AMVESCAP PLC Reports Preliminary Results for Year Ended 31 December 1998.LONDON--(BUSINESS WIRE)--Feb. 9, 1999--AMVESCAP (NYSE NYSE See: New York Stock Exchange :AVZ) (FTSE FTSE A company that specializes in index calculation. Although not part of a stock exchange, co-owners include the London Stock Exchange and the Financial Times. Notes: The FTSE is similar to Standard & Poor's in the United States. :AVZ)(Paris Stock Exchange:AVZ) reported that profit before tax, goodwill amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and exceptional item increased 30% to (pound) 231.3 million ($388.6 million) from (pound)177.3 million ($292.5 million) in 1997. Earnings per share before goodwill amortisation and exceptional item increased to 26.0p (1997: 22.7p). Fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of before goodwill amortisation and exceptional item increased 16.8% to 24.3p for the 1998 year (1997: 20.8p). Revenues amounted to (pound)802.2 million ($1,347.7 million) compared to (pound)530.7 million ($875.7 million) in 1997. -0-
----------------------------------------------------------------------
Results for Year Ended
1998(b) 1997(b) 1998 1997
----------- ----------- ----------- -----------
Revenues $1,347.7m $875.7m (pds)802.2m (pds)530.7m
Profit before tax,
exceptional item
and goodwill
amortisation $388.6m $292.5m (pds)231.3m (pds)177.3m
Earnings per
ordinary share,
before exceptional
item and goodwill
amortisation:
--basic $2.18(a) $1.87(a) 26.0p 22.7p
--fully diluted $2.04(a) $1.72(c) 24.3p 20.8p(c)
Funds under
management $275.4b $192.2b (pds)163.9b (pds)116.5b
Dividends per
share $0.67(a) $0.58(a) 8.0p 7.0p
----------------- ------------ ----------- ----------- -----------
(a) Per American Depository Share equivalent to 5 ordinary shares.
(b) For the convenience of the reader, pounds sterling for the year
ending 31 December 1998 have been translated to U.S. dollars
using 1.68 per (pound)1.00 (1997: $1.65 per (pound)1.00).
(c) Diluted earnings per ordinary share for 1997 restated pursuant to
FRS 14, adopted in 1998.
The Company completed its acquisition of GT Global on 29 May, 1998. The results of GT Global have been included from 1 June June: see month. 1998. The amortisation of goodwill arising from the GT Global acquisition has reduced the Group's earnings for the 1998 year by (pound)21.2 million (3.5p per share). The integration of GT Global involves combining office locations, consolidating administration and back-office activities and processes and bringing technology onto common platforms. The cost of integration of (pound)48.6 million ((pound)40.8 million after tax and 6.8p per share) has been reflected as an exceptional item in the 1998 results. Integration is expected to take up to 18 months from June 1998, with the major activities completed by June 1999. Funds under management totalled $275.4 billion ((pound)163.9 billion) at 31 December December: see month. 1998, an increase of $83.2 billion over 31 December 1997, including $46.8 billion added through the GT Global acquisition. Average funds under management were $232.9 billion for the year 1998. The Group had $26.2 billion in market appreciation during the year 1998, net of the market decline experienced in the third quarter of the year. New business during the 1998 year amounted to $4.6 billion. Average funds under management amounted to $258.3 billion for the fourth quarter compared to $248.4 billion for the previous quarter. At 31 December 1998 approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. two-thirds of the total funds under management were invested in equity securities and one-third in fixed interest securities. The Board has recommended a final dividend of 5.0p resulting in a total dividend of 8.0p for 1998 (1997: 7.0p). This is an increase of 14% over the prior year and the sixth consecutive year that the dividend has been increased. This dividend, if approved by the shareholders at the Annual General Meeting in May, will be paid on 7 July July: see month. 1999 to shareholders on the register on 6 April 1999. The ex-dividend date Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend. for the dividend will be 29 March 1999. THE YEAR IN REVIEW Each business group achieved record levels of revenue and operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. during 1998. The integration of the GT Global businesses is progressing on schedule and within the financial budgets established at the time of acquisition. The acquisition has enhanced our competitive position in the global markets and continues to provide us with expanded product and distribution capabilities. Our Company currently provides services to clients in more than 100 countries, employs approximately 4,900 people in 25 countries and manages more than 1,600 separate institutional accounts and 400 retail funds. "The exceptional volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the experienced in August and September September: see month. of 1998 created caution and concern in the global marketplace," said Mr. Charles Charles, archduke of Austria Charles, 1771–1847, archduke of Austria; brother of Holy Roman Emperor Francis II. Despite his epilepsy, he was the ablest Austrian commander in the French Revolutionary and Napoleonic