SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 Under
the Securities Exchange Act of 1934
For the month of February, 2006
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Commission File Number 001-13908
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AMVESCAP PLC
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(Translation of registrant's name into English)
30 Finsbury Square, London EC2A 1AG, ENGLAND
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(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1):
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7):
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Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
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If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- N/A
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Description of document filed: AMVESCAP ANNOUNCES RESULTS
--------------------------
For immediate Release
Contact: Michael Perman
Phone: (44) 0207-065-3942
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AMVESCAP REPORTS FOR YEAR ENDED DECEMBER 31, 2005
Company Building Renewed Business Momentum
London, February 7, 2006 - AMVESCAP reported that profit before tax for the 2005
year amounted to $360.1 million (2004: $39.0 million). The results for 2005
include a $75.7 million restructuring charge, and the 2004 results included a
charge of $413.2 million representing the U.S. regulatory settlement,
collectively referred to as "the Adjustment" or "the Adjustments". Operating
profit for 2005 amounted to $424.6 million (2004: $87.3 million). Operating
profit before the Adjustments for 2005 amounted to $500.3 million
(2004: $500.5 million).
Diluted earnings per share before the Adjustments was $0.34 for 2005
(2004: $0.35). (NYSE: AVZ).
"Our work during the past months has laid a strong foundation for success in
2006," said AMVESCAP president and CEO Martin L. Flanagan. "We are building
renewed business momentum by taking advantage of AMVESCAP's inherent global
strengths, simplifying our operating platform, and with our recently announced
combination with PowerShares, creating a unique industry product line featuring
both actively managed mutual funds and distinctive ETFs."
"Our restructuring actions will allow AMVESCAP to reduce costs by operating more
efficiently and effectively," added Mr. Flanagan. "Assuming a continuation of
the current business environment, the actions we are taking should allow us to
reduce 2006 operating expenses by approximately $120 million."
-----------------------------------------------------------------------------------
Results for Year Ended Results before the Adjustments
December 31, for the Year Ended December 31,
------------------------ -------------------------------
2005 2004(a) 2005 2004(a)
---------- ----------- --------- ----------
Net Revenues $2,173.2m $2,124.5m $2,173.2m $2,124.5m
Operating expenses $1,748.7m $2,037.1m $1,673.0m $1,623.9m
Operating profit $424.6m $87.3m $500.3m $500.5m
Net operating margin(b) 19.5% 4.1% 23.0% 23.6%
Profit before tax $360.1m $39.0m $435.8m $452.2m
Earnings per share:
--basic $0.27 $(0.05) $0.34 $0.35
--diluted $0.26 $(0.05) $0.34 $0.35
-----------------------------------------------------------------------------------
(a) 2004 results have been restated to reflect the transition from U.K.
Generally Accepted Accounting Practice ("U.K. GAAP") to International
Financial Reporting Standards ("IFRS") and have been translated into U.S
dollars, the presentation currency of AMVESCAP. See Note 10 for
reconciliations of AMVESCAP's U.K. GAAP results to IFRS.
(b) Net operating margin is equal to Operating profit divided by Net revenues.
Quarterly Earnings Summary
AMVESCAP's fourth quarter of 2005 includes the Adjustment of $75.7 million
($58.3 million after tax, or $0.07 per share), which was recorded as part of the
operating review that the company has been implementing across all business
units. The Adjustment includes staff termination, property, and fund
rationalization costs. See Note 7 for additional details. Also during the fourth
quarter, AMVESCAP redenominated its share capital and changed its presentation
currency from sterling to U.S. dollars. See Note 3 for further information.
Net revenues (total revenues less third-party distribution, service and advisory
fees) for the three months ended December 31, 2005, were $551.4 million (3rd
quarter 2005: $536.2 million). As required under IFRS, third-party distribution,
service and advisory fees are now presented separately from total revenues on
the income statement. Operating expenses before the Adjustment totaled $427.3
million for the fourth quarter of 2005 (3rd quarter 2005: $423.2 million).
