3rd May 2006 13:18
Aberdeen Asset Management PLC03 May 2006 ABERDEEN ASSET MANAGEMENT PLC Interim Results for six months to 31 March 2006 - REPLACEMENT The following replaces the interim results announcement released on 2 May 2006at 07:00 under RNS number 2474C. The amendments, contained on the group incomestatement and in notes 3, 5 and 13, have been highlighted by use of the symbols"^^". The amendments have no material effect on the underlying figures containedwithin the interim results. 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 2005Turnover £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, integrationcosts and finance costs as shown in note 12 Commenting on the results Martin Gilbert, Chief Executive of Aberdeen AssetManagement said: "These are excellent results and I would like to thank all ourpeople for their hard work. Aberdeen is now a broadly-based international assetmanagement group with expertise in equities, fixed income and property. We areparticularly pleased that so many of DeAM's clients have demonstrated theirconfidence by keeping their funds with the enlarged Group. As we move forward,we will continue to develop our asset management activities to deliver optimumvalue 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 classEquities : 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 theenlarged Group that incorporates the businesses acquired from Deutsche AssetManagement ("DeAM") in late 2005. Whilst the scale of the Group's activities mayhave changed, the underlying themes remain constant: solid long term investmentperformance and very healthy new business flows. Presentation of the results for the period has changed due to the transition toInternational Financial Reporting Standards ("IFRS") but the strong growth inprofits is shown in the underlying measures of performance which the Board usesin managing the business. We have continued to disclose these additionalmeasures, as we did consistently when reporting under UK GAAP, and we have alsoincluded a brief financial review which discusses the results in more detail. Profit before taxation generated by the Group's core business, stated beforenon-recurring costs and gains, was £36.8 million compared to £9.0 million forthe equivalent period in 2005. This represents underlying earnings per share, ona diluted basis, of 4.0p, an increase of 110% on the 2005 figure of 1.9p. TheBoard 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 nomaterial seasonality in the Group's results and, in the absence of any materialchange in market conditions, the Board expects to recommend a final dividend ofsimilar amount in due course. Global stock and bond markets have generally been favourable throughout theperiod but this alone is not sufficient to drive any asset management groupforward. I am therefore pleased to report record levels of new business, thefoundation for which is the long term investment performance, the robustinvestment process and the relationships built by our client facing teams.Substantial levels of new business have been generated in all key areas: inequities, where Asia Pacific and global emerging markets remain very popular butwith investor interest now extending to our global equities and SRI capability;in fixed income, where our new colleagues who joined from DeAM have madesubstantial progress in a very short time; and in property, where 2 new fundlaunches have been completed during the period, including a European fund ofproperty funds, the first of its kind in Europe. Gross new business generated in the period totalled £6.5 billion, of which £5.5billion was funded before 31 March and is included in assets under management atthat date, while a further £1.0 billion represents new business awarded orcommitted before the period end but which had not then been funded. Net newbusiness 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 factors in the growth in assets under management to £74.4billion at 31 March. This represents a 24.6% increase compared to 30 September2005, 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 onannouncement of the transaction) of the former DeAM equities and multi assetclients remained in place. Although it is still possible that some furtherclient losses may arise before 30 June, at which point final measurement of thedeferred consideration payable for this business can take place, this representsa very satisfactory outcome. Assuming no material change to this level of AUMretention, the deferred consideration is expected to be between £20 million and£25 million. As previously reported, the respective fixed income teams have beensuccessful 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 aseffectively and efficiently as possible. I have previously reported that theintegration of the front office teams was completed as planned by early Decemberand the respective teams now share the same offices and operating platforms inboth 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 isalso spread over a wider geographical area. The Group is taking a careful anddisciplined approach to this process since we know these systems lie at theheart of our client service and client relationships. We have a detailedprogramme to implement this integration and we continue to work through it aswell as identifying systems enhancements that will directly benefit the furtherscalability of the Group's activities in future. We remain confident that thesynergy benefits will, over the course of the next 12 - 18 months, equal orexceed the levels envisaged at the time of the acquisition. On behalf of the Board, I