2nd May 2006 07:02
Aberdeen Asset Management PLC02 May 2006 ABERDEEN ASSET MANAGEMENT PLC Interim Results for six months to 31 March 2006 Operational highlights •Assets under management £74.4 billion, up 24.6% from year-end•Record half-year net new business of £3.6 billion•Broad geographic and asset class growth in funds•Underlying fund management operating margin 29.5% (2005 - 28.3%)•Front office integration complete: back office integration progressing according to plan Financial highlights March 2006 March 2005 Turnover £164.4m £89.9m -----------------------Pre-tax profit(before amortisation of intangibles & non-recurring* items) £36.8m £9.0m(after amortisation of intangibles & non-recurring* items) £17.7m £13.2m Diluted earnings per share(before amortisation of intangibles & non-recurring* items) 3.98p 1.93p(after amortisation of intangibles & non-recurring* items) 1.97p 3.23pDividend per share 2.00p 1.416pNet new business - funded £2.6bn £1.5bn - awarded but not yet funded £1.0bn £0.45bn * - non-recurring items consist of gains on disposal of investments, integration costs and finance costs as shown in note 12 Commenting on the results Martin Gilbert, Chief Executive of Aberdeen Asset Management said: "These areexcellent results and I would like to thank all our people for their hard work. Aberdeen is now abroadly-based international asset management group with expertise in equities, fixed income and property.We are particularly pleased that so many of DeAM's clients have demonstrated their confidence by keepingtheir funds with the enlarged Group. As we move forward, we will continue to develop our asset management activities to deliver optimum value for our clients and shareholders alike." For further information, please contact: Aberdeen Asset Management PLCMartin Gilbert, Chief Executive 020 7463 6000 MaitlandNeil Bennett 020 7379 5151 Assets under Management March September 2006 2005 £m £mBy type of mandate:Institutional funds 56,194 44,633Open end funds 11,826 9,060Closed end funds 5,587 5,312Other 758 734 -------------------- 74,365 59,739 --------------------By asset class:Equities : UK 11,255 16,294European 2,173 2,672USA 1,827 2,619Asia Pacific 12,719 8,672Japan 1,455 1,045Emerging markets 946 609 -------------------- 30,375 31,911Fixed interest & cash 37,479 22,302Property 6,511 5,526 -------------------- 74,365 59,739 -------------------- Chairman's Statement The six month period to 31 March 2006 is the first reporting period for the enlarged Group that incorporates the businesses acquired from Deutsche Asset Management ("DeAM") in late 2005. Whilst the scale of the Group's activities may have changed, the underlying themes remain constant: solid long term investment performance and very healthy new business flows. Presentation of the results for the period has changed due to the transition to International Financial Reporting Standards ("IFRS") but the strong growth in profits is shown in the underlying measures of performance which the Board uses in managing the business. We have continued to disclose these additional measures, as we did consistently when reporting under UK GAAP, and we have also included a brief financial review which discusses the results in more detail. Profit before taxation generated by the Group's core business, stated before non-recurring costs and gains, was £36.8 million compared to £9.0 million for the equivalent period in 2005. This represents underlying earnings per share, on a diluted basis, of 4.0p, an increase of 110% on the 2005 figure of 1.9p. The Board has therefore decided to pay an interim dividend of 2.0p per share (2005 - 1.416p, after restating for the effects of the rights issue). There is no material seasonality in the Group's results and, in the absence of any material change in market conditions, the Board expects to recommend a final dividend of similar amount in due course. Global stock and bond markets have generally been favourable throughout the period but this alone is not sufficient to drive any asset management group forward. I am therefore pleased to report record levels of new business, the foundation for which is the long term investment performance, the robust investment processand the relationships built by our client facing teams. Substantial levels of new business have been generatedin all key areas: in equities, where Asia Pacific and global emerging markets remain very popular but with investor interest now extending to our global equities and SRI capability; in fixed income, where our new colleagues who joined from DeAM have made substantial progress in a very short time; and in property, where2 new fund launches have been completed during the period, including a European fund of property funds, the first of its kind in Europe. Gross new business generated in the period totalled £6.5 billion, of which £5.5 billion was funded before 31 March and is included in assets under management at that date, while a further £1.0 billion represents new business awarded or committed before the period end but which had not then been funded. Net new business for the period is summarised in the following table: Funded Yet to Net new in period fund business £m £m £mOpen end funds 928.9 - 928.9Segregated account mandates 1,177.3 658.7 1,836.0Other 3.6 - 3.6 ---------------------------Total