IFRS transition statement

28th Mar 2006 07:05

Aberdeen Asset Management PLC28 March 2006 ABERDEEN ASSET MANAGEMENT PLC Transition to International Financial Reporting Standards Aberdeen Asset Management PLC ("Aberdeen") will adopt International FinancialReporting Standards ("IFRS"), as adopted in the European Union ("EU"), as the basisfor the preparation of its consolidated financial statements for the year to 30September 2006. This announcement explains the impact of the changes inaccounting treatment under IFRS on the financial results of the Aberdeen Group("the Group") previously reported under UK Generally Accepted AccountingPrinciples ("UK GAAP"), as follows: •Consolidated balance sheet at 1 October 2004, being the date of the Group's transition to IFRS •Consolidated income statement for the year to 30 September 2005 •Consolidated statement of recognised income and expense for the year to 30 September 2005 •Consolidated cash flow statement for the year to 30 September 2005 •Consolidated balance sheet at 30 September 2005 Reconciliations of the differences between the UK GAAP and IFRS presentation ofthe above financial information are provided at Appendix 1. Equivalentinformation is also provided in respect of the interim results to 31 March 2005. A summary of the principal IFRS accounting policies adopted by the Group isprovided for reference at Appendix 2. This announcement also includes guidance on the principal adjustments requiredto the Group's balance sheet at 1 October 2005 to comply with InternationalAccounting Standard 32, Financial Instruments: Disclosure and Presentation ("IAS32") and International Accounting Standard 39, Financial Instruments:Recognition and Measurement ("IAS 39"). The information provided in this announcement has been prepared on the basis ofthe IFRS in effect at the date of this announcement and the Group's currentunderstanding of how these standards should be applied to its business andtherefore there is a possibility that the information could change as a resultof any changes in IFRS before the Group's year end. The standards in issue are subjectto ongoing review and endorsement by the EU, whilst interpretation of the standards remains subject to review by the International Financial Reporting Interpretations Committee ("IFRIC"). Basis of preparation The Group's first Annual Report and Accounts prepared in accordance with IFRSwill be for the year to 30 September 2006. The date of transition to IFRS is 1October 2004, being the beginning of the earliest period of comparativeinformation. The financial information included in Appendix 1 to this announcement ispresented in accordance with accounting policies which are consistent with IFRS.The format and presentation of this information may require amendment shouldfurther guidance be issued and as industry practice develops. These statementshave been prepared in accordance with standards and interpretations approved bythe International Accounting Standards Board and its predecessors, all of whichhave been endorsed by the European Commission. The Group will adopt therequirements of IAS 32 and IAS 39 with effect from 1 October 2005. Summary of principal changes affecting the presentation of the Group's results A summary of the impact on the Group of the transition to IFRS is provided inthe table below: IFRS UK GAAP £'000 £'000Profit before tax - 30 September 2005 30,123 12,968Basic earnings per share - 30 September 2005 6.64p 1.44pUnderlying profit before tax - 30 September 2005 * 24,655 25,680Underlying earnings per share - 30 September 2005 * 4.64p 4.79pTotal equity - 1 October 2004 121,076 132,922Total equity- 30 September 2005 428,590 419,849* - these items represent voluntary disclosures of the Group's financial resultsexcluding the effects of non-recurring income and costs and the amortisation ofintangible assets (under IFRS) and goodwill (under UK GAAP). These measures havebeen consistently published by the Group in addition to the mandatory UK GAAPnumbers as, in our experience, this alternative presentation tends to befavoured by major investors and analysts as it more clearly focuses on theGroup's profitability. The most significant changes affecting the consolidated income statement for theyear to 30 September 2005 and the consolidated balance sheets at 1 October 2004and 30 September 2005 are: •A charge to profit or loss in respect of the fair value of share options granted after 7 November 2002 (IFRS 2); •The discontinuance of amortisation of goodwill (IFRS 3); •The impact on the accounting for the acquisition of Deutsche Asset Management, which was completed on 30 September 2005, which resulted in a larger element of consideration being attributed to intangible assets as opposed to goodwill as would have been the case under UK GAAP and the future amortisation of these intangible assets (IFRS 3); •The recognition of dividends in the accounting period in which they are paid rather than in the period in which they are declared or proposed (IAS 10); •The inclusion in the balance sheet of provisions for all employee benefits including, principally, pensions deficits in respect of the Group's legacy defined benefit pension schemes (IAS 19); •The consolidation of part of the Group's private equity business where, notwithstanding the commercial reality, the Group is deemed by IFRS definitions to control limited partnerships operated for the benefit of investors and certain companies in which these limited partnerships have invested (IAS 27). Changes in the fair value of the Group's remaining private equity investments are taken to the income statement; •The reclassification of certain capitalised software expenditure as intangible assets rather than as an element of tangible assets (IAS 38); and •Certain investment management fees, and related costs of acquisition, previously recognised on commencement of the relevant contracts, are now recognised over the life of those contracts (IAS 18). The significant change to the consolidated cash flow statement for the yearto 30 September 2005 is: •The consolidation of private equity funds (IAS 27) A further significant change to the consolidated balance sheet at 1 October 2005 is: •The inclusion of those private equity investments not being consolidated, as noted above, at their respective fair values (IAS 39) and the classification of most investments as "available for sale" with unrealised gains and losses taken to equity, and only being recognised in the income statement on sale or impairment (IAS 39). Transitional arrangements IFRS 1, First time Adoption of International Financial Reporting Standardsoutlines how companies should apply IFRS at transition. The standardrequires the adoption of accounting policies that comply with each IFRSeffective at the first reporting date under IFRS and for those policies to beapplied retrospectively to all periods presented in those first IFRS statements.There are, however, a number of optional exemptions to this general principle toassist the transition and the Group has taken advantage of these exemptionswhere appropriate. Impact analysis The analysis below sets out the most significant adjustments arising from thetransition to IFRS. IFRS 2: Share-based Payment The Group recognises a charge to the income statement for the fair value ofoutstanding share options granted to employees after 7 November 2002. The chargeis calculated using a binomial lattice valuation model and is charged over therelevant vesting periods, adjusted to reflect actual and expected levels ofvesting, which are dependent on forfeit rates and the satisfaction ofperformance conditions. Under UK GAAP there was no charge to the incomestatement for share options granted to employees. There is no change in respect of shares issued under the Group's Long TermIncentive Plan ("LTIP"). The UK GAAP policy of charging to profit or loss thefair value of LTIP awards, adjusted to reflect actual and expected levels ofvesting and spread over the relevant performance and vesting periods, willcontinue under IFRS. The impact of the charge for share options is to reduce balance sheet equity at1 October 2004 by £0.1 million. The effect for the year to 30 September 2005 isto increase the post tax charge in the income statement by £0.1 million and toincrease balance sheet equity by £0.1 million. IFRS 3: Business Combinations In accordance with the transitional provisions of IFRS 1, the Group has electedto apply IFRS 3 prospectively from the date of transition. This results in (i)the value of goodwill and intangible assets recognised on previous acquisitionsbeing frozen at their respective carrying values in the consolidated balancesheet at 1 October 2004; and (ii) the reversal of any amortisation charged inthe year to 30 September 2005. IFRS 3 requires intangible assets acquired as part of a business combination tobe separately identified. A review of the businesses acquired from Deutsche Bankin late 2005 has therefore been undertaken for this purpose. This acquisitionwas completed in two stages, on 30 September and 1 December 2005. A valuationexercise has been carried out which has identified £212.8 million of fairvalue in respect of client contracts and relationships which fall to be treatedas intangible assets. Of this amount, £139.5 million relates to the fixed incomebusiness, which will be amortised on a straight line basis over 10 years. Theremaining £73.3 million relates to the open end funds which are considered tohave an indefinite life. This item will not be amortised but will be subject toan annual impairment review. From 1 October 2004 goodwill is not amortised but is subject to an annualimpairment review, and more frequently if there are indications that thecarrying value may not be recoverable. The impact of this change is to increasethe balance sheet equity at 30 September 2005 by £19.5 million and to reduce thepost tax charge in the income statement by £19.5 million. The intangible assets acquired on the acquisition of the DeAM fixed incomebusiness has no impact on the income statement for the year to 30 September.However, the amortisation of these assets will result in a charge to the