30th Nov 2009 07:00
ABERDEEN ASSET MANAGEMENT PLC
FINAL RESULTS FOR YEAR TO 30 SEPTEMBER 2009
Aberdeen Asset Management has today, 30 November 2009, announced its final results for the year to 30 September 2009 (unaudited).
HIGHLIGHTS
Assets under management increased to £146.2 billion (2008: £111.1 billion)
Clean profit before tax £85.1 million (2008: £95.1 million)
Final dividend of 3.2p per share, 6.0p for the full year (2008: 5.8p)
Strong balance sheet, with gearing of 17%
New business wins of £19.1 billion, funded in the year, with £3.6 billion awarded but not funded at the year end
Businesses acquired from Credit Suisse now fully integrated into Group
FINANCIAL HIGHLIGHTS
|
2009 |
2008 |
|
|
Revenue |
£421.9m |
£430.1m |
|
Pre-tax profit |
||
|
Before exceptional items, amortisation and impairment of intangibles |
£85.1m |
£95.1m |
|
After exceptional items, amortisation and impairment of intangibles |
£10.5m |
£60.5m |
|
Diluted earnings (loss) per share |
||
|
Before exceptional items, amortisation and impairment of intangibles |
6.31p |
9.01p |
|
After exceptional items, amortisation and impairment of intangibles |
(1.71p) |
4.52p |
|
Total dividend per share |
6.0p |
5.8p |
|
Gross new business - funded |
£19.1bn |
£21.8bn |
|
Net new business - funded |
£(10.7bn) |
£1.0bn |
|
- awarded but not funded at year end |
£3.6bn |
£1.9bn |
|
Assets under management at the year-end |
£146.2bn |
£111.1bn |
Martin Gilbert, Chief Executive of Aberdeen Asset Management commented:
"We are pleased with the solid business performance this past year, despite the unprecedented turbulence in world financial markets. The Group has shown the benefits of its scale and diversity across geographies, channels and asset classes, in difficult conditions. Our gross new business wins were healthy by year end, especially from our equity capability, while net outflows slowed significantly from the first half. The businesses we acquired from Credit Suisse have now been integrated, thanks to an excellent effort by our operations team and these are now making a material contribution. The cost reductions made, the more stable market conditions and the Credit Suisse transaction earlier this year will all help position us well for the coming year."
For more information:
Aberdeen Asset Management
Martin Gilbert Chief Executive + 44 (0) 20 7463 6000
Bill Rattray Finance Director + 44 (0) 20 7463 6000
Maitland
Neil Bennett/ Tom Roberts + 44 (0) 20 7379 5151
Chairman's statement
During the twelve month period ended 30 September 2009, Aberdeen Asset Management has ridden out one of the fiercest financial storms on record and emerged in good shape. New business levels, while down on last year, were healthy with support for higher margin equity lines offsetting fixed income outflows. The successful completion of the Credit Suisse transaction lifted assets under management to £146.2 billion and leaves the Group well placed to make progress from current levels.
The reporting year began amid a severe downturn in global bond and equity markets, with consequent pressure on Group revenues; since then the Group has faced an ongoing challenge to balance cost reductions with the need to position itself for eventual recovery. However, 2009 also brought opportunities, and the acquisition of certain fund management businesses from Credit Suisse, completed on 30 June 2009, has added further scale and depth to our investment capabilities.
New business amounted to £19.1 billion, only 12% below 2008 levels, but was outweighed by an exodus of £29.8 billion, principally in fixed income. However the bulk of that was recorded in the first half of the year and we have been encouraged by the decreasing rate of redemptions of late. New business inflows were mainly into equities, so the effect overall on annualised revenues has been milder than headline numbers might suggest - indeed, the effect of net new business flows on run rate revenues was positive during the second half. With a further £3.6 billion of mandates awarded but not funded at the year end, we consider this performance very respectable.
Financials
Revenue for the year of £421.9 million was 2% lower than in 2008 as the effects of weak markets in the earlier part of the year have been offset by the additional revenue introduced by the Credit Suisse transaction.
Operating costs were 2% lower than last time. The Group's commitment to deliver annualised cost savings of £80 million has been met, with approximately £55 million of the net benefit reflected in the 2009 numbers and the final tranche of savings will come into effect over the next financial year. The Credit Suisse acquisition added approximately £11 million to operating costs for the period from completion of the transaction; the integration of this business into the wider Group has now been completed in line with the timetable.
Overall, the Group's operating profit was slightly behind that of last year, at £95.7 million (2008: £100.0 million), and the operating margin was also slightly lower this year at 22.7% (2008: 23.2%). Again, it is important to note the improvement in profitability and margins in the second half as markets and revenues recovered and the Credit Suisse transaction began to make a contribution.
The balance sheet remains solid with net debt of about £175 million supported by £1.0 billion of equity, representing a gearing ratio of 17% at the year end. Since then, we have successfully placed a £90 million convertible bond issue, which will improve the average maturity of the debt and bring more flexibility to the Group's financing structure.
Results and dividend
The Group's underlying profit, which we define as profit before taxation, exceptional items, amortisation and impairment of intangible assets, was £85.1 million compared to £95.1 million in 2008. This represents underlying earnings per share, on a diluted basis, of 6.31p, a decrease of 30% on last year. After accounting for exceptional items, amortisation and impairment we report a pre-tax profit of £10.5 million, compared to £60.5 million for 2008.
The Board is recommending a final dividend of 3.2p per share, making a total payment for the year of 6.0p per share, an increase of 3% on the total payment for 2008. Notwithstanding difficult markets this year, the Board remains committed to a progressive dividend policy.