fund management division 2,109.8 658.7 2,768.5Net inflows to property division 491.7 335.6 827.3 ---------------------------Group total 2,601.5 994.3 3,595.8 --------------------------- The effect of these inflows, together with market appreciation and performance, have been major factorsin the growth in assets under management to £74.4 billion at 31 March. This represents a 24.6% increase compared to 30 September 2005, the increase arising as follows: £bnAt 30 September 2005 59.7Net new business 2.6 +4.3%Market appreciation and performance 3.7 +6.2%Net movements resulting directly from DeAM acquisition 8.4 +14.1% ----------------At 31 March 2006 74.4 +24.6% ---------------- At 31 March, approximately £9.0 billion (54% of the value reported on announcement of the transaction) of the former DeAM equities and multi asset clients remained in place. Although it is still possible that some further client losses may arise before 30 June, at which point final measurement of the deferred consideration payable for this business can take place, this represents a very satisfactory outcome. Assuming no material change to this level of AUM retention, the deferred consideration is expected to be between £20 million and £25 million. As previously reported, the respective fixed income teams have been successful in retaining over 95% of AUM managed in the UK and approximately 99% in the US. In any acquisition, it is important that the integration be completed as effectively and efficiently as possible. I have previously reported that the integration of the front office teams was completed as planned by early December and the respective teams now share the same offices and operating platforms in both London and Philadelphia. The back office integration is a much more complex and time consuming process, involving a larger number of staff as well as external service providers. It is also spread over a wider geographical area. The Group is taking a careful and disciplined approach to this process since we know these systems lie at the heart of our client service and client relationships. We have a detailed programme to implement this integration and we continue to work through it as well as identifying systems enhancements that will directly benefit the further scalability of the Group's activities in future. We remain confident that the synergy benefits will, over the course of the next 12 - 18 months, equal or exceed the levels envisaged at the time of the acquisition. On behalf of the Board, I would at this stage like to thank all those involved for their hard work and commitment to this exercise. This has been an excellent first half year and we are confident of our ability to extend the progress during the second half of the financial year and beyond. C L A Irby2 May 2006 Financial review The Group's financial statements for the year to 30 September 2006 will be prepared in accordance with International Financial Reporting Standards ("IFRS") and these interim financial statements have therefore been prepared on the same basis. Comparative figures have been restated, where necessary, from the UK GAAP basis on which they were originally reported. Investors may wish to consider these interim financial statements in conjunction with the additional information contained in the IFRS Transition Statement which we published on 28 March 2006, which can be accessed on our website. IFRS profit before taxation and minority interests was £17.7 million (2005 - £13.2 million), generated on revenues of £164.4 million (2005 - £89.9 million). The IFRS statements require the presentation of the results in a particular format and we have provided additional analysis of the results on the face of the Income Statement which seeks to distinguish non-recurring items from the underlying revenues and costs of the Group's ongoing business activities. Revenues and operating expenses each include figures which relate to two private equity investments managed by the Group on behalf of limited partnership clients. These two investments are deemed, under IFRS definitions, to be controlled by one of the Group's subsidiaries and are therefore required to be fully consolidated, with the entitlements of the clients then reflected as a minority interest. The economic effect on the Group for the period of these investments was a net cost of £334,000 (2005 - £50,000). Recurring revenues for the period were £147.4 million (2005 - £72.9 million) and recurring operating expenses were £110.9 million (2005 - £58.1 million). We are also required to amortise certain of the intangible assets acquired on the Deutsche Asset Management ("DeAM") transaction, resulting in a non-cash charge for the period of £5.5 million (2005 - nil). Other operating income of £8.2 million (2005 - £4.8 million), representing gains on sale of certain non-core assets, is also taken into accountin presenting the IFRS operating profit. Excluding these items, and the operating loss of the two privateequity investments, the underlying operating profit is £36.5 million (2005 - £14.8million), an increase of 147%. One of the effects of IFRS presentation on the Group's results is to introduce an element of variability in the operating margin between the first and second halves of the financial year, principally due to an acceleration into the