastructure and property assets under new branding in a company to be listed on the ASX.
The demerger is part of AMP’s strategy to simplify operations to focus on domestic wealth management, super and banking.
Morningstar analyst Shaun Ler said the charges would not detract from AMP’s valuation at this stage. “It’s mainly the brand name,” said Mr Ler. “It’s bits and pieces of things that come along with the demerger plans.”
Mr Ler said the more significant impact on AMP’s profitability was its ongoing management of the $7 billion office property fund, which was announced earlier this week. While AMP has agreed to reduce management fees, the property portfolio is a key asset for the success of the private markets business.
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