AMP to write down £1bn for demerger of its UK businesses

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The Independent Online

AMP, the troubled financial services company, was yesterday forced to reveal another blow for its UK assets, saying it would have to devalue the businesses it is trying to hive off by £1bn when they demerge.

AMP, the troubled financial services company, was yesterday forced to reveal another blow for its UK assets, saying it would have to devalue the businesses it is trying to hive off by £1bn when they demerge.

The directors of the company had given AMP's UK arm a book value of £2.3bn in June. But they admitted this has now been revised down to a more conservative £1.3bn as it prepares to demerge and list the businesses into a separate company at the end of the year.

This is because AMP is now anticipating that the market value of the demerged UK businesses, which include Pearl Assurance, London Life, NPI, Henderson Global Investors and Towry Law, will be much lower than the current value.

The reduction is the third AMP has made on its UK businesses in a year. AMP has already had to write down the value of its UK assets by £900m, which contributed to record losses at the group this year. The company said the change in the value of the UK assets was purely an accounting measure to ensure the current book value of the businesses tallied with their expected market value when they demerge.

A spokesman for the company said the move had no cash meaning on AMP's balance sheet. The final value of the reduction will not be known until next year.

The company is expected to send out a detailed prospectus outlining the demerger details and the capital position of the new company at the end of this week.

The 550-page document may re-ignite interest in the UK companies from potential bidders.

AMP got the go-ahead to split from its UK arm last week from UK and Australian regulators. It said a further £34m would have to be injected in the businesses to help finance the demerger and that it would have to swallow £1bn of its debt.

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