would at this stage like to thank all those involvedfor their hard work and commitment to this exercise. This has been an excellentfirst half year and we are confident of our ability to extend the progressduring 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 beprepared in accordance with International Financial Reporting Standards ("IFRS")and these interim financial statements have therefore been prepared on the samebasis. Comparative figures have been restated, where necessary, from the UK GAAPbasis on which they were originally reported. Investors may wish to considerthese interim financial statements in conjunction with the additionalinformation contained in the IFRS Transition Statement which we published on 28March 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 particularformat and we have provided additional analysis of the results on the face ofthe Income Statement which seeks to distinguish non-recurring items from theunderlying revenues and costs of the Group's ongoing business activities. Revenues and operating expenses each include figures which relate to two privateequity investments managed by the Group on behalf of limited partnershipclients. These two investments are deemed, under IFRS definitions, to becontrolled by one of the Group's subsidiaries and are therefore required to befully consolidated, with the entitlements of the clients then reflected as aminority interest. The economic effect on the Group for the period of theseinvestments was a net cost of £334,000 (2005 - £50,000). Recurring revenues for the period were £147.4 million (2005 - £72.9 million) andrecurring operating expenses were £110.9 million (2005 - £58.1 million). We arealso required to amortise certain of the intangible assets acquired on theDeutsche Asset Management ("DeAM") transaction, resulting in a non-cash chargefor the period of £5.5 million (2005 - nil). Other operating income of £8.2million (2005 - £4.8 million), representing gains on sale of certain non-coreassets, is also taken into account in presenting the IFRS operating profit.Excluding these items, and the operating loss of the two private equityinvestments, 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 introducean element of variability in the operating margin between the first and secondhalves of the financial year, principally due to an acceleration into the firsthalf year of accruals for short term employee benefits which would previouslyhave been incurred in the second half. Whilst this item will have no effect in afull year, it does reduce the operating margin for the first half year byapproximately 1%. Despite this anomaly, the Group's overall operating margin was25.7% compared to 22.6% last year. The underlying operating margin for the fundmanagement division, which is a key measure of the Group's performance, was29.5% (2005 - 28.3%). Integration costs of £17.2 million, relating to the DeAM transaction, wereincurred during the period. These costs comprise charges in respect of atransitional services agreement with the vendor to ensure that both people andsystems are transferred in a controlled manner; set-up costs in respect of themigration of the back office data and systems to the Group's third partyadministrator; and costs of retaining duplicate staffing for a transitionalperiod to ensure a smooth migration of data. Further integration costs, of alesser amount, will occur in the second half year. The underlying net finance revenue for the period was £0.3 million (2005 - netfinance cost of £5.8 million), reflecting the restructuring and reduction of theGroup's debt during 2005, both from the rights issue which financed the DeAMtransaction 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 DeAMtransaction. Clearly, this increased profit has been generated from a largercapital base and diluted underlying earnings per share, which take account ofthe 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 inflowsof £28.4 million have arisen on the sale of investments and from deferredconsideration received for businesses sold in previous years. Against this,£110.7 million was paid during the period in respect of the purchase of DeAM andpayments totalling £12.0 million were made in respect of the costs of therelated integration project. Group Income Statement For 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 atfair 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 46,455 Integration 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 assets before taxation (15,261) 4,775 8,977Private equity partnerships lossbefore taxation (3,834) (539) (1,524) ----------------------------------Profit before taxation 17,700 13,241 30,123 ----------------------------------Tax on profit from core business (8,901)^^ (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 Notes 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 atbeginning of 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 withInternational Financial Reporting Standards (IFRS) as adopted by the EuropeanUnion, and to those parts of the Companies Act 1985 applicable to companiesreporting under IFRS. The financial information contained in these interimfinancial statements has been prepared on the basis of IFRS that the directorsexpect to be applicable as at 30 September 2006 and comparative information hasbeen restated accordingly. IFRS is subject to amendment and interpretation bythe IASB and there is an ongoing process of review and endorsement by theEuropean Commission. For these reasons, it is possible that the informationpresented here may be subject to change before its