On 31 December 2008, the Group announced the acquisition of certain fund businesses of Credit Suisse's Global Investors business, the traditional long-only asset management division. The transaction was completed in two stages, on 30 April 2009 and 30 June 2009, and added approximately £35.1 billion to assets under management ("AuM") during the year. Total AuM at the year end increased by 32% to £146.2 billion (2008: £111.1 billion).
Many of our fixed income products struggled in 2008 because of the widening of credit spreads. The scale of global deleveraging led to extreme price falls, even of high quality securities, with the result that our performance, particularly in US credit, was badly affected. However, performance has rebounded strongly in 2009 and the subsequent Credit Suisse acquisition has enabled us to strengthen the overall team and investment process, with more resources devoted to top-down analysis and the appointment of a new global head of fixed income.
Our equity teams have continued to outperform benchmarks on a consistent basis. As well as the Group's key global equity, global emerging markets equity and Asia Pacific equity capabilities, our US equities team has shown consistent outperformance. Our UK and Pan European equities performance has also improved over the year.
The property division encountered some turbulence. However, our institutional client base has insulated it from the worst of the downturn. Flows have been flat to mildly positive, although our German property funds experienced some selling, a problem common to the industry there as certain institutions reduced exposure. Against that, the division was awarded a €1.4 billion mandate by a Swedish client, which will fund in January 2010.
New business
We made considerable progress in attracting new clients, especially from Europe, the Middle East and Americas, with strong flows into equities. The main beneficiaries were global and global emerging market equities where we enjoy a strong reputation and our fundamental investment process proved very resilient.
One pleasing new development was the interest of European-based investors in our US equity strategy. As highlighted, the fixed income division did poorly in 2008 and this led to outflows that team changes may in turn have exacerbated. There were some bright spots, however, namely our global and emerging market debt strategies.
The property division is now the third largest such manager in Europe and one of the largest independents globally. The division has a wide range of investment products both by asset type and geography and as a global specialist player is well positioned for further growth, when it comes, especially in Europe and Asia. At present the UK faces a severe downturn in both commercial and residential property while in Europe transactions are well down. The Group's property assets under management decreased to £22.6 billion at the year end, representing approximately 15% of total AUM.
Gross sales can be summarised in the table below and were sourced from Continental Europe 35%, the UK 28%, the United States and Canada 16%, Asia 15% and the Middle East 6%.
|
Funded £m |
Yet to fund £m |
Total £m |
|
|
Equities: |
|||
|
Gross inflows |
9,367 |
1,816 |
11,183 |
|
Outflows |
(5,353) |
- |
(5,353) |
|
Net flow |
4,014 |
1,816 |
5,830 |
|
Fixed income: |
|||
|
Gross inflows |
6,722 |
- |
6,722 |
|
Outflows |
(20,777) |
- |
(20,777) |
|
Net flow |
(14,055) |
- |
(14,055) |
|
Money market: |
|||
|
Gross inflows |
1,427 |
- |
1,427 |
|
Outflows |
(1,270) |
- |
(1,270) |
|
Net flow |
157 |
- |
157 |
|
Multi asset: |
|||
|
Gross inflows |
221 |
- |
221 |
|
Outflows |
(1,410) |
- |
(1,410) |
|
Net flow |
(1,189) |
- |
(1,189) |
|
Property: |
|||
|
Gross inflows |
1,393 |
1,833 |
3,226 |
|
Outflows |
(1,011) |
- |
(1,011) |
|
Net flow |
382 |
1,833 |
2,215 |
|
Group total: |
|||
|
Gross inflows |
19,130 |
3,649 |
22,779 |
|
Outflows |
(29,821) |
- |
(29,821) |
|
Net flow |
(10,691) |
3,649 |
(7,042) |
Corporate activity
As mentioned, the Group announced the completion of the acquisition of certain fund management businesses from Credit Suisse on 1 July, adding some £35.1 billion of assets. The transaction was an all share deal. We reported that estimated run-rate revenues delivered at closing exceeded 90% of the target and, as a consequence, 240 million new ordinary shares were issued to Credit Suisse, being the maximum consideration and equating to 23.9% of total share capital; subsequent refinement of the estimates confirmed that the full consideration was due.
While the deal was complex in respect of the number of jurisdictions involved, the considerable systems development work undertaken during the Deutsche Asset Management acquisition in 2005, has meant that we have been able to migrate the portfolios in a much shorter timescale - and on time.
Shortly after the completion of the Credit Suisse transaction, we announced the sale of certain equity funds, with AuM of £858 million, to Premier Asset Management Group. This transaction is due to complete in mid-December, when sale proceeds of £23 million will be received.
Business development
One of our main aims is to market and cross-sell our core competencies of equities, fixed income and property, and we gained noticeable traction in Canada, Europe, the Middle East and North America; we also added new offices in Toronto and Sao Paulo. Both these openings will enable us to get closer to, and service better, our investors.
Additionally, we are hopeful that with a wider product range and access to Credit Suisse's significant private bank platform, we can tap new channels. The acquisition has brought us a new asset class in the form of money market funds. It has also expanded our Continental European operation, not least in Switzerland, with two new offices; while in Australia we have vaulted into the top 15 largest managers.
Last, in wishing to develop distribution of products through third parties, we can report that our strategic partnership with Mitsubishi (MUFJ) in Japan is showing promise as we proceed to gather institutional assets following our first roadshow.
Outlook
Our new financial year has started well, with new business flows and improved markets benefiting revenues and operating costs under tight control.
