Amvescap Plc Reports Results for Three Months Ended 30 September 1998.LONDON--(BUSINESS WIRE)--Oct. 28, 1998--AMVESCAP (NYSE NYSE See: New York Stock Exchange :AVZ) reported that revenues for the three months ended 30 September September: see month. 1998 amounted to (pds)226.3 million ($373.4 million) compared to (pds)149.9 million ($244.3 million) for the three months of 1997. Profit before tax and 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. increased to (pds)57.3 million ($94.5 million) from (pds)51.2 million ($83.5 million) in 1997. 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 amounted to 5.8p for the 1998 period (1997: 5.5p).
Results for Three Months Ended
30 Sept 30 Sept 30 Sept 30 Sept
1998+ 1997+ 1998 1997
--------- ---------- ---------- ----------
Revenues $373.4m $244.3m (pds)226.3m (pds)149.9m
Profit before tax $94.5m $83.5m (pds) 57.3m (pds)51.2m
and goodwill
amortisation
Earnings per ordinary
share, before
goodwill amortisation:
--basic $0.50(a) $0.50(a) 6.1p 6.1p
--fully diluted $0.48(a) $0.45(a) 5.8p 5.5p
(a) Per American Depository Share equivalent to 5 ordinary shares.
+ For the convenience of the reader, pounds sterling for the three
months ending 30 September 1998 have been translated to U.S.
dollars using 1.65 per (pds)1.00 (1997: $1.63 per [pds]1.00)
Revenues for the nine months ended 30 September 1998 amounted to
(pds)580.2 million ($963.1 million) compared to (pds)370.0 million
($599.4 million) for the nine months of 1997. Profit before tax,
goodwill amortisation and exceptional item increased to (pds)174.9
million ($290.3 million) from (pds)124.7 million ($202.0 million) in
1997. Earnings per share before goodwill amortisation and exceptional
item increased to 19.5p (1997: 16.5p), an increase of 18% over the
prior year. Fully diluted earnings per share before goodwill
amortisation and exceptional item amounted to 18.0p for the 1998
period (1997: 14.8p), an increase of 22%.
The Company completed its acquisition of GT Global on 29 May
1998. The results of GT Global have been included from 1 June 1998.
The amortisation of goodwill arising from the GT Global acquisition
has reduced the Group earnings for the nine months ended 30 September
1998 by (pds)11.4 million (1.9p per share). Amortisation of goodwill
reduced the group earnings for the three months ended 30 September
1998 by (pds)8.6 million. Net profits for the future will be
materially reduced by the amortisation of goodwill.
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 (pds)48.6 million ([pds]40.8 million after tax and 6.9p per
share) was reflected as an exceptional item at 30 June 1998. The
integration is expected to take up to 18 months, with the major
activities completed by June 1999.
Each business group achieved record levels of revenue and
operating profit in the current quarter and for the nine months of
1998 due to the continued implementation of our business strategies
and aided in part by the GT Global acquisition. Each group also had
positive flows of net new business during the current quarter.
Earnings before interest, taxes, amortisation and depreciation reached
(pds)76.7 million ($126.6 million) and (pds)218.7 million ($363.0
million) for the third quarter and nine months ended 30 September
1998. "These factors -- growth in new business, strong cash flow and
sound earnings patterns -- support our confidence in the fundamentals
of our business," said Mr. Charles W. Brady, Chairman and Chief
Executive Officer. "As we have stated, our business is focused only on
managing funds for our clients. As such, we do not have financial
exposures arising from proprietary investment practices and trading
activities," noted Mr. Brady.
Funds under management totalled $241.2 billion ([pds]142.7
billion) at 30 September 1998, an increase of $49 billion over 31
December 1997. This increase is due primarily to the inclusion of the
GT Global funds under management of $46.8 billion at the date of
purchase. Approximately one-third of the total funds under management
remain invested in fixed interest securities.
The global capital markets have experienced exceptional
volatility during the third quarter of 1998 and the Group's funds
under management were adversely impacted by these market changes,
declining by $19.7 billion (7.6%) during the third quarter of 1998.
The Group had $2.4 billion in net new business during the quarter
spread among each of the business units, partially offsetting the
$22.5 billion reduction resulting from the volatile global
marketplace. Redemptions of the US mutual funds were in line with
industry statistics but higher than redemption levels for prior
periods.
As our operations are primarily conducted in US dollars the
continued strength of sterling versus the dollar adversely impacted
the translation of the 1998 nine month operating profits by
approximately (pds)2.4 million compared to the same period of the
prior year.