first half year of accruals for short term employee benefits which would previously have been incurred in the second half. Whilst this item will have no effect in a full year, it does reduce the operating margin for the first half year by approximately 1%.Despite this anomaly, the Group's overall operating margin was 25.7% compared to 22.6% last year. The underlying operating margin for the fund management division, which is a key measure of the Group's performance, was 29.5% (2005 - 28.3%). Integration costs of £17.2 million, relating to the DeAM transaction, were incurred during the period. These costs comprise charges in respect of a transitional services agreement with the vendor to ensure that bothpeople and systems are transferred in a controlled manner; set-up costs in respect of the migration of the backoffice data and systems to the Group's third party administrator; and costs of retaining duplicate staffingfor a transitional period to ensure a smooth migration of data. Further integration costs, of a lesser amount, will occur in the second half year. The underlying net finance revenue for the period was £0.3 million (2005 - net finance cost of £5.8 million), reflecting the restructuring and reduction of the Group's debt during 2005, both from the rights issue which financed the DeAM transaction and the other actions reported in the 2005 Annual Report. Underlying profit before taxation was £36.8 million (2005 - £9.0 million), reflecting the increased scale of the Group's operations after the DeAM transaction. Clearly, this increased profit has been generated from a larger capital base and diluted underlying earnings per share, which take account of the enlarged capital base, have increased by 110% to 4.0p (2005 - 1.9p). Core cashflow from operating activities reflected an inflow of £10.4 million, compared to £9.1 million in the equivalent period last year. Additional inflows of £28.4 million have arisen on the sale of investments and from deferred consideration received for businesses sold in previous years. Against this, £110.7 million was paid during the period in respect of the purchase of DeAM and payments totalling £12.0 million were made in respect of the costs of the related integration project. Group Income StatementFor the six months to 31 March 2006 Notes 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 (as restated) (as restated) £'000 £'000 £'000Revenue from core business 147,263 72,902 156,124Net fair value gains on assets at fair value through income 175 - -Revenues of private equity partnerships 16,970 16,954 36,302 -----------------------------------Revenue 3 164,408 89,856 192,426 ----------------------------------- Operating costs of core business (110,917) (58,121) (123,215)Amortisation of acquired intangible assets (5,462) - -Non-recurring release of provisions - - 2,600Operating costs of private equity partnerships (19,718) (16,815) (36,391) -----------------------------------Operating expenses (136,097) (74,936) (157,006) ----------------------------------- Other operating income 4 8,238 4,775 11,047Share of results of associates - - (12) Operating profit of core business 36,521 14,781 32,897Non-recurring gains on investments and amortisation of intangibles 2,776 4,775 13,647Private equity partnerships (2,748) 139 (89) ----------------------------------Operating profit before integration costs 36,549 19,695 46,455Integration costs 5 (17,237) - - ----------------------------------Operating profit after integration costs 19,312 19,695 46,455 Finance revenue of core business 1,813 401 1.098Finance costs of core business (1,539) (6,177) (11,325)Non-recurring finance costs (800) - (4,670)Finance costs of private equity partnerships (1,086) (678) (1,435) ----------------------------------Net finance costs (1,612) (6,454) (16,332) ---------------------------------- Profit before taxation from core business 36,795 9,005 22,670Non-recurring items and amortisation of intangible assetsbefore taxation (15,261) 4,775 8,977Private equity partnerships loss before taxation (3,834) (539) (1,524) ----------------------------------Profit before taxation 17,700 13,241 30,123 ---------------------------------- Tax on profit from core business (3,501) (1,777) (5,368)Tax on non-recurring items (2,700) - (501)Tax on private equity partnerships 288 162 457 ----------------------------------Tax expense (5,913) (1,615) (5,412) ---------------------------------- Profit after taxation from core business 33,294 7,228 17,302Non-recurring items after taxation (17,961) 4,775 8,476Private equity partnerships loss after taxation (3,546) (377) (1,067) ----------------------------------Profit for the period 11,787 11,626 24,711 ---------------------------------- Attributable to:Equity shareholders 14,999 11,864 25,553Minority interests in core business - 89 89Minority interests in private equity partnerships (3,212) (327) (931) ---------------------------------- 11,787 11,626 24,711 ----------------------------------Earnings per shareBasic 12 2.05p 3.23p 6.64pDiluted 12 1.97p 3.23p 6.60pUnderlying earnings per shareBasic 12 4.14p 1.93p 4.64pDiluted 12 3.98p 1.93p 4.61p Dividend per share 2.00p 1.416p 3.00p All items dealt with in arriving at the profits stated above relate to continuing operations Group Statement of Recognised Income and ExpenseFor