Looking ahead, the impact of the financial crisis on asset managers is likely to see more consolidation. The survivors will be those that can differentiate themselves through performance, first of all, but also through diversification of revenues via products and channels. Certainly, the trend to scale of the recent past appears to be ending, with size no guarantee of staying power. The industry's upheavals also mean we can expect more scrutiny from financial regulators and legislators.
Finally, I would like to thank all our staff for their continued hard work, particularly in ensuring the smooth integration of the Credit Suisse acquisition, which we expect will be reflected in further profitable growth in the years ahead. I would also like to welcome three new directors to the Board: Simon Troughton, who has joined as an independent non executive; Gerhard Fusenig, who was nominated by Credit Suisse; and Kenichi Miyanaga, nominated by Mitsubishi. All three have considerable experience of global asset management that will be of great value. I took over as Chairman in January, and I would like to thank my predecessor, Charles Irby for his contribution and fine effort over the nine years he served on the Board, having left the Group a much larger and more diversified organisation than when he first joined.
In summary, while some commentators still doubt whether market confidence has been fully restored, the Group has emerged from the financial crisis comfortably positioned both to enjoy organic growth and to expand opportunistically as competitors shrink or even withdraw from the industry.
Roger C Cornick
Chairman
|
Group Income Statement |
|||
|
For the year ended 30 September 2009 |
|
|
|
|
2009 |
2008 |
||
|
|
Notes |
£'000 |
£'000 |
|
Revenue |
2 |
421,897 |
430,086 |
|
Operating costs |
(325,900) |
(330,794) |
|
|
Exceptional costs |
4 |
(44,498) |
(25,002) |
|
Amortisation and impairment of intangible assets |
(30,136) |
(13,785) |
|
|
Operating expenses |
(400,534) |
(369,581) |
|
|
Exceptional gains |
5 |
- |
4,129 |
|
(Losses) gains on investments and other income |
5 |
(282) |
724 |
|
Other operating (expense) income |
5 |
(282) |
4,853 |
|
Operating profit before: |
95,715 |
100,016 |
|
|
Exceptional gains and charges |
(44,498) |
(20,873) |
|
|
Amortisation and impairment of intangible assets |
(30,136) |
(13,785) |
|
|
Operating profit |
21,081 |
65,358 |
|
|
Finance revenue |
1,125 |
5,697 |
|
|
Finance costs |
(11,736) |
(10,598) |
|
|
Net finance costs |
7 |
(10,611) |
(4,901) |
|
Profit before exceptional items, amortisation, impairment and taxation |
85,104 |
95,115 |
|
|
Exceptional items, amortisation and impairment before taxation |
(74,634) |
(34,658) |
|
|
Profit before taxation |
10,470 |
60,457 |
|
|
Tax expense on profit before exceptional items, amortisation and impairment |
(14,605) |
(16,491) |
|
|
Tax on exceptional items, amortisation and impairment |
10,831 |
2,881 |
|
|
Tax expense |
8 |
(3,774) |
(13,610) |
|
Profit after taxation before exceptional items, amortisation and impairment |
70,499 |
78,624 |
|
|
Exceptional items, amortisation and impairment after taxation |
(63,803) |
(31,777) |
|
|
Profit for the year |
6,696 |
46,847 |
|
|
Attributable to: |
|||
|
Equity shareholders of the Company |
(8,073) |
35,216 |
|
|
Other equity holders |
14,769 |
11,631 |
|
|
6,696 |
46,847 |
||
|
(Loss) earnings per share |
|||
|
Basic |
10 |
(1.71p) |
4.57p |
|
Diluted |
10 |
(1.71p) |
4.52p |
|
Group Statement of Recognised Income and Expense |
|||
|
For the year ended 30 September 2009 |
|||
|
2009 |
2008 |
||
|
£'000 |
£'000 |
||
|
Net actuarial (loss) gain on defined benefit pension schemes |
(25,386) |
7,223 |
|
|
Translation of foreign currency net investments |
21,725 |
(1,425) |
|
|
Movement in fair value of available for sale investments |
(6,400) |
(4,992) |
|
|
Tax on items taken directly to equity |
8,943 |
(1,269) |
|
|
Net expense recognised directly in equity |
(1,118) |
(463) |
|
|
Profit for the year |
6,696 |
46,847 |
|
|
Total recognised income and expense for the year |
5,578 |
46,384 |
|
|
Attributable to equity holders of the Company |
|||
|
Ordinary shareholders |
(9,191) |
34,753 |
|
|
Other equity holders |
14,769 |
11,631 |
|
|
Group Balance Sheet |
||||
|
As at 30 September 2009 |
||||
|
2009 |
2008 |
|||
|
|
Notes |
£'000 |
£'000 |
|
|
Assets |
||||
|
Non-current assets |
||||
|
Intangible assets |
11 |
1,147,614 |
