6th May 2008 07:03
Aberdeen Asset Management PLC06 May 2008 Aberdeen Asset Management PLC Interim Results for six months to 31 March 2008 Operational highlights • Continued growth in revenues, underlying profits, cash flows and Assets under Management in challenging markets• Group Assets under Management increase 12.6% to £107.3 billion since start of year• Annualised cost reductions of more that £15 million identified• Strong balance sheet with debt at 23% of equity• Acquisition of DEGI completed• Acquisition of Goodman Property Investors announced today for an initial £89 million (see separate announcement) Finaincial highlights March March 2008 2007Revenue £201.5m £162.5m ---------------- Pre-tax profit (loss) Before exceptional items and amortisation of intangibles £47.3m £43.6mAfter exceptional items and amortisation of intangibles £32.5m (£21.9m) Diluted earnings (loss) per share Before exceptional items and amortisation of intangibles 4.71p 5.07pAfter exceptional items and amortisation of intangibles 3.07p (2.73p) Total dividend per share 2.8p 2.6pNet new business - funded £0.5bn £4.1bn - awarded but not funded at period end £2.0bn £3.5bn Assets under Management at the period end £107.3bn £80.4bn Commenting on the results, Martin Gilbert, Chief Executive of Aberdeen AssetManagement said: "We are extremely pleased with our progress in the past halfyear in difficult market conditions. These results are a tribute to thetremendous resilience of our Group. The combination of our global scale, ourbroad spread of operations and asset classes, our strong balance sheet and mostof all our skilled people is enabling us to build our asset base, cash flow andprofitability. We are never complacent however and are looking to improve our efficiency and reduce group costs by at least £15 million over the next year. This will put us in an even better position to seize some of the opportunitiesthat these markets are creating and build value over the long-term. Today'sacquisition of Goodman Property Investors is an excellent example of theopportunities in front of us." For further information, please contact: Aberdeen Asset Management PLCMartin Gilbert, Chief Executive 020 7463 6000 Maitland 020 7379 5151Neil Bennett 07900 000 777Charlotte Walsh 07813 889 660Victoria Trench 07799 132 634 Assets under Management March September March 2008 2007 2007 £m £m £mBy Asset Class Fixed Income 51,513 48,443 38,926Equities 38,600 37,515 33,795Property 17,175 9,354 7,693 ----------------------------- 107,288 95,312 80,414 -----------------------------By Mandate Type Fixed Income 47,963 44,564 38,295Equities 35,357 33,975 27,841Property 17,175 9,354 6,289Multi Asset 6,552 7,164 7,731Private Equity 241 255 258 ----------------------------- 107,288 95,312 80,414 ----------------------------- Chairman's statement The six month period to 31 March 2008 has seen the Group make satisfactoryprogress against the backdrop of challenging market conditions. Whilst thevolatility in global equity, bond and property markets has impacted revenues inthe short term, we are conscious that such markets also bring opportunities. Wehave completed two acquisitions during the period and we are announcing a thirdtoday, each of which we expect to add value for our shareholders. The Group achieved profit before taxation of £32.5 million (2007: loss of £21.9million). Underlying profit, stated before exceptional items and amortisation of intangible assets, was £47.3 million (2007: £43.6 million). This representsunderlying earnings per share, on a diluted basis, of 4.71p (2007: 5.07p), thisfigure having been effected by the issue of US$ 400 million 7.9% perpetualcapital securities in 2007, which considerably strengthened the balance sheet.The Board has decided to pay an interim dividend of 2.8 pence per share, anincrease of 8% on the equivalent payment last year. This interim dividend willbe paid on 19 June 2008 to shareholders on the register at 16 May 2008. Although higher in absolute terms, revenue growth has been hampered by theeffects of weaker global markets and this is reflected in reduced operatingmargins for the period. The nature of asset management is such that revenueswill always be dependent on markets and we focus our attention on the elementswe can influence, namely operating costs and new business generation. We have a constant focus on operating costs and have been working on achievingfurther efficiencies following integration of recent acquisitions. Whilst theseactions will have some limited effect in the second half of the currentfinancial year, the principal benefit will be seen in the next financial year,with annualised cost reductions of over £15 million already identified. We willcontinue to ensure that the Group is fully resourced to enable us to takeadvantage of further growth opportunities that may emerge, but there is no doubt that further cost reductions could be implemented if the downturn in markets is prolonged. Cash flow generation from operating activities of £23.7 million for the periodwas some 63% higher than for the same period in 2007. This positive cash flow,supplemented by additional borrowings drawn, has been reinvested in the twoacquisitions we have completed during the period and ongoing operational cashflow will provide the basis and flexibility for