incomestatement of £12.9 million for the year to 30 September 2006 and an annualcharge of £14.0 million in subsequent years. IAS 10: Events after the Balance Sheet Date. The Group recognises dividends declared after the balance sheet date in thereporting period in which they are declared, as they represent non-adjustingevents after the balance sheet date under IFRS. This change results in an increase in balance sheet equity at 1 October 2004 of£4.7 million. The effect for the year to 30 September 2005 is to decrease thedividend recorded in the year by £6.1 million and to increase balance sheetequity at 30 September 2005 by £10.8 million. IAS 19: Employee Benefits The Group recognises the net liability on defined benefit schemes in the balancesheet and takes all actuarial gains and losses to the statement of recognisedincome and expense, in accordance with the methods of recognition of permitted bythe amendment to IAS 19, issued in December 2004. Under UK GAAP, the Groupaccounted for defined benefit schemes in accordance with SSAP 24 Accounting forpension costs. In addition, adjustments to staff costs have been made inaccordance with IAS 19 to reflect the short-term employee benefits (accruedholiday entitlement) not recognised under UK GAAP. These changes reduce balance sheet equity at 1 October 2004 by £14.0 million.The effect for the year to 30 September 2005 is to increase the post tax chargein the income statement by £0.4 million and to reduce balance sheet equity by£19.3 million. A net charge of £4.2 million has been recognised directly inequity. IAS 27: Consolidation The application of IAS 27 has resulted in a number of the Group's private equityinvestments being consolidated. The impact of this on the consolidated balancesheet is to replace the value the private equity investments which require to beconsolidated and record the net assets of the investee companies together with aminority interest. The impact on the income statement is to record, line byline, the results of the underlying controlled investments together with theassociated minority interest. The accounts of these investments are notcoterminous with the Group, therefore management accounts to 31 March and 30September have been used for consolidating these entities. IAS 38: Intangible Assets Under UK GAAP capitalised software and licence costs were included withinproperty, plant and equipment. In compliance with IAS 38, these have beenreclassified as "other intangible assets". The net book value of amountsreclassified were £3.2 million at 1 October 2004 and £3.0 million at 30September 2005. The change has no effect on the balance sheet equity at 1 October 2004 or at 30September 2005 and nor is there any effect on the income statement for the yearto 30 September 2005. IFRS 5: Non - current assets held for sale and discontinued operations The Group classifies certain "seed capital" investments in funds as non-current assets held for sale. In accordance with IFRS 5, this classification is only made where each fund is actively marketed and the investment is expected to be redeemed within one year or, where the period is greater than one year, the investment meets the criteria in the standard to extend the period required to make a sale. The standard is applicable for annual periods beginning on or after 1 October2005 but the Group has elected for early adoption, from the date of transition.This results in investments being held at the lower of carrying value and fairvalue less costs to sell, where carrying value is either fair value on the dateof transition or the cost of the investment, if the investment is made after thedate of transition. Such investments were previously held at fair value under UKGAAP and classified as current asset investments. These changes have no impact on the balance sheet equity as at 1 October 2004. IAS 18: Revenue Under IAS 18, when the outcome of a transaction involving the rendering ofservices can be estimated reliably, revenue associated with the transactionshould be recognised by reference to the stage of completion of the transactionat the balance sheet date. The guidance issued in the appendix to IAS 18 on theapplication of this principle states that revenues earned on investmentmanagement contracts, and related incremental costs associated with securingsuch contracts, should be recognised over the life of the contract. Under UK GAAP, and in accordance with industry practice, the Group recognisedinitial income on the sale of shares in open ended investment companies, and anyrelated initial commissions payable to intermediaries, on completion of the salecontract. This is no longer permitted under the current interpretation of IAS 18and such revenue and costs are therefore spread over the estimated average lifeof the contract. These changes reduce balance sheet equity at 1 October 2004 by £0.8 million. Theeffect on the year to 30 September 2005 is to increase the post tax profit inthe income statement by £0.1 million and to increase balance sheet equity by£0.1 million. IAS 39: Financial Instruments The Group has opted not to apply the requirements of IAS 39 in respect ofcomparative information. The Group will therefore follow the requirements ofIFRS 1 and disclose the nature of the main adjustments required for thecomparative information to comply with IAS 39 in the Group's first interimaccounts under IFRS. IAS 7: Cash Flow Statements The Group has prepared its cash flow statement in accordance with IAS 7. UnderIAS 7, the cash flow statement shows the movement in cash and cash equivalents,being defined as cash on hand, demand deposits and short term highly liquidinvestments that are readily convertible to known amounts of cash and which aresubject to an insignificant risk of changes in value. The Group does not have any short term highly liquid investments and therefore under UK GAAP, the Group'scash flow statement showed the movement in cash repayable on demand only. The adjustments made by the Group to the cash flow statement represent reclassifications between line items and the incorporation of movements as a result of the consolidation of the Group's private equity funds as described under IAS 27 above. Further communication The Group will publish its interim results on 2 May 2006. The Interim Reportwill include a reconciliation of the Group's financial information included inthis announcement from UK GAAP to IFRS for the 6 months to 31 March 2005,together with notes sufficient to give an understanding of the 6 month period to31 March 2006. This announcement will be available on the Group's website, www.aberdeen-asset.com.Further copies can be obtained from the Company Secretary. Aberdeen Asset Management PLCIndex to IFRS reconciliationsAppendix 1 1. Summary reconciliation of changes in equity as at 1 October 2004, 31 March 2005 and 30 September 2005.2. Summary reconciliation of changes in profit after tax for the six months ended 31 March 2005 and the year ended 30 September 2005.3. Summary reconciliation of changes in underlying profit before tax for the six months ended 31 March 2005 and the year ended 30 September 20054. Balance Sheet as at 1 October 2004 - effect of IAS 1 "Presentation of Financial Statements" on UK GAAP balances.5. Balance Sheet as at 1 October 2004 - measurement effect of other IFRS on UK GAAP balances.6. Income Statement for the six months ended 31 March 2005 - effect of IAS 1 "Presentation of Financial Statements" on UK GAAP balances.7. Income Statement for the six months ended 31 March 2005 - measurement effect of other IFRS on UK GAAP balances.8. Balance Sheet as at 31 March 2005 - effect of IAS 1 "Presentation of Financial Statements" on UK GAAP balances.9. Balance Sheet as at 31 March 2005 - measurement effect of other IFRS on UK GAAP balances.10. Income Statement for the year ended 30 September 2005 - effect of IAS 1 "Presentation of Financial Statements" on UK GAAP balances.11.Income Statement for the year ended 30 September 2005 - measurement effect of other IFRS on UK GAAP balances.12.Balance Sheet as at 30 September 2005 - effect of IAS 1 "Presentation of "Financial Statements" on UK GAAP balances.13.Balance Sheet as at 30 September 2005 - measurement effect of other IFRS on UK GAAP balances.14.Cash Flow Statement for the six months ended 31 March 2005 - effect of IFRS adjustments.15.Cash Flow Statement for the year ended 30 September 2005 - effect of IFRS adjustments.16.Statement of Recognised Income and Expense for the year ended 30 September 2005. Aberdeen Asset Management PLCSummary reconciliation of changes in equity as at 1 October 2004, 31 March 2005 and September 2005 1 October 31 March 30 September 2004 2005 2005 £'000 £'000 £'000 UK GAAP equity (as previouslyreported) 132,922 130,952 419,849 Dividends 4,724 4,960 10,850Reversal of goodwill amortisation - 9,306 19,510Share-based payments 55 84 111Revenue (844) (876) (706)Employee benefits (13,967) (16,937) (19,317)Consolidation of private equity (1,814) (1,575) (1,707) ---------- ---------- ---------IFRS - (Decrease) increase inequity (11,846) (5,038) 8,741 ---------- ---------- --------- IFRS equity 121,076 125,914 428,590 ---------- ---------- --------- Aberdeen Asset Management PLCSummary reconciliation of changes in profit after tax for the six months ended 31 March 2005 and the year ended 30 September 2005 6 months ended Year ended 31 March 2005 30 September 2005 £'000 £'000UK GAAP profit after tax (as previously reported) 3,599 6,682 Reversal of goodwill amortisation 9,306 19,510Share-based payments (65) (132)Pension costs (144) (420)Other employee benefits (661) -Revenue (32) 138Consolidation of private equity (377) (1,067) ----------- ------------IFRS - increase in profit 8,027 18,029 ----------- ------------IFRS profit after tax 11,626 24,711 ----------- ------------ Aberdeen Asset Management PLCSummary reconciliation of changes in underlying profit before tax for the six months ended 31 March 2005 and the year ended 30 September 2005 6 months ended Year ended 31 March 2005 30 September 2005 £'000 £'000UK GAAP profit after tax (as previously reported) 10,444 25,680 Share-based payments (94) (188)Pension costs (420) (840)Other