the six months to 31 March 2006 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 (as restated) (as restated) £'000 £'000 £'000Net actuarial loss on defined benefit pension schemes - (2,984) (5,968)Translation of foreign currency net investments 191 (284) 189Movement in fair value of available for sale investments 1,043 - -Tax on items taken directly to equity (158) 895 1,280 ----------------------------------Net income (expense) recognised directly in equity 1,076 (2,373) (4,499)Profit for the financial period 11,787 11,626 24,711 ----------------------------------Total recognised income and expense for the period 12,863 9,253 20,212 ---------------------------------- Attributable to:Equity holders of the parent 16,075 9,491 21,054Minority interest (3,212) (238) (842) ----------------------------------Total recognised income and expense for the period 12,863 9,253 20,212 ---------------------------------- Impact of change in accounting policy on retained earnings at beginningof period 16 84 - - Group Balance SheetAs at 31 March 2006 Notes 31 Mar 2006 31 Mar 2005 30 Sept 2005 (as restated) (as restated) £'000 £'000 £'000ASSETSNon-current assetsIntangible assets 7 558,146 345,236 456,118Property, plant and equipment 10,376 10,017 9,944Other investments 8 52,396 56,643 65,644Deferred tax assets 8,932 8,503 8,932 -----------------------------------Total non-current assets 629,850 420,399 540,638 -----------------------------------Current assetsFinancial investments 1,634,007 52,888 2,554,983Stock 9 4,252 3,845 5,193Trade and other receivables 175,501 74,188 155,900Other investments 8 27,571 2,102 20,331Cash and cash equivalents 30,171 23,526 103,384 -------------------------------------Total current assets 1,871,502 156,549 2,839,791 -------------------------------------- Total assets 2,501,352 576,948 3,380,429 ------------------------------------- EquityCalled up share capital 70,547 23,620 68,502Share premium account 290,573 19,710 261,040Other reserves 220,974 203,805 219,805Retained loss (138,708) (121,221) (120,757) -----------------------------------Total equity attributable to equity holders of the parent 10 443,386 125,914 428,590Minority interest 47,933 47,261 51,145 -----------------------------------Total equity 491,319 173,175 479,735 ----------------------------------- LiabilitiesNon-current liabilitiesInterest bearing loans and borrowings 11 30,284 188,092 58,094Other creditors - 72 277Provisions 14 - 7,714 4,631Pension deficit 14 28,437 28,604 30,034Deferred tax liabilities 14 4,866 975 4,078 ----------------------------------Total non-current liabilities 63,587 225,457 97,114 ----------------------------------Current liabilitiesInvestment contract liabilities 1,634,007 52,888 2,554,983Interest bearing loans and borrowings 11 25,061 2,704 3,757Trade and other payables 253,953 82,559 216,810Provisions 14 18,463 23,447 19,478Employee benefits 1,377 945 -Deferred income 2,876 1,346 1,576Current tax payable 10,709 14,427 6,976 -------------------------------------Total current liabilities 1,946,446 178,316 2,803,580 -------------------------------------Total liabilities 2,010,033 403,773 2,900,694 -------------------------------------Total equity and liabilities 2,501,352 576,948 3,380,429 ------------------------------------- Summary Group Cash Flow StatementFor the six months to 31 March 2006 Notes 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 (as restated) (as restated) £'000 £'000 £'000Core cashflow from operating activities 10,371 9,100 32,869Effects of short-term timing differences on unit trust settlements (2,149) 6,887 995 ---------------------------------- 8,222 15,987 33,864Split capital settlement costs paid (6,446) (25,539) (50,491)Other non-recurring costs paid (12,018) (1,329) (1,329) ----------------------------------Net cash used in operating activities 6 (10,242) (10,881) (17,956) ----------------------------------Cash flows from investing activitiesProceeds from sale of investments 28,393 29,155 42,432Proceeds from sale of property, plant and equipment 21 - 27Disposal of subsidiaries, net of cash disposed of 2,124 1,956 3,012Acquisition of subsidiaries, net of cash acquired (45,006) (5,204) (79,224)Acquisition of intangible assets (65,672) - -Acquisition of property, plant & equipment (1,993) (1,164) (2,633)Acquisition of investments (2,727) (2,257) (13,989) ----------------------------------Net cash (used in) from investing activities (84,860) 22,486 (50,375) ----------------------------------Cash flows from financing activitiesIssue of ordinary share capital 602 - 219,180Issue of preference share capital - - 76,443Issue of convertible bonds - 25,624 25,584New borrowings 33,000 - -Repayment of borrowings (2,062) (30,721) (161,575)Dividends paid (9,899) (4,724) (10,044) ----------------------------------Net cash from (used in) financing activities 21,641 (9,821) 149,588 ----------------------------------Net (decrease) increase in cash and cash equivalents (73,461) 1,784 81,257Cash and cash equivalents at 1 October 103,384 22,867 22,867Effect of exchange rate fluctuations on cash held 248 (1,125) (740) -----------------------------------Cash and cash equivalents at end of period 30,171 23,526 103,384 ----------------------------------- Notes 1. Basis of preparation The next financial statements of the Group will