RNS Number:5403K
Aberdeen Asset Management PLC
30 April 2003
ABERDEEN ASSET MANAGEMENT PLC
Interim Results for six months to 31 March 2003
Highlights
March 2003 March 2002
Turnover #74.9m #94.3m
Pre-tax profit #41.9m #10.8m
Pre-tax profit (exc goodwill amortisation and exceptional items) # 5.6m #22.2m
Earnings per share 17.29p 2.71p
Earnings per share (exc goodwill amortisation and exceptional items) 2.01p 8.87p
Dividend per share 2.0p 3.85p
Net gearing 76.4% 118.6%
* Despite continued volatility in global markets, significant performance
achieved from Asian equity funds, bonds and property asset classes.
* Balance sheet strengthened following the #86.8 million disposal of selected
retail funds to New Star Asset Management.
* Negotiations for the sale of Aberdeen Property Investors well advanced.
Exclusive negotiations expected to begin shortly.
* Annualised costs savings of #40 million already achieved, close to target of
#45 million.
* Group's open-ended funds returned to net investment inflows at period end.
Commenting on the interim results, Chief Executive Martin Gilbert said:
"The last six months were another testing period, in what has been the longest
bear market for 65 years. We have taken significant steps to strengthen the
balance sheet, keep costs down and position the Group for the eventual upturn in
markets. We are on target to achieve our goal of reducing costs by #45 million
compared to their peak and have already made annualised cost savings of #40
million. Given time lags, the cost savings are not as yet fully reflected in the
earnings figures for this half and these reductions will be better reflected in
the full year results.
"During this half, we successfully transferred #1.73 billion of retail
open-ended funds to New Star Asset Management, raising proceeds of #86.8
million. I am also pleased to report progress with the sale of Aberdeen
Property Investors. We received a significant number of high quality
expressions of interest. These approaches have been refined through a
structured process comprising several stages, with a view to identifying the
best outcome for Aberdeen and API. We are now in advanced negotiations with a
limited number of interested parties and expect to enter into exclusive
negotiations with one potential buyer shortly. In line with our original
expectations, we expect a sale to be completed before the end of June 2003.
"Despite the difficult investment conditions, we have seen strong relative
performance from our conventional closed end fund ranges both in the UK and the
US. In the UK in February, the Group won the top position from S&P in the
larger investment trust companies category for the performance of our
conventional trusts over one, three and five years. In the United States, our
two largest closed end funds were awarded by Lipper first and second places for
performance achievement, in the closed end bond fund sector, for the year to
December 2002. We are also encouraged, in these circumstances, to report a
return to net inflows into our UK open-ended funds in March, demonstrating the
resilience of our underlying business."
For further information, please contact:
Aberdeen Asset Management PLC
Martin Gilbert, Chief Executive 020 7463 6000 / 01224 631 999
Gavin Anderson & Company
Neil Bennett/ Lindsey Harrison 020 7554 1400
ABERDEEN ASSET MANAGEMENT PLC
INTERIM RESULTS TO 31 MARCH 2003
CHAIRMAN'S STATEMENT
Despite the continued bear market, the Group has made considerable advances
during the last six months, notably in the reduction of debt through disposals
and a continuing focus on the cost reduction programme that began in 2002. We
have taken meaningful steps to reduce the cost base to a level more compatible
with the current revenue base and market conditions, and this will continue to
be kept under review. Such reductions will become more evident at the year end,
once the effect of time lags become clearer, coupled with the expected reduction
of operating costs from the property division.
Profit before taxation for the period was #41.9 million, compared to #10.8
million for the equivalent period last year. This represents earnings per share
of 17.29p (2002: 2.71p). Excluding the effects of goodwill amortisation and
exceptional items, pre-tax profit was #5.6 million against #22.2 million for the
same period in 2002. Earnings per share on this basis were 2.01p (2002: 8.87p).
Assets under management at 31 March 2003 were #20.0 billion (30 September 2002:
#23.7 billion).
After the end of the half year period assets under management were reduced
further as a result of the termination of a closed end fund mandate by Real
Estate Opportunities Limited, from whom we will be pursuing compensation for the
early termination of the management contract.