Included within General and Administrative expenses during the fourth quarter of
2005 is a non-cash goodwill impairment charge of $16.6 million ($10.4 million
after tax, or $0.01 per share) related to the Atlantic Trust business. See the
supplemental schedule included in this earnings release for additional
information. The net operating margin before the Adjustment for the three months
ended December 31, 2005 was 22.5% (3rd quarter 2005: 21.1%).
Profit before tax and the Adjustments for the three months ended December 31,
2005 amounted to $94.3 million, compared to $119.1 million in the third quarter
of 2005. Included in Other (loss)/income for the fourth quarter of 2005 is an
$11.3 million expense associated with a capital infusion into our Taiwan bond
funds. In addition, we incurred a non-cash loss of $6.8 million related to the
foreign exchange revaluation of our senior notes into sterling. This loss was
recorded pursuant to our adoption of International Accounting Standard ("IAS")
39, "Financial Instruments: Recognition and Measurement", as discussed in Note
2, before the redenomination from sterling to U.S. dollars. See the supplemental
schedule included in this earnings release for additional information regarding
these charges. Diluted earnings per share before the Adjustments amounted to
$0.07 for the three months ended December 31, 2005 (2004: $0.09).
Annual Earnings Summary
Net revenues for 2005 were $2,173.2 million (2004: $2,124.5 million). Operating
expenses before the Adjustments totaled $1,673.0 million for 2005 (2004:
$1,623.9 million). In addition to the impairment charge noted previously,
operating expenses for 2005 include several charges relating to continuing
reviews of the business. Included in Property and Office expenses in the third
quarter are onerous lease charges of $11.4 million related to the finalization
of sub-lease arrangements that were originally estimated and expensed in a $37.0
million charge in the third quarter of 2004. Also in the third quarter is an
$11.8 million recruitment charge, recorded in Compensation expenses.
Additionally, the outsourcing of the German banking operation and pending sale
of the banking license resulted in a charge of $4.7 million included within
Compensation expenses in the third quarter. See the supplemental schedule
included in this earnings release for additional information regarding these
charges. The net operating margin before the Adjustments for 2005 was 23.0%
(2004: 23.6%).
Profit before tax and the Adjustments for 2005 amounted to $435.8 million (2004:
$452.2 million). We recorded a $32.6 million gain from the sale of the AMVESCAP
Retirement business in the third quarter, offset by a charge related to the
outsourcing of the defined contribution platform in the U.K. of $7.2 million.
Fourth quarter charges relating to the capital infusion into the Taiwan bond
funds and the foreign exchange loss also contributed to Other (loss)/income
during the year. See the supplemental schedule included in this earnings release
for additional information regarding these items. Diluted earnings per share
before the Adjustments amounted to $0.34 for the year ended December 31, 2005
(2004: $0.35).
Dividends
The Board has recommended a final dividend for 2005 of 5.5p per share,
approximately $0.10 per share at an exchange rate of $1.74 per (pound)1.00
(2004: 5.0p per share), resulting in a total dividend of 9.5p per share for 2005
(2004: 7.5p). The final dividend, if approved by shareholders at the Annual
General Meeting on April 27, 2006, will be paid on May 4, 2006, to shareholders
on the register as of March 31, 2006. The ex-dividend date will be March 29,
2006. Future dividends will be declared in U.S. dollars.
Assets Under Management
Assets under management at the end of 2005 were $386.3 billion (2004: $382.1
billion). Average assets under management during the fourth quarter were $380.9
billion, compared to $378.1 billion for the preceding quarter and $374.0 billion
for the fourth quarter of 2004. Average assets under management for 2005 were
$377.6 billion, compared to $371.3 billion in 2004.
Net outflows for the year ended December 31, 2005, were $16.2 billion, with
sales of $66.3 billion and redemptions of $82.5 billion. For the fourth quarter
of 2005, net outflows were $3.7 billion, with sales of $15.8 billion and
redemptions of $19.5 billion. Fourth quarter 2005 net outflows included the loss
of a $1.4 billion sub-advised client in our U.S. Retail channel. Additional
analysis of assets under management is included in the supplemental schedules in
this earnings release.
