AMP Ltd (ASX: AMP) shares are on the move on Thursday morning.
At the time of writing, the financial services company's shares are up 12% to $1.27.
This follows the release of its half-year results and the announcement of a major new partnership.
AMP shares rocket on half-year update
- Total revenue down 4% to $641 million
- EBIT up 4.1% to $153 million
- Underlying net profit after tax up 5.4% to $118 million
- Interim dividend of 2 cents per share
What happened during the half?
For the six months ended 30 June, AMP reported a 4% decline in revenue to $641 million but a 5.4% lift in underlying net profit after tax to $118 million.
The latter reflects a 6.4% reduction in controllable costs to $339 million, which means that AMP is on track to achieve its FY 2024 target.
The company's Platform business was the star of the show, delivering a 22.7% increase in underlying profit to $54 million. This was driven by stronger market conditions and disciplined cost control.
Also performing strongly was its Superannuation & Investments business, which reported a 21.4% increase in underlying profit to $34 million.
This helped to offset a sizeable decline in AMP Bank profits and a loss from the Advice business.
In light of its profit growth, the AMP board elected to declare a 20% franked interim dividend of 2 cents per share.
Management commentary
AMP's chief executive, Alexis George, was pleased with the half. She said:
We have made good progress this half on our key strategic commitments, and we have positive momentum heading into the second half of the year.
We have continued to deliver on simplification and cost reduction, while also driving growth in our wealth businesses and returning capital to shareholders.
Advice partnership
In other news, AMP has announced a new strategic partnership and ownership structure with Entireti and AZ Next Generation Advisory (AZ NGA) for its AMP Advice business. It notes that the partnership will create a sustainable business model for AMP Advice and sees potential for it to transform the advice industry landscape in Australia.
Entireti is an experienced and well-resourced provider of licensing and business services. It has a longstanding alliance with AZ NGA, which invests in financial advisory SMEs and is backed by leading European financial services company Azimut.
Management advised that Entireti will establish a new joint venture entity to acquire AMP's financial advice licensees, Charter, Hillross and AMP Financial Planning, as well as its self-licensed offer Jigsaw, with AMP to retain a 30% shareholding in the joint venture.
This will lead to an anticipated accounting loss on the sale of its AMP Advice business of ~$30 million in the second half. This is due to separation and transition costs.
AMP Advice group executive Matt Lawler commented:
There is a real strength in combining forces. This partnership leverages the scale of bringing the businesses together, taking advantage of talent, expertise and experience of both organisations to deliver a high-quality professional service for advisers.
It gives advice practices a clear path forward and offers them future growth opportunities.