wars; however, he was handicapped by W. Brady Bra·dy , James Buchanan Known as "Diamond Jim." 1856-1917. American financier and philanthropist who gained his nickname because of his attraction to diamonds and his extravagant lifestyle. Noun 1. , Chairman and Chief Executive Officer. "These market fluctuations did not change the underlying demand for our services. In fact, they created opportunities for us to expand our businesses globally and to attract new members to our management team. The key points to our strategy, which were confirmed during this period, are founded on creating a company with multiple channels of distribution and product offerings, a global reach and financial strength. As always, we remain very conscious of controlling our expense levels to be able to adjust rapidly to the types of extreme market changes experienced during the past year," noted Mr. Brady. Managed Products Funds under management increased to $134.5 billion at 31 December 1998, an increase of $33.1 billion for the year, including the $9.8 billion of assets acquired in the GT acquisition. AIM and INVESCO INVESCO, (NYSE: IVZ) is an investment management company based in London, England, UK. It is quoted on the London Stock Exchange and is a member of the FTSE 100 Index. It has branches in 19 countries, but more than half of its business is in the United States. had gross retail sales of $16.2 billion and $10.9 billion during the year and both had positive net flows in the year. Revenues and operating profits reached record levels in the current year for both AIM and INVESCO fund groups. The Canadian business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. also achieved record revenues and funds under management at the end of 1998 amounted to $2.6 billion. US Institutional The US Institutional group produced record results for the year 1998. Revenue and operating profits improved by 43% and 21%, respectively over the prior year. While the unit continues to experience a loss of assets caused by the shift to index products, the flow from active to passive management has declined and the group continues to rank among the largest active-only asset managers in the US. Marketing activity for 1998 produced record levels of new business as well as 130 new clients. The addition of GT Global has enhanced our product lines and has provided other synergies for this business. INVESCO Global Operating profits increased to (pound)31.7 million in 1998, reaching an operating profit margin Operating profit margin The ratio of operating profit to net sales. of 21% for the year. The GT acquisition provided increased market positions in several important areas and added over $17 billion in funds under management. The Asian markets continued to be very volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. throughout 1998; however, new business activity has remained sound both in retail and institutional operations and we are confident about our position in these important marketplaces. Retail sales, particularly in France, have been very favourable compared to prior year levels. Net new business totalled $2.7 billion during the year for this group. Retirement Benefit Services This new operating group co-ordinates, develops and manages defined contribution services in related retirement products world-wide. The group generated over $1.3 billion in net new business for various units of AMVESCAP during the year and was responsible for over $6.2 billion in funds under management for all distribution channels. The group currently services over 340 separate retirement plans with approximately 260,000 plan participants Plan participants Employees or other beneficiaries who are eligible to receive benefits from a company's employee benefit plan. . OUTLOOK The results for 1998 are satisfying and we continue to focus on creating value for our shareholders by positioning the Company strategically in each of the major capital markets throughout the world. Maintaining a proper balance between the revenue streams and expense levels, including investments in new activities, remains a major part of our effort. We remain very optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the future for our Company and our industry. We believe in the strength of our brands, our distribution channels, our global presence and our strong financial position. We are confident that we are positioned to continue as one of the few truly global investment management groups. AMVESCAP is one of the world's largest independent investment managers, operating under the AIM and INVESCO brand names. AMVESCAP is a holding company offering a broad array of investment products and services to institutions and individuals across all distribution channels. The Company is listed on the London London, city, Canada London, city (1991 pop. 303,165), SE Ont., Canada, on the Thames River. The site was chosen in 1792 by Governor Simcoe to be the capital of Upper Canada, but York was made capital instead. London was settled in 1826. , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Paris Stock Exchanges with the symbol "AVZ". -0-
AMVESCAP PLC
Unaudited
Group Profit and Loss Account
(in thousands)
Year Ended 31 December
---------------------------------------------------
1998