inclusion in the 2006 Reportand Accounts, which will be the Group's first complete financial statementsprepared in accordance with IFRS. The Group took the exemption not to restatecomparative information in respect of IAS 32 and IAS 39. These standards wereadopted from 1 October 2005 and the adjustments to reflect the adoption areshown in note 16. The interim results have not been audited but have been reviewed by theauditors. The comparative figures for the financial year ended 30 September 2005are not the company's statutory accounts for that financial year. Those accountshave been reported on by the company's auditors and delivered to the Registrarof Companies. The report of the auditors was (i) unqualified, (ii) did notinclude a reference to any matters to which the auditors drew attention by wayof emphasis without qualifying their report, and (iii) did not contain astatement 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 toqualifying shareholders on the register at 12 May 2006. 3. Segmental information The Group has two business segments, 1) investment management and 2) propertyasset 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 valuethrough 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-recurringgains, integration costs and amortisation ofintangibles) 29,673 4,100 33,773 -------------------------------- Operating profit (after non-recurring gains,integration costs and amortisation of intangibles) 15,212 4,100 19,312 -------------------------------- 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 intangibles) 12,795 2,125 14,920 --------------------------------Operating profit (after non-recurring gains and amortisation of intangibles) 17,570 2,125 19,695 -------------------------------- Property Investment asset Group management management total £'000 £'000 £'000Year 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)Release of provisions 2,600 - 2,600^^Operating 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 intangibles) 26,832 5,976 32,808 --------------------------------Operating profit (after non-recurring gains and amortisation of intangibles) 40,479 5,976 46,455 -------------------------------- 6 mths to 6 mths Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000Revenue from core business includes the following performance fees in each of theperiods: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 Year to 31 Mar 2006 31 Mar 2005 30 Sept 2005 £'000 £'000 £'000Preliminary fees earned but not recognisedInvestment 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 whichare not subject to clawback. 4. Other operating income The other operating income for the six months to 31 March 2006 principallyconsists of the gain realised on the disposal of the Group's investment in NewStar Asset Management PLC which was stated at a cost of £6 million. Thisshareholding was sold on 11 November 2005 following the listing of thiscompany's shares on the Alternative Investment Market. The net proceeds from thesale were £14.6 million. Other operating income in prior periods representsgains on disposal of investments and subsidiaries. 5. Integration costs^^ On 30 September 2005 the Company completed the acquisition of certain fundmanagement businesses of Deutsche Bank AG. These businesses consisted of theLondon fixed interest business, the OEIC business and the equities/multi assetbusiness. On 1 December 2005 the second and final stage of the acquisition wascompleted when the Philadelphia fixed income contracts were acquired. Thesebusinesses and contracts are in the process of being integrated with theexisting operations of the Company, a process which is well advanced. Theintegration 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 pensionssubsidiary 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 equitypartnerships 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 andnumbers of shares: Basic Diluted -------------------------------- ------------------------------- 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 2006 2005 2005 2006 2005 2005 £'000 £'000 £'000 £'000 £'000 £'000Profit attributable toshareholders 14,999 11,864 25,553 14,999 11,864 25,553Less non-equitydividends (2,700) - (1,350) (2,700) - (1,350) -----------------------------------------------------------------Profit for financialperiod-IAS 33 basis 12,299 11,864 24,203 12,299 11,864 24,203Amortisation of intangible assets 5,462 - - 5,462 - -Non-recurring gains ondisposal ofinvestments, net ofattributable taxation (5,767) (4,775) (8,868) (5,767) (4,775) (8,868)Integration costs, net of attributable taxation 12,066 - - 12,066 - -Non-recurring finance costs, net ofattributable taxation 800 - 4,169 800 - 4,169Release of provision for Uplift Plan, net ofattributable taxation - - (2,600) - - (2,600) ----------------------------------------------------------------Profit for the financial period before amortisationof intangible assets,integration costs &non-recurring items 24,860 7,089 16,904 24,860 7,089 16,904 ---------------------------------------------------------------- 31 Mar 31 Mar 30 Sept 2006 2005 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 currentlynot dilutive. These shares would potentially convert into 80,523,402 ordinaryshares. In addition to the share options noted as already being exercisablethere are a further 9.2 million options in issue which have not yet reached thefirst date for exercise. The Directors believe that the Group's results are more fairly represented by ameasure of earnings per share which excludes non-recurring items andamortisation of intangible assets and therefore also present earnings per sharefigures stated before these items are charged (credited) to the incomestatement. 