future growth. Accounting rules have required us to book a post-tax impairment charge of £4.7million on seed capital investments, which we regard as an exceptional,non-recurring item; indeed, we have every expectation that we will be in aposition to record an exceptional gain of similar magnitude during the secondhalf of this financial year. We have also recorded a post-tax provision of £1.4million for the estimated retrospective impact of the VAT case brought againstHMRC by a UK investment trust. We have continued to attract healthy levels of new business inflows, frominvestors around the world and across a range of asset classes although,unsurprisingly in more volatile markets, outflows have increased somewhat. Gross inflows of £10.8 billion were generated during the period and these areincluded in assets under management ("AuM") at 31 March 2008. A further £2.0billion of mandates were awarded or committed before the period end but had notbeen funded by that date. Gross outflows, which include partial withdrawals bycontinuing clients, totalled £10.3 billion. Open end fund flows, which hadexperienced a difficult first quarter, recovered somewhat in the second quarterand good progress has been achieved in integrating the US mutual fund mandatespurchased from Nationwide Financial Services in October 2007. The composition of the net new business inflows is summarised in the following table. Funded Yet to fund Total £m £m £mFixed income: Gross inflows 4,646 449 5,095Outflows (4,655) - (4,655) --------------------------------Net flows (9) 449 440 --------------------------------Equities: Gross inflows 4,495 582 5,077Outflows: (5,035) - (5,035) --------------------------------Net flows (540) 582 42 --------------------------------Property: Gross inflows 1,362 890 2,252Outflows (393) - (393) ------------------------------Net flows 969 890 1,859 ------------------------------Multi asset: Gross inflows 333 50 383Outflows (295) - (295) ------------------------------Net flows 38 50 88 ------------------------------Group totals: Gross inflows 10,836 1,971 12,807Outflows (10,378) - (10,378) ---------------------------------Net flows 458 1,971 2,429 --------------------------------- Net equity flows had a difficult first quarter, as reflected in the figurespublished in the Interim Management Statement in January, but have recoveredsomewhat in the second quarter, supported by the consistent performancedelivered by our investment process. Fixed income flows were relatively flat for the first half year but there is a reasonable inflow to come from mandatesalready awarded but not yet funded at 31 March 2008. The property division has continued to win new investment commitments for itsrange of funds and the addition of the DEGI fund range has further increased theproportion of property AuM represented by funds. We regard this as an importantdevelopment in this division, as the income from funds tends to be morepredictable than for institutional segregated mandates, on which income can bepartially dependent on the timing of transactions. The proposed acquisition ofGoodman Property Investors, which we also announce today, will add a critical UKdimension to our property platform going forward. The Group's AuM increased by 12.6% in the period, to stand at £107.3 billion at31 March 2008. This increase arose as follows: £bn %At 30 September 2007 95.3 Net new business funded in the period 0.5 +0.5Net movements from corporate acquisitions 9.0 +9.5Restructuring of portfolio by major client 2.6 +2.7Market appreciation & performance (0.1) -0.1 -----------------At 31 March 2008 107.3 +12.6 ----------------- The balance sheet remains strong, bolstered by the issue of perpetual capitalsecurities in 2007 and the conversion of £23.6 million of the 4.5% Convertiblebonds 2010 into ordinary shares in December 2007. Net gearing was increased atthe end of March to pay for the DEGI acquisition but, at 23% of equity, remainsat a reasonable level. We expect market conditions to remain challenging during the second half of thefinancial year. However, it is a normal consequence of the asset managementcycle that acquisition opportunities tend to increase at times when organicgrowth is slower and we believe we are well positioned to take advantage ofsuitable opportunities that may emerge. C L A Irby 6 May 2008 Group Income Statement For the six months to 31 March 2008 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 Notes £'000 £'000 £'000 Revenue 2 201,474 162,486 347,843 ------------------------------ Operating costs (153,898) (119,439) (251,299)Exceptional costs 3 (9,625) (18,936) (20,301)Amortisation of intangible assets (5,192) (4,500) (9,404)Exceptional settlement costs 4 - (50,000) (46,776) ------------------------------Operating expenses (168,715) (192,875) (327,780) ------------------------------ Exceptional gains on investments - 7,892 8,667Gains on investments and other income 372 3,482 3,440 -----------------------------Other operating income 5 372 11,374 12,107 ----------------------------- Operating profit before: 47,948 46,529 99,984Exceptional gains and charges (9,625) (61,044) (58,410)Amortisation of intangible assets (5,192) (4,500) (9,404) -----------------------------Operating profit (loss) 33,131 (19,015) 32,170 ----------------------------- Finance revenue 