828,461 |
|
|
Property, plant and equipment |
18,888 |
15,661 |
||
|
Other investments |
12 |
59,903 |
50,335 |
|
|
Pension surplus |
19 |
- |
5,481 |
|
|
Deferred tax assets |
36,087 |
24,109 |
||
|
Trade and other receivables |
6,853 |
8,898 |
||
|
Total non-current assets |
1,269,345 |
932,945 |
||
|
Current assets |
||||
|
Stock of units and shares |
13 |
468 |
268 |
|
|
Financial investments |
15 |
1,465,470 |
1,131,060 |
|
|
Trade and other receivables |
197,021 |
191,558 |
||
|
Other investments |
12 |
34,013 |
15,441 |
|
|
Cash and cash equivalents |
81,362 |
82,161 |
||
|
Assets classified as held for sale |
12 |
27,817 |
17,596 |
|
|
Total current assets |
1,806,151 |
1,438,084 |
||
|
Total assets |
3,075,496 |
2,371,029 |
||
|
Equity |
||||
|
Called up share capital |
104,306 |
79,691 |
||
|
Share premium account |
683,214 |
396,010 |
||
|
Other reserves |
226,009 |
216,876 |
||
|
Retained loss |
(196,583) |
(147,216) |
||
|
Total equity attributable to equity holders of the parent |
16 |
816,946 |
545,361 |
|
|
Minority interest |
6,932 |
- |
||
|
Attributable to other equity holders - perpetual capital securities |
198,111 |
197,942 |
||
|
Total equity |
1,021,989 |
743,303 |
||
|
Liabilities |
||||
|
Non-current liabilities |
||||
|
Interest bearing loans and borrowings |
17 |
227,561 |
172,340 |
|
|
Other creditors |
603 |
11,970 |
||
|
Pension deficit |
19 |
33,415 |
17,376 |
|
|
Deferred tax liabilities |
111,812 |
60,930 |
||
|
Total non-current liabilities |
373,391 |
262,616 |
||
|
Current liabilities |
||||
|
Investment contract liabilities |
15 |
1,465,470 |
1,131,060 |
|
|
Interest bearing loans and borrowings |
17 |
28,331 |
46,529 |
|
|
Trade and other payables |
178,384 |
169,269 |
||
|
Provisions |
1,300 |
2,000 |
||
|
Deferred income |
841 |
1,588 |
||
|
Current tax payable |
5,790 |
14,664 |
||
|
Total current liabilities |
1,680,116 |
1,365,110 |
||
|
Total liabilities |
2,053,507 |
1,627,726 |
||
|
Total equity and liabilities |
3,075,496 |
2,371,029 |
||
|
Statements of Cash Flow |
|||
|
For the year ended 30 September 2009 |
|||
|
2009 |
2008 |
||
|
|
Notes |
£'000 |
£'000 |
|
Core cashflow from operating activities |
84,368 |
109,590 |
|
|
Effects of short-term timing differences on unit trust settlements |
(4,732) |
(3,314) |
|
|
79,636 |
106,276 |
||
|
Net interest paid |
(9,717) |
(5,146) |
|
|
Tax paid |
(27,611) |
(22,270) |
|
|
Net cash generated from operations |
42,308 |
78,860 |
|
|
Other non-recurring costs paid |
(25,244) |
(14,358) |
|
|
Net cash generated from operating activities |
6 |
17,064 |
64,502 |
|
Cash flows from investing activities |
|||
|
Proceeds from sale of investments |
29,466 |
19,877 |
|
|
Proceeds from sale of property, plant and equipment |
3,430 |
17,161 |
|
|
Acquisition of subsidiaries, net of cash acquired |
36,285 |
(195,741) |
|
|
Acquisition of intangible assets |
(2,445) |
(2,433) |
|
|
Acquisition of property, plant & equipment |
(10,243) |
(2,959) |
|
|
Acquisition of investments |
(43,392) |
(37,031) |
|
|
Net cash from (used in) investing activities |
13,101 |
(201,126) |
|
|
Cash flows from financing activities |
|||
|
Issue of ordinary share capital net of expenses |
(841) |
95,206 |
|
|
Purchase of own shares |
(328) |
- |
|
|
New borrowings |
178,331 |
98,582 |
|
|
Repayment of borrowings |
(146,529) |
(373) |
|
|
Dividends paid and coupon payments |
(61,547) |
(54,959) |
|
|
Net cash (used in) from financing activities |
(30,914) |
138,456 |
|
|
Net (decrease) increase in cash and cash equivalents |
(749) |
1,832 |
|
|
Cash and cash equivalents at 1 October |
82,161 |
80,680 |
|
|
Effect of exchange rate fluctuations on cash and cash equivalents |
(50) |
(351) |
|
|
Cash and cash equivalents at 30 September |
81,362 |
82,161 |
|
Notes to the Accounts |
|||||
|
1. |
Preparation in accordance with IFRS This preliminary announcement of results sets out information which will be more fully covered in the Annual Report for the year to 30 September 2009. The Board has chosen to make certain voluntary disclosures in addition to the requirements of IFRS to enable investors to achieve a proper understanding of the financial statements. These additional disclosures involve identifying items that arise outwith the Group's normal business activities and which are sufficiently material to warrant separate disclosure. The Board has elected to use the term "exceptional" in referring to such items.
