Half Yearly Report

ABERDEEN ASSET MANAGEMENT PLC

Interim Results for six months to 31 March 2014

Highlights

· Revenue £503.5 million (-2%)

· Underlying profit before tax £217.0 million (-3%)

· Underlying earnings per share 14.3p (-4%)

· Dividend per share 6.75p (+12.5%)

· Operating margin 43.0% (2013: 43.8%)

· AuM £324.5 billion

FINANCIAL HIGHLIGHTS

Martin Gilbert, Chief Executive of Aberdeen Asset Management, commented:

"Aberdeen has delivered a resilient set of numbers in this half year, given the difficult backdrop for emerging markets. Our disciplined investment approach, long-term investment track record and tradition of client service have enabled us to limit equity outflows whilst we have continued to win mandates in other asset classes, such as fixed income and property.

"There are signs of a pick-up in sentiment towards emerging economies, as investors are again identifying opportunities and recognising the fundamental strengths of these markets. Equally encouraging is the healthy improvement in the relative performance of our key equity products so far this year.

"At the end of March we were delighted to complete our acquisition of SWIP and the process of integrating the business is proceeding as planned. The deal adds scale and strengthens further our broad range of investment capabilities and confirms Aberdeen's position as one of the world's leading asset management groups."

Management will host a presentation for analysts and institutions today at 10:00 (UK) to be held at the offices of Aberdeen Asset Management, Bow Bells House, 1 Bread Street, London EC4M 9HH. The event will also be available to view via a live webconference. To register please use the following weblink:

http://www.media-server.com/m/p/puq2e24j 

For more information:

Aberdeen Asset Management

Martin Gilbert Chief Executive + 44 (0) 207 463 6000

Bill Rattray Finance Director + 44 (0) 207 463 6000

Maitland

Neil Bennett + 44 (0) 207 379 5151

Tom Eckersley + 44 (0) 207 379 5151

Chairman's statement

The first half of this financial year was characterised by exacting conditions in emerging markets, with weaker investment sentiment impacting our equity new business flows. Nevertheless, we have enjoyed further encouraging demand for certain of our fixed income and property strategies and have continued to make progress in developing our diversified pipeline of new business which will be added to assets under management ("AuM") in the coming months.

We completed the major element of the acquisition of Scottish Widows Investment Partnership ("SWIP") on 31 March 2014, and the purchase of the SWIP infrastructure business completed on 1 May 2014. Considerable corporate energy, in addition to the specific transition-related costs, was invested during the period in bringing this acquisition to a successful conclusion, while the benefits to profitability will not begin to accrue until the beginning of the second half of the financial year.

This transaction adds new and complementary strategies to our product range, and enhances the Group's position as a leading global asset manager. We aim to build on and deepen the strategic relationship with Lloyds Banking Group as well as marketing our additional capabilities to our worldwide client base.

Total AuM at 31 March 2014 were £324.5 billion; excluding the £134.1 billion added by SWIP, Aberdeen's AuM fell 5% to £190.4 billion (30 September 2013: £200.4 billion).

Financials

Profit before taxation for the period was £168.7 million (2013: £188.2 million). Underlying profit, stated before amortisation of intangible assets and exceptional costs in respect of the SWIP acquisition, was £217.0 million, compared to £222.8 million in 2013. This represents underlying earnings per share, on a diluted basis, of 14.32p (2013:14.88p).

The Board has decided to pay an interim dividend of 6.75p per share, an increase of 12.5% on the interim dividend announced last year which will be paid on 19 June 2014 to qualifying shareholders on the register at 16 May 2014. This increase is in line with the Board's objective to pay a growing dividend each year.

Net revenue for the period decreased by 2% to £503.5 million (2013: £516.0 million). Recurring fee income was little changed at £491.1 million (2013: £492.5 million), while performance fees contributed £12.4 million (2013: £23.5 million). The blended average management fee rate remained steady at 50.0 basis points (year to September 2013: 50.0 basis points).

Operating costs of £286.9 million fell by 1% compared to the equivalent period last year, and were 4% lower than for the second half of our last financial year, and we have been proactive in identifying and implementing further cost savings over and above the synergies expected from the SWIP transaction. The Group's operating margin for the period was 43.0% (2013: 43.8%).

We generated £221.6 million of core operating cashflow (2013: £221.2 million), representing a conversion rate of underlying operating profit of 102% (2013: 98%), and ended the period with a cash position of £410.4 million.

As we stated when we announced the transaction, the addition of SWIP will reinforce Aberdeen's progressive dividend policy and, while we will incur some one-off integration costs over the next year, it will enhance our ability to return surplus capital to shareholders over time.

Review of operations

Assets under management increased to £324.5 billion, of which the SWIP transaction added £134.1 billion. The principal changes in total AuM are shown in the following table, and a fuller analysis by asset class is included at the end of the interim results statement.