be prepared in accordance with International FinancialReporting Standards (IFRS) as adopted by the European Union, and to those parts of the Companies Act 1985 applicable to companies reporting under IFRS. The financial information contained in these interim financial statements has been prepared on the basis of IFRS that the directors expect to be applicable as at 30 September 2006 and comparative information has been restated accordingly. IFRS is subject to amendment and interpretation by the IASB and there is an ongoing process of review and endorsement by the European Commission. For these reasons, it is possible that the information presented here may be subject to change before its inclusion in the 2006 Report and Accounts, which will be the Group's first complete financial statements prepared in accordance with IFRS. The Group took the exemption not to restate comparative information in respect of IAS 32 and IAS 39. These standards were adopted from 1 October 2005 and the adjustments to reflect the adoption are shown in note 16. The interim results have not been audited but have been reviewed by the auditors. The comparative figures for the financial year ended 30 September 2005 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and deliveredto the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 2. Interim dividend The interim ordinary dividend of 2.0p per share will be paid on 7 June 2006 to qualifying shareholders on the register at 12 May 2006. 3. Segmental information The Group has two business segments, 1) investment management and 2) property asset management. The results for these two segments are analysed below. Property Investment asset Group management management total £'000 £'000 £'000Six months to 31 March 2006RevenuesRevenue from core business 119,203 28,060 147,263Net fair value gains on assets at fair value through income 175 - 175Revenues of private equity partnerships 16,970 - 16,970 -----------------------------------Total revenue 136,348 28,060 164,408 ----------------------------------- Operating costs of core business (86,957) (23,960) (110,917)Amortisation of acquired intangible assets (5,462) - (5,462)Integration costs (17,237) - (17,237)Operating costs of private equity partnerships (19,718) - (19,718) -----------------------------------Total operating expenses (129,374) (23,960) (153,334) ----------------------------------- Other operating income 8,238 - 8,238 Operating profit (before non-recurring gains, integration costs and 29,673 4,100 33,773amortisation of intangibles) ---------------------------------- Operating profit (after non-recurring gains, integration costs and 15,212 4,100 19,312amortisation of intangibles) ---------------------------------- Property Investment asset Group management management total £'000 £'000 £'000Six months to 31 March 2005RevenuesRevenue from core business 51,504 21,398 72,902Revenues of private equity partnerships 16,954 - 16,954 ----------------------------------Total revenue 68,458 21,398 89,856 ---------------------------------- Operating costs of core business (38,848) (19,273) (58,121)Operating costs of private equity partnerships (16,815) - (16,815) ----------------------------------Total operating expenses (55,663) (19,273) (74,936) ---------------------------------- Other operating income 4,775 - 4,775 Operating profit (before non-recurring gains and amortisation of 12,795 2,125 14,920intangibles) ---------------------------------- Operating profit (after non-recurring gains and amortisation of 17,570 2,125 19,695intangibles) ---------------------------------- Property Investment asset Group management management total £'000 £'000 £'000 Year to 30 September 2005RevenuesRevenue from core business 109,979 46,145 156,124Revenues of private equity partnerships 36,302 - 36,302 -----------------------------------Total revenue 146,281 46,145 192,426 ----------------------------------- Operating costs of core business (83,058) (40,169) (123,227)Amortisation of intangible assets (1,818) - (1,818)Release of provisions 2,600 - 2,600Operating costs of private equity partnerships (36,391) - (36,391) -----------------------------------Total operating expenses (116,849) (40,169) (157,018) ----------------------------------- Other operating income 11,047 - 11,047 Operating profit (before non-recurring gains and amortisation of 26,832 5,976 32,808intangibles) ---------------------------------- Operating profit (after non-recurring gains and amortisation of 40,479 5,976 46,455intangibles) ---------------------------------- 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005Revenue from core business includes the following performance fees in £'000 £'000 £'000each of the periods:Investment management 1,487 1,029 2,274Property asset management 1,508 214 1,388 ---------------------------------- 2,995 1,243 3,662 ---------------------------------- 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005Preliminary fees earned but not recognised £'000 £'000 £'000Investment management 1,876 1,346 1,576Property asset management 1,000 - - ---------------------------------- 2,876 1,346 1,576 ---------------------------------- These figures include only fees which have been earned unconditionally and which are not subject to clawback. 