|
||||
|
2. |
Revenue |
2009 |
2008 |
||
|
£'000 |
£'000 |
||||
|
Turnover |
419,016 |
432,591 |
|||
|
Net fair value gains (losses) on assets at fair value through income |
2,881 |
(2,505) |
|||
|
Total revenue |
421,897 |
430,086 |
|||
|
3. |
Segment reporting |
||||
|
The Group's primary business segments, based on the Group's management and reporting structure, are the investment management division and the property asset management division. |
|||||
|
The results, analysed by these two business segments, are shown below. |
|||||
|
Investment management |
Property asset management |
Group total |
|||
|
Year to 30 September 2009 |
£'000 |
£'000 |
£'000 |
||
|
Turnover |
310,440 |
108,576 |
419,016 |
||
|
Net fair value gains on assets at fair value through income |
2,881 |
- |
2,881 |
||
|
Revenue |
313,321 |
108,576 |
421,897 |
||
|
Operating costs |
(233,960) |
(91,940) |
(325,900) |
||
|
Exceptional costs (note 4) |
(37,246) |
(7,252) |
(44,498) |
||
|
Amortisation and impairment of intangible assets |
(25,636) |
(4,500) |
(30,136) |
||
|
Operating expenses |
(296,842) |
(103,692) |
(400,534) |
||
|
Other operating income (expense) |
48 |
(330) |
(282) |
||
|
Operating profit (before exceptional items and amortisation and impairment of intangibles) |
79,409 |
16,306 |
95,715 |
||
|
Operating profit (after exceptional items and amortisation and impairment of intangibles) |
16,527 |
4,554 |
21,081 |
||
|
Profit before tax |
9,088 |
1,382 |
10,470 |
||
|
Total assets |
2,868,647 |
206,849 |
3,075,496 |
||
|
Total liabilities |
1,977,757 |
75,750 |
2,053,507 |
||
|
Depreciation |
3,720 |
640 |
4,360 |
||
|
Share-based payment expense |
25,555 |
- |
25,555 |
||
|
Capital expenditure |
8,964 |
2,200 |
11,164 |
||
|
Acquisition and additions of intangible assets and goodwill |
317,261 |
- |
317,261 |
||
|
Investment management |
Property asset management |
Group total |
||||
|
Year to 30 September 2008 |
£'000 |
£'000 |
£'000 |
|||
|
Turnover |
315,291 |
117,300 |
432,591 |
|||
|
Net fair value losses on assets at fair value through income |
(2,505) |
- |
(2,505) |
|||
|
Revenue |
312,786 |
117,300 |
430,086 |
|||
|
Operating costs |
(229,704) |
(101,090) |
(330,794) |
|||
|
Exceptional costs (note 4) |
(11,094) |
(13,908) |
(25,002) |
|||
|
Amortisation of intangible assets |
(11,940) |
(1,845) |
(13,785) |
|||
|
Operating expenses |
(252,738) |
(116,843) |
(369,581) |
|||
|
Exceptional gains on property |
- |
4,129 |
4,129 |
|||
|
Gains on disposal of other investments |
724 |
- |
724 |
|||
|
Other operating income |
724 |
4,129 |
4,853 |
|||
|
Operating profit (before exceptional items and amortisation of intangibles) |
83,806 |
16,210 |
100,016 |
|||
|
Operating profit (after exceptional items and amortisation of intangibles) |
60,772 |
4,586 |
65,358 |
|||
|
Profit before tax |
56,587 |
3,870 |
60,457 |
|||
|
Total assets |
2,151,222 |
219,807 |
2,371,029 |
|||
|
Total liabilities |
1,541,440 |
86,286 |
1,627,726 |
|||
|
Depreciation |
2,901 |
914 |
3,815 |
|||
|
Share-based payment expense |
14,716 |
- |
14,716 |
|||
|
Capital expenditure |
2,518 |
441 |
2,959 |
|||
|
Acquisition of intangible assets and goodwill |
22,116 |
192,683 |
214,799 |
|||
|
Exceptional impairment provision on property seed capital |
- |
8,644 |
8,644 |
|||
|
4. |
Exceptional costs |
|||||
|
Exceptional costs incurred in 2009 fall into three categories. First the costs arising from the acquisition of certain businesses and assets from Credit Suisse and the integration and migration of these businesses of the Group. These integration costs include charges in respect of a transitional services agreement with the vendor to ensure that both people and systems were transferred in a controlled manner; set up costs in respect of the migration of the back office data and systems to the Group's third party administrator; and costs of retaining duplicate staffing for a transitional period to ensure a smooth migration of data. Secondly, non-recurring rationalisation and redundancy costs have been incurred in implementing a cost reduction programme. Finally, one-off costs have been incurred in completing the integration of businesses acquired during the previous financial year. These costs include the acceleration of certain property lease costs following the elimination of duplication of office premises as well as redundancy and other rationalisation costs. |
||||||
|
2009 |
2008 |
|||||
|
£'000 |
£'000 |
|||||
|
Arising on Credit Suisse acquisition: |
||||||
|
Transitional service costs from vendor |
7,849 |
- |
||||
|
Costs of separation, migration and integration of back office data and systems |
10,405 |
- |
||||
|
18,254 |
- |
|||||
|
Duplicate staff costs, redundancy and third party integration costs arising from earlier acquisitions |
- |
4,074 |
||||