3,199 5,890 14,787Finance costs (3,808) (8,805) (20,506)Exceptional finance costs - - (2,778) -----------------------------Net finance costs (609) (2,915) (8,497) ----------------------------- Profit before exceptional items, amortisation and taxation 47,339 43,614 94,265Exceptional items and amortisation before taxation (14,817) (65,544) (70,592) -----------------------------Profit (loss) before taxation 32,522 (21,930) 23,673 ----------------------------- Tax expense before exceptional items and amortisation (8,276) (8,006) (11,387)Tax credit on exceptional items 3,233 16,213 18,357 ----------------------------Tax (expense) credit (5,043) 8,207 6,970 ---------------------------- Profit after taxation before exceptional items 39,063 35,608 82,878Exceptional items and amortisation after taxation (11,584) (49,331) (52,235) -----------------------------Profit (loss) for the period 27,479 (13,723) 30,643 ----------------------------- Attributable to equity holders of the parent: Ordinary shareholders 21,992 (13,723) 26,957Other equity holders 5,487 - 3,686 -----------------------------Earnings (loss) per share Basic 8 3.21p (2.73p) 3.61pDiluted 8 3.07p (2.73p) 3.50p -----------------------------Underlying earnings per share Basic 8 5.14p 5.47p 12.29pDiluted 8 4.71p 5.07p 11.09p ---------------------------- Dividend per share 7 2.8p 2.6p 5.5p ---------------------------- Group Statement of Recognised Income and Expense For the six months to 31 March 2008 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 Notes £'000 £'000 £'000 Net actuarial gain on defined benefit pension schemes - - 10,527Translation of foreign currency net investments 4,256 183 1,823Movement in fair value of available for sale investments (71) (6,930) (4,054)Tax on items taken directly to equity (236) - (5,772) -----------------------------Net income (expense) recognised directly in equity 14 3,949 (6,747) 2,524Profit (loss) for the period 27,479 (13,723) 30,643 -----------------------------Total recognised income and expense for the period 31,428 (20,470) 33,167 ----------------------------- Attributable to equity holders of the parent Ordinary shareholders 25,941 (20,470) 29,481Other equity holders 5,487 - 3,686 ----------------------------- Group Balance Sheet As at 31 March 2008 31 Mar 31 Mar 30 Sept 2008 2007 2007 Notes £'000 £'000 £'000 Assets Non-current assets Intangible assets 9 705,340 547,168 619,687Property, plant and equipment 24,712 11,246 13,833Other investments 10 41,072 19,343 34,898Deferred tax assets 23,283 28,424 21,155Trade and other receivables 13,982 3,302 4,485 ------------------------------Total non-current assets 808,389 609,483 694,058 ------------------------------Current assets Stock of units and shares 11 520 679 537Financial investments 13 1,213,171 1,328,924 1,298,402Trade and other receivables 163,851 152,659 178,173Other investments 10 41,025 26,391 23,508Cash and cash equivalents 53,456 56,937 80,680 --------------------------------Total current assets 1,472,023 1,565,590 1,581,300 --------------------------------Total assets 2,280,412 2,175,073 2,275,358 --------------------------------Equity Called up share capital 73,111 70,812 70,888Share premium account 307,545 287,226 287,565Other reserves 226,468 217,767 222,283Retained loss (151,263) (156,069) (158,636) ------------------------------Total equity attributable to ordinary equity holders of the parent 14 455,861 419,736 422,100 ------------------------------Attributable to other equity holders - perpetual capital securities 197,662 - 197,814 ------------------------------Total equity 653,523 419,736 619,914 ------------------------------Liabilities Non-current liabilities Interest bearing loans and borrowings 15 175,468 121,936 85,334Other creditors 1,912 1,843 1,548Provisions 500 500 500Pension deficit 17 16,450 30,737 18,269Deferred tax liabilities 34,279 25,565 30,108 ------------------------------Total non-current liabilities 228,609 180,581 135,759 ------------------------------Current liabilities Investment contract liabilities 13 1,213,171 1,328,924 1,298,402Interest bearing loans and borrowings 15 28,448 59,899 48,320Trade and other payables 139,402 162,744 156,123Employee benefits - 1,631 -Provisions 2,376 1,775 -Deferred income 1,780 2,351 2,276Current tax payable 13,103 17,432 14,564 --------------------------------Total current liabilities 1,398,280 1,574,756 1,519,685 --------------------------------Total liabilities 1,626,889 1,755,337 1,655,444 --------------------------------Total equity and liabilities 2,280,412 2,175,073 2,275,358 -------------------------------- Summary Group Cash Flow Statement For the six months to 31 March 2008 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 Notes £'000 £'000 £'000 Core cashflow from operating activities 21,210 19,269 33,423Effects of short-term timing differences on unit trust settlements 2,530 (4,791) 3,728 ----------------------------- 23,740 14,478 37,151Split capital settlement costs paid - (20,934) (46,776)Other exceptional integration and settlement costs paid (1,125) (17,267) (20,301) -----------------------------Net cash generated from (used in) operating activities 6 22,615 (23,723) (29,926) -----------------------------Cash flows from investing activities Proceeds from sale of investments 5,245 21,646 33,539Proceeds