--------------------------------------
Ordinary Exceptional
Activities item Total 1997
------------ ------------ ------------ ------------
Revenues (pds)802,172 (pds) -- (pds)802,172 (pds)530,659
Operating expenses (544,856) (48,600) (593,456) (344,573)
------------ ------------ ------------ ------------
257,316 (48,600) 208,716 186,086
Goodwill
amortisation (21,221) -- (21,221) --
------------ ------------ ------------ ------------
Operating profit 236,095 (48,600) 187,495 186,086
Investment income 12,183 -- 12,183 9,260
Interest payable (38,200) -- (38,200) (18,053)
------------ ------------ ------------ ------------
Profit before
taxation 210,078 (48,600) 161,478 177,293
Taxation (75,173) 7,800 (67,373) (60,279)
------------ ------------ ------------ ------------
Profit after
taxation 134,905 (40,800) 94,105 117,014
Dividends (50,594) (50,594) (39,462)
------------ ------------ ------------ ------------
Retained profit (pds)84,311 (pds)(40,800) (pds)43,511 (pds)77,552
------------ ------------ ------------ ------------
Earnings per
ordinary share
Before goodwill
Amortisation:
---basic 26.0p (6.8)p 19.2p 22.7p
---fully diluted 24.3p (6.4)p 17.9p 20.8p
------------ ------------ ------------ ------------
Earnings per
ordinary share:
---basic 22.5p (6.8)p 15.7p 22.7p
---fully diluted 21.1p (6.4)p 14.7p 20.8p
------------ ------------ ------------ ------------
AMVESCAP PLC
Unaudited
Group Balance Sheet
(in thousands)
1998 1997
---------- ----------
Fixed assets
Tangible assets (pds)88,781 (pds)46,832
Investments 133,508 86,626
Goodwill 708,644 --
---------- ----------
930,933 133,458
Currents assets
Debtors: amounts falling due within one year(a) 543,064 190,155
Investments 31,676 26,554
Cash at bank and in hand 119,651 70,681
---------- ----------
694,391 287,390
Creditors: amounts falling due within one year (553,248) (213,971)
---------- ----------
Net current assets 141,143 73,419
---------- ----------
Total assets less current liabilities 1,072,076 206,877
Creditors: amounts falling due after more
than one year
Long-term debt (684,938) (203,598)
Other creditors (5,937) (5,531)
---------- ----------
(690,875) (209,129)
Provisions for liabilities and charges (41,924) (19,210)
---------- ----------
Net assets (pds)339,277 (pds)(21,462)
========== ==========
Capital and reserves
Called up share capital (pds)167,506 (pds)148,855
Share premium account 469,382 157,365
Profit and loss account 257,929 214,418
========== ==========
894,817 520,638
Other reserves (555,540) (542,100)
========== ==========
Shareholders' funds, equity interests (pds)339,277 (pds)(21,462)
========== ==========
(a) Includes (pds)160.1million due from customers and other
counterparties of the Group's German subsidiary.
AMVESCAP PLC
Segmental Information
(in thousands)
Year Ended 31 Dec 1998
--------------------------------------------
Revenues Expenses Profit
-------------- -------------- --------------
Managed Products (pds)488,936 (pds)(290,562) (pds)198,374
US Institutional 143,221 (88,027) 55,194
INVESCO Global 150,511 (118,784) 31,727
Retirement and Benefit
Plan Services 19,504 (20,630) (1,126)
Corporate -- (26,853) (26,853)
-------------- -------------- --------------
802,172 (544,856) 257,316
Goodwill amortisation -- (21,221) (21,221)
-------------- -------------- --------------
(pds)802,172 (pds)(566,077) (pds)236,095
============== ============== ==============
Year Ended 31 Dec 1997
--------------------------------------------
Revenues Expenses Profit
-------------- -------------- --------------
Managed Products (pds)339,361 (pds)(178,914) (pds)160,447
US Institutional 99,939 (54,275) 45,664
INVESCO Global 77,793 (70,533) 7,260
Retirement and Benefit
Plan Services 13,297 (20,000) (6,703)
Corporate 269 (20,851) (20,582)
============== ============== ==============
(pds)530,659 (pds)(344,573) (pds)186,086
============== ============== ==============
NOTE: The Segmental Information for 1997 has been reclassified to
reflect the changes in the Group's operational structure, which
became effective on 1 January 1998.
Notes
1. On 29 May 1998, AMVESCAP PLC (the "Group") completed the
acquisition of the Asset Management Division of Liechtenstein
Global Trust AG ("GT Global"), an international asset management
group offering a broad range of discretionary management services
to pension funds, institutional clients, and individual
investors. The Company paid approximately (pound)510 million
($833 million) including transaction costs and assumed
liabilities of (pound)219 million for GT Global. (pound)275
million of the purchase consideration was satisfied by the
issuance of 42.5 million new ordinary shares.
The results of the acquired companies have been included from 1
June 1998. Goodwill arising from the transaction has been
recorded as an asset and is being amortised over a twenty-year
period in accordance with FRS-10, which was adopted by the
Company in 1998. The Company has elected not to restate its
financial statements for goodwill arising from prior period
acquisitions, which were written off against shareholders'
funds. The Company commenced an integration program for the
acquired businesses; the estimated cost of this program is
(pound)48.6 million ((pound)40.8 million after tax) which
was recorded as an exceptional item in the year.
