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AMP shares rose yesterday despite concerns that new chief executive Andrew
Mohl may have more writedowns in store.
On Monday, the company slashed $1.2 billion from the value of assets largely
purchased in an investment splurge by previous management.
AMP shares finished 9c higher at $12.57, despite concerns that the main
driver of the writedowns, the UK-based NPI operation, was by implication facing
an increasingly difficult sales environment.
Several brokers were keeping hold calls on the shares, acknowledging that
despite Mr Mohl's early action to stem the group's woes, he still had a big task
to put the company back on a growth path.
UBS Warburg, with a hold and a valuation of $11.80, said there was a
possibility of more writedowns and the outlook for sales remained weak.
Macquarie Equities, with a market perform, said institutional investors would
give Mr Mohl a tick for his latest efforts to clean the slate and make the hard
decisions required to ensure cultural change.
Merrill Lynch, with a neutral call, is now expecting AMP to post a full-year
annual net loss of $422 million.
The broker also warned of more writedowns in the value of the UK-based Pearl
operation, but these would not affect the bottom line like the writedowns
announced on Monday.
Merrill described the $1.2 billion writedown as a surprise in terms of its
size.
Apart from NPI, the $250 million balance of the $800 million UKFS component
related to two recent acquisitions, Towry Law and Interactive Investor, and the
Ample financial services website.
AMP spent $144 million for Interactive Investor and $260 million for Towry
Law during an acquisitive period under former managing director Paul Batchelor
last year.
The $350 million in write-offs associated with former AMP International
businesses (that division is now disbanded) again relates to the writedown of
goodwill primarily, including Virgin Money, Asian life, AMP Banking and Cobalt,
the renamed business handling part of the ``run-off" or gradual closure of the
remaining old GIO general insurance book.
AMP half-year accounts show net assets of $1.05 billion in the old AMP
International division, plus intangibles of $195 million.
The write-offs may allow AMP to write back profits should it be able to exit
any of these businesses at a profit to book value.
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