Transition to IFRS
Effective January 1, 2005, AMVESCAP began recording its results of operations
under IFRS. The comparative period has been restated to apply these IFRS on a
consistent basis. Prior to this date, AMVESCAP prepared its consolidated
financial statements under U.K. GAAP. The most significant changes affecting
AMVESCAP's financial reporting due to the IFRS transition are:
o The cessation of goodwill amortization (IFRS 3) and redenomination of
goodwill into the currency of the underlying acquired entities (IAS 21);
o The inclusion of a fair value charge in respect of outstanding employee share
options granted after November 7, 2002 (IFRS 2);
o The replacement of existing charges for awards under certain
equity-based compensation plans with fair value charges spread over
revised time periods (IFRS 2);
o The inclusion in the balance sheet of all employee benefit liabilities
(IAS 19); and
o The reclassification of certain income statement and balance sheet
items for disclosure purposes, including the presentation of
third-party distribution fees, service fees and advisory fees in the
income statement separately from total revenues.
The underlying business transactions and cashflows of AMVESCAP did not change
upon the transition to IFRS. The transition to IFRS resulted in the reduction of
total shareholders' funds from the U.K. GAAP figure at January 1, 2004
(transition date) of $208 million. This reduction is due primarily to the
redenomination of goodwill and management contract intangible assets into the
currency of the underlying acquired entities. Under U.K. GAAP, these balances
were recorded in pounds sterling. For the year ended December 31, 2004, the
transition to IFRS resulted in the addition of $276 million to profit for the
year, primarily due to the cessation of goodwill amortization previously
recorded under U.K. GAAP. Diluted earnings per share for the year ended December
31, 2004 was a loss of $0.05 under IFRS, compared with a loss of $0.39 under
U.K. GAAP. See Note 10 for further details.
AMVESCAP's first Annual Report under IFRS will be for the year ended December
31, 2005 and is expected to be sent to shareholders in March, 2006.
AMVESCAP is a leading independent global investment manager dedicated to helping
people worldwide build their financial security. Operating under the AIM,
INVESCO, AIM Trimark, INVESCO Perpetual and Atlantic Trust brands, AMVESCAP
strives to deliver outstanding products and services through a comprehensive
array of retail and institutional investment solutions for clients around the
world. The Company is listed on the London, New York and Toronto stock exchanges
with the symbol "AVZ." Additional information is available at www.amvescap.com.
Members of the investment community and general public are invited to listen to
the conference call today, Tuesday, February 7, 2006, at 2:00 p.m. GMT (9:00
a.m. EST), by dialing one of the following numbers: 1-773-756-0108 or
1-888-455-2053 for U.S. callers. An audio replay of the conference call will be
available until Tuesday, February 14, 2006, at 10:00 p.m. GMT (5:00 p.m. EST) by
calling 1-203-369-1038 or 1-866-436-9392 for U.S. callers. The presentation
slides that will be reviewed during the conference call will be available on
AMVESCAP's Web site at www.amvescap.com.
# # #
This release may include statements that constitute "forward-looking statements"
under the United States securities laws. Forward-looking statements include
information concerning possible or assumed future results of our operations,
earnings, liquidity, cash flow and capital expenditures, industry or market
conditions, assets under management, acquisition activities and the effect of
completed acquisitions, debt levels and the ability to obtain additional
financing or make payments on our debt, regulatory developments, demand for and
pricing of our products and other aspects of our business or general economic
conditions. In addition, when used in this release, words such as "believes,"
"expects," "anticipates," "intends," "plans," "estimates," "projects" and future
or conditional verbs such as "will," "may," "could," "should," and "would" and
any other statement that necessarily depends on future events, are intended to
identify forward-looking statements.
Forward-looking statements are not guarantees of performance. They involve
risks, uncertainties and assumptions. Although we make such statements based on
assumptions that we believe to be reasonable, there can be no assurance that
actual results will not differ materially from our expectations. We caution
investors not to rely unduly on any forward-looking statements. In connection
with any forward-looking statements, you should carefully consider the areas of
risk described in our most recent Annual Report on Form 20-F, as filed with the
United States Securities and Exchange Commission ("SEC"). You may obtain these
reports from the SEC's Web site at www.sec.gov.