|
Integration costs |
18,254 |
4,074 |
||||
|
Redundancy and other non-recurring costs arising from implementation of the cost reduction programme |
17,800 |
10,284 |
||||
|
Acceleration of property lease costs on office rationalisation |
7,052 |
- |
||||
|
Costs arising on disposal of private equity business |
1,392 |
- |
||||
|
VAT expense on investment trusts |
- |
2,000 |
||||
|
Exceptional impairment provision on property seed capital |
- |
8,644 |
||||
|
Total exceptional costs |
44,498 |
25,002 |
||||
|
5. |
Other operating (expense) income |
2009 |
2008 |
|
|
£'000 |
£'000 |
|||
|
Other operating income comprises the following items: |
||||
|
Exceptional gain on disposal of property |
- |
4,129 |
||
|
(Losses) gains on disposal of other investments |
(282) |
724 |
||
|
Other operating (expense) income |
(282) |
4,853 |
||
|
The loss on disposal of other investments comprise net gains of £48,000 on the disposal of private equity investments less net losses of £330,000 on the disposal of investments held by the property asset management division. |
||||
|
6. |
Analysis of cash flows |
2009 |
2008 |
|
|
£'000 |
£'000 |
|||
|
Reconciliation of profit after tax to operating cash flow |
||||
|
Profit after tax |
6,696 |
46,847 |
||
|
Depreciation charges |
4,360 |
3,815 |
||
|
Amortisation and impairment of intangible assets |
30,136 |
13,785 |
||
|
Fair value (gains) losses on investments |
(2,881) |
2,505 |
||
|
Losses (gains) on disposals of investments and other assets |
2,186 |
(4,723) |
||
|
Share based element of remuneration |
25,555 |
14,716 |
||
|
Net finance costs |
10,611 |
4,901 |
||
|
Income tax expense (credit) |
3,774 |
13,610 |
||
|
80,437 |
95,456 |
|||
|
(Decrease) increase in provisions |
(700) |
1,500 |
||
|
(Increase) decrease in stock |
(200) |
269 |
||
|
Decrease (increase) in trade and other receivables |
14,567 |
(16,764) |
||
|
Decrease in short-term loans to property funds |
- |
24,027 |
||
|
Increase in trade and other payables |
(39,712) |
(12,570) |
||
|
Net cash inflow from operating activities |
54,392 |
91,918 |
||
|
Net interest paid |
(9,717) |
(5,146) |
||
|
Corporation tax paid |
(27,611) |
(22,270) |
||
|
Net cash generated from operating activities |
17,064 |
64,502 |
||
|
7. |
Net finance costs |
2009 |
2008 |
|
|
£'000 |
£'000 |
|||
|
Interest on 7.2% Subordinated loan notes 2016 |
5,987 |
4,582 |
||
|
Interest on 4.5% Convertible bonds 2010 |
89 |
240 |
||
|
Interest on unsecured guaranteed loan notes |
- |
14 |
||
|
Interest on overdrafts, revolving credit facilities and other interest bearing accounts |
5,586 |
5,649 |
||
|
11,662 |
10,485 |
|||
|
Amortisation of issue costs on Convertible bonds |
74 |
113 |
||
|
Total finance costs |
11,736 |
10,598 |
||
|
Finance revenue - interest income |
(1,125) |
(5,697) |
||
|
Net finance costs |
10,611 |
4,901 |
||
|
8. |
Tax expense |
2009 |
2008 |
|
|
£'000 |
£'000 |
|||
|
Current year tax charge on profit before exceptional items,amortisation and impairment of intangible assets |
15,090 |
19,903 |
||
|
Adjustments in respect of prior periods |
(485) |
(3,412) |
||
|
14,605 |
16,491 |
|||
|
Tax credit on exceptional items,amortisation and impairment of intangible assets arising in the year |
(10,831) |
(2,881) |
||
|
3,774 |
13,610 |
|||
|
9. |
Dividends |
2009 |
2008 |
|
|
£'000 |
£'000 |
|||
|
Dividends on perpetual preference shares: |
||||
|
Dividend paid |
4,445 |
5,395 |
||
|
Coupon payments in respect of perpetual capital securities (net of tax) |
||||
|
Coupon payments made during the year |
14,769 |
11,461 |
||
|
Ordinary dividends |
||||
|
Declared and paid during the year |
||||
|
Dividends paid on ordinary shares: |
||||
|
Final dividend for 2008 - 3.0p (2007 - 2.9p) |
21,222 |
18,451 |
||
|
Interim dividend for 2009 - 2.8p (2008 - 2.8p) |
21,111 |
19,652 |
||
|
42,333 |
38,103 |
|||
|
Total dividends and coupon payments paid during the year |
61,547 |
54,959 |
||
|
Proposed for approval at the Annual General Meeting (not recognised as a liability at 30 September 2009) |
||||
|
Dividends on ordinary shares: |
||||
|
Final dividend for 2009 - 3.2p (2008 -3.0p) |
32,208 |
21,086 |
||
The total ordinary dividend for the year is 6.0p per share including the proposed final dividend for 2009 of 3.2p per share. This payment will trigger an adjustment to the subscription price applying to the warrants which form part of the 6.75% Convertible Preference Share Units issued in June 2005. Assuming approval of the final dividend payment at the forthcoming Annual General Meeting, the subscription price will reduce from 94p per ordinary share to 92p per ordinary share.
The proposed final dividend of 3.2p per ordinary share will be paid on 28 January 2010 to qualifying shareholders on the register at the close of business on 11 December 2009.
