3rd May 2005 07:14
Aberdeen Asset Management PLC03 May 2005 ABERDEEN ASSET MANAGEMENT PLC Interim Results for six months to 31 March 2005 & issue of Convertible Preference Share Units HIGHLIGHTS • Net new business of £2 billion • Assets under management grew 15% to £25.4 billion • Continued expansion in Asia Pacific region • Balance sheet to be strengthened by issue of £75m convertible preference share units, to be used to repurchase a significant proportion of the existing 5.875% convertible bonds Financial highlights March 2005 March 2004Turnover £72.9m £73.4m ======== =======Pre-tax profit (loss)Before goodwill amortisation &exceptional items £10.4m £5.5mGoodwill amortisation (£9.3m) (£9.7m)Gain on disposals & exceptionaloperating items £4.8m (£5.4m) ------- --------After goodwill amortisation gainson disposal & exceptional items £5.9m (£9.6m) ======= ======== Earnings (loss) per shareBefore goodwill amortisation &exceptional items 3.41p 1.56pGoodwill amortisation (3.94p) (4.59p)Gain on disposals/exceptionaloperating items 2.02p (2.58p) ------- ------- After goodwill amortisation gainson disposal & exceptional items 1.05p (5.61p) ======= =======Dividend per share 2.20p 2.00p ======= ======= Martin Gilbert, Chief Executive of Aberdeen Asset Management commented; "We have had an excellent start to the year with steady investment performanceleading to strong new business wins. This performance continues to build on theprogress we made in the second half of last year. We expect the Group tocontinue to benefit from increasing revenues arising from new business inflows.Together with the issue of £75 million of convertible preference share units,this provides a strong platform from which to improve shareholder returns." For further information, please contact: Aberdeen Asset Management PLCMartin Gilbert, Chief Executive 020 7463 6000 MaitlandFiona Piper/Neil Bennett 020 7379 5151 JP Morgan CazenoveIan Hannam/Richard Locke 020 7588 2828 ABERDEEN ASSET MANAGEMENT PLC INTERIM RESULTS TO 31 MARCH 2005 The Group has made substantial progress during the six month period to 31 March2005, building on the improvements in profits and margins delivered during thesecond half of 2004. The Group earned a profit before taxation, goodwill amortisation and exceptionalitems of £10.4 million for the first half year, compared to £5.5 million for thesame period last year. This healthy improvement has continued into the secondhalf year and the Group should continue to benefit from increasing revenuesarising from new business inflows. The Board has therefore decided to pay aninterim dividend of 2.2p per share, a 10% increase on the interim payment for2004. We have also continued to strengthen the balance sheet and we are pleased toannounce that JP Morgan has agreed to underwrite an issue of £75 million(subject to an overallotment option of a further £5 million) of convertiblepreference share units. These units will initially carry a fixed coupon ofbetween 6.25% and 6.75% and have a conversion price at a premium of between 23%and 27% to the average price of the ordinary shares over no more than twoconsecutive London business days beginning on 3 May 2005. £25 million of theunits (subject to the overallotment option of a further £5 million) will beplaced firm and £50 million will be placed subject to clawback by existingAberdeen shareholders pursuant to an open offer to be made to shareholders indue course. The proceeds of the issue will be used to finance the repurchase of existingAberdeen 5.875% convertible bonds due 2007. JP Morgan has committed to sell toAberdeen not less than £75 million of the existing 5.875% convertible bonds at aprice of 101% plus accrued interest. Continued steady investment performance and a demonstrably robust investmentprocess has enabled us to win substantial amounts of new business, with a totalof £3.7 billion of gross new business (including £0.6 billion of mandatesawarded but not yet funded). Inevitably, some outflows also occur, but our netnew business for the first half year is very satisfactory at £2 billion, assummarised below: Total net Yet to fund £m Funded in inflows £m period £mNet