AMVESCAP PLC
Consolidated Income Statement
(Unaudited, in thousands other than per share amounts)
Year Ended Dec 31,
-------------------------------
2005 2004 % Change
-------------- ------------- --------
Revenues:
Management $2,213,650 $2,052,664 7.8%
Service and distribution 538,210 593,265 (9.3)%
Other 127,358 111,562 14.2%
--------------- ------------
Total revenues 2,879,218 2,757,491 4.4%
Third-party distribution,
service and advisory fees (705,981) (633,030) 11.5%
--------------- -------------
Net Revenues 2,173,237 2,124,461 2.3%
--------------- -------------
Operating expenses:
Compensation (1,044,706) (966,788) 8.1%
Marketing (139,560) (129,098) 8.1%
Property and office (130,294) (169,290) (23.0)%
Technology/telecommunications (138,966) (148,709) (6.6)%
General and administrative (219,462) (210,040) 4.5%
Restructuring charge (75,690) -- N/A
U.S. regulatory settlement -- (413,211) (100.0)%
--------------- ---------------
Total operating expenses (1,748,678) (2,037,136) (14.2)%
--------------- ---------------
Operating profit 424,559 87,325 386.2%
Gain on sale of business 32,626 11,831 175.8%
Other (loss)/income (11,965) 21,044 N/A
Interest expense (85,142) (81,171) 4.9%
--------------- ---------------
Profit before taxation 360,078 39,029 822.6%
Taxation - U.K. (18,013) (2,391) 653.4%
Taxation - overseas (128,677) (72,297) 78.0%
--------------- ---------------
Profit/(loss) after taxation 213,388 (35,659) N/A
Minority interests (1,148) (536) 114.2%
--------------- ---------------
Profit/(loss) for the period
attributable to equity holders of
the parent $212,240 $(36,195) N/A
=============== ================
Earnings per share -- basic $0.27 $(0.05)
--diluted $0.26 $(0.05)
Earnings per share before
restructuring charge (2005) and
U.S. regulatory settlement (2004),
basic and diluted $0.34 $0.35
Dividends paid $134,118 $135,681
Final dividend proposed per share (pence) 5.5p 5.0p
Final dividend proposed $78,471 $78,645
AMVESCAP PLC
Consolidated Income Statement
(Unaudited, in thousands other than per share amounts)
%
Q405 Q305 Change Q205 Q105 Q404
------------ ------------ ------------ ------------ ------------
Revenues:
Management $573,674 $555,715 3.2% $542,479 $541,782 $533,835
Service and distribution 129,330 125,895 2.7% 140,530 142,455 154,944
Other 31,676 35,016 (9.5)% 34,804 25,862 41,529
------------ ------------ ------------ ------------ ------------
Total revenues 734,680 716,626 2.5% 717,813 710,099 730,308
Third-party distribution, service
and advisory fees (183,238) (180,383) 1.6% (170,020) (172,340) (164,955)
------------ ------------ ------------ ------------ ------------
Net revenues 551,442 536,243 2.8% 547,793 537,759 565,353
------------ ------------ ------------ ------------ ------------
Operating expenses:
Compensation (263,434) (267,308) (1.4)% (259,081) (254,883) (257,139)
Marketing (33,638) (28,169) 19.4% (38,166) (39,587) (29,945)
Property and office (26,866) (40,953) (34.4)% (31,118) (31,357) (34,551)
Technology/telecommunications (31,581) (33,464) (5.6)% (36,934) (36,987) (34,762)
General and administrative (71,814) (53,287) 34.8% (48,580) (45,781) (70,421)
Restructuring charge (75,690) -- N/A -- -- --
------------ ------------ ------------ ------------ ------------
Total operating expenses (503,023) (423,181) 18.9% (413,879) (408,595) (426,818)
------------ ------------ ------------ ------------ ------------
Operating profit 48,419 113,062 (57.2)% 133,914 129,164 138,535
Gain on sale of business -- 32,626 (100.0)% -- -- --
Other(loss)/income (9,304) (6,557) N/A 1,229 2,667 8,216
Interest expense (20,511) (20,063) 2.2% (23,579) (20,989) (26,839)
------------ ------------ ------------ ------------ ------------
Profit before taxation 18,604 119,068 (84.4)% 111,564 110,842 119,912
Taxation (23,376) (43,778) (46.6)% (39,919) (39,617) (49,686)
------------ ------------ ------------ ------------ ------------
(Loss)/profit after taxation (4,772) 75,290 N/A 71,645 71,225 70,226
Minority interests (256) (370) (30.8)% (376) (146) (443)
------------ ------------ ------------ ------------ ------------
(Loss)/profit for the period
attributable to equity holders