from sale of property, plant and equipment - - 22Disposal of subsidiaries, net of cash disposed of - 1,500 1,500Acquisition of subsidiaries, net of cash acquired (87,161) - (50,009)Acquisition of intangible assets (467) (960) (15,356)Acquisition of property, plant & equipment (1,231) (3,091) (6,367)Acquisition of investments (34,179) (16,058) (28,106) ------------------------------Net cash from (used in) investing activities (117,793) 3,037 (64,777) ------------------------------Cash flows from financing activities Issue of ordinary share capital 161 1,156 1,571Issue of perpetual securities - - 196,465Purchase of own shares - - (29,473)New borrowings 90,559 68,487 22,947Repayment of convertible bonds - (24,997) -Repayment of borrowings - (3) (25,683)Dividends paid (26,266) (14,979) (39,409) -----------------------------Net cash from financing activities 64,454 29,664 126,418 -----------------------------Net (decrease) increase in cash and cash equivalents (30,724) 8,978 31,715Cash and cash equivalents at 1 October 80,680 48,120 48,120Effect of exchange rate fluctuations on cash held 3,500 (161) 845 -----------------------------Cash and cash equivalents at end of period 53,456 56,937 80,680 ----------------------------- Notes 1. Basis of preparation This condensed set of financial statements has been prepared in accordance withIAS 34 Interim Financial Reporting as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year to 30 September 2007 except for the following changes. On 1 October 2007 the Group adopted IFRS 7 - Financial Instruments: Disclosuresand IAS 1, Amendments to capital disclosures. As this interim report contains only condensed financial information, only disclosures of events or transactions that are material to understanding the current interim period have been disclosed. The full IFRS 7 disclosures, including sensitivity to market risk and capital disclosures required by the amendment to IAS 1 will begiven in the annual financial statements. The preparation of the Interim Report requires management to make estimates andassumptions that affect the reported income and expense, assets and liabilitiesand disclosure of contingencies at the date of the Interim Report. Although these estimates and assumptions are based on management's best judgement at thedate of the Interim Report, actual results may differ from these estimates. The interim results have not been audited but have been reviewed by the auditors. The comparative figures for the financial year ended 30 September 2007 are not the company's statutory accounts for that financial year. Those statutory accounts have been reported on by the company's auditors and delivered to 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. Segmental information The primary business segments, based on the Group's management and reportingstructure, are the investment management division and the property management division. The results, analysed between these two business segments, are shown below. Property Investment asset Group management management totalSix months to 31 March 2008 £'000 £'000 £'000 Turnover 157,476 45,370 202,846Net fair value losses on assets at fair value through income (1,372) - (1,372) ------------------------------Revenue 156,104 45,370 201,474 ------------------------------ Operating costs (113,676) (40,222) (153,898)Exceptional costs (note 3) (3,125) (6,500) (9,625)Amortisation of intangible assets (5,192 - (5,192) ------------------------------Operating expenses (121,993) (46,722) (168,715) ------------------------------ Other operating income 372 - 372 -------------------------- Operating profit (before exceptional items and amortisation of intangibles) 42,800 5,148 47,948 ----------------------------- Operating profit (after exceptional items and amortisation of intangibles) 34,483 (1,352) 33,131 ----------------------------- Property Investment asset Group management management totalSix months to 31 March 2007 £'000 £'000 £'000 Turnover 128,926 32,867 161,793Net fair value gains on assets at fair value through income 693 - 693 ------------------------------Revenue 129,619 32,867 162,486 ------------------------------ Operating costs (93,126) (26,313) (119,439)Exceptional costs (note 3) (18,936) - (18,936)Amortisation of intangible assets (4,500) - (4,500)Exceptional settlement costs (note 4) (50,000) - (50,000) ------------------------------Operating expenses (166,562) (26,313) (192,875) ------------------------------ Exceptional gains on investments 7,892 - 7,892Gains on investments and other income 3,482 - 3,482 -----------------------------Other operating income 11,374 - 11,374 ----------------------------- Operating profit (before exceptional items and amortisation of intangibles) 39,975 6,554 46,529 ----------------------------- Operating (loss) profit (after exceptional items and amortisation of intangibles) (25,569) 6,554 (19,015) ----------------------------- Property Investment asset Group management management totalYear to 30 September 2007 £'000 £'000 £'000 Turnover 277,958 69,016 346,974Net fair value gains on assets at fair value through income 869 - 869 ------------------------------Revenue 278,827 69,016 347,843 ------------------------------ Operating costs (196,679) (54,620) (251,299)Exceptional costs (note 3) (20,301) - (20,301)Amortisation