"We take a conservative view about short-term changes in the
markets and are cautious about the remainder of 1998 and 1999 due to
the extreme changes in the global markets. We continue to concentrate
on the management of our headcount and on cost spending levels to
retain a reasonable balance in our business," noted Mr. Brady. "Even
market fluctuations do not change the underlying demand for our
services which are driven by the changing demographic trends and shift
toward individual savings from government-sponsored pension plans. The
factors affecting our long-term success - diverse product offerings,
multiple channels of distribution, global reach and financial strength
- remain stable. We therefore remain very optimistic about the future
of our company and our industry."
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, New York and Paris
Stock Exchanges with the symbol "AVZ."
-0-
AMVESCAP PLC Unaudited Group Profit and Loss Account (in thousands) Nine Months Ended 30 Sept 1998 Ordinary Exceptional Activities item Total 1997 ---------------------------------- --------- Revenues (pds)580,197 -- (pds)580,197(pds)370,047 Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. (388,142) (48,600) (436,742) (240,242) ---------------------------------- --------- 192,055 (48,600) 143,455 129,805 Goodwill amortisation (11,409) -- (11,409) -- ---------------------------------- --------- 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. 180,646 (48,600) 132 ,046 129,805 Investment income 8,542 -- 8,542 7,452 Interest payable (25,673) -- (25,673) (12,521) ---------------------------------- --------- Profit before taxation 163,515 (48,600) 114,915 124,736 Taxation (59,125) 7,800 (51,325) (42,410) ---------------------------------- --------- Profit after taxation (pds)104,390(pds)(40,800)(pds)63,590(pds)82,326 ---------------------------------- --------- Earnings per ordinary share: ---basic 17.6p (6.9)p 10.7p 16.5p ---fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. 16.3p (6.0)p 10.3p 14.8p ---------------------------------- --------- Earnings per ordinary share before goodwill amortisation: ---basic 19.5p (6.9)p 12.6p 16.5p ---fully diluted 18.0p (6.0)p 12.0p 14.8p ---------------------------------- ---------
AMVESCAP PLC
Unaudited
Group Profit and Loss Account
(in thousands)
Three Months Ended 30 Sept
--------------------------
1998 1997
------------ ------------
Revenues (pds)226,344 (pds)149,871
Operating expenses (157,817) (96,687)
------------ ------------
68,527 53,184
Goodwill amortisation (8,553) --
------------ ------------
Operating profit 59,974 53,184
Investment income 1,082 2,831
Interest payable (12,263) (4,771)
------------ ------------
Profit before taxation 48,793 51,244
Taxation (19,148) (17,155)
------------ ------------
Profit after taxation (pds)29,645 (pds)34,089
------------ ------------
Earnings per ordinary
share:
---basic 4.8p 6.1p
---fully diluted 4.6p 5.5p
------------ ------------
Earnings per ordinary
share before goodwill
amortisation:
---basic 6.1p 6.1p
---fully diluted 5.8p 5.5p
------------ ------------
AMVESCAP PLC Unaudited Group Balance Sheet (in thousands) 30 Sept 31 Dec ------- ------ 1998 1997 ------- ------ Fixed Assets fixed assets npl → activo sg fijo fixed assets npl → immobilisations fpl fixed assets fix npl → Goodwill (pds)685,853 (pds) - Tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. 77,464 46,832 Investments 124,640 86,626 ----------- ----------- 887,957 133,458 ----------- ----------- Current Assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. Cash 167,028 70,681 Other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. (a) 563,777 216,709 ----------- ----------- 730,805 287,390 Creditors: Amounts falling due within one year: Customer and counterparty Counterparty The other participant, including intermediaries, in a swap or contract. (139,928) - deposits Other loans and creditors (422,156) (213,971) ----------- ----------- Net current assets Net current assets The difference between current assets and current liabilities, also known as working capital. net current assets See working capital. 168,721 73,419 ----------- ----------- Total assets less current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. 1,056,678 206,877 Creditors: Amounts falling due after one year: Long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. (660,238) (209,172) Provisions for liabilities and charges (85,718) (19,167) ------------ ----------- Net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. (pds)310,722 (pds)(21,462) ------------ ----------- Capital and reserves Called up share capital (pds)163,628 (pds)148,855 Share premium account 448,656 157,365 Reserves (301,562) (327,682) ------------ ----------- Shareholders' funds (pds)310,722 (pds)(21,462) ----------- ----------- (a) Includes (pds)139.9 million due from customers and other counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. of the Group's German subsidiary.