employee benefits (879) -Revenue (46) 197Consolidation of private equity (71) (194) ----------- ------------IFRS - increase in profit (1,510) (1,025) ----------- ------------IFRS underlying profit after tax 8,934 24,655 ----------- ------------ Underlying profit before tax excludes the effects of non-recurring income and costs and the amortisation of intangible assets (under IFRS) and goodwill (under UK GAAP) Aberdeen Asset Management PLCBalance Sheet as at 1 October 2004 - effect of IAS 1 'Presentation of FinancialStatements' on UK GAAP balances As reported IFRS IFRS UK GAAP under adjustments adjustments balances in UK GAAP Assets Liabilities IFRS format £'000 £'000 £'000 £'000ASSETSFixed assets Non-current assetsIntangible assets 40,788 297,083 - 337,871 Intangible assetsGoodwill 297,083 (297,083) - -Tangible fixed assets 10,567 - - 10,567 Property, plant and equipmentInvestments 46,654 - - 46,654 Other investments --------- ---------- ---------- --------- 395,092 395,092 Total non-current assets --------- ---------- ---------- --------- Current assets Current assets - 231,045 - 231,045 Financial investments Stock 519 - - 519 StockDebtors 45,730 - - 45,730 Trade and other receivablesInvestments 424 - - 424 Other investmentsCash at bank and in hand 17,763 - - 17,763 Cash and cash equivalents --------- ---------- ---------- --------- 64,436 295,481 Total current assets --------- ---------- ---------- --------- Assets attributable to equity shareholders 459,528 - 690,573Assets of long-term lifeassurance business 231,045 (231,045) - - --------- ---------- ---------- --------- Total assets 690,573 690,573 Total assets --------- ---------- ---------- --------- LIABILITIESCapital and Equityreserves Called up share capital 23,620 - - 23,620 Called up share capitalShare premium account 19,710 - - 19,710 Share premium accountRevaluation reserve 19,901 - - 19,901 Revaluation reserveOther reserves 203,805 - - 203,805 Other reservesProfit & loss account (134,114) - - (134,114) Retained loss --------- ---------- ---------- --------- Equity shareholders'funds 132,922 132,922 Total equity --------- ---------- ---------- --------- Minority interests - equity 282 282 Minority interests Provisions for liabilitiesand charges 45,625 - (45,625) - --------- ---------- ---------- --------- LiabilitiesCreditors: due within one year, including convertible debt Non-current liabilities - - 102,080 102,080 Interest bearing loans and borrowingsCreditors 145,409 - (144,949) 460 Other creditorsProposed ordinary dividend 4,724 - (4,724) -Current tax 12,829 - (12,829) - - - 24,721 24,721 Provisions - - - - Pension deficit - - - - Deferred income - - 693 693 Deferred tax liabilitiesConvertible debt 15,197 - (15,197) - --------- ---------- ---------- --------- 178,159 127,954 Total non-current liabilities --------- ---------- ---------- --------- Current liabilitiesCreditors: due after more than one year,including convertible debt - 231,045 231,045 Investment contract liabilitiesCreditors 4,267 - (4,267) - - - 84,948 84,948 Interest bearing loans and borrowings - - 75,658 75,658 Trade and other payables - - 20,211 20,211 Provisions - - - - Deferred income - - 12,829 12,829 Current tax payable - - 4,724 4,724 Ordinary dividend payableConvertible debt 98,273 - (98,273) - --------- ---------- ---------- --------- 102,540 429,415 Total current liabilities --------- ---------- ---------- --------- 459,528 690,573Liabilities of long - term life assurancebusiness 231,045 - (231,045) - --------- ---------- ---------- --------- Total liabilities 690,573 690,573 Total equity and liabilities --------- ---------- ---------- --------- Aberdeen Asset Management PLCBalance Sheet as at 1 October 2004 - measurement effect of other IFRS on UK GAAP balances UK GAAP Employee Share based balances in Dividends Revenue benefits Consolidation Intangibles payments As reported IFRS format ISA 10 IAS 18 IAS 19 IAS 27 IAS 38 IFRS 2 under IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Non-current assetsProperty,plant andequipment 10,567 - - - 3,209 (3,204) - 10,572Intangible assets 337,871 - - - 10,810 3,204 - 351,885Other investments 46,654 - - - 34,629 - - 81,283Deferred tax assets - - - 8,152 - - - 8,152 -------- --------- -------- --------- -------- -------- -------- ---------Total non-currentassets 395,092 - - 8,152 48,648 - - 451,892 --------- --------- --------- -------- --------- -------- -------- --------- Current assetsFinancial investments 231,045 - - - - - - 231,045Stock 519 - - - 3,279 - - 3,798Trade and otherreceivables 45,730 - - - 8,889 - - 54,619Other investments 424 - - - - - - 424Cash and cashequivalents 17,763 - - - 5,104 - - 22,867 -------- --------- -------- --------- -------- --------- -------- ---------Total currentassets 295,481 - - - 17,272 - - 312,753 -------- --------- -------- --------- -------- --------- -------- ---------Total assets 690,573 - - 8,152 65,920 - - 764,645 -------- --------- -------- --------- -------- --------- --------- ---------- EquityCalled up share capital 23,620 - - - - - - 23,620Share premium account19,710 - - - - - - 19,710Revaluation reserve 19,901 - - - - - - 19,901Other reserves 203,805 - - - - - - 203,805Retained loss (134,114) 4,724 (844) (13,967) (1,814) - 55 (145,960) -------- --------- -------- --------- -------- --------- -------- --------Total equityattributable to equity holdersof the parent 132,922 4,724 (844) (13,967) (1,814) - 55 121,076 Minority interests 282 - - - 49,723 - - 50,005 -------- --------- -------- --------- -------- --------- -------- ---------Total equity 133,204 4,724 (844) (13,967) 47,909 - 55 171,081 -------- --------- -------- --------- -------- --------- -------- ---------LiabilitiesNon-current liabilitiesInterest bearing loans andborrowings 102,080 - - - 8,485 - - 110,565Other creditors 460 - - - - - - 460Provisions 24,721 - - (5,732) 105 - - 19,094Pension deficit - - - 27,173 - - - 27,173Deferred income - - - - - - - -Deferred taxliabilities 693 - - 678 - - - 1,371 -------- --------- -------- --------- -------- --------- -------- ---------Total non-currentliabilities 127,954 - - 22,119 8,590 - - 158,663 -------- --------- -------- --------- -------- --------- -------- --------- Current liabilitiesInvestment contractliabilities 231,045 - - - - - - 231,045Interest bearing loansand borrowings 84,948 - - - 818 - - 85,766Trade andother payables 75,658 - - - 8,255 - - 83,913Provisions 20,211 - - - - - - 20,211Deferred income - - 1,206 - - - - 1,206Current tax payable 12,829 - (362) - 292 - (55) 12,704Ordinary dividendpayable 4,724 (4,724) - - 56 - - 56 -------- --------- -------- --------- -------- --------- -------- ---------Total currentliabilities 429,415 (4,724) 844 - 9,421 - (55) 434,901 -------- --------- -------- --------- -------- --------- -------- -------- Total liabilities 557,369 (4,724) 844 22,119 18,011 - (55) 593,564 -------- --------- -------- --------- -------- --------- -------- --------Total equity andliabilities 690,573 - - 8,152 65,920 - - 764,645 -------- --------- -------- --------- -------- --------- -------- --------- Aberdeen Asset Management PLCIncome Statement for the six months ended 31 March 2005 - effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances UK GAAP As reported balances in under Amortisation Other IFRS UK GAAP Revenue of goodwill expenses format £'000 £'000 £'000 £'000 £'000 -------- -------- -------- ------- -------- RevenuesTurnover 72,948 - - - 72,948 Investment management fees 4,775 - - 4,775 Other revenue -------- -------- -------- ------- -------- 72,948 4,775 - - 77,723 Total revenues Operating expenses, excludingamortisation of goodwill (56,728) - (9,306) (16) (66,050) Operating expensesAmortisation of goodwill (9,306) - 9,306 - - Amortisation of intangible assets - - - 16 16 Gain on foreign exchange -------- -------- -------- ------- -------- Total administrative expenses (66,034) - - - (66,034) Total operating expenses - - - - - Share of results of associatesOperating profit beforegoodwill amortisation 16,220 - - - -Amortisation of goodwill (9,306) - - - - -------- -------- --------- -------- -------- Operating profit 6,914 - - - 11,689 Profit from operationsGain on disposals 4,775 (4,775) - - Net interest payable andsimilar charges (5,776) - - - (5,776) Finance costs -------- -------- --------- -------- -------- Profit on ordinaryactivities beforetaxation 5,913 5,913 Profit before taxTax on profit onordinary activities (2,314) - - - (2,314) Income tax expense -------- -------- --------- -------- -------- Profit on ordinaryactivities after taxation 3,599 3,599 Profit after tax -------- -------- --------- -------- -------- Attributable to: 3,510 Equity holders of the parentMinority interests - equity 89 - - - 89 Minority interestsProfit for thefinancial period 3,510 - - - 3,599 Profit for the periodDividends Memo - DividendsEquity dividends onordinary shares (5,196) - - - (5,196) Aberdeen Asset Management PLCIncome Statement for the six months ended 31 March 2005 - measurement effect of other IFRS on UK GAAP balances UK GAAP Employee Intangible Share based As reported balances in Revenue benefits Consolidation assets payments Goodwill under IFRS format IAS 18 IAS 19 IAS 27 IAS 38 IFRS 2 IFRS 3 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000RevenuesInvestment managementfees 72,948 (46) - - - - - 72,902Other revenue 4,775 - - 16,954 - - - 21,729 -------- -------- -------- --------- -------- --------- -------- --------Total revenues 77,723 (46) - 16,954 - - - 94,631 Operating expenses (66,050) - (1,299) (16,815) 896 (94) 9,306 (74,056)Amortisation ofintangible assets - - - - (896) - - (896)Gain on foreign exchange 16 - - - - - - 16 -------- -------- -------- --------- -------- --------- -------- --------Total operating expenses (66,034) - (1,299) (16,815) - (94) 9,306 (74,935) -------- -------- -------- --------- -------- --------- --------- --------Profit from operations 11,689 (46) (1,299) 139 - (94) 9,306 19,695Finance costs (5,776) - - (678) - - - (6,454) -------- -------- -------- --------- -------- --------- -------- --------Profit before tax 5,913 (46) (1,299) (539) - (94) 9,306 13,241Income tax expense (2,314) 14 494 162 - 