The Board has decided to pay an interim dividend of 2.0p per share. This is
lower than the 3.85p per share paid at the interim stage in 2002, but is
consistent with the rebalancing of the total dividend for 2002 undertaken at the
year-end.
Business Strategy
Continued volatility and uncertainty remained the dominant themes in the period
to 31 March 2003. The global bear market is now three years old, the FTSE has
fallen some 45 per cent between March 2000 and March 2003 and, looking forward,
economic indicators do not yet predict an early recovery. We are addressing our
cost and operating structures and focusing on products and fund expertise where
we can successfully compete and add value over the medium-term. We are
strengthening our balance sheet by the disposal of non-core assets and are
concentrating on the delivery of superior asset management performance.
Asset Disposals and Financial Position
On 15 January 2003 the Group announced the sale of the management rights of six
UK retail funds assets to New Star Asset Management. The transaction was
completed on 21 February 2003, achieving proceeds of #86.8 million from the
#1.73 billion of assets which transferred to New Star. Last year, the Group
also announced the planned disposal of Aberdeen Property Investors ("API"). We
are in advanced negotiations with a limited number of interested parties for the
sale of this division and we hope shortly to enter into exclusive negotiations
with one potential buyer. We expect a sale to be completed before the end of
June 2003.
The completion of the latter transaction will reduce the Group's assets under
management to approximately #13.5 billion, comprising approximately 60 per cent
equities and 40 per cent fixed income securities. The Group's net debt has
reduced from #234.4 million at 30 September 2002 to #174.0 million at 31 March
2003. This represents a reduction in the gearing ratio from 113% to 76% and this
will fall further after the API transaction.
Of the total net borrowings at 31 March 2003, bank term loans represent #51.0
million, compared to #122.7 million at 30 September 2002. This bank debt is now
provided by a single lender, Bank of Scotland, the previous banking syndicate
having been dissolved at 31 March 2003. As stated previously we do not intend
to make further significant disposals, but we do expect to make additional, but
much smaller, disposals during the year, in particular in areas of duplication
or in skills which do not reflect our strategic priorities.
Refined investment processes
We have aimed to increase the consistency within our investment process in order
to achieve strong performance and to differentiate our funds from our
competitors. We have streamlined and refocused our investment management teams,
adopting the very clear investment process developed in our Asian operation,
which is grounded on proprietary research and traditional valuation models. We
have now brought key disciplines and controls to a consistent standard across
all equity investment teams in the Group. The process consists of fundamental
analysis of companies and stocks, undertaken internally and with a detailed
audit trail. As a result, unconstrained portfolios under our management can
take very clear portfolio positions. Such portfolios, characterised by clear
and disciplined in-house research, should mark our funds as distinctive, as well
as meeting the highest standards demanded by investment consultants and
discretionary managers. A similar exercise is nearing completion in respect of
the fixed income division.
The sale of the management rights to New Star Asset Management included the
disposal of #1.2 billion of assets within three funds in the fixed income
sector. Two fixed income fund managers transferred to New Star as part of this
transaction, but our capability in this area is undiminished, with a team of
twenty four fund managers continuing to manage #5.3 billion of fixed income
assets. We are in the course of launching replacement funds to service the
significant assets managed on behalf of several institutional clients which did
not transfer to New Star. These funds, together with our existing offshore
funds, will continue to be marketed to institutions and professional investors.
UK and European open ended funds
The substantial retail outflows that were being experienced in the widely-held
UK funds in the last quarter of 2002 have effectively ceased following the sale
of management rights to New Star, and March 2003 has seen a return to net fund
inflows with very limited outflows overall. The experience in our Dublin and
Luxembourg domiciled funds, with assets of #845 million, has been much less
influenced by events in the UK and we have experienced net inflows overall,
albeit at subdued levels. Recent months have been characterised by interest in
our funds investing in the Asia-Pacific region, which are demonstrating very
strong performance. Fund inflows from continental Europe have been broadly
based, originating over the half-year from Italy, Switzerland and the Nordic
Region. More generally, our fund sales focus has shifted from retail to a much
more focussed universe of intermediaries, in particular discretionary fund
managers and fund-of-fund managers.