AMVESCAP PLC
Segmental Information
(in thousands)
Nine Months Ended 30 Sept 1998
------------------------------------------
Revenues Expenses Profit
------------ -------------- -------------
Managed Products (pds)360,499 (pds)(215,082) (pds)145,417
US Institutional 103,216 (60,536) 42,680
INVESCO Global 100,594 (78,982) 21,612
Retirement and Benefit Plan
Services 15,888 (17,014) (1,126)
------------ -------------- ------------
580,197 (371,614) 208,583
Corporate -- (16,528) (16,528)
------------ -------------- ------------
580,197 (388,142) 192,055
Goodwill amortisation -- (11,409) (11,409)
------------ -------------- ------------
(pds)580,197 (pds)(399,551) (pds)180,646
============ ============== ============
Nine Months Ended 30 Sept 1997
------------------------------------------
Revenues Expenses Profit
------------ -------------- ------------
Managed Products (pds)230,738 (pds)(123,114) (pds)107,624
US Institutional 73,323 (36,130) 37,193
INVESCO Global 56,637 (50,498) 6,139
Retirement and Benefit Plan
Services 9,326 (15,290) (5,964)
------------ ------------- -----------
370,024 (225,032) 144,992
Corporate 23 (15,210) (15,187)
============ ============= ===========
(pds)370,047 (pds)(240,242) (pds)129,805
============ ============= ===========
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 (pds)490 million ($800 million)
including transaction costs and assumed liabilities of (pds)215
million for GT Global. (pds)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 (pds)48.6 million ((pds)40.8 million
after tax) which was recorded as an exceptional item in the
period.
2. The taxation charge for the nine months to 30 September 1998 is
estimated based on the total expected tax charge for the year. A
significant proportion of the charge is expected to arise from US
operations.
3. Earnings per ordinary share is calculated on the after taxation
profit of (pds)63.6 million (1997: (pds)82.3 million). The
weighted average number of ordinary shares in issue during the
period was 593.0 million (1997: 499.2 million).
The fully diluted earnings per share is based on earnings of
(pds)69.3 million (1997: (pds)87.0 million) and shares of 674.7
million (1997: 586.5 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.
AMVESCAP PLC Funds Under Management (in billions) Managed Products ---------------- Total AIM 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. US Inst Global RBPS RBPS Raritan Bay Power Squadron (New Jersey) ----- --- ------- ------- ------ ---- 31 Dec 1997 $192.2 $83.4 $18.0 $67.5 $18.4 $4.9 Market gains (3.3) (2.9) 0.5 1.5 (2.4) -- GT Global acquisition 46.8 9.8 -- 19.6 17.4 -- Net new (lost) business 5.0 2.9 1.1 (1.9) 2.3 0.6 Change in US Money Market Funds 0.3 0.3 -- -- -- -- Foreign currency 0.2 (0.1) -- -- 0.3 -- ------ ------- ------- ------- ------- ----- 30 Sept 1998 $241.2 $93.4 $19.6 $86.7 $36.0 $5.5 ------ -------- ------- ------- ------- ------ 30 Sept 1998 + (pds)142.7 (pds)55.2 (pds)11.6 (pds)51.3 (pds)21.3 (pds)3.3 --------- --------- --------- --------- -------- ------- + Translated at $1.69 per (pds)1.00.
AMVESCAP PLC
Reconciliation to US Accounting Principles
(in thousands)
Nine Months Ended 30 Sept
---------------------------
1998 1997
------------- ------------
Net profit under UK GAAP (pds)63,590 (pds)82,326
US GAAP Adjustments:
Pension costs 812 645
Goodwill and other intangibles (45,749) (31,639)
Exceptional item - integration 40,800 --
Taxation 1,481 (981)
============= =============
Net income under US GAAP (pds)60,934 (pds)50,351
============= =============
Net income per share under US GAAP
(primary) 10p 9p
============= =============
Net income per share under US GAAP
(fully diluted) 10p 9p
============= =============
30 Sept 1998 31 Dec 1997
------------- -------------
Shareholders' funds under UK GAAP (pds)310,722 (pds)(21,462)
US GAAP Adjustments:
Pension costs 6,110 5,298
Goodwill and other intangibles 1,046,061 1,079,307
Deferred taxation (5,769) (4,764)
Treasury stock (124,461) (82,138)
Deferred earn-out payments 333 383
Employee stock ownership plans (2,290) (5,772)
Dividends -- 25,510
============= =============
Shareholders' equity under US GAAP (pds)1,230,706 (pds)996,362
============= =============
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