Gross new business inflows for the period totalled £14.3 billion (2013: £24.6 billion) and outflows amounted to £23.1 billion (2013: £20.2 billion), resulting in a net outflow for the six month period of £8.8 billion (2013: net inflow £4.4 billion).

Inflows were subdued for the first five months although we then saw some improvement during March as we began to convert the pipeline of new mandates awarded by a range of clients. Against the backdrop of weak investor sentiment, we encountered net outflows from our main equity products, but we enjoyed healthy net inflows to our property, emerging market debt and high yield bond products.

Investment performance across our fixed income strategies is generally ahead of the relevant benchmarks for both short and longer term time periods and our property performance remains robust. Performance of our key equity products has been running behind benchmark on a one year basis, but we have continued to focus on our bottom up, fundamental style of investing for the longer term in good quality companies at attractive valuations, and we have seen healthy outperformance in March and April. It is inevitable that our style will lead to periods of shorter term underperformance, but we believe our longer term performance track record remains compelling and we do not plan to make any significant changes to our equity process.

Our distribution is focused on multiple business and distribution channels with teams operating on-the-ground in 26 countries and covering a further 34 remotely. We continue to see strong growth in North America, continental Europe and selective markets in Asia. Our focus is on providing our existing clients with a high level of service and to market our wider range of products outwith our well known strengths in Asia Pacific, emerging markets and global equities. As reflected in the flow figures, EMD, high yield and European property are areas which are attracting interest.

SWIP completion and integration

The major part of the SWIP transaction was completed on 31 March 2014, for purchase consideration comprising 108.5 million new ordinary shares, a further 17.3 million shares to be issued once Lloyds have received certain regulatory consents and a deferred top-up payment of £39.4 million which is payable on 31 March 2015. A further 5.9 million shares were issued to Lloyds on completion of the acquisition of the SWIP infrastructure business.

We have an excellent track record of integrating businesses with a clear global operating model. The respective teams of Aberdeen and SWIP have worked together over the last few months to create and refine the detailed integration plans across all areas of the business, and the implementation process has begun, and I am pleased to welcome our new colleagues to the Group.

Aberdeen's traditional approach has been to build relationships with key clients at all levels. Together with the existing SWIP teams we have already started to develop further relationships with Lloyds Banking Group and its Wealth, Insurance and Retail businesses.

As we highlighted in our announcement of the transaction in November, SWIP brings some further diversification to the enlarged Group's product range, and our Aberdeen solutions business will be enhanced by the integration of SWIP's quantitative investments, investment solutions and alternatives capabilities. We have also decided to include money market assets as a component of the enlarged Group's fixed income business.

This re-alignment is consistent with our strategy of growing our non-equity businesses over time. Our enhanced solutions capability, encompassing new quantitative investment strategies, stronger fixed income team and broader alternatives offering, mean we have a comprehensive suite of products to meet the needs of investors around the world.

Outlook

Whilst the six month period under review has been demanding, the completion of the SWIP transaction creates an exceptional platform to ensure the continuity of high quality client service which will enable further organic growth.

Towards the end of the period, there were indications of some pick-up in investor sentiment towards emerging markets, although we anticipate that some uncertainty could remain. More recently, an encouraging improvement in investment performance should improve the outlook for our equities strategies and we are confident that the added scale and breadth of the enlarged Group's capabilities, combined with our long-term investment focus, provide a solid base from which to pursue further profitable growth for our investors.

Roger Cornick

Chairman

Condensed consolidated income statement

For the six months to 31 March 2014

Condensed consolidated statement of comprehensive income

For the six months to 31 March 2014

Condensed consolidated balance sheet

31 March 2014

Condensed consolidated statement of changes in equity

For the six months to 31 March 2014

For the six months to 31 March 2013

For the year to 30 September 2013

Condensed consolidated cash flow statement

For the six months to 31 March 2014

Notes to the interim condensed consolidated financial statements

For the six months to 31 March 2014

1 General information

The interim results have not been audited but have been reviewed by the auditor. The condensed comparative figures for the financial year to 30 September 2013 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditor and delivered to the Registrar of Companies. The auditor's report was unqualified and did not contain a statement under section 498 of the Companies Act 2006.

2 Accounting policies

Basis of preparation

These condensed financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The annual financial statements are prepared in accordance with IFRS as adopted by the EU.

As required by the Disclosure and Transparency Rules of the Financial Conduct Authority, the condensed financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Group's published consolidated financial statements for the year ended 30 September 2013.

The preparation of interim financial statements requires management to make estimates and assumptions that affect the reported income and expense, assets and liabilities and disclosure of contingencies at the date of the interim financial statements. Although these estimates and assumptions are based on management's best judgement at the date of the interim financial statements, actual results may differ from these estimates. The interim financial statements, which are in a condensed format, do not include all the information and disclosures required in the Group's annual report, and should be read in conjunction with the Group's annual report for the year ended 30 September 2013.

Going concern

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than twelve months from the date of this report. Accordingly, it is appropriate to adopt the going concern basis in preparing the condensed financial statements.