inflows toopen-end funds 711 - 711Segregatedaccount mandates 886 510 376Closed-end funds 163 - 163 ------ --------- ------Total fundmanagementdivision 1,610 360 1,250Net inflows topropertyopen-end funds 360 110 250 ------ ---------- ------Group total 1,970 470 1,500 ------ ---------- ------ The new business flows reported above include inflows from investors in Europe,North America, the Middle East and the Asia Pacific region. UK-originatedmandates include The New India Investment Trust and our recent appointment asone of the two new managers of the F & C Pacific Investment Trust. Assets under management at 31 March totalled £25.4 billion, a 15% increase onthe equivalent figure at 30 September 2004. Of the total increase in assetsunder management, £1.5 billion came from net new business, £0.6 billion frommarket movements and performance, and £1.2 billion from small acquisitions inThailand and by the property division in Belgium and the Netherlands. These new business inflows have contributed to improved revenues andconsequently to a higher operating margin. The major cost cutting exercise wascompleted during 2004 but, while we recognise that additional costs inevitablyarise on winning new business, we continue to focus on cost efficiencies. Thefund management division achieved an operating margin of 27.2% for the firsthalf year, compared to 16.1% for the same period last year and 20.7% for 2004 asa whole. We still view an operating margin of 30% as being both achievable andsustainable. We continue to see opportunities for growth in a number of areas but twodevelopments in Asia are worthy of mention. First, we now own 100% of AberdeenAsset Management Company Limited, based in Thailand, following the exercise ofthe call option negotiated at the time of our initial investment. Second, it hasrecently been announced that Aberdeen has been granted a licence to open a fundmanagement office in Malaysia and we expect to open a small office in KualaLumpur in the second half of 2005. Both of these developments represent furthersignificant steps in extending our investment and asset gathering capabilitiesmore widely across the Asia Pacific region. The property management division continues to develop and has achieved £0.3billion of new investment in its Norwegian property fund, with good progressalso being made on a similar Danish property fund. This division is wellpositioned to add further assets under management from a number of initiativescurrently under development, with commitments of over £100 million already inplace for a further fund. The Board recognises that to maximise the growthopportunities available in this division will require additional financing andwe have entered exclusive discussions with a potential investor/partner who canprovide the additional resources required to properly seed these newinitiatives. We have completed successfully several disposals of non-core assets and haveused the cash proceeds to pay down debt. Cash proceeds received during the firsthalf year include a total of £33.7 million from the sale of the investment inLombard International Assurance and £7.4 million from the sale of the Isle ofMan life subsidiary. In both cases, further proceeds are anticipated in futureyears. The recent £26.6 million convertible bond issue and the agreement of a£55 million revolving credit facility with Bank of Scotland provide acomfortable level of financial resources going forward. We were pleased to announce the Group's participation in the settlement, onChristmas Eve, of the split capital investigation. The uplift plan offered toinvestors in the Aberdeen Progressive Growth Unit Trust, for which we madeprovision in the results to 30 September 2004, has been well received and wehave now received acceptances from investors representing approximately 94% byvalue of those entitled to participate. In accordance with the terms of theuplift plan, we have made interim payments totalling £5.6 million to those whohave accepted and this amount has been set against the provision set up lastyear. There have been no developments in the dispute with Real Estate OpportunitiesLimited ("REO") over the