|
10. |
Earnings per share |
||||||||
|
The calculations of earnings per share are based on the following profits and numbers of shares. Basic earnings per share amounts are calculated by dividing profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share amounts are calculated by dividing the net profit for the year attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the potentially dilutive shares into ordinary shares. Underlying earnings per share figures are calculated by adjusting the profit to exclude exceptional items, amortisation and impairment of intangible assets. The purpose of providing the underlying earnings per share is to allow readers of the accounts to clearly consider trends without the impact of exceptional and non-cash items. |
|||||||||
|
IAS33 |
Underlying |
||||||||
|
Basic earnings per share |
2009 £'000 |
2008 £'000 |
2009 £'000 |
2008 £'000 |
|||||
|
Profit for the year |
6,696 |
46,847 |
6,696 |
46,847 |
|||||
|
Dividends on redeemable preference shares |
(5,527) |
(5,395) |
(3,771) |
(5,395) |
|||||
|
Coupon payments in respect of perpetual capital securities (net of tax) |
(14,769) |
(11,631) |
(14,769) |
(11,631) |
|||||
|
(Loss) profit for the financial year |
(13,600) |
29,821 |
(11,844) |
29,821 |
|||||
|
Amortisation and impairment of intangible assets, net of attributable taxation |
27,237 |
12,285 |
|||||||
|
Exceptional gains on disposal of investments, and property, net of attributable taxation |
- |
(2,932) |
|||||||
|
Exceptional integration costs and expenses associated with cost reduction programme, net of attributable taxation |
36,566 |
22,424 |
|||||||
|
Profit for the financial year - underlying basis |
51,959 |
61,598 |
|||||||
|
Weighted average number of shares (000's) |
796,745 |
652,149 |
796,745 |
652,149 |
|||||
|
Basic (loss) earnings per share |
(1.71p) |
4.57p |
6.52p |
9.45p |
|||||
|
Diluted earnings per share |
|||||||||
|
(Loss) profit for calculation of basic earnings per share, as above |
(13,600) |
29,821 |
51,959 |
61,598 |
|||||
|
Add: interest on 2010 convertible bonds, net of attributable taxation |
N/A |
N/A |
- |
170 |
|||||
|
Add: dividend on convertible preference share units |
N/A |
N/A |
3,771 |
5,395 |
|||||
|
(Loss) profit for calculation of diluted earnings per share |
(13,600) |
29,821 |
55,730 |
67,163 |
|||||
|
Weighted average number of shares (000's) |
|||||||||
|
For basic earnings per share |
796,745 |
652,149 |
796,745 |
652,149 |
|||||
|
Dilutive effect of 2010 convertible bonds |
N/A |
N/A |
- |
2,793 |
|||||
|
Dilutive effect of convertible preference share units |
N/A |
N/A |
61,621 |
82,395 |
|||||
|
Dilutive effect of LTIP awards |
N/A |
5,745 |
1,008 |
5,745 |
|||||
|
Dilutive effect of exercisable share options and deferred shares |
N/A |
2,202 |
23,801 |
2,202 |
|||||
|
796,745 |
660,096 |
883,175 |
745,284 |
||||||
|
Diluted (loss) earnings per share |
(1.71p) |
4.52p |
6.31p |
9.01p |
|||||
|
The effects of the 2010 convertible bonds and the convertible preference share units were anti-dilutive on an IAS 33 basis in both years. |
|||||||||
|
11. |
Intangible assets |
2009 |
2008 |
||||||
|
£'000 |
£'000 |
||||||||
|
Intangible assets |
470,142 |
291,856 |
|||||||
|
Goodwill |
677,472 |
536,605 |
|||||||
|
1,147,614 |
828,461 |
||||||||
|
12. |
Other investments |
2009 |
2008 |
||||||
|
£'000 |
£'000 |
||||||||
|
Non-current assets |
|||||||||
|
Non-current investments |
59,903 |
50,335 |
|||||||
|
Current assets |
|||||||||
|
Liquid investments of life and pensions subsidiaries |
21,718 |
14,595 |
|||||||
|
Listed equities held for trading |
12,295 |
846 |
|||||||
|
34,013 |
15,441 |
||||||||
|
Assets classified as held for sale |
|||||||||
|
Seed capital investments |
4,817 |
17,596 |
|||||||
|
Management contracts held for sale |
23,000 |
- |
|||||||
|
27,817 |
17,596 |
||||||||
|
13. |
Stock of units and shares |
2009 |
2008 |
||||||
|
£'000 |
£'000 |
||||||||
|
Units and shares in managed funds |
468 |
268 |
|||||||
|
14. |
Acquisition |
||||||||
|
During the year the Group completed the acquisition of certain businesses and assets from Credit Suisse. The first element of the transaction, which completed on 30 April 2009, was in respect of the businesses acquired in Asia Pacific (ex Japan) with total assets under management of £7.1 billion. Consideration for this part of the acquisition was satisfied by the issue of 32,526,196 New Ordinary Shares in the Company to Credit Suisse. The second and final part of the acquisition was completed on 30 June 2009 in respect of the Rest of the World target business and had assets under management of approximately £28 billion bringing the total assets under management acquired to £35.1 billion. The final consideration was satisfied by the issue of 207,473,804 New Ordinary Shares in the Company. Combined with the consideration of new shares issued in respect of the first closing, a total of 240,000,000 New Ordinary Shares were issued to Credit Suisse in satisfaction of the purchase consideration. The acquisition consisted primarily of investment management contracts, although it also included several small operating companies in which 100% of the equity was acquired. Independent valuation specialists were engaged to carry out a purchase price allocation exercise in respect of this acquisition in order to allocate the purchase price between tangible assets, goodwill and intangible assets. The fair value adjustments from this allocation process are reflected in the table below. On 13 July the Group announced the sale of some former Credit Suisse funds acquired to Premier Asset Management Group Limited for a cash consideration of £23 million. The sale comprised two OEIC fund umbrellas containing 10 open-end funds which had total assets of some £858 million (as at 8 July 2009). The sale of these funds is expected to complete on 5 December 2009. The assets and liabilities at the date of the acquisition and the fair value adjustments were as follows: |