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 31 Mar 30 Sept 31 Mar 31 Mar 30 Sept 2006 2005 2005 2006 2005 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 ofinvestments, net ofattributable taxation (0.96)p (1.30)p (2.43)p (0.92)p (1.30)p (2.42)pIntegration costs, net of attributable taxation 2.01p - - 1.93p - -Non-recurring finance costs, net ofattributable taxation 0.13p - 1.14p 0.13p - 1.14pRelease of provision for Uplift Plan, net ofattributable taxation - - (0.71)p - - (0.71)p ---------------------------------------------------------------Before amortisation of intangible assets,integration costs &non-recurring operating items 4.14p 1.93p 4.64p 3.98p 1.93p 4.61p --------------------------------------------------------------- 13. Analysis of changes in net funds (debt) Adjustment At on Other At 30 Sept Cash Adoption of non cash Exchange 31 Mar 2005 flow IAS 32 & 39 changes movement 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% --- 14. Provisions Provision Pension for Uplift Scheme Deferred Plan Deficit Taxation £'000 £'000 £'000At 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 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 2006. 15. Contingent liabilities On 28 June 2005, proceedings were issued against Aberdeen Asset Management PLCand Aberdeen Asset Managers Jersey Limited (together the "Aberdeen Parties") anda non- Aberdeen party, in the High Court in London by Real Estate OpportunitiesLimited ("REO"). In 2003, the board of REO announced, with regard to theAberdeen Parties, that REO had terminated its management contract with immediateeffect and indicated that it held the Aberdeen Parties liable for damages inrespect of its losses incurred on REO's income portfolio. The Aberdeen partiesdo not accept the validity of REO's termination without notice. The AberdeenParties believe that the claim is without merit and will be vigorously defendthe proceedings and counterclaim for their accrued fees and the fees relating tothe 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 periodsinto IFRS financial information are detailed in the reconciliations below. Acomprehensive review of the adjustments made in respect of the six months to 31March 2005 and the year to 30 September 2005 can be found in the Group's IFRSStatement dated 28 March 2006 and can be accessed on the Group's website atwww.aberdeen-asset.com. A summary of the Group's accounting policies under IFRSare 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 year ended 30 September 2005 6 months Year ended ended 30 Sept 31 Mar 2005 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 six months ended 31 March 2005 and the year ended 30 September 2005 6 months Year ended ended 30 Sept 31 Mar 2005 2005 £'000 £'000UK GAAP underlying profit before tax (as previouslyreported) 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 andcosts and the amortisation of intangible assets (under IFRS) and goodwill (underUK 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 inrespect 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 theGroup's balance sheet at 30 September 2005 to reflect the adoption of IAS 32 andIAS 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 ofthe parent 428,590 4,759 433,349 ---------------------------------- The adjustment to interest bearing loans and borrowings represents the IAS 32adjustment to the convertible bonds to reflect the liability and equity natureof the instruments. The adjustment to available for sale investments representsthe movement in fair value on adoption of IAS 32. 17. 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 to Aberdeen Asset Management PLC Introduction We have been engaged by the company to review the financial information for thesix months to 31 March 2006 which comprises the Group Income Statement, theGroup Statement of Recognised Income and Expense, the Group Balance Sheet, theSummary Group Cash Flow Statement and the related notes and we have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial 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' responsibilities The interim report, including the financial information contained therein, isthe responsibility of and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual financial statements except where any changes, and the reasonsfor them, are disclosed. As disclosed in note 1 to the financial information, the next annual financialstatements of the group will be prepared in accordance with IFRSs adopted foruse by the European Union. The accounting policies that have been adopted in preparing the financialinformation are consistent with those that the directors currently intend to usein the next annual financial statements. There is, however, a possibility thatthe directors may determine that some changes to these policies are necessarywhen preparing the full annual financial statements for the first time inaccordance with those IFRSs adopted for use by the European Union. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4Review of interim financial information issued by the Auditing Practices Boardfor use in the United Kingdom. A review consists principally of making enquiriesof group management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly, we do not express an auditopinion on the financial information. Review conclusion On 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 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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