termination of Aberdeen's management contract withoutnotice. The Board is resolute in its belief that REO has no proper cause forcomplaint and, on the basis of legal advice, remains of the view that there isno need to make any provision in respect of any action threatened. Three of our major shareholders, who had each invested for their own separatestrategic reasons, have departed the register in early 2005 and I would like tonote the Board's appreciation of their support over the years. It was veryencouraging to note that these shares were readily absorbed by the market, witheach of the three placings being considerably oversubscribed. I would like towelcome the new shareholders and we look forward to reporting the Group'sfurther progress in the future. C L A Irby3 May 2005 Group Profit and Loss Accountfor the six months to 31 March 2005 6 mths to 6 mths to Year to Notes 31 Mar 2005 31 Mar 2004 30 Sep 2004 £'000 £'000 £'000 Turnover 72,948 73,393 140,011 Operating expenses (56,728) (61,479) (113,783)Costs relating to settlementof regulatory issues 3 - (1,176) (38,519)Provision for ProgressiveGrowth Uplift Plan 3 - - (39,200)Other exceptional costs 3 - (4,281) (7,589)Amortisation of goodwill (9,306) (9,701) (19,122)Provisions for impairment ofgoodwill - - (584) ------------ --------- ---------Total administrativeexpenses (66,034) (76,637) (218,797) Other operating income - - 1,116Operating profit beforegoodwill amortisation,impairment provisions &exceptional costs 16,220 11,914 27,344Amortisation of goodwill,impairment provisions &exceptional costs (9,306) (15,158) (105,014) ------------ --------- --------- Operating profit (loss) 6,914 (3,244) (77,670)Gain on disposals 4 4,775 - 2,361Net interest payable andsimilar charges (5,776) (6,402) (12,273) ------------ --------- ---------Profit (loss) on ordinaryactivities before taxation 5,913 (9,646) (87,582)Tax on profit (loss) onordinary activities (2,314) (1,961) 6,981 ------------ --------- ---------Profit (loss) on ordinaryactivities after taxation 3,599 (11,607) (80,601)Minority interests - equity (89) (211) (170) ------------ --------- ---------Profit (loss) for thefinancial period 3,510 (11,818) (80,771) DividendsEquity dividends on ordinaryshares 1 (5,196) (4,715) (9,437)Non-equity dividends onpreference shares - (45) (46) ------------ --------- --------- (5,196) (4,760) (9,483)Retained loss for thefinancial period (1,686) (16,578) (90,254) ------------ --------- --------- Earnings (loss) per share -basicBefore goodwillamortisation, impairmentprovisions & exceptionalitems 6 3.41p 1.56p 4.68pAfter goodwill amortisation,impairment provisions &exceptional items 6 1.49p (5.61p) (34.90p) Earnings (loss) per share -dilutedBefore goodwillamortisation, impairmentprovisions & exceptionalitems 6 3.41p 1.56p 4.68pAfter goodwill amortisation,impairment provisions &exceptional items 6 1.49p (5.61p) (34.90p) Turnover and operating profit (loss) in the current and previous periods arise whollyfrom continuing activities. Group Statement of Total Recognised Gains and Lossesfor the six months to 31 March 2005 6 mths to 6 mths to Year to 31 Mar 2005 31 Mar 2004 30 Sep 2004 £'000 £'000 £'000Profit (loss) for thefinancial period 3,510 (11,818) (80,771)Revaluation of fixed assetinvestment - 4,428 4,428Translation of foreigncurrency net investments (284) (915) (475) ---------- --------- ---------Total recognised gains(losses) since last report 3,226 (8,305) (76,818) ---------- --------- ---------Note of historical cost profits and lossesfor the six months to 31 March 2005 6 mths to 6 mths to Year to 31 Mar 2005 31 Mar 2004 30 Sep 2004 £'000 £'000 £'000Profit (loss) on ordinaryactivities before taxation 5,913 (9,646) (87,582)Realisation of investmentrevaluation gains of prioryears 19,901 - - ------- --------- ---------Historical cost profit(loss) on ordinary activities before taxation 25,814 (9,646) (87,582) ------- --------- ---------Historical cost profit(loss) for the periodretained after taxation, minority interests anddividends 18,215 (16,578) (90,254) ------- --------- --------- Group Balance Sheetas at 31 March 2005 31 Mar 2005 31 Mar 2004 30 Sep 2004 Notes £'000 £'000 £'000ASSETSFixed assetsIntangible assets 28,991 41,598 40,788Goodwill 293,062 332,577 297,083Tangible assets 10,095 15,760 10,567Investments 26,038 43,911 46,654 ------- --------- --------- 358,186 433,846 395,092 ------- --------- ---------Current assetsStock 658 335 519Debtors 65,287 44,454 45,730Investments 2,102 1,703 424Cash at bank and in hand 7 15,546 14,741 17,763 ------- --------- --------- 83,593 61,233 64,436 ------- --------- ---------Assets attributable toequity shareholders 441,779 495,079 459,528Assets of long-term lifeassurance business 52,888 238,854 231,045 ------- --------- ---------Total assets 494,667 733,933 690,573 ------- --------- ---------LIABILITIESCapital and reservesCalled up share capital 23,620 23,575 23,620Share premium account 19,710 19,484 19,710Revaluation reserve - 19,957 19,901Other reserves 203,805 209,702 203,805Profit & loss account (116,183) (66,774) (134,114) ------- --------- ---------Equity shareholders' funds 130,952 205,944 132,922Minority interests - equity - 403 282Provisions for liabilitiesand charges 8 35,961 7,525 45,625Creditors: due within one year,including convertible debtCreditors 94,218 127,990 162,962Convertible debt - 14,963 15,197 ------- --------- ---------Creditors: due after morethan one year, includingconvertible debt 94,218 142,953 178,159 ------- --------- ---------Creditors 56,379 40,353 4,267Convertible debt 124,269 97,901 98,273 ------- --------- --------- 180,648 138,254 102,540 ------- --------- --------- 441,779 495,079 459,528Liabilities of long - termlife assurance business 52,888 238,854 231,045 ------- --------- ---------Total liabilities 494,667 733,933 690,573 ------- --------- --------- Summary Group Cash Flow Statementfor the six months to 31 March2005 6 mths to 6 mths to Year to Notes 31 Mar 2005 31 Mar 30 Sep 2004 2004 £'000 £'000 £'000 -------- --------- ---------Core cashflow from operatingactivities 14,356 4,548 14,510Effects of short-term timingdifferences on unit trustsettlements 6,887 9,786 (2,550) -------- --------- --------- 21,243 14,334 11,960Split capital settlement costs paid (25,539) - -Other exceptional costs paid (1,329) (7,455) (10,317) -------- --------- ---------Net cash (outflows) inflows fromoperating activities 5 (5,625) 6,879 1,643Returns on investments andservicing (6,168) (5,679) (10,241)of financeTaxation received (paid) 472 (4,378) (6,194)Capital expenditure and financialinvestment 23,399 32,795 32,290Acquisitions and disposals (3,248) (4,869) 29,305Equity dividends paid (4,724) (3,538) (8,251) -------- --------- ---------Net cash inflow before financing 4,106 21,210 38,552FinancingIssue of ordinary share capital - 316 586Redemption of preference sharecapital - (10,343) (10,343)Decrease in debt (18,763) (11,722) (44,241) -------- --------- ---------Decrease in cash (14,657) (539) (15,446) -------- --------- --------- Reconciliation of net cash flow tomovement in net debt 6 mths to 6 mths Year to to Notes 31 Mar 2005 31 Mar 30 Sep 2004 2004 £'000 £'000 £'000 -------- --------- ---------Decrease in cash (14,657) (539) (15,446)Decrease in long term debt 18,763 11,722 44,241Amortisation of issue costs ofconvertible bonds (372) (372) (744)Loans assumed on acquisition ofsubsidiary - (11,844) (11,844)Translation difference (315) (915) (140) -------- --------- ---------Movement in net debt 3,419 (1,948) 16,067Net debt brought forward 7 (169,265) (185,332) (185,332) -------- --------- ---------Net debt carried forward 7 (165,846) (187,280) (169,265) -------- --------- ---------Notes 1. Interim dividendThe interim ordinary dividend of 2.2p per share will be paid on 15 June 2005 toqualifying shareholders on the register at 13 May 2005.2. Segmental information Investment Property asset Group management management totalSix months to 31 March 2005 £'000 £'000 £'000Turnover 51,550 21,398 72,948 ---------- --------- ---------Operating expenses (37,455) (19,273) (56,728) Amortisation of goodwill (8,894) (412) (9,306) ---------- --------- ---------Total administrative expenses (46,349) (19,685) (66,034) ---------- --------- ---------Operating profit (before goodwillamortisation) 14,095 2,125 16,220 ---------- --------- ---------Operating profit (after goodwillamortisation) 5,201 1,713 6,914 ---------- --------- ---------Profit before interest and tax 9,976 1,713 11,689 ---------- --------- --------- Investment Property asset Group management management totalSix months to 31 March 2004 £'000 £'000 £'000Turnover 44,743 28,650 73,393 ---------- --------- --------- Operating expenses (37,554) (23,925) (61,479)Costs relating to settlement ofregulatory issues (1,176) - (1,176)Other exceptional costs (4,281) - (4,281)Amortisation of goodwill (8,526) (1,175) (9,701) ---------- --------- ---------Total administrative expenses (51,537) (25,100) (76,637) ---------- --------- ---------Operating profit (before goodwillamortisation & exceptional costs) 7,189 4,725 11,914 ---------- --------- ---------Operating (loss) profit (aftergoodwill amortisation & exceptionalcosts) (6,794) 3,550 (3,244) ---------- --------- ---------(Loss) profit before interest andtax (6,794) 3,550 (3,244) ---------- --------- --------- Investment Property asset Group management management totalYear to 30 September 2004 £'000 £'000 £'000Turnover 91,659 48,352 140,011Other operating income 1,116 - 1,116 ---------- --------- ---------Total operating income 92,775 48,352 141,127 ---------- --------- --------- Operating expenses (73,565) (40,218) (113,783)Costs relating to settlement ofregulatory issues (38,519) - (38,519)Provision for Progressive GrowthUplift Plan (39,200) - (39,200)Other exceptional costs (7,589) - (7,589)Amortisation of goodwill (17,282) (1,840) (19,122)Provisions for impairment ofgoodwill (584) - (584) ---------- --------- ---------Total administrative expenses (176,739) (42,058) (218,797) ---------- --------- ---------Operating profit (before goodwillamortisation,impairment provisions & exceptionalcosts) 19,210 8,134 27,344 ---------- --------- ---------Operating (loss) profit (after goodwillamortisation,impairment provisions & exceptionalcosts) (83,964) 6,294 (77,670) ---------- --------- ---------(Loss) profit before interest andtax (81,603) 6,294 (75,309) ---------- --------- --------- 3. Exceptional costs 6 mths to 6 mths to Year to 31 Mar 2005 31 Mar 2004 30 Sep 2004 £'000 £'000 £'000Recognised within operating profit(loss)Costs relating to settlement ofregulatory issues - 1,176 38,519Provision for Uplift Plan toeligible investors in AberdeenProgressive Growth Unit Trust - - 39,200Expenses in relation to the costreduction and - 4,281 6,829rationalisation programmeCosts of aborted sale, subsequentrationalisation and other costs - - 760 ---------- --------- --------- - 5,457 85,308 ---------- --------- --------- 4. Gain on disposalsThe gain on disposals represents the net gains recognised on the disposal of theGroup's investment in Lombard International Assurance SA and of the Group's lifeassurance subsidiaries. The net gain excludes the effect of contingent deferredproceeds which are expected to be received by the Group.5. Reconciliation of operating profit (loss) to operatingcash flow 6 mths to 6 mths to Year to 31 Mar 2005 31 Mar 2004 30 Sep 2004 £'000 £'000 £'000Operating profit (loss) 6,914 (3,244) (77,670)Depreciation charges 1,745 2,324 4,415Amortisation of goodwill 9,306 9,701 19,122Provision for impairment ofgoodwill - - 584Amortisation of intangible assets 607 810 1,620Gain on disposal of tangiblefixed assets - - (199)Loss (gain) on disposal of fixedand current asset investments - 816 (590)Amounts written off current assetinvestments - - 286Share of results of associatedundertakings - - (116)Decrease in liabilities for splitcapital settlement (25,539) - -(Decrease) increase in provisionsfor liabilities and charges (1,907) (1,654) 31,753Increase in stock (139) (143) (327)(Increase) decrease in debtors (11,513) 335 (6,407)Increase (decrease) in creditors 14,901 (2,066) 29,172 ---------- ---------- ---------Net cash (outflow) inflow fromoperating activities (5,625) 6,879 1,643 ---------- ---------- --------- Analysis of the 31 Mar 2005 Change in 30 Sep 2004 Change in 31 Marbalances of cash as period periodshown in the balancesheet 2004 £'000 £'000 £'000 £'000 £'000Cash at bankand in hand 15,546 (2,217) 