29 - (1,615) -------- -------- -------- --------- -------- --------- -------- --------Profit after tax 3,599 (32) (805) (377) - (65) 9,306 11,626 -------- -------- -------- --------- -------- --------- -------- -------- Attributable to:Equity holders of theparent 3,510 (32) (805) (50) - (65) 9,306 11,864Minority interests (89) - - (327) - - - (238) -------- -------- -------- --------- -------- --------- -------- -------- Profit for the period 3,599 (32) (805) (377) - (65) 9,306 11,626 -------- -------- -------- --------- -------- --------- -------- -------- Aberdeen Asset Management PLCBalance Sheet as at 31 March 2005 - effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances As reported IFRS IFRS UK GAAP under adjustments adjustments balances in UK GAAP Revenue of goodwill IFRS format £'000 £'000 £'000 £'000 ASSETSFixed assets Non-current assetsIntangible assets 28,991 293,062 - 322,053 Intangible assetsGoodwill 293,062 (293,062) - -Tangible assets 10,095 - - 10,095 Property, plant and equipmentInvestments 26,038 - - 26,038 Other investments --------- -------- --------- --------- 358,186 358,186 Total non-current assets --------- -------- --------- --------- Current assets Current assets - 52,888 - 52,888 Financial investmentsStock 658 - - 658 Stock Debtors 65,287 - - 65,287 Trade and other receivablesInvestments 2,102 - - 2,102 Other investmentsCash at bank and in hand 15,546 - - 15,546 Cash and cash equivalents --------- -------- --------- --------- 83,593 136,481 Total current assets --------- -------- --------- ---------Assets attributable toequity shareholders 441,779 - - 494,667 Assets of long-term life assurance business 52,888 (52,888) - - --------- -------- --------- --------- Total assets 494,667 494,667 Total assets --------- -------- --------- ---------LIABILITIESCapital and reserves EquityCalled up share capital 23,620 - - 23,620 Called up share capitalShare premium account 19,710 - - 19,710 Share premium accountOther reserves 203,805 - - 203,805 Other reservesProfit & loss account (116,183) - - (116,183)Retained loss --------- -------- --------- ---------Equity shareholders'funds 130,952 130,952 Total equity --------- -------- --------- --------- Provisions for liabilitiesand charges 35,961 (35,961) - --------- -------- --------- --------- LiabilitiesCreditors: due within one year, including convertible debt Non-current liabilities - - 180,576 180,576 Interest bearing loans and borrowingsCreditors 73,906 - (73,834) 72 Other creditorsProposed ordinary dividend 4,960 - (4,960) -Current tax 15,352 - (15,352) - - - 11,539 11,539 Provisions - - - - Pension deficit - - - - Deferred income - - 975 975 Deferred tax ------- -------- --------- --------- liabilities 94,218 193,162 Total non-current liabilities ------- -------- --------- --------- Current liabilitiesCreditors: due after more than one year, including convertible debt - 52,888 52,888 Investment contract liabilitiesCreditors 56,379 - (56,379) - - - 816 816 Interest bearing loans and borrowings - - 73,090 73,090 Trade and other payables - - 23,447 23,447 Provisions - - - - Employee benefits - - - - Deferred income - - 15,352 15,352 Current tax payable - - 4,960 4,960 Ordinary dividend payableConvertible debt 124,269 - (124,269) - --------- -------- --------- --------- 180,648 170,553 Total current liabilities --------- -------- --------- --------- 441,779 494,667 Liabilities of long - termlife assurance business 52,888 - (52,888) - --------- -------- --------- --------- Total liabilities 494,667 494,667 Total equity and liabilities --------- -------- --------- --------- Aberdeen Asset Management PLCBalance Sheet as at 31 March 2005 - measurement effect of other IFRS on UK GAAP balances UK GAAP Employee Share based Goodwill As reported balances in Dividends Revenue benefits Consolidation Intangibles payments & intangibles under IFRS format IAS 10 IAS 18 IAS 19 IAS 27 IAS 38 IFRS 2 IFRS 3 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ASSETSNon-current assetsProperty, plant andequipment 10,095 - - - 3,166 (3,244) - - 10,017Intangible assets 322,053 - - - 10,633 3,244 - 9,306 345,236Other investments 26,038 - - - 30,605 - - - 56,643Deferred tax assets - - - 8,503 - - - - 8,503 -------- -------- ------- -------- --------- --------- -------- -------- --------Total non-currentassets 358,186 - - 8,503 44,404 - - 9,306 420,399 -------- -------- ------- -------- --------- --------- -------- -------- --------Current assetsFinacial investments 52,888 - - - - - - - 52,888Stock of units and shares 658 - - - 3,187 - - - 3,845Trade and other receivables 65,287 - 93 - 8,808 - - - 74,188Other investments 2,102 - - - - - - - 2,102Cash and cashequivalents 15,546 - - - 7,980 - - - 23,526 -------- -------- ------- -------- --------- -------- -------- --------- --------Total current assets 136,481 - 93 - 19,975 - - - 156,549 -------- -------- ------- -------- --------- -------- -------- --------- -------- Total assets 494,667 - 93 8,503 64,379 - - 9,306 576,948 -------- -------- ------- -------- --------- -------- -------- --------- -------- EquityCalled up share capital 23,620 - - - - - - - 23,620Share premium account 19,710 - - - - - - - 19,710Other reserves 203,805 - - - - - - - 203,805Retained loss (116,183) 4,960 (876) (16,937) (1,575) - 84 9,306 (121,221) -------- -------- -------- -------- --------- -------- -------- --------- --------Total equity attributable to equity holders of theparent 130,952 4,960 (876) (16,937) (1,575) - 84 9,306 125,914 Minority interests - - - - 47,261 47,261 -------- -------- -------- -------- --------- -------- -------- --------- --------Total equity 130,952 4,960 (876) (16,937) 45,686 - 84 9,306 173,175 -------- -------- -------- -------- --------- -------- -------- --------- -------- LiabilitiesNon-current liabilitiesInterest bearing loansand borrowings 180,576 - - - 7,516 - - - 188,092Other creditors 72 - - - - - - - 72Provisions 11,539 - - (3,825) 97 - - - 7,811Pension deficit - - 28,604 - - - - 28,604Deferred income - - - - - - - - -Deferred tax liabilities 975 - - - - - - - 975 -------- -------- -------- -------- --------- -------- -------- --------- --------Totalnon-currentliabilities 193,162 - - 24,779 7,613 - - - 225,554 -------- -------- -------- -------- --------- -------- -------- --------- -------- Current liabilitiesInvestment contractliabilities 52,888 - - - - - - - 52,888Interest bearing loansand borrowings 816 - - - 1,888 - - - 2,704Trade and other payables 73,090 - - - 9,289 - - - 82,379Provisions 23,447 - - - - - - - 23,447Employee benefits - - - 945 - - - - 945Deferred income - - 1,346 - - - - - 1,346Current tax payable 15,352 - (376) (284) (181) - - (84) 14,427Ordinary dividendpayable 4,960 (4,960) - - 84 - - - 84 -------- -------- ------- -------- --------- -------- -------- --------- -------- Total currentliabilities 170,553 (4,960) 970 661 11,080 - - (84) 178,220 -------- -------- ------- -------- --------- -------- -------- --------- -------- Total liabilities 363,715 (4,960) 970 25,440 18,693 - - (84) 403,774 -------- -------- ------- -------- --------- -------- -------- --------- -------- Total equity andliabilities 494,667 - 94 8,503 64,379 - - 9,306 576,948 -------- -------- ------- -------- --------- -------- -------- --------- -------- Aberdeen Asset Management PLCIncome Statement for the year ended 30 September 2005 - effect of IAS 1'Presentation of Financial Statements' on UK GAAP balances UK GAAP As reported Amortisation Other balances in under UK GAAP Revenues of goodwill expenses IFRS format £'000 £'000 £'000 £'000 £'000 RevenuesTurnover 155,927 - - - 155,927 Investment management fees 11,047 - - 11,047 Other income -------- -------- --------- -------- -------- 155,927 11,047 - - 166,974 Total revenues Operating expenses,excludingamortisation of goodwill (122,199) - (19,510) (263) (141,972) Operating expensesRelease from ProgressiveGrowth Uplift Plan 2,600 - - - 2,600 Release from provisionsAmortisation of goodwill (19,510) - 19,510 - - - - - - - Amortisation of intangible assets - - - 275 275 Gain on foreign exchange -------- ------- --------- -------- -------- Total administrative expenses (139,109) - - 12 (139,097) Total operating expensesOther operating income 1,016 (1,016) - - - (12) (12) Share of results of associates Operating profit beforegoodwill amortisation, 34,744 - - -Amortisation of goodwill (16,910) - - - -------- -------- --------- -------- -------- Operating profit 17,834 27,865 Profit from operationsGain on disposal ofinvestments 10,031 (10,031) - - - - - - - Finance revenue Interest payable and similarcharges (10,227) - - - -Unwinding of discount onProgressive Growth provision (3,000) - - - -Write off of bond expensesand repayment premium (1,670) - - - -Net interest payable andsimilar charges (14,897) - - - (14,897) Finance costs -------- -------- --------- -------- -------- Profit on ordinary activitiesbefore taxation 12,968 (10,031) - - 12,968 Profit before taxTax on profit (loss) onordinary activities (6,286) - - - (6,286) Income tax expense -------- -------- --------- -------- -------- Profit on ordinary activitiesafter taxation 6,682 6,682 Profit after tax -------- -------- --------- -------- -------- Attributable to: 6,593 Equity holders of the parentMinority interests - equity 89 - - - 89 Minority interests - equity -------- -------- --------- -------- -------- Profit for the financial period 6,593 - - - 6,682 Profit for the period -------- -------- --------- -------- -------- Dividends Memo - dividends Equity dividends on ordinaryshares (14,821) - - - (14,821) Equity dividends on ordinary sharesNon-equity dividends on Non-equity dividends on preference shares (1,350) - - - (1,350) preference shares (16,171) (16,171)Retained loss for the financialperiod (9,578) Aberdeen Asset Management PLCIncome Statement for the year ended 30 September 2005 - measurement effect of other IFRS on UK GAAP balances UK GAAP Employee Intangible Share based As reported balances in Revenue benefits Consolidation assets payments Goodwill under IFRS format IAS 18 IAS 19 IAS 27 IAS 38 IFRS 2 IFRS 3 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000RevenuesInvestment management fees 155,927 