of the parent ($5,028) $74,920 N/A $71,269 $71,079 $69,783
============ ============ ============ ============ ============
Earnings per share, basic and diluted
($0.01) $0.09 $0.09 $0.09 $0.09
Earnings per share before restructuring
charge, basic and diluted
$0.07 $0.09 $0.09 $0.09 $0.09
Average shares outstanding:
---basic 794,511 794,052 793,822 793,434 797,641
---diluted 810,134 807,516 801,164 800,668 800,753
AMVESCAP PLC
Consolidated Balance Sheet
(Unaudited, in thousands)
Dec 31, 2005 Dec 31, 2004
-------------------- -------------------
Non-current assets
Goodwill $4,213,648 $4,317,391
Intangible assets 98,971 129,869
Property and equipment 180,044 226,987
Deferred sales commissions 78,944 110,982
Deferred tax assets 150,600 150,114
Investments 149,410 134,478
-------------------- -------------------
4,871,617 5,069,821
Current assets
Trade and other receivables 749,181 844,358
Investments 1,202,076 958,524
Cash and cash equivalents 754,754 546,928
-------------------- -------------------
2,706,011 2,349,810
Total assets 7,577,628 7,419,631
Current liabilities
Current maturities of long-term debt (10,106) (79,476)
Trade and other payables (2,461,006) (2,218,862)
Provisions (52,108) (28,449)
-------------------- -------------------
(2,523,220) (2,326,787)
Net current assets 182,791 23,023
Non-current liabilities
Long-term debt (1,212,130) (1,302,168)
Deferred tax liabilities (43,496) (36,655)
Provisions (182,479) (211,054)
-------------------- -------------------
Total liabilities (3,961,325) (3,876,664)
Net assets $3,616,303 $3,542,967
==================== ===================
Equity
Share capital $81,811 $388,953
Share premium 84,968 1,345,143
Shares held by employee trusts (413,473) (456,717)
Exchangeable shares 431,778 593,025
Retained earnings 638,739 571,574
Other reserves 2,789,187 1,098,468
------------------- -------------------
Equity attributable to equity
holders of the parent 3,613,010 3,540,446
Minority interests 3,293 2,521
-------------------- -------------------
Total equity $3,616,303 $3,542,967
==================== ===================
AMVESCAP PLC
Consolidated Statement of Changes in Equity
(Unaudited, in thousands)
2005
-----------------------
January 1, 2005 $3,542,967
Adoption of IAS 32/39 at January 1, 2005 29,100
Profit after taxation 213.388
Currency translation differences on investments
in overseas subsidiaries (111,029)
-----------------------
Total equity before transactions with owners 3,674,426
Dividends (134,118)
Exercise of options 7,720
Acquisition earn-out 2,193
Gains on available-for-sale assets 5,371
Tax impact of equity transactions 8,151
Increase in share-based payment reserve 52,560
-----------------------
December 31, 2005 $3,616,303
-----------------------
AMVESCAP PLC
Consolidated Cash Flow Statement
(Unaudited, in thousands)
Year Ended Dec 31,
-------------------------------------
2005 2004
---------------- -----------------
Operating profit $424,559 $87,325
Amortization and depreciation 94,463 92,522
Interest paid, net of investment income (86,232) (59,388)
Taxation (118,789) (133,113)
Change in other assets and liabilities 155,109 216,570
---------------- -----------------
Net cash inflow from operating activities 469,110 203,916
Investing activities:
Capital expenditures, net of sales (35,995) (50,583)
Disposal/(purchase) of long-term
investments, net 13,252 (2,511)
Dispositions and acquisitions 53,640 (53,884)
--------------- -----------------
investing activities 30,897 (106,978)
Financing:
Dividends paid (134,118) (138,207)
Net repayment of debt (160,476) 100,476
Other financing 7,719 (87,489)
---------------- ----------------
Net cash outflow from financing activities (286,875) (125,220)
Increase/(decrease) in cash and cash equivalents 213,132 (28,282)
Foreign exchange (5,306) 11,884
Cash and cash equivalents, beginning of period 546,928 563,326
---------------- ----------------
Cash and cash equivalents, end of period $754,754 $546,928
================ ================
Notes
1. Accounting policies
The accounting policies used in the preparation of this earnings release
follow IFRS in effect as of the date of this release. The comparative