17,763 3,022 14,741Bank overdraft - 41,435 (41,435) (16,920) (24,515) -------- -------- -------- --------- --------- 15,546 39,218 (23,672) (13,898) (9,774) -------- -------- -------- --------- --------- 6 mths to 6 mths to 31 Mar 2005 31 Mar 2004Analysis of changes in cash £'000 £'000Net cash outflow before adjustment for theeffects of foreign exchange (14,657) (539)Conversion of overdraft to revolving creditfacility 55,000 -Effects of foreign exchange rate changes (1,125) (2,721) --------- ---------- 39,218 (3,260) --------- ---------- 6. Earningsper shareThe calculations of earnings per share are based on the following profits (losses) and numbers ofshares: Basic Diluted -------- -------- -------- -------- -------- -------- 6 mths to 6 mths to Year to 6 mths to 6 mths to Year to 31 Mar 2005 31 Mar 2004 30 Sep 2004 31 Mar 2005 31 Mar 2004 30 Sep 2004 £'000 £'000 £'000 £'000 £'000 £'000Profit (loss)attributabletoshareholders 3,510 (11,818) (80,771) 3,510 (11,818) (80,771)Lessnon-equitydividends - (45) (46) - (45) (46) -------- -------- -------- -------- -------- --------Profit (loss)for financial 3,510 (11,863) (80,817) 3,510 (11,863) (80,817)period-FRS 14basisGoodwillamortisationand 9,306 9,701 19,706 9,306 9,701 19,706impairmentprovisionsExceptionaloperatingitems, - 5,457 74,308 - 5,457 74,308net ofattributabletaxationGain ondisposals (4,775) - (2,361) (4,775) - (2,361) -------- -------- -------- -------- -------- --------Profit forthe financialperiod beforegoodwillamortisation,impairmentprovisions &exceptionalitems 8,041 3,295 10,836 8,041 3,295 10,836 -------- -------- -------- -------- -------- -------- 31 Mar 2005 31 Mar 2004 30 Sep 2004 Number of Number of Number of shares shares shares 000's 000's 000'sWeighted averagenumber of sharesFor basic earnings pershare 236,199 211,314 231,597 Dilutive effect of exercisable share options 147 133 - ------------ ------------ ------------For dilutedearnings pershare 236,346 211,447 231,597 ------------ ------------ ------------ The Directors believe that the Group's results are more fairly representedby a measure of earnings per share which excludes exceptional items,impairment provisions and amortisation of goodwill and therefore alsopresent earnings per share figures stated before these items are charged(credited) to the profit and loss account. The two measures of earnings pershare can be reconciled as follows: 6 mths to Basic Year to 6 mths to Diluted Year to 6 mths to 6 mths to 31 Mar 2005 31 Mar 2004 30 Sep 2004 31 Mar 2005 31 Mar 2004 30 Sep 2004Aftergoodwillamortisation,impairmentprovisions &exceptionaloperatingitems- FRS 14 basis 1.49p (5.61p) (34.90p) 1.49p (5.61p) (34.90p)Goodwillamortisationand impairmentprovisions 3.94p 4.59p 8.51p 3.94p 4.59p 8.51pExceptionaloperatingitems, net ofattributabletaxation - 2.58p 32.09p - 2.58p 32.09pGain ondisposals (2.02p) - (1.02p) (2.02p) - (1.02p) -------- -------- -------- -------- -------- -------Beforegoodwillamortisation,impairmentprovisions &exceptionalitems 3.41p 1.56p 4.68p 3.41p 1.56p 4.68p -------- -------- -------- -------- -------- ------- 7. Analysis At 30 Sep Cash Other Exchange At 31 Marof changes in 2004 flow non cash movement 2005net debt changes £'000 £'000 £'000 £'000 £'000Cash at bankand in hand 17,763 (1,092) - (1,125) 15,546Bank overdraft (41,435) (13,565) 55,000 - - -------- -------- --------- ---------- --------- (23,672) (14,657) 55,000 (1,125) 15,546 -------- -------- --------- ---------- ---------Debt duewithin oneyear (28,316) 27,500 - - (816)Convertibledebt duewithin (15,197) 14,387 - 810 -one yearDebt due aftermore than oneyear (3,807) 2,500 (55,000) - (56,307)Convertibledebt due aftermore than oneyear (98,273) (25,624) (372) - (124,269) -------- -------- --------- ---------- --------- (145,593) 18,763 (55,372) 810 (181,392) -------- -------- --------- ---------- --------- Total (169,265) 4,106 (372) (315) (165,846) -------- -------- --------- ---------- ---------Net gearing 127.3% 126.6% -------- ------- Provision for Provision for liabilities on Deferred Uplift pension taxation8. Provisions for Plan scheme Totalliabilities andcharges £'000 £'000 £'000 £'000At 1 October2004 39,200 5,732 693 45,625Utilised (8,039) (1,907) - (9,946)Provided inthe year - - 295 295Exchangemovement - - (13) (13) ------------- ----------- --------- ----------At 31 March2005 31,161 3,825 975 35,961 ------------- ----------- --------- ---------- The provision for Uplift Plan represents the provision made for eligibleinvestors in Aberdeen Progressive Growth Unit Trust. The amount utilisedrepresents payments made to investors and legal fees incurred in relation tosplit capital issues in the six month period to 31 March 2005. 