197 - - - - - 156,124Other revenue 11,047 - 36,302 - - - 47,349 -------- -------- -------- --------- -------- -------- --------- --------Total revenues 166,974 197 - 36,302 - - - 203,473 -------- -------- -------- --------- -------- -------- --------- -------- Operating expenses (141,972) - (840) (36,391) 1,818 (188) 19,510 (158,063)Release from provision 2,600 - - - - - - 2,600Amortisation of intangibleassets - - - - (1,818) - - (1,818)Gain on foreign exchange 275 - - - - - - 275 -------- -------- -------- --------- -------- -------- --------- --------Total operating expenses (139,097) - (840) (36,391) - (188) 19,510 (157,006)Share of results ofassociates (12) (12) -------- -------- -------- --------- -------- -------- --------- --------Profit from operations 27,865 197 (840) (89) - (188) 19,510 46,455Finance costs (14,897) - - (1,435) - - - (16,332) -------- -------- -------- --------- -------- -------- --------- --------Profit before tax 12,968 197 (840) (1,524) - (188) 19,510 30,123Income tax expense (6,286) (59) 420 457 - 56 - (5,412) -------- -------- -------- --------- -------- -------- --------- --------Profit after tax 6,682 138 (420) (1,067) - (132) 19,510 24,711 -------- -------- -------- --------- -------- -------- --------- --------Attributable to:Equity holders of theparent 6,593 138 (420) (136) - (132) 19,510 25,553Minority interests 89 - - (931) - - - (842) -------- -------- -------- --------- -------- -------- --------- --------Profit for the period 6,682 138 (420) (1,067) - (132) 19,510 24,711 -------- -------- -------- --------- -------- -------- --------- -------- Aberdeen Asset Management PLCBalance Sheet as at 30 September 2005 - effect of IAS 1 'Presentation of Financial Statements' on UK GAAP balances £'000 IFRS IFRS UK GAAP under adjustments adjustments balances in UK GAAP Assets Liabilities IFRS format £'000 £'000 £'000 £'000 ASSETSFixed assets Non-current assetsIntangible assets 28,991 394,353 - 423,344 Intangible assetsGoodwill 394,353 (394,353) - -Tangible assets 9,836 - - 9,836 Property, plant and equipmentInvestments 28,593 - - 28,593 Other investments --------- -------- --------- --------- 461,773 461,773 Total non-current assets --------- -------- --------- --------- Current assets Current assets - 2,554,983 - 2,554,983 Financial investmentsStock 2,317 - - 2,317 Stock Debtors 146,396 - - 146,396 Trade and other receivablesInvestments 20,331 - - 20,331 Other investmentsCash at bank and in hand 97,016 - - 97,016 Cash and cash equivalents --------- -------- --------- --------- 266,060 2,821,043 Total current assets --------- -------- --------- --------- Assets attributable toequity shareholders 727,833 - 3,282,816 Assets of long-term life assurance business 2,554,983 (2,554,983) - - --------- --------- --------- --------- Total assets 3,282,816 3,282,816 Total assets --------- --------- --------- --------- LIABILITIESCapital and reserves EquityCalled up share capital 68,502 - - 68,502 Called up share capitalShare premium account 261,040 - - 261,040 Share premium accountOther reserves 219,805 - - 219,805 Other reservesProfit & loss account (129,498) - - (129,498)Retained loss --------- --------- --------- ---------Equity shareholders'funds 419,849 419,849 Total equity --------- --------- --------- --------- Provisions for liabilitiesand charges 29,972 (29,972) - --------- --------- --------- --------- LiabilitiesCreditors: due within one year, including convertible debt Non-current liabilities - - 51,330 51,330 Interest bearing loans and borrowingsCreditors 207,742 - (207,465) 277 Other creditorsProposed dividend 10,850 - (10,850) -Current tax 7,813 - (7,813) - - - 6,416 6,416 Provisions - - - - Pension deficit - - - - Deferred income - - 4,078 4,078 Deferred tax liabilities ------- -------- --------- --------- 226,405 62,101 Total non-current liabilities ------- -------- --------- --------- Current liabilitiesCreditors: due after more than one year,including convertible debt - - 2,554,983 2,554,983 Investment contract liabilitiesCreditors 1,176 - (1,176) - - - 591 591 Interest bearing loans and borrowings - - 207,151 207,151 Trade and other payables - - 19,478 19,478 Provisions - - - - Employee benefits - - 7,813 7,813 Current tax payable - - 10,850 10,850 Ordinary dividend payableConvertible debt 50,431 - (50,431) - --------- -------- --------- --------- 51,607 2,800,866 Total current liabilities --------- -------- --------- --------- 727,833 - (51,330) 3,282,816 Liabilities of long - termlife assurance business 2,554,983 - (2,554,983) - ---------- -------- --------- --------- Total liabilities 3,282,816 3,282,816 Total equity and liabilities ---------- -------- --------- --------- Aberdeen Asset Management PLCBalance Sheet as at 30 September 2005 - measurement effect of other IFRS on UK GAAP balances UK GAAP Employee Share based Goodwill As reported balances in Dividends Revenue benefits Consolidation Intangibles payments & intangibles under IFRS format IAS 10 IAS 18 IAS 19 IAS 27 IAS 38 IFRS 2 IFRS 3 IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 ASSETSNon-current assetsProperty, plant andequipment 9,836 - - - 3,087 (2,979) - - 9,944Intangible assets 423,344 - - - 10,285 2,979 - 19,510 456,118Other investments 28,593 - - - 37,051 - - - 65,644Deferred tax assets - - - 8,932 - - - - 8,932 -------- -------- ------- -------- --------- --------- -------- -------- --------Total non-currentassets 461,773 - - 8,932 50,423 - - 19,510 540,638 -------- -------- ------- -------- --------- --------- -------- -------- --------Current assetsFinacial investments 2,554,983 - - - - - - - 2,554,983Stock 2,317 - - - 2,876 - - - 5,193Trade and other receivables 146,396 - 568 - 8,936 - - - 155,900Other investments 20,331 - - - - - - - 20,331Cash and cashequivalents 97,016 - - - 6,368 - - - 103,384 -------- -------- ------- -------- --------- -------- -------- --------- --------Total current assets 2,821,043 - 568 - 18,180 - - - 2,839,791 -------- -------- ------- -------- --------- -------- -------- --------- -------- Total assets 3,282,816 - 568 8,932 68,603 - - 19,510 3,380,429 -------- -------- ------- -------- --------- -------- -------- --------- -------- EquityCalled up share capital 68,502 - - - - - - - 68,502Share premium account 261,040 - - - - - - - 261,040Other reserves 219,805 - - - - - - - 219,805Retained loss (129,498) 10,850 (706) (19,317) (1,707) - 111 19,510 (120,757) -------- -------- -------- -------- --------- -------- -------- --------- --------Total equity attributable to equity holders of theparent 419,849 10,850 (706) (19,317) (1,707) - 111 19,510 428,590 Minority interests - - - - 51,145 - 51,145 -------- -------- -------- -------- --------- -------- -------- --------- --------Total equity 419,849 10,850 (706) (19,317) 49,438 - 111 19,510 479,735 -------- -------- -------- -------- --------- -------- -------- --------- -------- LiabilitiesNon-current liabilitiesInterest bearing loansand borrowings 51,330 - - - 6,764 - - - 58,094Other creditors 277 - - - - - - - 277Provisions 6,416 - - (1,785) 97 - - - 4,728Pension deficit - - - 30,034 - - - - 30,034Deferred tax liabilities 4,078 - - - - - - - 4,078 -------- -------- -------- -------- --------- -------- -------- --------- --------Total non-currentliabilities 62,101 - - 28,249 6,861 - - - 97,211 -------- -------- -------- -------- --------- -------- -------- --------- ------- Current liabilitiesInvestment contractliabilities 2,554,983 - - - - - - - 2,554,983Interest bearing loansand borrowings 591 - - - 3,166 - - - 3,757Trade and other payables 207,151 - - - 9,478 - - - 216,629Provisions 19,478 - - - - - - - 19,478Employee benefits - - - - - - - - -Deferred income - - 1,577 - - - - - 1,577Current tax payable 7,813 - (302) - (424) - (111) - 6,975Dividend payable 10,850 (10,850) - - 84 - - - 84 -------- -------- -------- -------- --------- -------- -------- --------- --------Total currentliabilities 2,800,866 (10,850) 1,275 - 12,304 - (111) - 2,803,483 -------- -------- ------- -------- -------- -------- -------- -------- -------- Total liabilities 2,862,967 (10,850) 1,275 28,249 19,165 - (111) - 2,900,694 --------- -------- ------- -------- -------- -------- -------- -------- -------- Total equity andliabilities 3,282,816 - 568 8,932 68,603 - - 19,510 3,380,429 --------- -------- ------- ------- -------- -------- -------- -------- --------- Aberdeen Asset Management PLCCash Flow Statement for the six months ended 31 March 2005 Share Employee based As benefits Revenue Consolidation payments Goodwill Total IFRS reported IAS 19 IAS 18 IAS 27 IFRS 2 IFRS 3 adjustments under IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Operating activities Operating profit 11,689 (1,299) (46) 139 (94) 9,306 8,006 19,695Depreciation of property,plant & equipment 1,745 - - 53 - - 53 1,798Amortisation of goodwilland intangibles 9,913 - - 177 - (9,306) (9,129) 784(Increase) decrease indebtors (11,513) - (93) 82 - - (11) (11,524)(Decrease) increase increditors 14,901 945 139 749 - - 1,833 16,734(Decrease) increase instock (139) - - 92 - - 92 (47)(Decrease) increase inprovisions (27,446) 354 - (8) - - 346 (27,100)Gain on disposal of investments (4,775) - - - - - - (4,775)Share based element ofremuneration - - - - - - 94 94UK corporation taxreceived 472 - - - - - - 472Overseas tax paid - - - - - - - -Interest paid (6,168) - - (750) - - (750) (6,918) ------- -------- ------- ------- ------- -------- ------- -------- Net cash from operatingactivities (11,321) - - 534 (94) - 440 (10,881) ------- -------- ------- ------- ------- -------- ------- -------- Cash flows from investing activities Proceeds from disposalof subsidiaryundertakings 1,956 - - - - - - 1,956Purchase of subsidiaryundertakings (5,204) - - - - - - (5,204)Purchase of property, plant & equipment (1,154) - - (10) - - (10) (1,164)Purchase of non-currentasset investments (657) - - - - - - (657)Proceeds from the sale ofnon-current asset investments 26,810 - - - - - - 26,810Net purchase of currentasset investments (1,600) - - 2,345 - - 2,345 745 -------- ------ ------- --------- ------- ------- -------- --------Net cash from investingactivities 20,151 - - (2,335) - - (10) (22,486) -------- ------ ------- --------- ------- ------- -------- -------- Cash flows from financing activities Proceeds from issue ofconvertible bonds 2010 25,624 - - - - - - 25,624Repayment of convertibleloan notes (14,387) - - - - - - (14,387)Instalments repaid onlong term loans (30,000) - - 101 - - 101 (29,899)Dividends paid (4,724) - - - - - - (4,724) -------- ------ ------- --------- ------- ------- -------- --------Net cash usedin financing (23,487) - - 101 - - 101 (23,386) -------- ------ ------- --------- ------- ------- -------- -------- Net increase in cash andcash equivalents (14,657) - - 2,970 (94) - 2,876 (11,781) Cash and cash equivalentsat 1 October 2004 17,763 - - 5,104 - - 5,104 (22,867)Net increase in cashand cash equivalents (14,657) (11,781)Bank overdraft less transferto revolving credit 13,565 13,565Effect of exchange ratechanges (1,125) (1,125) -------- --------Cash and cash equivalentsat 31 March 2005 15,546 23,526 -------- -------- Aberdeen Asset Management PLCCash Flow Statement for the year ended 30 September 2005 Share Employee based As benefits Revenue Consolidation payments Goodwill Total IFRS reported IAS 19 IAS 18 IAS 27 IFRS 2 IFRS 3 adjustments under IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Operating activities Profit from operations 27,865 (840) (197) (89) (188) 19,510 18,590 46,455Depreciation of property,plant & equipment 3,448 - - 262 - - 262 3,710Amortisation of goodwilland intangibles 20,118 - - 526 - (19,510) (18,984) 1,134(Increase) decrease indebtors (3,194) - (568) (46) - - (614) (3,808)(Decrease) increase increditors (36,558) - 371 178 - - 549 (35,009)Decrease in stock 247 - - 404 - - 404 651(Decrease) increase inprovisions (6,547) 840 - (8) - - 832 (5,715)Gain on disposal of investments (10,031) - - - - - - (10,031)Gain on disposal on non-currentasset investment (611) - - - - - - (611)(Gains) losses on currentasset investments (444) - - - - - - (444)Loss on disposal on non-currentasset investment 34 - - - - - - 34Share based element ofremuneration 776 - - - - - - 776Share of results of associate 12 - - - - - - 12UK corporation taxpaid (1,121) - - (3) - - (3) (1,124)Interest paid (11,498) - - (1,488) - - (1,488) (12,986) ------- -------- ------- ------- ------- -------- ------- -------- Net cash from operatingactivities (17,504) - - (264) (188) - (452) (17,956) ------- -------- ------- ------- ------- -------- ------- -------- Investing activities Proceeds from disposalof subsidiaryundertakings 10,004 - - - - - - 10,004Net cash and cash equivalents disposed of in subsidiaryundertakings (6,992) - - - - - - (6,992)Purchase of subsidiaryundertakings (148,406) - - - - - - (148,406)Net cash and cash equivalents acquired on acquisition of subsidiaryundertakings 69,182 - - - - - - 69,182Purchase of property, plant & equipment (2,492) - - (141) - - (141) (2,633)Purchase of non-currentasset investments (3,588) - - - - - - (3,588)Proceeds from the sale ofproperty, plant & equipment 27 - - - - - - 27Proceeds from the sale ofnon-current assetinvestments 34,353 - - 1,227 - - 1,227 35,580Net purchase of currentasset investments (3,549) - - - - - - (3,549) -------- ------ ------- --------- ------- ------- -------- --------Net cash from investingactivities (51,461) - - 1,086 - - 1,086 (50,375) -------- ------ ------- --------- ------- ------- -------- -------- Financing activities Proceeds from issue ofordinary share capital 219,180 - - - - - - 219,180Proceeds from issue ofpreference sharecapital 76,443 - - - - - - 76,443Proceeds from issue ofconvertible bonds 2010 25,584 - - - - - - 25,584Repayment of convertiblebonds 2007 (75,750) - - - - - - (75,750)Repayment of loan notes (508) - - - - - - (508)Repayment of convertibleloan notes (14,387) - - - - - - (14,387)Instalments repaid onlong term loans (65,125) - - 630 - - 630 (64,495)Dividends paid (10,044) - - - - - - (10,044) -------- ------ ------- --------- ------- ------- -------- --------Net cash usedin financing 155,393 - - 630 - - 630 156,023 -------- ------ ------- --------- ------- ------- -------- -------- Net increase in cash andcash equivalents 86,428 - - 1,452 (188) - 1,264 87,692 Cash and cash equivalentsat 1 October 2004 17,763 - - 5,104 - - - (22,867)Net increase in cashand cash equivalents 86,428 87,692Bank overdraft less transferto revolving credit (6,435) (6,435)Effect of exchange ratechanges (740) (740) -------- --------Cash and cash equivalentsat 3 September 2005 97,016 103,384 -------- ------- Aberdeen Asset Management PLCStatement of Recognised Income and Expense for the year ended 30 September 2005 measurement of effect of IFRS on UK GAAP balances Share UK GAAP Employee based As balances Revenue benefits Consolidation payments Goodwill reported IFRS format IAS 18 IAS 19 IAS 27 IFRS 2 IFRS 3 under IFRS £'000 £'000 £'000 £'000 £'000 £'000 £'000 Net actuarial loss on definedbenefit pension schemes - - (5,968) - - - (5,968)Share based payments - - - - 370 - 370Translation of foreigncurrency net investments 189 - - - - - 189Tax on items taken directlyto equity - - 1,790 - - - 1,790 -------- -------- -------- -------- ------ ------- -------Net income (expense) recogniseddirectly in equity 189 - (4,178) - 370 - (3,619)Profit (loss) for thefinancial period 6,682 138 (420) (1,067) (132) 19,510 24,711 -------- -------- -------- -------- ------ ------- -------Total recognised income andexpense for the period 6,871 138 (4,598) (1,067) 238 19,510 21,092 -------- -------- -------- -------- ------ ------- ------- Attributable to:Equity holders of the parent 6,782 138 (4,598) (1,067) 238 19,510 21,003Minority interest 89 - - - - - 89 -------- -------- -------- -------- ------ ------- -------Total recognised income andexpense for the period 6,871 138 (4,598) (1,067) 238 19,510 21,092 -------- -------- -------- -------- ------ ------- ------- ABERDEEN ASSET MANAGEMENT PLCTRANSITION TO IFRSAPPENDIX 2 SUMMARY OF ACCOUNTING POLICIES Basis of preparation The financial information contained in this announcement has been prepared in accordancewith International Financial Reporting Standards, as adopted in the EU, ("IFRS") for thefirst time. The financial information in this announcement has been prepared on thebasis of the Group's expectation of the standards that will be applicable as at 30September 2006. The disclosures required by IFRS 1 First time adoption of IFRSconcerning the transition from UK GAAP to IFRS are set out below. The financial information presented in this announcement has been prepared on thehistorical cost basis, except that the following assets and liabilities are stated attheir fair values: derivative financial instruments and financial assets held asavailable for sale. The principal accounting policies, which have been consistentlyapplied, are set out below. Non-current assets and disposal groups held for sale are stated at the lower of carryingamount and fair value less costs to sell. The preparation of financial statements in conformity with IFRS requires management tomake judgements, estimates and assumptions that affect the application of policies andreported values of assets and liabilities, income and expenses. The estimates andassociated assumptions are based on historical experience and various other factors thatare believed to be reasonable under the circumstances and they are reviewed on anongoing basis. Actual results may differ from these estimates. Where estimates werepreviously made under UK GAAP, consistent estimates have been made on transition toIFRS. First time adoption of IFRS Under the first time adoption procedures set out in IFRS 1, the Group is required toestablish its IFRS accounting policies as at 1 October 2005 and to apply theseretrospectively in the determination of prior period comparatives from 1 October 2004,the date of transition to IFRS. There are a number of optional exemptions to thisgeneral principle, the most significant of which are set out below. IFRS 3 Business Combinations Business combinations that occurred prior to the date of transition have not beenrestated. IFRS 2 Share-based Payments The Group has elected to apply IFRS 2 to all share based awards and payments grantedafter 7 November 2002 but not vested at 1 October 2005. IAS 19 Employee Benefits All cumulative actuarial gains and losses on defined benefit pension schemes have beenrecognised in equity at the date of transition. The presentation of five year historicalinformation on pension schemes will be applied prospectively from the transition date. IFRS 5 Non-current Assets Held for Sale and Discontinued Operations Recognition of investments as financial assets or financial liabilities at fair valuethrough profit or loss or as available for sale has been applied prospectively from thedate of transition. IAS 21 The Effects of Changes in Foreign Exchange Rates Cumulative translation differences for all foreign exchange operations have been deemedto be zero at the date of transition. IAS 16 Property, Plant and Equipment The fair value of owner occupied property at the date of transition has been used as itsdeemed cost at that date. Basis of consolidation The consolidated financial information in this announcement incorporates the results,cash flows and financial position of the Company and its subsidiaries for the period to30 September 2005. Subsidiaries are entities controlled by the Company and are includedfrom the date that control commences until the date that control ceases. Control existswhen the Group has the power, directly or indirectly, to govern the financial andoperating policies of an entity so as to obtain benefits from its activities. The Group has 'seed capital' investments in a number of funds where it is in a positionto be able to control those funds. These funds are consolidated unless they meet thecriteria, set out in the Financial Instruments policy below, to be designated as being'held for sale', in which case they are classified and accounted for in accordance withthat policy. The consolidated financial statements include the Group's share of the total recognisedgains and losses of associates on an equity accounted basis, from the date thatsignificant influence commences until the date that significant influence