Investment Trusts
The Group manages or advises 12 conventional investment trusts, currently some
#1.3 billion of assets under management. Our funds overall have seen strong
relative performance over the period. In Standard & Poor's Fund Performance
Awards in February 2003, we won four awards, including "Best UK Investment Trust
Manager 2003". The Group won the top position in the larger investment trust
companies category for performance over one, three and five years. Many
investment trusts have found the bear market very taxing. Weakness in the
secondary market has meant that buy-backs across the sector are likely to
continue in the foreseeable future. We remain committed to supporting our
investment trust clients by way of dedicated teams and specialist expertise
devoted to this area of our business. The advent of Treasury Shares later in
the year is expected to provide another source of flexibility in enabling UK
investment trusts to manage their structures.
Split capital closed end funds
During the period the Group advised 13 split capital closed end funds listed on
the London Stock Exchange with assets of #1.0 billion. The Group continues to
be at the forefront of industry efforts, across a range of initiatives, to
improve transparency, best practice and investor communications. The Group
supports the UK's Treasury Select Committee's February recommendation that the
Financial Services Authority and Financial Ombudsman Service investigations are
completed quickly and continues to co-operate fully.
Shortly after the period end, the board of Real Estate Opportunities Limited ("
REO") announced its intention to terminate Aberdeen's management contract with
immediate effect. We regret that extensive mediation over several months with
this company failed to resolve mutual concerns. We do not accept the validity
of REO's decision to terminate the contract without notice and we will be taking
appropriate action to recover all sums due to the Group under the terms of the
contract.
UK Private Equity
The Group's private equity division, Aberdeen Murray Johnstone Private Equity ("
AMJPE") at the period end, had #480 million of assets under management. In
AMJPE's target market, activity levels are less dependent on the stock market
appetite for new issues. This has been reflected in a number of very successful
trade sales of investee companies during the period. The seven regional offices
have remained very active and are exploring a large variety of transactions.
The difficulties created by the tough economic environment and the increasingly
risk-averse approach of the banking market should lead to an increased number of
opportunities for our team. In addition, the falls in stock market indices over
the last three years have led to more realistic pricing expectations.
Asia Pacific
Our Asian operations continue to perform well, with profits in line with
forecast thanks to tight cost management and the high allocation to fixed income
funds. However, weak equity markets and increasing risk aversion have
noticeably affected Singaporean retail fund volumes, with the climate for new
launches poor. We have maintained local brand marketing expenditure in
Singapore and, to a lesser extent, Hong Kong. Interest in our product range
from the institutional market globally has been high on the back of very strong
performance and process integrity. We have gained some new assets locally over
the period and we are participating in numerous tenders world-wide. As in the
UK, the alignment of our investment process in Sydney is paying off in terms of
performance and in enabling us to gain access to influential intermediaries.
North America
The Canadian and US markets continue to show interest in our specialist fund
management product range. Performance has been strong, particularly among our
bond funds. Aberdeen Asia-Pacific Income Fund, Inc., our largest closed-end
fund with assets of US$2.0 billion, was the top-performing fund for the year
ended 31 December 2002, among the 340 U.S. closed-end bond funds reviewed by
Lipper, Inc. Lipper also ranked the Aberdeen Global Income Fund, Inc., which has
assets of US$132.6 million, the second best performing closed-end bond fund for
the same period. Net asset value total returns for these funds for the year
2002 were 25.5% and 21.9% respectively. The US operation has also seen
encouraging inflows of assets from a number of Chilean pension funds, and we now
manage assets on behalf of the four largest pension fund managers, representing
about 80% of Chilean pension fund assets, among our clients.
Property
The UK commercial property market has been stable during the period overall,
showing a 1% rise, with Continental Europe and the Nordic Region performing
similarly. Aberdeen Property Investors ("API") experienced a steady six months
in all areas of its business, with assets under management at #5.9 billion (up
1.3 per cent since September 2002). Overall, the business is in strong shape
with both domestic and European successes. API has won several small mandates
and has been encouraged by its appointment by Ilmarinen, a Finnish insurer, to
advise on investing up to Euro750 million in Eurozone countries. This consolidates
API's position as the leading provider of pan-European indirect investment
management services to Nordic institutions. Led by its Dutch office, API has
also recently raised a further Euro70 million of institutional capital for its
Pan-European logistics fund, the CEurologix Property Fund.