period has been restated to apply these IFRS on a consistent basis (see
Note 10). The most significant changes due to the IFRS transition are:
o The cessation of goodwill amortization (IFRS 3) and redenomination of
goodwill into the currency of the underlying acquired
entities (IAS 21);
o The inclusion of a fair value charge in respect of outstanding employee
share options granted after November 7, 2002 (IFRS 2);
o The replacement of existing charges for awards under certain
equity-based compensation plans with fair value charges spread over
revised time periods (IFRS 2);
o The inclusion in the balance sheet of all employee benefit liabilities
(IAS 19); and
o The reclassification of certain income statement and balance sheet
items for disclosure purposes, including the presentation of
third-party distribution fees, service fees and advisory fees in the
income statement separately from total revenues.
AMVESCAP's first Annual Report under IFRS will be for the year ended
December 31, 2005, and is expected to be sent to shareholders in March
2006. The accounting policies applied to the information in this earnings
release are consistent with those that will be applied in the 2005 Annual
Report. Please refer to www.amvescap.com for a more detailed discussion of
these policies.
2. Adoption of accounting standards
AMVESCAP has adopted IAS 32, "Financial Instruments: Disclosure and
Presentation" and IAS 39, "Financial Instruments: Recognition and
Measurement" as of January 1, 2005. These standards require that financial
assets and liabilities be recognized on the balance sheet and accounted for
according to their underlying classification. Shareholders' equity
increased by $29.1 million as a result of these changes primarily arising
from the recognition of net unrealized gains on investments classified as
available for sale. Also as a result of the adoption of IAS 39, a charge of
$6.8 million was recorded into Other (loss)/income during 2005. This charge
was the result of foreign exchange revaluation of the U.S. dollar senior
notes into sterling, and was recorded before the change in foreign currency
from sterling to U.S. dollars (discussed in Note 3).
3.
3. Presentation Currency
AMVESCAP PLC redenominated its share capital and changed its presentation
currency from sterling to U.S. dollars on December 8, 2005. The balance
sheet information presented in this earnings release has been translated to
U.S. dollars using the exchange rates at the balance sheet dates. The
income statements and cash flows have been translated at the average rates
for each period presented. The U.S. dollar to sterling rates used are as
follows:
2005 2004
-------------------- --------------------
Average:
1st Quarter $1.88 $1.83
2nd Quarter $1.85 $1.81
3rd Quarter $1.76 $1.81
4th Quarter $1.74 $1.89
Ending:
December 31 $1.74 $1.92
4. Taxation
A significant proportion of the tax charge arose from U.S. and Canadian
operations. The effective tax rate is 40.7% in 2005
(37.7% before the restructuring charge) and 191.4% in 2004 (37.5% before
the U.S. regulatory settlement).
5. Earnings per share
Basic earnings per share is based on the weighted average number of
ordinary and exchangeable shares outstanding during the respective periods,
excluding shares purchased and held by employee share ownership trusts.
Diluted earnings per share takes into account the effect of the potential
issuance of ordinary shares.
2005
---------------------------------------------
in thousands other than
per share amounts Profit for Number of shares Per share
the period Amount
--------------- ------------------ -----------
Basic earnings per share $212,240 793,958 $0.27
==========
Dilutive effect of
share-based awards -- 11,105
--------------- -----------------
Diluted earnings per share $212,240 805,063 $0.26
--------------- -------------------- =========
2004
---------------------------------------------
Loss for the Number of shares Per share
period Amount
-------------- --------------- -------
Basic and diluted earnings
per share $(36,195) 802,160 $(0.05)
-------------- ----------------- ========
6.