ceases.Associates are those entities in which the Group has significant influence, but notcontrol, over the financial and operating policies. When the Group's share of lossesexceeds its interest in an associate, the carrying amount is reduced to nil andrecognition of further losses is discontinued except to the extent that the Group hasincurred legal or constructive obligations or made payments on behalf of an associate.The results of subsidiary undertakings and associates acquired or sold are included fromor to the date control changes. All intercompany transactions, balances, income andexpenses between Group entities are eliminated on consolidation. Unrealised gainsarising from transactions with associates are eliminated to the extent of the Group'sinterest in the entity. Unrealised losses are eliminated in the same way as unrealisedgains, but only to the extent that there is no evidence of impairment. Revenue Revenue from the provision of asset management services is recognised as the servicesare provided. Initial income from the sale of shares in open ended investment companies received inadvance is taken to the balance sheet and amortised over the period of the assetmanagement service, which is estimated based on the Group's experience of the averageholding periods by investors. Performance fees relate to the performance of assets managed during the period and arerecognised when the quantum of the fee can be estimated reliably, which is normally atthe end of the performance period. Finance revenue Finance revenue comprises interest, dividends, expected return on pension assets andgains on sale of investments held at amortised cost and investments classified asavailable for sale. Interest income is recognised as it accrues. Dividend income isrecognised when the Group's right to receive payment is established which, in the caseof listed securities, is the ex-dividend date. Finance costs Finance costs comprise interest payable on borrowings, interest on pension liabilitiesand dividends on preference shares. Deferred acquisition costs For insurance contracts, acquisition costs comprising all direct and indirect costs aredeferred as an explicit acquisition cost asset gross of tax. These are amortised overthe period in which the costs are expected to be recoverable out of margins frommatching revenues from related policies, and in accordance with the pattern of suchmargins. At the end of each accounting period, deferred acquisition costs are reviewedfor recoverability, against future margins from the related policies in force at thebalance sheet date. For investment contracts, directly related acquisition costs are deferred to the extentthat they are recoverable out of future income. This includes initial commission paid inrespect of certain investment products. Leases All Group leases are operating leases, being leases where the lessor retainssubstantially all the risks and rewards of ownership of the leased asset.Rental payments made under operating leases are charged to the income statement on astraight line basis over the term of the lease. Lease incentives received are recognisedas a reduction in the rental expense, recognised on a straight line basis over the termof the lease. Pension costs The principal pension scheme operated by the Group is a self-administered money purchasescheme. In addition, overseas subsidiaries make contributions to various trade and statedefined contribution schemes. Benefits from these schemes are based on contributionsmade. Obligations for contributions to these defined contribution pension schemes arerecognised as an expense in the Income Statement. The Group also operates three legacy defined benefit pension schemes which arose onacquisitions. All three schemes are closed to new membership and to future serviceaccruals. The Group's net obligation in respect of these schemes is calculatedseparately for each scheme by estimating the amount of future benefit that members haveearned in return for their service in current and prior periods; that benefit isdiscounted to determine its present value, and the fair value of any scheme assets isdeducted. The benefits are discounted at a rate equal to the yield on high credit ratedcorporate bonds that have maturity dates approximating to the terms of the Group'sobligations. The calculation is performed by a qualified actuary using the projectedunit credit method. The surplus or deficit in respect of defined benefit schemes is expressed as the excessor shortfall of the fair value of the assets of the scheme compared to the present valueof the scheme liabilities and is recognised as an asset or liability of the Group. Current service costs, interest costs (on the liability), expected return on plan assetsand the costs of curtailments and settlements are recognised in the Income Statement.All actuarial gains and losses as at 1 October 2004, the date of transition to IFRS,were recognised. Actuarial gains and losses arising after 1 October 2004 are recognisedin the period in which they occur directly in equity. Employee benefits Short term employee benefits Short term employee benefits are recognised as an undiscounted expense and liabilitywhen the employee has rendered services during an accounting period. Short termaccumulating compensated absences are recognised when the employee renders the servicethat increases his entitlement to future compensated absence. Non-accumulatingcompensated absences are recognised when the absence occurs. Profit sharing and bonus payments These are recognised when there is a present legal or constructive obligation to makesuch payments as a result of past events and a reliable estimate of the obligation canbe made. Termination benefits Termination benefits are recognised as a liability and an expense when the Group iscommitted to the termination of employment before the normal retirement date. Acommitment to such termination benefits arises when the Group has initiated detailedplans which cannot realistically be withdrawn. Taxation Tax on the profit or loss for the year comprises current and deferred tax. Taxis recognised in the income statement except to the extent that it relates to itemsrecognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable on the taxable income for the year,using tax rates enacted or substantially enacted at the balance sheet date, and anyadjustment to tax payable in respect of previous years. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amount of assets and liabilities in the financial statements andthe corresponding basis used for tax purposes. Deferred tax is provided using the balance sheet liability method and iscalculated at the tax rates that are expected to apply when the asset is realised or theliability settled. Deferred tax liabilities are generally recognised for all taxable temporarydifferences and deferred tax assets are recognised to the extent that it is probablethat taxable profits will be available against which deductible temporary differencescan be utilised, except: In respect of taxable or deductible temporary differences associated with investments in subsidiaries and joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that they will not reverse in the foreseeable future. Where the deferred tax asset or liability arises from the initial recognition of goodwill. Property, plant & equipment Property, plant & equipment is stated at cost less accumulated depreciation andaccumulated impairment losses. Expenditure on property, plant & equipment is capitalised on initial recognition.Subsequent expenditure is only capitalised when it is probable that there will be futureeconomic benefits associated with the item and the cost of the item can be measuredreliably. All other expenditure is recognised in the Income Statement as an expense asincurred. Property, plant & equipment is depreciated so as to write off the cost of assets, on astraight line basis, over their estimated useful lives as follows: Heritable property: 50 years Leasehold property: over the period of the lease Property improvements: 5 years or the period of the lease Computers, fixtures & fittings: 3 - 10 years Motor vehicles: 4 years Intangible assets Goodwill Goodwill arising on consolidation, representing the excess of the cost of acquisitionover the fair value of the Group's share of the identifiable assets and liabilitiesacquired, is capitalised in the balance sheet. The carrying value of goodwill at 1October 2004, the date of transition to IFRS, is equivalent to the carrying value underUK GAAP. Following initial recognition, goodwill is stated at cost less any accumulatedimpairment losses. Goodwill is allocated to the appropriate cash-generating unit for thepurpose of impairment testing. Management contracts The useful lives of management contracts in respect of open end funds are consideredindefinite and are therefore not subject to amortisation. Management contacts in respectof segregated mandates are considered to have a finite life and are therefore amortisedon a straight line basis over their estimated average contract term of 10 years, withamortisation charged to the Income Statement. The Group tests for impairment of theseassets annually or more frequently if there is an indication that the carrying amountmay not be recoverable. Other intangible assets Purchased intangible assets have a finite life and are stated at cost less accumulatedamortisation and impairment losses. Amortisation is charged to the Income Statement on astraight line basis according to the useful economic life of the intangible asset asfollows: Software - 3 years Subsequent expenditure on capitalised intangible assets is capitalised only when itincreases the future economic benefits embodied in the specific asset to which itrelates. All other expenditure is expensed as incurred. Financial instruments Financial instruments are recognised initially at fair value plus, in the case ofinvestments not at fair value through profit or loss, directly attributable transactioncosts. They are categorised as described below. Financial investments at fair value through profit or loss include investmentsspecifically designated as such as well