Outlook
Following the Iraq war and now to some extent with the SARs threat in Asia, the
risk of decline in global economic activity in coming months has increased.
Longer-term we expect post war economic growth to recover only gradually through
the second half of 2003 and 2004. The outlook for all fund management companies
continues to be uncertain but we believe that the early and proactive steps
taken last year and in more recent months have placed the Group in a healthy
position with newly strengthened and defined investment processes in place.
Good performance should, in turn, lead to fund inflows and increased revenues,
underpinned by a far stronger financial position as a result of disposals and
cost reduction.
C L A Irby
Chairman
Aberdeen Asset Management PLC
Group Profit and Loss Account
for the six months to 31 March 2003
Notes 6 mths to 6 mths to Year to
31 Mar 2003 31 Mar 2002 30 Sept 2002
#'000 #'000 #'000
Turnover - fixed margin property management 7,376 5,886 11,899
Turnover - other 67,547 88,434 180,179
Total turnover 74,923 94,320 192,078
Operating expenses
- Fixed margin property management (6,680) (5,435) (11,030)
- Other (54,961) (59,233) (123,771)
- Exceptional costs 2 (2,965) (2,128) (5,621)
Amortisation of goodwill (9,179) (9,180) (19,640)
Total administrative expenses (73,785) (75,976) (160,062)
Other operating income - exceptional - - 4,446
Exceptional amounts written off investments 2 (5,783) - (2,651)
Operating profit before goodwill
amortisation & exceptional items 13,282 29,652 57,277
Amortisation of goodwill & exceptional items (17,927) (11,308) (23,466)
Operating (loss) profit (4,645) 18,344 33,811
Gain on disposal of management contracts 2 54,237 - -
Net interest payable and similar charges (7,700) (7,502) (15,533)
Profit on ordinary activities before taxation 41,892 10,842 18,278
Tax on profit on ordinary activities (10,817) (5,362) (11,184)
Profit for the financial period 31,075 5,480 7,094
Minority interests - equity (320) (164) (216)
Profit attributable to shareholders 30,755 5,316 6,878
Dividends
Equity dividends on ordinary shares 1 (3,539) (6,725) (10,500)
Non equity dividends on preference shares (318) (593) (1,132)
(3,857) (7,318) (11,632)
Retained profit (loss) for the financial period 26,898 (2,002) (4,754)
Earnings per share - basic
Before goodwill amortisation & exceptional items 4 2.01p 8.87p 16.51p
After goodwill amortisation & exceptional items 4 17.29p 2.71p 3.29p
Earnings per share - diluted
Before goodwill amortisation & exceptional items 4 2.01p 8.37p 16.47p
After goodwill amortisation & exceptional items 4 17.29p 2.79p 3.28p
Turnover and operating (loss) profit arise wholly from continuing activities.
There is no material difference between the profit on ordinary activities before
taxation above and the historic cost equivalent.