6. Acquisitions and dispositions
On July 15, 2005, AMVESCAP completed the disposal of the AMVESCAP
Retirement business. The results of this business are included through the
closing date of the transaction. A gain of $32.6 million has been recorded
within other income. Revenues of $33.5 million were derived by the AMVESCAP
Retirement business in 2005 through the date of disposal. The disposal is
analyzed as follows:
$ thousands
Total net assets 23,460
Gain on disposal 32,626
----------------------
Cash consideration 56,086
In December 2005, AMVESCAP outsourced its banking operations in Germany
and, on January 31, 2006, completed the sale of its German banking license.
Net assets at December 31, 2005 were $7.1 million. For the year ended
December 31, 2005 the German bank recorded revenues of $14.4 million.
On January 23, 2006 AMVESCAP announced the acquisition of PowerShares
Capital Management LLC ("PowerShares"). The transaction, subject to certain
conditions including approvals from the Board of Directors and the
shareholders of PowerShares, is expected to close in the second or third
quarter of 2006. The initial purchase consideration is $60 million to be
paid on closing. Additional consideration of up to a maximum of $670
million is payable in the future depending on the achievement of various
revenue and assets under management growth targets being reached.
7. Restructuring charge and U.S. regulatory settlement
The consolidated net income statement for 2005 includes a restructuring
charge of $75.7 million. The charge relates to operational and structural
charges made in 2005 as a result of a review of the business. The charge is
comprised of the following:
$ millions
Staff termination costs 45.1
Property costs 20.4
Fund rationalization costs 6.9
Other 3.3
--------------------
Total restructuring charge 75.7
--------------------
Taxation (17.4)
--------------------
Net income charge 58.3
--------------------
Per share impact $0.07
--------------------
The consolidated income statement for 2004 includes a charge of $413.2
million ($318.2 million after tax, or $0.39 per share) relating to the
mutual fund market timing investigations by regulators in the United
States. The charge comprised settlement payments and civil penalties of
$376.7 million, along with related costs of $36.5 million, primarily
additional legal costs associated with the investigations. Previously, when
reporting under U.K. GAAP, the settlement was included in exceptional items
totaling $450.3 million. The exceptional items, as reported in 2004, also
included $37.0 million primarily relating to estimates of lease payments in
excess of the expected sublease proceeds over the remaining lives of the
leases. These amounts have been reclassified into operating expenses.
8. Dividends
A final dividend in respect of 2005 of 5.5p per share (approximately $0.10
per share, or $78.5 million, at an exchange rate of $1.74 per (pound)1.00:
$76.3 million for ordinary shares and $2.2 million for exchangeable shares)
has been proposed by the Board and will be paid, subject to shareholder
approval, in May 2006. The dividend will be accrued when approved by
shareholders. A final dividend in respect of 2004 of 5.0p per share ($0.09
per share, or $75.0 million, at an exchange rate of $1.83: $72.4 million
for ordinary shares and $2.6 million for exchangeable shares) was approved
at the Annual General Meeting of Shareholders on April 28, 2005, and
charged to retained earnings at that time. This dividend was paid on May 4,
2005, to shareholders on the register on April 1, 2005.
An interim 2005 dividend of 4.0p per share (2004: 2.5p) ($0.07 per share,
or $59.1 million, at an exchange rate of $1.79: $57.1 million for ordinary
shares and $2.0 million for exchangeable shares) was declared by the Board
of Directors on August 2, 2005, and was paid on October 12, 2005 to
shareholders on the register on September 9, 2005.
9. Credit facility
On March 31, 2005, AMVESCAP entered into a new five-year credit agreement
("credit facility") with a group of lenders, providing a revolving credit
facility in an aggregate principal amount of up to $900 million. Under
certain conditions, the aggregate commitments under the credit facility may
be increased to $1.2 billion. The credit facility requires specified
financial ratios to be maintained, including a maximum debt to EBITDA ratio
of 3.25:1 and a minimum interest coverage ratio of 4.0:1.
