ceasing to be substantial holder, page-2

By Belinda Tasker
SYDNEY, Feb 26 AAP - AMP Ltd today warned its earnings remained
under pressure after unveiling a massive $896 million net loss for
2002.
The loss - the eighth biggest in Australian corporate history -
was in line with AMP's guidance given in December and represented a
huge change from the $690 million profit the group made in 2001.
The earnings slump forced AMP to cut its dividend payments to
shareholders, with the final dividend falling to 20 cents a share,
partly franked, from 26 cents previously.
The total dividend payout for the year fell to 46 cents from 51
cents.
Chief executive Andrew Mohl described the earnings result as
"very disappointing" and warned that AMP's earnings would fall
again in 2003 if equity markets continued to slide.
"We are not expecting better markets in the short term," he
said.
"In the medium term our business portfolio and strategic
positioning will improve and we remain focused on achieving long
term shareholder value."
AMP's plunge into the red was largely a result of $1.2 billion
worth of writedowns and $344 million worth of restructuring costs
the group made in the past year to help restore its fortunes.
AMP's net profit before significant items fell to $495 million
from $667 million.
Despite the massive fall in earnings, Mr Mohl said the group was
soundly capitalised and all its United Kingdom life entities were
exceeding minimum capital requirements.
AMP had also put in place several instruments, including
derivatives and hedging, to reduce its sensitivity to further falls
on equity markets.
During 2002, AMP was forced to inject more than $1 billion into
its troubled UK Financial Services (UKFS) business to help shore up
its capital position following large falls by London's FTSE 100
index.
Mr Mohl said if the FTSE fell below 3000 points, shareholders
funds would be protected and the UKFS division would not need
another capital injection.
"There are no plans for an equity capital raising at this time,"
he told journalists.
"We don't know what the future holds, so never say never.
"Obviously we have the ability to raise debt funding if we need
to and there will be some scope to do that."
Mr Mohl added that the outlook for the UKFS division's operating
margins was "very uncertain" and all current forces "are pushing
earnings lower".
During 2002, operating margins in UKFS division fell 36 per cent
to $211 million, while new business dropped 21 per cent to $6.8
billion.
AMP's Australian Financial Services (AFS) division performed
slightly better, with operating margins down nine per cent to $334
million.
The division's total new business also fell 11 per cent to $9.4
billion but new business for its corporate superannuation unit rose
12 per cent to $2.4 billion thanks to the company winning several
new tenders.
AMP said the outlook for its AFS division was "sound" despite
the downturn in the wealth management sector.
AMP's Henderson Global Investors also suffered an eight per cent
fall in operating margins to $192 million, while assets under
management fell 13 per cent to $255.6 billion.
Mr Mohl also reiterated that the company was still in dispute
with former chief executive Paul Batchelor over his departure
payout.
AMP's earnings results came a day after chairman Stan Wallis
confirmed he would step down from his post today - five months
earlier than originally planned - and four other directors quit the
company.
AAP