Statement of Total Recognised Gains and Losses
for the six months to 31 March 2003
Notes 6 mths to 6 mths to Year to
31 Mar 2003 31 Mar 2002 30 Sept 2002
(restated)
#'000 #'000 #'000
Profit attributable to shareholders 30,755 5,316 6,878
Revaluation of fixed asset investment 7 3,171 2,465 2,521
Translation of foreign currency net investments 819 404 (735)
Total recognised gains and losses for the period 34,745 8,185 8,664
Prior period adjustment - 1,900 1,900
Total gains recognised since last report 34,745 10,085 10,564
Group Balance Sheet
as at 31 March 2003
Notes 31 Mar 2003 31 Mar 2002 30 Sept 2002
(restated)
#'000 #'000 #'000
ASSETS
Fixed assets
Intangible assets 47,251 81,946 76,820
Goodwill 324,221 342,174 331,792
Tangible assets 16,987 18,813 17,452
Investments 36,146 32,658 36,280
424,605 475,591 462,344
Current assets
Stock 284 730 720
Debtors 41,974 100,526 55,807
Investments 6,145 4,765 2,932
Cash at bank and in hand 5 7,813 35,540 32,490
56,216 141,561 91,949
Assets attributable to equity shareholders 480,821 617,152 554,293
Assets of long-term life assurance business 242,126 369,975 255,824
Total assets 722,947 987,127 810,117
LIABILITIES
Capital and reserves
Called up share capital 6 28,034 38,421 38,411
Capital redemption reserve 6 20,772 10,343 10,395
Share premium account 19,205 18,425 19,203
Merger reserve 133,994 133,994 133,994
Revaluation reserve 7 15,529 11,563 12,358
Profit & loss account 10,203 (3,130) (7,173)
Shareholders' funds
Equity 217,394 188,931 186,503
Non-equity 10,343 20,685 20,685
227,737 209,616 207,188
Minority interest - equity 776 374 456
Creditors: due within one year 137,428 137,934 134,888
Creditors: due after more than one year,
including convertible debt
Creditors 10,947 137,781 108,061
Convertible debt 97,157 122,760 96,788
108,104 260,541 204,849
Provisions for liabilities and charges 6,776 8,687 6,912
480,821 617,152 554,293
Liabilities of long-term life assurance business 242,126 369,975 255,824
Total liabilities 722,947 987,127 810,117
Summary Group Cash Flow Statement
for the six months to 31 March 2003
Notes 6 mths to 6 mths to Year to
31 Mar 2003 31 Mar 2002 30 Sep 2002
#'000 #'000 #'000
Net cash inflows from operating activities
Core cashflow from operating activities 13,465 8,401 47,227
Effects of short-term timing differences on
unit trust settlements (8,025) (9,368) (8,208)
3 5,440 (967) 39,019
Returns on investments and servicing of finance (7,684) (8,524) (18,037)
Taxation paid (875) (1,924) (7,154)
Capital expenditure and financial investment 79,403 (7,667) (12,522)
Acquisitions and disposals (2,208) (25,217) (22,897)
Equity dividends paid (3,774) (11,503) (18,245)
Net cash inflow (outflow) before financing 70,302 (55,802) (39,836)
Financing
Issue of share capital - 11 42
Redemption of share capital (10,342) (10,343) (10,495)
(Decrease) increase in debt (71,762) 53,587 24,433
Decrease in cash (11,802) (12,547) (25,856)
Reconciliation of net cash flow to movement in net
debt
Notes 6 mths to 6 mths to Year to
31 Mar 2003 31 Mar 2002 30 Sep 2002
#'000 #'000 #'000
Decrease in cash (11,802) (12,547) (25,856)
Decrease (increase) in debt 71,762 (53,587) (24,433)
Amortisation of issue costs of convertible bonds (372) - (494)
Conversion of convertible bonds 3 - -
Translation difference 819 404 (735)
Movement in net debt in the period 60,410 (65,730) (51,518)
Net debt brought forward 6 (234,451) (182,933) (182,933)
Net debt carried forward 6 (174,041) (248,663) (234,451)
Notes
1. Interim dividend
The interim ordinary dividend of 2p per share will be paid on 16 July 2003 to qualifying
shareholders on the register at 13 June 2003.
6 mths to 6 mths to Year to
31 Mar 2003 31 Mar 2002 30 Sept 2002
#'000 #'000 #'000
2. Exceptional items
Exceptional costs
Recognised within operating profit
Redundancy, relocation and duplicate 826 2,128 5,155
staff costs
Office closure costs 309 - -
Other costs 1,830 - 466
2,965 2,128 5,621
Amounts written off investments 5,783 - 2,651
8,748 2,128 8,272
The amounts written off investments represent provisions made against the value of both fixed asset
and current asset investments.
Exceptional income
Gain on disposal of management contracts 54,237 - -
The effect of this gain on the taxation charge for the period was a charge of #10,000,000.