of intangible assets (excluding software) (9,285) (119) (9,404)Exceptional settlement costs (note 4) (46,776) - (46,776) ------------------------------Operating expenses (273,041) (54,739) (327,780) ------------------------------ Exceptional gains on investments 8,667 - 8,667Gains on investments and other income 3,440 - 3,440 -----------------------------Other operating income 12,107 - 12,107 ----------------------------- Operating profit (before exceptional items and amortisation of intangibles) 85,588 14,396 99,984 ----------------------------- Operating profit (after exceptional items and amortisation of intangibles) 17,893 14,277 32,170 ----------------------------- 3. Exceptional costs Exceptional costs incurred in the six months to 31 March 2008 comprise rationalisation and redundancy costs relating to acquisitions completed overthe last 12 months and impairment of a seed capital investment. The exceptional costs incurred in prior periods relate to the acquisition and integration of certain fund management businesses of Deutsche Bank AG inlate 2005. In the period since acquisition substantial integration costs were incurred in combining these acquired businesses with the existing businesses of the Group. These integration costs comprised charges in respect of a transitional services agreement with the vendor to ensure that both people and systems were transferred in a controlled manner; set up costs in respect of the migration of the back office data and systems to theGroup's third party administrator; and costs of retaining duplicate staffingfor a transitional period to ensure a smooth migration of data. The exceptional provision for VAT expense on investment trusts represents VAT which may be repayable to the Group's UK investment trust clients following conclusion of an action brought against HMRC by a UK investment trust. The amount of this provision is an estimate of the costs which may arise in respect of historic periods in excess of the amount to be recoveredfrom HMRC. The exceptional impairment provision arose from the decision to discontinue maketing of a proposed property fund in order to focus attention on completion and integration of the DEGI acquisition. As a result of this decision, the fair value of this fund was considered to be impaired because of the accelerated recognition of future costs arising from the portfolio. An exceptional gain of a similar value is expected to arise in the second half of the financial year. 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Transitional service costs from vendor - 10,245 10,295Set-up costs in respect of back office data and systems - 2,401 3,396Duplicate staff costs, redundancy costs and third party integration costs 1,125 6,290 6,610 ---------------------------- 1,125 18,936 20,301 ---------------------------- VAT provision on investment trusts 2,000 - - ----------------------------Exceptional impairment provision on property seed capital 6,500 - - ---------------------------- Total exceptional costs 9,625 18,936 20,301 ---------------------------- 4. Exceptional settlement costs 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Recognised within operating profit Settlement of legal action initiated by Real Estate Opportunities - 57,500 54,276Less payment made in 2006 to defend proceedings by Real Estate Opportunities - (7,500) (7,500) --------------------------- - 50,000 46,776 --------------------------- On 16 March 2007 the Company announced that it had reached agreement with Real Estate Opportunities Limited ('REO') to settle the Company's part in thelegal action initiated in 2005 by REO against the Company and another party. The Company made no admission whatsoever of any liability or acceptance of the validity of REO's claim, but the Board recognised that it was in the interests of the Group and its shareholders to conclude this matter and to end the distraction it was causing to the Company. The net cost to the Group,including the Group's legal costs and after return of the defence payment of £7,500,000, was £46,776,000. 5. Other operating income Other operating income for the six months to 31 March 2008 comprises gains onthe disposal of short term investments. Other operating income for the six months to 31 March 2007 comprises an exceptional gain of £7.9 million following the receipt of contingent deferredconsideration in respect of the sale, in January 2005, of the Group's investment in Lombard International Assurance SA. The gain includes the transfer of £7 million from the available for sale reserve. The balance of other operating income comprise gains on the disposal of private equity investments. 