Segmental disclosures

The Group operates a single business segment of asset management for reporting and control purposes.

IFRS 8 Operating Segments requires disclosures to reflect the information which the Group Management Board (GMB), being the body that is the Group's chief operating decision maker, uses for evaluating performance and the allocation of resources. The Group is managed as a single asset management business, with multiple investment strategies of equities, fixed income and property, complemented by a solutions business which provides multi asset and fund of alternatives services. These strategies are managed across a range of products, distribution channels and geographic regions. Reporting provided to the GMB is on an aggregated basis.

3 Revenue

4 Analysis of cash flows

5 Net finance revenue

6 Tax expense

The tax charge for the six month period ended 31 March 2014 is calculated using the expected effective annual tax rate in each country of operation and applying these rates to the results of each country for the first six months of the year. This also takes account of acquisitions made during the period (note 9).

7 Dividends and coupons payments

The interim ordinary dividend of 6.75p per share will be paid on 19 June 2014 to qualifying shareholders on the register at 16 May 2014.

8 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 net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

Diluted earnings per share amounts are calculated by dividing the net profit for the period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period 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 amortisation 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 certain non-cash items.

10 Intangible assets

11 Other investments

Seed capital investments comprise amounts invested in funds when the intention is to dispose of these as soon as practicably possible.

12 Assets backing investment contract liabilities

These balances represent unit linked business carried out by the Group's life assurance and pooled pensions subsidiary. The risks and rewards of these assets fall to the benefit of or are borne by the underlying policyholders. Therefore, the investment contract liabilities shown in the Group's balance sheet are equal and opposite in value to the assets held on behalf of the policyholders. The Group has no direct exposure to fluctuations in the value of assets which are held on behalf of policyholders, nor to fluctuations in the value of the assets arising from changes in market prices or credit default. The Group's exposure to these assets is limited to the revenue earned, which varies according to movements in the value of the assets.

13 Share capital

During the period a total of 621,500 ordinary shares of 10p each were issued in respect of the exercise of share options granted to employees under the 1994 Executive Share Option Scheme.

On 31 March 2014 108,537,009 ordinary shares of 10p each were issued in respect of the acquisition of Scottish Widows Investment Partnership Group Limited as described in note 9. The acquisition completed on 31 March 2014 and the allotment of the shares was approved by the Board. Due to timing, the shares were not admitted until after trading opened on 1 April 2014.

14 Perpetual capital securities

On 1 March 2013 the Company issued US$500 million perpetual cumulative capital notes. The securities bear interest on their principal amount at 7.0% per annum, payable quarterly in arrears on 1 March, 1 June, 1 September and 1 December in each year commencing on 1 June 2013. Net proceeds after deduction of issue expenses were £321.6 million.

15 Retirement benefits

The Group's principal form of pension provision is by way of three defined contribution schemes operated worldwide. The Group also operates a number of legacy defined benefit schemes. There are three schemes in the UK which are closed to new membership and to future service accrual, two schemes in Japan and schemes in Germany, Norway and Finland.

The actuarial valuations of the defined benefit pension schemes referred to above were updated to 30 September 2013 by the respective independent actuaries. Contributions to the schemes since 30 September 2013 have been set off against the scheme deficits.

16 Contingent liabilities

The Group may, from time to time, be subject to claims, actions or proceedings in the normal course of its business. When such circumstances arise, the Board considers the likelihood of a material outflow of economic resources and provides for its best estimate of costs where an outflow of economic resources is probable. While there can be no assurances, the directors believe, based on information currently available to them, that the likelihood of other material outflows is remote.

17 Post balance sheet events

On 1 May 2014, the Group completed the purchase of SWIP's infrastructure fund management business for a consideration of £26.4 million, satisfied by the issue of 5.95 million new Aberdeen shares to Lloyds at a price of 443.4p. The acquired business will add approximately £5 million of net assets to the combined business.

Due to the timing of this transaction, any adjustments to the fair values of assets and liabilities will be finalised during the second half of the financial year and disclosed in in the Group consolidated financial statements for the year ended 30 September 2014. There will be certain intangible assets included in the provisional goodwill value of £21.4 million that cannot be individually separated and reliably measured until completion of the valuation by independent valuation specialists.

Responsibility statement

We confirm that to the best of our knowledge:

• the condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

• the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

For and on behalf of the Board

Scott E Massie

Secretary

2 May 2014

Independent review report to Aberdeen Asset Management PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2014 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA"). Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FCA.

Catherine Burnet

for and on behalf of KPMG Audit Plc

Chartered Accountants

37 Albyn Place

Aberdeen

AB10 1JB

2 May 2014

Appendix - Assets under management and new business flows

Assets under management at 31 March 2014

Overall new business flows for 6 months to 31 March 2014 - By mandate type

Overall new business flows for 6 months to 31 March 2013 - By asset class

New business flows for 6 months to 31 March 2014 - Equities

New business flows for 6 Months to 31 March 2014 - Fixed income