6 mths to 6 mths to Year to
31 Mar 2003 31 Mar 2002 30 Sept 2002
#'000 #'000 #'000
3. Reconciliation of operating (loss) profit to operating cash
flow
Operating (loss) profit (4,645) 18,344 33,811
Depreciation charges 2,133 2,601 5,939
Amortisation of goodwill 9,179 9,180 19,640
Amortisation of intangible assets 1,044 - 1,565
Profit on disposal of tangible fixed assets - - 32
Amounts written off fixed and current asset investments 5,783 - 2,651
Share of results of associated undertakings - - (67)
Decrease in provisions for liabilities and charges (510) - (521)
Decrease (increase) in stock 436 (360) (350)
Decrease (increase) in debtors 13,765 (18,020) 26,664
Decrease in creditors (21,745) (12,712) (50,345)
Net cash inflow (outflow) from operating activities 5,440 (967) 39,019
Change in Change in
Analysis of the balances of cash 31 Mar 2003 period 30 Sept 2002 period 31 Mar 2003
as shown in the balance sheet #'000 #'000 #'000 #'000 #'000
Net cash balances (note 5) 7,813 (11,147) 18,960 16,580 35,540
6 mths to 6 mths to
31 Mar 2003 31 Mar 2002
#'000 #'000
Analysis of changes in cash
Net cash outflow before adjustment for the effects of foreign (11,802) (12,547)
exchange
Effects of foreign exchange rate changes 655 924
(11,147) (11,623)
4. Earnings per share
The 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 2003 31 Mar 2002 30 Sep 2002 31 Mar 2003 31 Mar 2002 30 Sep 2002
#'000 #'000 #'000 #'000 #'000 #'000
Profit attributable to 30,755 5,316 6,878 30,755 5,316 6,878
shareholders
Less non-equity dividends (318) (593) (1,132) (318) (593) (1,132)
Interest saving, net of
attributable taxation, on
notional conversion of
loan notes - - - - 634 -
Profit for financial 30,437 4,723 5,746 30,437 5,357 5,746
period-FRS 14 basis
Amortisation of goodwill 9,179 9,180 19,640 9,179 9,180 19,640
Exceptional items (net of
attributable taxation) 8,157 1,553 3,474 8,157 1,553 3,474
Gain on disposal of management
contracts
(net of attributable (44,237) - - (44,237) - -
taxation)
Profit for the financial
period before goodwill
amortisation
& exceptional items 3,536 15,456 28,860 3,536 16,090 28,860
31 Mar 2003 31 Mar 2002 30 Sept 2002
Number of Number of Number of
shares shares shares
000's 000's 000's
Weighted average number of shares
For basic earnings per share 176,050 174,255 174,806
Dilutive effect of convertible loan notes - 17,442 -
Dilutive effect of exercisable share options and - 463 395
performance shares
For diluted earnings per share 176,050 192,160 175,201
At 31 March 2003 the loan notes are no longer convertible and no performance
shares remain in issue. The loan notes and share options currently in issue have
no dilutive effect and have therefore been excluded from the above table. The
Directors believe that the Group's results are more fairly represented by a
measure of earnings per share which excludes exceptional items and amortisation
of goodwill and therefore also present earnings per share figures stated before
these items are charged to the profit and loss account. 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 2003 31 Mar 30 Sep 2002 31 Mar 2003 31 Mar 2002 30 Sep 2002
2002
#'000 #'000 #'000 #'000 #'000 #'000
After goodwill amortisation
& exceptional items
- FRS 14 basis 17.29p 2.71p 3.29p 17.29p 2.79p 3.28p
Add:amortisation of 5.21p 5.27p 11.23p 5.21p 4.78p 11.21p
goodwill
Add:exceptional items, net
of attributable taxation 4.64p 0.89p 1.99p 4.64p 0.80p 1.98p
Less:gain on disposal of management
contracts net of attributable (25.13)p - - (25.13)p - -
taxation
Before goodwill amortisation
& exceptional items 2.01p 8.87p 16.51p 2.01p 8.37p 16.47p
Other
At Cash non cash Exchange At
30 Sept 2002 flow changes movement 31 Mar 2003
5. Analysis of changes in net #'000 #'000 #'000 #'000 #'000
debt
Cash at bank and in hand 32,490 (25,332) - 655 7,813
Bank overdraft (13,530) 13,530 - - -
18,960 (11,802) - 655 7,813
Debt due within one year (50,552) - (24,309) 164 (74,697)
Debt due after more than one (202,859) 71,762 23,940 - (107,157)
year
(253,411) 71,762 (369) 164 (181,854)
Total (234,451) 59,960 (369) 819 (174,041)
6. Share capital
During the period 10,342,000 redeemable preference shares of #1 were
redeemed at par and #10,342,000 has been transferred to the capital
redemption reserve.