6. Reconciliation of profit (loss) after tax to operating cash flow 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Profit (loss) after tax 27,479 (13,723) 30,643 Depreciation charge 1,737 1,196 2,525Amortisation of intangible assets 5,192 4,858 9,404Fair value adjustment to investments 1,372 (693) (869)Impairment of investments 6,500 - -Gain on disposal of investments and other assets (372) (3,482) (12,170)Share based element of remuneration 4,068 3,934 7,498Net finance costs 609 2,915 8,497Income tax expense (credit) 5,043 (8,207) (6,970) ----------------------------- 51,628 (13,202) 38,558Decrease in provisions (151) (1,852) (4,981)Decrease (increase) in stock 17 (415) (273)Decrease (increase) in trade and other receivables 20,241 (21,010) (24,711)Decrease (increase) in short-term loans to property funds 11,767 - (24,027)(Decrease) increase in trade and other payables (51,527) 20,904 20 -----------------------------Net cash inflow (outflow) from operating activities 31,975 (15,575) (15,414)Net finance costs paid (647) (2,895) (4,807)Corporation tax paid (8,713) (5,253) (9,705) -----------------------------Net cash generated from (used in) operating activities 22,615 (23,723) (29,926) ----------------------------- 7. Dividends 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Dividends on perpetual preference shares:Dividend paid - - 5,395 ----------------------------Coupon payments in respect of perpetual capital securities (net of tax) Coupon payments made during the period 5,453 - 2,742 ---------------------------- Ordinary dividends Declared and paid during the period Dividends paid on ordinary shares: Final dividend for 2007 - 2.9p (2006 - 2.4p) 18,451 14,979 14,978Interim dividend for 2007 - 2.6p - - 16,294 ----------------------------- 18,451 14,979 31,272 -----------------------------Total dividends and coupon payments paid during the period 23,904 14,979 39,409 ----------------------------- The interim ordinary dividend of 2.8p per share will be paid on 19 June 2008 to qualifying shareholders on the register at 16 May 2008. 8 Earnings per share The calculations of earnings per share are based on the following profits and numbers of shares. Basic earnings per share amounts are calculated by dividing profit for the period attributable to ordinary shareholders by the weighted average number ofordinary shares outstanding during the period. Diluted earnings per share amounts are calculated by dividing the profit forthe period attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on the conversion of all the potentially dilutive shares into ordinary shares. Underlying earnings per share figures are calculated by adjusting the profit toexclude exceptional items and amortisation of intangible assets. The purpose of providing the underlying earnings per share is to allow readers of the accounts to clearly consider trends without the impact of exceptional and non-cash items. IAS 33 Underlying 6 mths to 6 mths to Year to 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2008 2007 2007 2008 2007 2007 £'000 £'000 £'000 £'000 £'000 £'000 Basic earnings per share Profit (loss) for the financial period 27,479 (13,723) 30,643 27,479 (13,723) 30,643 Dividends on convertible preference share units (2,697) (2,697) (5,395) ( 2,697) (2,697) (5,395)Coupon payments in respect of perpetual capital securities (net of tax) (5,487) - (3,686) (5,487) - (3,686) ----------------------------------------------------Profit (loss) for the financial period, attributable to ordinary shareholders 19,295 (16,420) 21,562 19,295 (16,420) 21,562 -------------------------Amortisation of intangible assets net of attributable taxation 4,654 4,500 9,054Exceptional gains on disposal of investments, net of attributable taxation - (7,892) (6,067)Exceptional integration costs, net of attributable taxation 810 14,482 14,211Exceptional VAT expense on investment trusts, net of attributable taxation 1,440 - -Exceptional impairment costs, net of attributable taxation 4,680 - -Exceptional settlement costs, net of attributable taxation - 38,241 32,743Non-recurring finance costs, net of attributable taxation - - 1,945 -----------------------Profit for the financial period - underlying basis 30,879 32,911 73,448 ------------------------Weighted average number of shares 600,433 601,740 597,388 600,433 601,740 597,388 ------------------------------------------------------Basic earnings (loss) per share 3.21p (2.73p) 3.61p 5.14p 5.47p 12.29p ------------------------------------------------------ IAS 33 Underlying 6 mths to 6 mths to Year to 6 mths 6 mths to Year to 31 Mar 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2008 2007 2007 2008 2007 2007 £'000 £'000 £'000 £'000 £'000 £'000 Diluted earnings pershare Profit (loss) for calculation of basic earnings per share, as above 19,295 (16,420) 21,562 30,879 32,911 73,448Add: interest on 2010 convertible bonds, net of attributable taxation N/A N/A N/A 101 419 1,170Add: dividend on convertible preference share units N/A N/A N/A 2,697 2,697 5,395 -----------------------------------------------------Profit (loss) for calculation of diluted earnings per share 19,295 (16,420) 21,562 33,677 36,027 80,013 -----------------------------------------------------Weighted average number of shares For basic earnings per share 600,433 601,740 597,388 600,433 601,740 597,388Dilutive effect of 2010 convertible bonds N/A N/A N/A 2,793 24,737 24,737Dilutive effect of convertible preference share units N/A N/A N/A 82,395 80,733 81,554Dilutive effect of LTIP awards 26,217 - 14,629 26,217 - 14,629Dilutive effect of exercisable share options 2,730 N/A 3,291 2,730 3,762 3,291 ------------------------------------------------------ 629,380 601,740 615,308 714,568 710,972 721,599 ------------------------------------------------------Diluted earnings (loss) per share 3.07p (2.73p) 3.50p 4.71p 5.07p 11.09p --------------------------------------------------- 9. Intangible assets 