|||||||||
|
Business acquired from Credit Suisse |
|||||||||
|
At date of acquisition £'000 |
Fair Value adjustments £'000 |
Fair Value £'000 |
|||||||
|
Intangible assets |
838 |
194,100 |
194,938 |
||||||
|
Property, plant & equipment |
98 |
- |
98 |
||||||
|
Assets held for sale |
- |
23,000 |
23,000 |
||||||
|
Trade and other receivables |
15,449 |
- |
15,449 |
||||||
|
Cash and cash equivalents |
36,077 |
- |
36,077 |
||||||
|
Trade and other payables |
(14,691) |
(15,318) |
(30,009) |
||||||
|
Deferred tax on intangible assets |
- |
(53,788) |
(53,788) |
||||||
|
Net assets of acquired business |
37,771 |
147,994 |
185,765 |
||||||
|
Goodwill |
120,746 |
||||||||
|
306,511 |
|||||||||
|
Discharged by: |
|||||||||
|
Value of shares issued |
300,425 |
||||||||
|
Expenses of acquisition |
6,086 |
||||||||
|
306,511 |
|||||||||
|
The businesses acquired from Credit Suisse are being integrated with the Group's existing business therefore the results and cashflows can no longer be identified. The pooled pensions company acquired as part of the acquisition from Credit Suisse has obtained a controlling interest in two funds which have been consolidated in these accounts. The minority interest noted in these accounts relates to one of these funds. |
|||||||||
|
15. |
Other financial investments / investment contract liabilities |
||||||||
|
These balances represent unit linked business carried out by the Group's life and pension subsidiary. The assets represent investments held to meet contracted liabilities. |
|||||||||
|
16. |
Statement of changes in equity |
2009 |
2008 |
||||||
|
£'000 |
£'000 |
||||||||
|
Profit for the year |
6,696 |
46,847 |
|||||||
|
Other recognised income and expense |
(1,118) |
(463) |
|||||||
|
Dividends paid |
(61,547) |
(54,959) |
|||||||
|
Issue of ordinary share capital |
302,496 |
117,248 |
|||||||
|
Share based payments |
25,555 |
14,716 |
|||||||
|
Movement on coupon outstanding on perpetual capital securities |
(169) |
(128) |
|||||||
|
Purchase of own shares |
(328) |
- |
|||||||
|
Net additions to shareholders' funds |
271,585 |
123,261 |
|||||||
|
Opening shareholders' funds |
545,361 |
422,100 |
|||||||
|
Closing shareholders' funds |
816,946 |
545,361 |
|||||||
|
17. |
Interest bearing loans and borrowings |
2009 |
2008 |
|||||
|
£'000 |
£'000 |
|||||||
|
Non-current liabilities |
||||||||
|
7.2% Subordinated notes 2016 |
77,561 |
69,470 |
||||||
|
4.5% Convertible bonds 2010 |
- |
2,870 |
||||||
|
Amount drawn under bank revolving credit facility |
150,000 |
100,000 |
||||||
|
227,561 |
172,340 |
|||||||
|
Current liabilities |
||||||||
|
Amount drawn under bank revolving credit facility |
28,331 |
46,529 |
||||||
|
18. |
Analysis of changes in net debt |
At 1 October 2008 £'000 |
Cash flow £'000 |
Other non cash changes £'000 |
Exchange movement £'000 |
At 30 Sept 2009 £'000 |
||
|
Cash in hand, at bank |
82,161 |
(749) |
- |
(50) |
81,362 |
|||
|
Debt due within one year |
(46,529) |
18,198 |
- |
- |
(28,331) |
|||
|
Debt due after one year |
(169,470) |
(50,000) |
(63) |
(8,028) |
(227,561) |
|||
|
Convertible debt due after more than one year |
(2,870) |
- |
2,870 |
- |
- |
|||
|
(218,869) |
(31,802) |
2,807 |
(8,028) |
(255,892) |
||||
|
Total |
(136,708) |
(32,551) |
2,807 |
(8,078) |
(174,530) |
|||
|
19. |
Retirement benefits The Group's principal form of pension provision is by way of three defined contribution schemes operated world-wide. The Group also operates three legacy defined benefit schemes in the UK: the CGA Staff Pension Fund, the Murray Johnstone Limited Retirement Benefits Plan and the Edinburgh Fund Managers Group plc Retirement & Death Benefits Plan. All three UK defined benefit schemes are closed to new membership and to future service accrual. In addition, some defined benefit scheme exposure was added with the acquisition of DEGI in 2008 and businesses from Credit Suisse during the year. The actuarial valuations of these defined benefit arrangements were updated to 30 September 2009 by the respective independent actuaries using the projected unit method. |
|||||||
|
2009 |
2008 |
|||||||
|
£'000 |
£'000 |
|||||||
|
Pension scheme surplus |
- |
5,481 |
||||||
|
Pension scheme deficits |
(33,415) |
(17,376) |
||||||
|
20. |
The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2009 or 2008. The financial information for 2008 is derived from the statutory accounts for 2008 which have been delivered to the Registrar of Companies. The auditors have reported on the 2008 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for 2009 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course. |
|||||||
|
Assets under management |
||||||||
|
2009 |
2008 |
|||||||
|
£bn |
£bn |
|||||||
|
By type of mandate: |
||||||||
|
Institutional mandates |
105.0 |
84.0 |
||||||
|
Open end funds (excluding property funds) |
22.2 |
10.0 |
||||||
|
Closed end funds (excluding property funds) |
6.1 |
5.2 |
||||||
|
Property funds |
12.9 |
11.9 |
||||||
|
146.2 |
111.1 |
|||||||
|
By mandate type |
||||||||
|
Fixed Income |
51.7 |
47.0 |
||||||
|
Equities |
50.7 |
32.6 |
||||||
|
Property |
22.6 |
25.3 |
||||||
|
Multi Asset |
7.7 |
6.2 |
||||||
|
Money markets |
13.5 |
- |
||||||
|
146.2 |
111.1 |
|||||||
Related Shares:
ADN.L