7. Revaluation of fixed asset investment
The Group's investment in the ordinary shares of Lombard International
Assurance SA ("Lombard"), has been revalued to reflect the relevant share
of Lombard's most recently published embedded value.
8. Contingent liabilities
In the Annual Report to 30 September 2002 the Company made detailed
disclosures in respect of contingent liabilities which might exist due to
the Group's involvement in the management and marketing of split
capital closed end funds ("Splits") and as manager of the Aberdeen
Progressive Growth Unit Trust ("Progressive").
The investigation into the Splits sector by the Financial Services
Authority ("FSA") continues and there has been no material change to the
position disclosed in the 2002 Annual Report and in the Circular, dated
4 February 2003, sent to shareholders in respect of the sale of retail
funds to New Star.
In respect of Progressive, Aberdeen has provided a full response to the
Financial Ombudsman Service ("FOS") adjudicator's letter seeking the
Group's observations and awaits a response from the FOS.
The Board reiterates its belief that the Group has at all times acted with
integrity and in accordance with all relevant regulations and laws and that
no provision is appropriate.
On 3 April 2003, the Board of Real Estate Opportunities Limited ("REO")
announced that it had terminated the Group's management contract with
immediate effect and indicated that it may consider taking action
against Aberdeen in respect of losses incurred on its income portfolio.
Aberdeen believes any such action or complaint to be unfounded and will
defend any such action robustly. Neither does Aberdeen accept the
validity of REO's termination without notice. The Group considers that its
fees are properly payable and will take appropriate action to recover all
sums due under the terms of the contract.
The Board, having taken appropriate advice, considers that there is no need
for any provision in respect of any action threatened by REO.
9. The interim results have been prepared on the basis of the accounting
policies set out in the Group's 2002 statutory accounts. The comparative
figures for the period ended 31 March 2002 have been restated to
reflect the accounting treatment in the annual report for the year ended
30 September 2002. The restatement had no effect on the profit on ordinary
activities before taxation or shareholders' funds. The comparative figures
for the financial year ended 30 September 2002 are not the company's
statutory accounts for that year. Those accounts have been reported on by
the company's auditors and delivered to the Registrar of Companies. The
report of the auditors was unqualified and did not contain a statement
under section 237(2) or (3) of the Companies Act 1985.
10. Copies of this statement are being sent to all shareholders. Copies can be
obtained from the Company's registered office, One Albyn Place, Aberdeen,
AB10 1YG.
Independent Review Report by KPMG Audit Plc to
Aberdeen Asset Management PLC
Introduction
We have been instructed by the Group to review the financial information for the
six months ended 31 March 2003 which comprises the Profit and Loss Account,
Statement of Total Recognised Gains and Losses, Balance Sheet, Cash Flow
Statement and Notes to the Accounts. 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 of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
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 procedures to 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 excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Contingent liabilities
In forming our review conclusion, we have considered the adequacy of the
disclosures made in note 8 to the Interim Report concerning the contingent
liabilities of the Group in respect of the split-capital closed end fund sector
generally and the Aberdeen Progressive Growth Unit Trust, and their potential
impact on the Group's financial position. In view of the significance of this
uncertainty, we consider that it should be drawn to your attention but our
review conclusion is not qualified in this respect.
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 2003.
KPMG Audit Plc
Chartered Accountants
Aberdeen, 30 April 2003
ASSETS UNDER MANAGEMENT
March 2003 September 2002
#m #m
Institutional funds 12,131 12,902
Unit trusts & unit-linked 1,936 4,379
UK Investment trusts 4,178 4,480
Offshore funds 846 965
Discretionary accounts 402 432
Private equity 486 493
19,979 23,651
Equities: UK 4,701 5,417
European 1,146 1,420
USA 728 1,074
Asia Pacific 1,310 1,371
Japan 329 397
Emerging markets 168 221
8,382 9,900
Fixed interest & cash 5,373 7,107
Property 6,224 6,644
19,979 23,651
This information is provided by RNS
The company news service from the London Stock Exchange
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