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Intangible assets 197,287 147,307 185,718Goodwill 508,053 399,861 433,969 ------------------------------ 705,340 547,168 619,687 ------------------------------ 10. Other investments 31 Mar 31 Mar 30 Sep 2008 2007 2007 £'000 £'000 £'000 Non-current assetsNon-current investments 41,072 19,343 34,898 ----------------------------- Current assets Liquid investments of life and pensions subsidiary 13,039 12,841 14,530Listed equities - held for trading 27,986 13,550 8,978 ----------------------------- 41,025 26,391 23,508 ----------------------------- 11. Stock of units and shares 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Units and shares in managed funds 520 679 537 -------------------------- 12. AcquisitionsOn 1 October 2007 the Group completed the acquisition of the US equity assetmanagement business of Nationwide Financial Services Inc. The acquisition includes a broad cross-section of US equity strategies in sub-advisory mandates for 30 mutual funds and variable insurance trusts amounting to £3.4billion in assets under management. The acquisition was completed for a cashconsideration of US$32 million. On 27 March 2008 the Group's wholly owned subsidiary, Aberdeen Property Investors Holding AB, completed the acquisition of 100% of the ordinary share capital of DEGI Deutsche Gesellschaft fur Immobilienfonds mbH ( 'DEGI')from Dresdner Bank AG. The economic benefit of the acquisition was effective from 1 January 2008 and the Group were governing the operating andfinancial policies of DEGI from that date. The Group have therefore taken 1 January 2008 as the date of acquisition. DEGI has approximately €6.4 billion(£5.1 billion) of assets under management in a number of property funds offering German, European or global commercial property exposure. The acquisition was completed for a cash consideration of €110 million (£87.4 million). Provisional values for the net assets and liabilities of the acquired businesses at the date of the acquisition are set out in the table below. The Group will engage external valuation specialists to advise on the correct allocation of the purchase price between goodwill, intangible assets(which mainly relate to management contracts) and tangible assets. Business acquired from Acquisition Nationwide Financial Services Inc. of DEGI At date of Fair value Adjusted fair At date of acquisition adjustments value acquisition £'000 £'000 £'000 £'000 Intangible assets - 15,254 15,254 66Property, plant & equipment 965 - 965 10,420Trade and other receivables - - - 27,392Cash and cash equivalents - - - 12,858Trade and other payables - - - (31,783)Deferred tax on intangible assets - (4,271) (4,271) - ----------------------------------------------Net assets of acquired business 965 10,983 11,948 18,953Goodwill - 4,271 4,271 69,173 ---------------------------------------------- 965 15,254 16,219 88,126 ---------------------------------------------- Discharged by: Cash consideration 2,889 87,398Expenses of acquisition 242 728Deferred consideration 13,088 - --------------------- 16,219 88,126 --------------------- The businesses acquired during the period are being integrated with the Group'sexisting investment management and property asset management businesses therefore the results and cashflows can no longer be separately identified. 13. Other financial investments / investment contract liabilities These balances represent unit linked business carried out by the Group's life and pensions subsidiary. The assets represent investments held to meet contracted liabilities. 14. Statement of changes in equity 6 mths to 6 mths to Year to 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Profit (loss) for the period 27,479 (13,723) 30,643Other recognised income and expense 3,949 (6,747) 2,524Dividends paid (23,904) (14,979) (39,409)Issue of ordinary share capital 22,203 1,156 1,571Share based payments 4,068 3,934 7,498Movement on coupon outstanding on perpetual capital securities (34) - (1,349)Purchase of own shares - - (29,473) -----------------------------Net additions to (deductions from) shareholders' funds 33,761 (30,359) (27,995)Opening shareholders' funds 422,100 450,095 450,095 ------------------------------Closing shareholders' funds 455,861 419,736 422,100 ------------------------------ In December 2007 the holders of £23.6 million 4.5% Convertible bonds 2010 opted toconvert their holdings into ordinary shares which resulted in the issueof 21.9 million ordinary shares. A further 297,500 ordinary shares were issued during the period in respect of the exercise of share options. 