9. Contingent liabilitiesThe dispute with Real Estate Opportunities Limited ("REO") over the terminationof Aberdeen's management contract without notice remains outstanding. Fulldisclosure of the circumstances surrounding this dispute has been provided inprevious Annual Reports. Although REO has yet to take any of the action that ithas repeatedly threatened, we believe that it is likely that REO will issueproceedings. Aberdeen would welcome the opportunity to have this claimlitigated in court and the Board is resolute in its belief that REO has noproper cause for complaint. Aberdeen will continue to vigorously defend theclaim and, if proceedings are brought by REO, will pursue a substantialcounterclaim for outstanding fees and compensation for breach of thetermination provisions of up to £17 million. The Board, on the basis of legaladvice, remains of the view that there is no need to make any provision inrespect of any action threatened by REO. 10. The interim results have been prepared on the basis of the accountingpolicies set out in the Group's 2004 statutory accounts. The comparativefigures for the financial year ended 30 September 2004 are not the company'sstatutory accounts for that year. Those accounts have been reported on by thecompany's auditors and delivered to the Registrar of Companies. The report ofthe auditors was unqualified and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 11. Copies of this statement are being sent to all shareholders. Copies can beobtained from the Company's registered office, 10 Queen's Terrace, Aberdeen,AB10 1YG. Independent Review Report by KPMG Audit Plc toAberdeen Asset Management PLC IntroductionWe have been instructed by the Company to review the financial information forthe six months ended 31 March 2005 which comprises the Profit and Loss Account,Statement of Total Recognised Gains and Losses, Balance Sheet, Cash FlowStatement and Notes to the Accounts and we have read the other informationcontained in the Interim Report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin 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 forour review work, for this report, or for the conclusions we have reached. Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the Directors. The Directorsare responsible for preparing the Interim Report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where theyare to be changed in the next annual accounts in which case any changes, and thereasons for them, are disclosed. Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of Group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with United Kingdom AuditingStandards and therefore provides a lower level of assurance than an audit.Accordingly we do not express an audit opinion on the financial information. Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2005. KPMG Audit PlcChartered Accountants, Aberdeen29 April 2005 Assets under management --------- --------- March September 2005 2004 £m £m --------- --------- Institutional funds 13,897 11,821Unit trusts & unit-linked 2,874 2,594UK Investment trusts 5,016 4,966Offshore funds 2,851 1,961Discretionary accounts 412 393Private equity 362 363 --------- --------- 25,412 22,098 --------- --------- Equities : UK 6,076 6,740 European 1,087 994 USA 1,098 1,215 Asia Pacific 5,557 4,006 Japan 640 560 Emerging markets 278 266 --------- --------- 14,736 13,781Fixed interest & cash 5,406 4,405Property 5,270 3,912 --------- --------- 25,412 22,098 --------- --------- Stabilisation/FSA This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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