4. Other operating income The other operating income for the six months to 31 March 2006 principally consists of the gain realised on the disposal of the Group's investment in New Star Asset Management PLC which was stated at a cost of £6 million. This shareholding was sold on 11 November 2005 following the listing of this company's shares on the Alternative Investment Market. The net proceeds from the sale were £14.6 million. Other operating income in prior periods represents gains on disposal of investments and subsidiaries 5. Non-recurring integration costs On 30 September 2005 the Company completed the acquisition of certain fund management businesses of Deutsche bank AG. These businesses consisted of the London fixed interest business, the OEIC business and the equities/multi asset business. On 1 December 2005 the second and final stage of the acquisition was completed when the Philadelphia fixed income contracts were acquired. These businesses and contracts are in the process of being integrated with the existing operations of the Company, a process which is well advanced. The integration costs incurred to date amount to £17.2 million. 6. Reconciliation of profit after tax to operating cash flow 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000Profit after tax 11,787 11,626 24,711Depreciation charges 1,676 1,798 3,710Amortisation of intangible assets 5,612 784 1,134Gain on disposal of investments (8,825) (4,775) (11,052)Fair value adjustment to investments (175) - -Share of results of associated undertakings - - 12Share based element of remuneration 3,177 - 776Net finance costs 1,612 6,454 16,332Income tax expense 5,913 1,615 5,412 ---------------------------------- 20,777 17,502 41,035Increase in provisions (8,043) (27,100) (5,715)Decrease (increase) in stock 998 (47) 651Increase in trade and other receivables (15,597) (11,524) (3,808)(Increase)decrease in trade and other payables (6,794) 16,734 (36,009) ---------------------------------- (8,659) (4,435) (3,846)Interest paid (410) (6,918) (12,986)Income taxes (paid) received (1,173) 472 (1,124) ----------------------------------Net cash outflows from operating activities (10,242) (10,881) (17,956) ---------------------------------- 7. Intangible assets 31 Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000Intangible assets 227,023 32,235 171,946Goodwill 331,123 313,001 284,172 ----------------------------------- 558,146 345,236 456,118 ----------------------------------- 8. Other investments 31 Mar 2006 31 Mar 2005 30 Sept 2005Non-current assets £'000 £'000 £'000Non-current investments held by group companies 15,561 26,038 28,593Investments of private equity partnerships 36,835 30,605 37,051 ---------------------------------- 52,396 56,643 65,644 ---------------------------------- Current assetsLiquid investments of life and pensions subsidiary 19,951 - 15,743Other short-term investments 7,620 2,102 4,588 ---------------------------------- 27,571 2,102 20,331 ---------------------------------- 9. Stock 31 Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000Units and shares in managed funds 2,262 658 2,317Stock held by consolidated private equity partnerships 1,990 3,187 2,876 ---------------------------------- 4,252 3,845 5,193 ---------------------------------- 10. Reconciliation of movements in capital and reserves 6 mths to 31 6 mths to Year to Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000Profit for the period 14,999 11,864 25,553Other recognised income and expense 1,076 (2,373) (4,499)Dividends paid (9,899) (4,724) (10,044)Issue of ordinary share capital - 225,648Issue of preference share capital - - 76,443Issue of LTIP shares - - (5,896)LTIP charge 3,177 - -Adjustment to reflect adoption of IAS 32 and IAS 39 4,759 - -Share-based payments - 71 188Exercise of share options 684 - 121 -----------------------------------Net additions to shareholders' funds 14,796 4,838 307,514Opening shareholders' funds 428,590 121,076 121,076 -----------------------------------Closing shareholders' funds 443,386 125,914 428,590 ----------------------------------- 11. Interest bearing loans and borrowings 31 Mar 2006 31 Mar 2005 30 Sept 2005Non-current liabilities £'000 £'000 £'0004.5% Convertible bonds 2010 23,921 25,624 25,6805.875% Convertible bonds 2007 - 98,645 24,751Unsecured guaranteed loan notes 2003 - 2008 591 1,182 899Bank term loans - 55,125 -Loans and borrowings of private equity partnerships 5,772 7,516 6,764 ---------------------------------- 30,284 188,092 58,094 ---------------------------------- 31 Mar 2006 31 Mar 2005 30 Sept 2005Current liabilities £'000 £'000 £'0005.875% Convertible bonds 2007 22,066 - -Unsecured guaranteed loan notes 2003 - 2008 801 816 591Loans and borrowings of private equity partnerships 2,194 1,888 3,166 ---------------------------------- 25,061 2,704 3,757 ---------------------------------- 12. Earnings per shareThe calculations of earnings per share are based on the following profits and numbers of shares: Basic Diluted --------------------------------------- ------------------------------------- 6 mths to 6 mths to Year to 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 31 Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000 £'000 £'000 £'000Profit attributable to shareholders 14,999 11,864 25,553 14,999 11,864 25,553Less non-equity dividends (2,700) - (1,350) (2,700) - (1,350) --------------------------------------------------------------------------------Profit for financial period-IAS33 basis 12,299 11,864 24,203 12,299 11,864 24,203Amortisation of intangible assets 5,462 - - 5,462 - -Non-recurring gains on disposal ofinvestments, net of attributabletaxation (5,767) (4,775) (8,868) (5,767) (4,775) (8,868)Integration costs,net of attributabletaxation 12,066 - - 12,066 - - Non-recurring finance costs, netof attributable taxation 800 - 4,169 800 - 4,169Release of provision for Uplift Plan, net of attributable taxation - - (2,600) - - (2,600) ------------------------------------------------------------------------------Profit for the financial periodbefore amortisation of intangible assets, integration costs & non-recurring items 24,860 7,089 16,904 24,860 7,089 16,904 ------------------------------------------------------------------------------ 31 Mar 2006 31 Mar 2005 30 Sept 2005 Number of Number of Number of shares shares shares 000's 000's 000'sWeighted average number of sharesFor basic earnings per share 599,722 367,066 364,289Dilutive effect of convertible loan notes 24,737 - -Dilutive effect of exercisable share options 519 147 2,362 ----------------------------------For diluted earnings per share 624,978 367,213 366,651 ---------------------------------- The 6.75% non-cumulative, non voting perpetual preference shares are currently not dilutive. These shares would potentially convert into 80,523,402 ordinary shares. In addition to the share options noted as already being exercisable there are a further 9.2 million options in issue which have not yet reached the first date for exercise. The Directors believe that the Group's results are more fairly represented by a measure of earnings per share which excludes non-recurring items and amortisation of intangible assetsand therefore also present earnings per share figures stated before these items are charged (credited) to the income statement. The two measures of earnings per share can be reconciled as follows: Basic Diluted --------------------------------------- ------------------------------------- 6 mths to 6 mths to Year to 6 mths to 6 mths to Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 31 Mar 2006 31 Mar 2005 30 Sept 2005After amortisation of intangible assets & non-recurring operatingitems - IAS 33 basis 2.05p 3.23p 6.64p 1.97p 3.23p 6.60pAmortisation of intangible assets 0.91p - - 0.87p - -Non-recurring gains on disposal of investments, net of attributable taxation (0.96)p (1.30)p (2.43)p (0.92)p (1.30)p (2.42)pIntegration costs, net of attributabletaxation 2.01p - - 1.93p - -Non-recurring finance costs, net of attributable taxation 0.13p - 1.14p 0.13p - 1.14pRelease of provision for Uplift Plan, net of attributable taxation - - (0.71)p - - (0.71)p -------------------------------------------------------------------------Before amortisation of intangibleassets, integration costs & non-recurring items 4.14p 1.93p 4.64p 3.98p 1.93p 4.61p ------------------------------------------------------------------------- 13. Analysis of changes in net funds (debt) Adjustment on Other At Cash adoption of non cash Exchange At 30 Sept 2005 flow IAS 32 & 39 changes movement 31 Mar 2006 £'000 £'000 £'000 £'000 £'000 £'000Cash at bank and in hand 103,384 (73,461) - - 248 30,171 Debt due within one year (3,757) 2,062 - (1,300) - (2,995)Convertible debt due within one year - - - (22,066) - (22,066)Debt due after more than one year (7,663) - - (1,300) - (6,363)Convertible debt due after more than one year (50,431) - 4,636 21,874 - (23,921) --------------------------------------------------------------------------- (61,851) 2,062 4,636 (192) - (55,345) --------------------------------------------------------------------------- Total 41,533 71,399 4,636 (192) 248 (25,174) --------------------------------------------------------------------------- Net gearing 5.7% ---- Provision Pension for Uplift Scheme Deferred Plan Deficit Taxation £'000 £'000 £'000 14. Provisions At 1 October 2005 - non-current liabilities 4,631 - 4,078 - current liabilities 19,478 30,034 - ---------------------------------- 24,109 30,034 4,078Utilised (6,446) (2,040) -Provided in the period - 443 773Unwinding of discount 800 - -Exchange movement - - 15 ----------------------------------At 31 March 2006 18,463 28,437 4,866 ---------------------------------- The provision for Uplift Plan represents the provision made for eligible investors in Aberdeen Progressive Growth Unit Trust. The amount utilised represents payments made to investors and legal fees incurred in relation to split capital issues in the six month period to 31 March 2006. 15. Contingent liabilities On 28 June 2005, proceedings were issued against Aberdeen Asset Management PLC and Aberdeen Asset Managers Jersey Limited (together the "Aberdeen Parties") and a non - Aberdeen party, in the High Court in London by Real Estate Opportunities Limited ("REO"). In 2003, the board of REO announced, with regard to the Aberdeen Parties, that REO had terminated its management contract with immediate effect and indicated that it held the Aberdeen Parties liable for damages in respect of its losses incurred on REO's income portfolio. The Aberdeen parties do not accept the validity of REO's termination without notice. The Aberdeen Parties believe that the claim is withoutmerit and will vigorously defend the proceedings and counterclaim for their accrued fees and the fees relating to the 12 months' notice period provided for in the management contract. 