15. Interest bearing loans and borrowings 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Non-current liabilitiesAmount drawn under bank revolvingcredit facility 110,431 34,600 -7.2% Subordinated notes 2016 62,210 63,031 60,6434.5% Convertible bonds 2010 2,827 24,305 24,691 ------------------------------ 175,468 121,936 85,334 ------------------------------Current liabilities Amount drawn under bank revolving credit facility 28,075 58,887 47,947Unsecured guaranteed loan notes 2003 - 2008 373 1,012 373 ----------------------------- 28,448 59,899 48,320 ----------------------------- 16. Analysis of changes in net debt At Other At 1 Oct Cash non cash Exchange 31 Mar 2007 Flow changes Movement 2008 £'000 £'000 £'000 £'000 £'000 Cash at bank and in hand 80,680 (30,724) - 3,500 53,456 --------------------------------------------- Debt due within one year (48,320) - 19,872 - (28,448)Debt due after more than one year (60,643) (90,559) (19,899) (1,540)(172,641)Convertible debt due after more than one year (24,691) - 21,864 - (2,827) ---------------------------------------------- (133,654) (90,559) 21,837 (1,540)(203,916) ---------------------------------------------- Total (52,974) (121,283) 21,837 1,960 (150,460) ---------------------------------------------- The non-cash change in the convertible debt due after more than one year relates tothe conversion of convertible debt into ordinary shares. The issue of share capital in respect of the conversion is shown in note 14. 17. Pension deficit The Group's principal form of pension provision is by way of three defined contribution schemes operated world-wide. The Group also operates three legacydefined schemes in the UK: the CGA Staff Pension Fund, the Murray Johnstone Limited Retirement Benefits Plan and the Edinburgh Fund Managers Group plc Retirement and Death Benefits Plan. All three defined benefit schemes are closed to new membership and to future service accrual. The actuarial valuations of the defined benefit pension schemes referred to above were updated to 30 September 2007 by the respective independent actuariesusing the projected unit method. Contributions to the schemes since 30 September 2007 have been set off against the scheme deficits. 31 Mar 31 Mar 30 Sept 2008 2007 2007 £'000 £'000 £'000 Combined pension scheme deficits 16,450 30,737 18,269 ----------------------------- 18. Contingent Liabilities An action against HM Revenue & Customs ('HMRC') brought jointly by the Association of Investment Companies ('AIC') and a UK investment trust in early 2004 sought to establish that charges for investment management services provided to UK investment trusts should be exempt from VAT, rather than being subject to the standard rate as required by UK VAT legislation. Following a decision of the European Court of Justice on certain questions referred by the UK VAT Tribunal, HMRC announced on 26 October 2007 that it would no longer seek to defend this case. A number of the Group's UK subsidiaries, in common with other UK asset managers, now face claims from investment trust clients for the repayment of VAT previously charged for periods back to 1990. The Group charged VAT in accordance with applicable legislation at the time, but provision has been recognised to the extent that payments to investment trusts are expected to exceed the amounts recoverable from HMRC. The provision of £2 million represents the estimated net cost to the Group. Significant uncertainty remains as to the final quantification of amounts recoverable from HMRC and amounts payable to investment trusts. Also, uncertainty remains over the methodology to be adopted by HMRC and the timing of such payments. Principal Risks In common with many businesses, the Group is exposed to a range of risks. Some of these risks are an inherent part of the business conduct by the Group such as taking investment decisions on behalf of clients and our energies are focussed on managing this risk as opposed to eliminating it. On the other hand there is regulatory and compliance risk which we actively seek to avoid. The management of risk is embedded in the culture of the business and inthe way in which the Group carries out its business. The Risk ManagementCommittee together with the Risk, Compliance and Internal Audit departments are responsible for overseeing the implementation of the Group's risk strategies and this involves the provision of regular reports to the Group Board. The principal risks to which the Group will be exposed in the second half of the financial year are substantially the same as those discussedin the 2007 annual report. Responsibility Statement We confirm that to the best of our knowledge: • the condensed set of financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU • the interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. For and on behalf of the Board Scott E Massie Secretary 6 May 2008 Independent Review Report to Aberdeen Asset Management PLC Introduction We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 which comprises the Group Income Statement, the Group Statement of Recognised Income and Expense, the Group Balance Sheet, Cash Flow Statement and the related notes. We have read the otherinformation contained in the half-yearly financial report and consideredwhether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the company in accordance withthe terms of our engagement to assist the company in meeting the requirements of the Disclosure and Transparency Rules ("the DTR") of theUK's Financial Services Authority ("the UK FSA"). 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, forthis report, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA. As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Our responsibility Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued bythe Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA. KPMG Audit Plc Chartered Accountants 6 May 2008 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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