2. The taxation charge is primarily made up from overseas taxation.
The impact of the exceptional item and the amortisation of
goodwill on tax is as follows:
Ordinary Exceptional
Activities Item Total
(pds)'000 (pds)'000 (pds)'000
------------ ------------ ------------
Profit before taxation 210,078 (48,600) 161,478
Goodwill amortisation,
not tax deductible 21,221 -- 21,221
------------ ------------ ------------
Profit before tax and
amortisation 231,299 (48,600) 182,699
Taxation (75,173) 7,800 (67,373)
------------ ------------ ------------
Profit after tax 156,126 (40,800) 115,326
============ ============ ============
Effective tax rate 32.5% 16.0% 37.0%
3. Earnings per ordinary share before amortisation and exceptional
item is calculated on the after taxation profit of (pound)156.1
million (1997: (pound)117.0 million). The weighted average number
of ordinary shares in issue during the period was 601.2 million
(1997: 516.3 million).
Diluted earnings per share takes in to account the effect of
dilutive potential ordinary shares outstanding during the
period. The 1998 diluted earnings per share has been
calculated pursuant to FRS 14 and the 1997 amounts have been
restated.
The diluted earnings per share is based on earnings of
(pound)156.6 million (1997: (pound)118.2 million) and shares
of 643.4 million (1997: 567.4 million).
The Directors consider that profit before exceptional items and
amortisation of goodwill is a more appropriate basis for the
calculation of earnings per ordinary share since this represents
a more consistent measure of operating performance.
1998
Number of
Profit Shares Per Share
(pds)'000 '000 Amount
------------ ------------ ------------
Basic earnings per share 156,126 601,234 26.0p
============
Issuance of options -- 33,145
Conversion of loan note 521 8,977
============ ============ ============
Diluted earnings per share 156,647 643,356 24.3p
============ ============ ============
1997
Number of
Profit Shares Per Share
(pds)'000 '000 Amount
------------ ------------ ------------
Basic earnings per share 117,017 516,309 22.7p
============
Issuance of options -- 31,790
Conversion of loan note 1,140 19,253
============ ============ ============
Diluted earnings per share 118,157 567,352 20.8p
============ ============ ============
4. Dividends for 1998 and 1997 were as follows:
1998 1997
(pds)'000 (pds)'000
---------- ----------
Interim paid: 3.0p per share (1997: 2.5p) 18,900 13,952
Final proposed: 5.0p per share (1997: 4.5p) 31,694 25,510
========== ==========
50,594 39,462
========== ==========
Subject to shareholders' approval at the Annual General Meeting
in May 1999, the final dividend in respect of 1998 will be paid on 7
July 1999 to shareholders on the register at the close of business on
6 April 1999.
5. The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 1998
or 1997. Statutory accounts for 1997 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.
AMVESCAP PLC
Funds Under Management
(in billions)
Managed Products
Total AIM INVESCO
---------- ---------- ----------
31 Dec 1997 $ 192.2 $ 83.4 $ 18.0
Market gains 26.2 11.5 3.3
GT Global acquisition 46.8 9.8 --
Net new (lost) business 4.6 2.7 1.6
Change in US Money
Market Funds 4.7 4.4 --
Foreign currency 0.9 (0.2) --
---------- ---------- ----------
31 Dec 1998 $ 275.4 $ 111.6 $ 22.9
---------- ---------- ----------
31 Dec 1998(a) (pds)163.9 (pds) 66.4 (pds) 13.6
---------- ---------- ----------
(a) Translated at $1.68 per (pds)1.00
US Inst Global RBPS
---------- ---------- ----------
31 Dec 1997 $ 67.5 $ 18.4 $ 4.9
Market gains 9.6 1.2 0.6
GT Global acquisition 19.6 17.4 --
Net new (lost) business (3.1) 2.7 0.7
Change in US Money
Market Funds 0.3 -- --
Foreign currency -- 1.1 --
---------- ---------- ----------
31 Dec 1998 $ 93.9 $ 40.8 $ 6.2
---------- ---------- ----------
31 Dec 1998(a) (pds) 55.9 (pds) 24.2 (pds) 3.8
---------- ---------- ----------
(a) Translated at $1.68 per (pds)1.00
AMVESCAP PLC
Reconciliation to US Accounting Principles
(in thousands)
Year Ended 31 Dec
---------- ----------
1998 1997
---------- ----------
Net profit under UK GAAP (pds)94,105 (pds)117,014
US GAAP Adjustments:
Acquisition accounting differences (36,091) (44,496)
Taxation (13,613) (4,647)
Other (150) 1,082
========== ==========
Net income under US GAAP (pds)44,251 (pds)68,953
========== ==========
Shareholders' funds under UK GAAP (pds)339,277 (pds)(21,462)
US GAAP Adjustments:
Acquisition accounting differences 1,022,254 1,079,307
Deferred taxation (1,027) (4,764)
Treasury stock (131,857) (82,138)
Employee stock ownership plans (2,309) (5,772)
Dividends 31,694 25,510
Other 5,381 5,681
========== ==========
Shareholders' equity under US GAAP (pds)1,263,413 (pds)996,362
========== ========== |
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