AMP announced today that its continuing review of activities and costs is likely to result in asset write-downs of A$1.2 billion, over two thirds of this in the troubled UK businesses, including NPI as well as Pearl.
“Previous valuations are no longer appropriate in light of the substantial falls in equity markets since 30 June 2002, difficult operating conditions and the changes in the business arising from the five point reform agenda,” explains AMP’s Chief Executive Officer Andrew Mohl. “AMP believes the carrying value of these assets is unlikely to recover for some time and it will therefore be prudent to reflect a more realistic view in the balance sheet.”
While uncertainty remains around precise valuations as an independent valuation process and review will not be complete for several weeks, AMP currently anticipates that a writedown in the order of A$1.2 billion is possible for the year to 31 December 2002. It includes A$850 million related to UK assets including NPI, which accounts for around A$600 million, and A$350 million related mainly to former AMP International businesses. “While these numbers are very preliminary and subject to change, AMP believes it is important to keep the market informed,” says Mohl.
The writedowns in UKFS will largely be goodwill and will not impact on the net assets invested in the UK businesses. Total capital invested in UKFS is expected to be around A$6.6 billion (after the writedowns) at 31 December 2002. This compares with A$6.1 billion at 30 June 2002 and takes into account the 500 million invested in UKFS in the second half of the year, less the anticipated asset writedowns.
Standard & Poor’s has placed the credit ratings on several AMP group businesses on negative watch.