16. Adoption of International Financial Reporting Standards The adjustments made in converting UK GAAP information for comparative periods into IFRS financial information are detailed in the reconciliations below. A comprehensive review of the adjustments made in respect of the six months to 31 March 2005 and the year to 30 September 2005can be found in the Group's IFRS Statement dated 28 March 2006 and can be accessed on the Group's website at www.aberdeen-asset.com. A summary of the Group's accounting policies under IFRS are also detailed in the IFRS Statement. Summary reconciliation of changes in equity, net of tax, as at 31 March 2005 and 30 September 2005 31 Mar 2005 30 Sept 2005 £'000 £'000UK GAAP equity (as previously reported) 130,952 419,849 Dividends 4,960 10,850Reversal of goodwill amortisation 9,306 19,510Share-based payments 84 111Revenue (876) (706)Employee benefits (16,937) (19,317)Consolidation of private equity partnerships (1,575) (1,707) ---------------------IFRS - increase in equity (5,038) 8,741 --------------------- IFRS equity 125,914 428,590 --------------------- Summary reconciliation of changes in profit after tax for the six months ended 31 March 2005 and the yearended 30 September 2005 6 months ended Year ended 31 Mar 2005 30 Sept 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 partnerships (377) (1,067) -------------------IFRS - increase in profit 8,027 18,029 ------------------- IFRS profit after tax 11,626 24,711 ------------------- Summary reconciliation of changes in underlying profit before tax for the sixmonths ended 31 March 2005 and the year ended 30 September 2005 6 months ended Year ended 31 Mar 2005 30 Sept 2005 £'000 £'000UK GAAP underlying profit before 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 partnerships (71) (194) ------------------IFRS - increase in profit (1,510) (1,025) ------------------ IFRS underlying profit before 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). Effects of adoption of IAS 32 and IAS 39 at 1 October 2005 The Group took the exemption not to restate its comparative information in respect of IAS 32 and IAS 39. These standards were adopted from 1 October 2005. The following note explains the adjustments made at 1 October 2005 to the Group's balance sheet at 30 September 2005 to reflect the adoption of IAS 32 and IAS 39. IFRS pre Movement on IFRS post adoption of adoption of adoption of IAS 32 and IAS 32 and IAS 32 and IAS 39 IAS 39 IAS 39 £'000 £'000 £'000Interest bearing loans and borrowings 58,094 (4,636) 53,458Current tax payable 6,976 36 7,012Share premium 261,040 4,516 265,556Retained earnings (120,757) 84 (120,673) ---------------------------------- 205,353 - 205,353 ---------------------------------- Movement in fair value of available for sale investments 20,331 159 20,490 ---------------------------------- Equity attributable to equity holders of the parent 428,590 4,759 433,349 ---------------------------------- The adjustment to interest bearing loans and borrowings represents the IAS 32 adjustment to the convertible bonds to reflect the liability and equity nature of the instruments. The adjustmentto available for sale investments represents the movement in fair value on adoption of IAS 32. 17. Copies of this statement are being sent to all shareholders. Copies can be obtained from the Company's registered office, 10 Queen's Terrace, Aberdeen, AB10 1YG. Independent Review Report by KPMG Audit Plc to Aberdeen Asset Management PLC Introduction We have been engaged by the company to review the financial information for the six months to 31 March 2006 which comprises the Group Income Statement, the Group Statement of Recognised Income and Expense, the Group Balance Sheet, the Summary Group Cash Flow Statement and the related notes and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting the requirements of the Listing Rules of the Financial Services Authority.Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of and has been approved by the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual financial statements except where any changes, and the reasons for them, are disclosed. As disclosed in note 1 to the financial information, the next annual financial statements of the group will be prepared in accordance with IFRSs adopted for use by the European Union. The accounting policies that have been adopted in preparing the financial information are consistent with those that the directors currently intend to use in the next annual financial statements. There is, however, a possibility that the directors may determine that some changes to these policies are necessary when preparing the full annual financial statements for the first time in accordance with those IFRSs adopted for use by the European Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical proceduresto the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not expressan audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 31 March 2006. KPMG Audit PlcChartered AccountantsAberdeen2 May 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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