as investments held for trading purposes. Theyare carried at fair value in the balance sheet and gains or losses are taken to theincome statement. The following assets and liabilities are classified as financialinvestments at fair value through profit or loss: Current assets Financial investments Stock of units and shares Current liabilities Investment contract liabilities Available for sale financial assets are also carried at fair value in the balance sheet.Movements in fair value are taken to the fair value reserve until derecognition of theasset, at which time the cumulative amount dealt with through this reserve is recognisedin the income statement. The following assets are designated as available for sale: Non-current assets Other financial investments Included in this category are the Group's investments in private equity partnershipsexcept those which require to be consolidated under IAS 27. The fair value of theseinvestments represents the Group's direct investments and entitlement to carriedinterest distributions, both of which are measured with reference to the EuropeanPrivate Equity and Venture Capital Association Valuation Guidelines.Loans and receivables are recognised at amortised cost using the effective interest ratemethod. The following assets and liabilities are classified as loans and receivables: Current assets Trade and other receivables Non-current liabilities Interest bearing loans and borrowings Other creditors Current liabilities Interest bearing loans and borrowings Trade and other payables The Group has adopted trade date accounting. Accordingly, a financial investment isrecognised on the date the Group commits to its purchase and derecognised on the date onwhich the Group commits to its sale. Convertible bonds that can be converted to share capital at the option of the holder,where the number of shares issued does not vary with changes in their fair value, areaccounted for as compound financial instruments. Transaction costs that relate to theissue of a compound financial instrument are allocated to the liability and equitycomponents in proportion to the allocation of proceeds. The equity component of theconvertible bonds is calculated as the excess of the issue proceeds over the presentvalue of the future interest and principal payments, discounted at the market rate ofinterest applicable to similar liabilities that do not have a conversion option. Theinterest expense recognised in the income statement is calculated using the effectiveinterest rate method. Cash and cash equivalents Cash and cash equivalents comprise cash balances, call deposits and investments in moneymarket instruments with an original maturity of three months or less. Bank overdraftsthat are repayable on demand are included as a component of cash and cash equivalentsfor the purposes of the statement of cash flows. Investment contracts The Group sells unit linked life and pension contracts through its insurance subsidiary,Aberdeen Asset Management Life and Pensions Limited ("L&P"). Management fees earned fromthese contracts are accounted for as described in the accounting policy for revenue.L&P is consolidated into the Group financial statements on a line-by-line basis. Unitlinked policyholder assets held by L&P and related policyholder liabilities are carriedat fair value, with changes in fair value taken to profit or loss. Amounts received from and paid to investors under these contracts are treated asdeposits received or paid and therefore not recorded in the Income Statement. Chargesdue under these contracts are recognised in the Income Statement. At the balance sheetdate the value of these contracts is stated at an amount equal to the fair value of thenet assets held to match the contractual obligations. Insurance liabilities Insurance liabilities are measured in accordance with actuarial principles and guidance.Any change in the value of the liability is taken to the Income Statement. Where theseliabilities are reinsured, the element of the risk reinsured is valued on the same basisas the liability and is included as an asset in the balance sheet. Changes in the valueof the asset are taken to the Income Statement. Amounts recoverable under reinsurancecontracts are assessed for impairment at each balance sheet date. Impairment The Group carries out annual impairment reviews in respect of goodwill and intangiblefixed assets with indefinite lives. The Group carries out impairment reviews in respectof property, plant & equipment and other assets whenever events or changes incircumstances indicate that the carrying amount may not be recoverable.An impairment loss is recognised in the Income Statement whenever the carrying amount ofan asset or its cash-generating unit exceeds its recoverable amount. The recoverableamount for any asset or cash-generating unit is the higher of its value in use and itsfair value less costs to sell. Impairment losses recognised in respect of cash-generating units are allocated first toreduce the carrying amount of any goodwill allocated to cash-generating units and thento reduce the carrying amount of the other assets in the unit on a pro rata basis.Goodwill was tested for impairment at 1 October 2004, the date of transition to IFRS,even though no indication of impairment existed. Impairment losses in respect of goodwill are not reversed. In respect of other assets,an impairment loss is reversed if there has been a change in the estimates used todetermine the recoverable amount. An impairment loss is reversed only to the extent thatthe asset's carrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had beenrecognised. Preference share capital The issued preference capital is classified as an element of equity as it isirredeemable, except at the Company's option, and dividend payments are discretionary.Dividends on preference shares are recognised as distributions within equity. Provisions A provision is recognised in the balance sheet when the Group has a present legal orconstructive obligation as a result of a past event, and it is probable that an outflowof economic benefits will be required to settle the obligation. If the effect ismaterial, provisions are determined by discounting the expected future cash flows at apre-tax rate that reflects current market assessments of the time value of money and,where appropriate, the risks specific to the liability. No provision is establishedwhere a reliable estimate of the obligation cannot be made. Foreign currencies The consolidated financial statements are presented in sterling, the Company'sfunctional and presentation currency. Each entity in the Group determines its ownfunctional currency and items included in the financial statements of each entity aremeasured in that functional currency. Transactions in foreign currencies are translated to the functional currency at theexchange rate ruling at the date of the transaction. Monetary assets and liabilitiesdenominated in foreign currencies are translated at the exchange rate ruling at thebalance sheet date and any exchange differences arising are taken to the IncomeStatement. Non-monetary assets and liabilities measured at historical cost in a foreign currencyare translated to the functional currency using the exchange rate at the date of thetransaction and so no exchange differences arise. Non-monetary assets and liabilitiesstated at fair value in a foreign currency are translated at the exchange rate ruling atthe balance sheet date. Where fair value movements in assets and liabilities arereflected in the Income Statement, the corresponding exchange movements are alsorecognised in the Income Statement. Where fair value movements in assets and liabilitiesare reflected directly in equity, the corresponding exchange movements are alsorecognised directly in equity. The assets and liabilities of foreign operations are translated to sterling at exchangerates ruling at the balance sheet date. The revenues and expenses of foreign operationsare translated to sterling at rates approximating to the exchange rates ruling at thedates of the transactions Exchange differences arising from the translation of the net investment in foreignoperations are taken to translation reserve. They are released into the income statementon disposal. Segment reporting The Group's primary reporting segments are its two operating divisions, namely the fundmanagement division and the property division. Share based payments The Executive Share Option Scheme allows Group employees to acquire shares of theCompany. The fair value of options granted after 7 November 2002 is recognised as anemployee expense with a corresponding increase in equity. The fair value is measured atgrant date and spread over the period during which the employee becomes unconditionallyentitled to the options. The fair value of the options granted is measured using abinomial lattice model, taking into account the terms and conditions upon which theoptions were granted. The amount recognised as an expense is adjusted to reflect theactual number of share options that vest except where forfeiture is only due to shareprices not achieving the threshold for vesting. The fair value of awards under the Group's long term incentive plan ("LTIP") isrecognised as an expense with a corresponding increase in equity. The fair value isinitially measured at the date of the award and is spread over the period during whichemployees become unconditionally entitled to the shares. The fair value of LTIP awardsis based on the market price of the underlying shares at the date of the award, takinginto account the terms and conditions upon which the award was made. Employee Benefits Trust The Group has an Employee Benefit Trust ("EBT") which owns shares in the Company for thepurposes of administering the Group's Long Term Incentive Plan. The EBT is consolidatedinto the Group's financial statements, with these shares treated as treasury shares anddeducted from equity. For further information, please contact: Maitland, Fiona Piper 020 7379 5151 This information is provided by RNS The company news service from the London Stock Exchange

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