10. Reconciliations from U.K. GAAP to IFRS
Prior to January 1, 2005, AMVESCAP reported its results of operations under
U.K. Generally Accepted Accounting Practice ("U.K. GAAP"). Beginning
January 1, 2005, AMVESCAP transitioned from U.K. GAAP to International
Financial Reporting Standards ("IFRS"). The tables below reconcile total
shareholders' funds at December 31, 2003, and December 31, 2004 under U.K.
GAAP to total equity under IFRS, and loss after taxation for the year ended
December 31, 2004 from U.K. GAAP to IFRS.
Reconciliation of total U.K. GAAP total shareholders' funds to IFRS total
equity
$ millions Dec 31, 2003 Dec 31, 2004
-------------- ------------
U.K. GAAP total shareholders' funds $3,650 $3,577
IFRS Transition Adjustments:
Goodwill and intangibles (230) (31)
Shared based payment (12) (13)
Defined benefit obligation, net (55) (58)
Dividends 94 79
Other (5) (11)
--------------- -------------
IFRS total equity $3,442 $3,543
================ ============
Reconciliation of U.K. GAAP loss after taxation to IFRS loss after taxation
Year ended
$ millions Dec 31, 2004
-----------------------
U.K. GAAP profit/(loss) after taxation $(312)
IFRS Transition Adjustments:
Goodwill and intangibles 280
Defined benefit obligation, net --
Sale of business 5
Other (9)
-----------------------
IFRS profit/(loss) after taxation $(36)
=======================
IFRS Transition Adjustments:
Goodwill and intangibles. AMVESCAP has chosen to apply IFRS 3 prospectively
from the date of transition. This has resulted in the value of goodwill
arising from previous acquisitions being frozen at the value held on the
AMVESCAP balance sheet at January 1, 2004 and the reversal of any
amortization charged in 2004. AMVESCAP has elected to apply IAS 21
retrospectively to its goodwill and intangible asset balances, which were
previously recorded in pounds sterling from their respective acquisition
dates. The result of this application is that the goodwill and intangible
assets have been redenominated into their underlying currencies and will
subsequently be re-measured each reporting date for the effect of changes
in foreign exchange rates.
Share-based payment. AMVESCAP will recognize a charge in the Income
Statement for the fair value of outstanding share awards granted to
employees after November 7, 2002. The charge has been calculated using a
stochastic option valuation model and will be charged over the relevant
vesting periods, adjusted to reflect expected and actual levels of vesting.
Defined benefit obligation, net. AMVESCAP will recognize the net liability
for defined benefit post retirement plan schemes on the balance sheet and
will take actuarial gains and losses on a systematic basis to the Income
Statement, in accordance with the permitted methods of recognition under
IAS 19.
Sale of business. During 2004, AMVESCAP disposed of its U.K. and Jersey
businesses of Atlantic Wealth Management and included the previously
written off goodwill related to this business in the calculation of the net
gain resulting from the sale. Under IFRS 1 goodwill previously deducted
from equity is not recognized in the opening balance sheet and that
goodwill is not transferred into the Income Statement upon disposal of the
business. This had the effect of increasing the gain reported under U.K.
GAAP.
Dividends. AMVESCAP will recognize dividends declared after the balance
sheet date in the reporting period in which they are declared, as they
represent non-adjusting events after the balance sheet date.
Other. Other adjustments upon transition to IFRS include the recognition
and establishment of accruals related to compensated absences, foreign
exchange items and certain tax adjustments.
Reclassifications. For disclosure purposes, IFRS requires that certain
reclassifications be made to the financial statements that were presented
under U.K. GAAP, including the presentation of distribution, transfer
agent, and sub-advisory fees in the income statement separately from total
revenues. Certain balance sheet reclassifications were made, including the
presentation of the policyholder assets as investments (previously included
in receivables), the presentation of software assets as intangible assets
(previously included in property and equipment assets), and the separation
of deferred tax liabilities from provisions.
11. Statutory financial statements
The financial information shown in this earnings release, which was
approved by the Board of Directors on February 3, 2006, is unaudited and
does not constitute statutory financial statements. The 2004 Annual Report
has been filed with the Register of Companies on which the auditors issued
a report, which was unqualified and did not contain a statement under
section 237(2) or section 237(3) of the Companies Act 1985.
AMVESCAP PLC
Assets Under Management
(billions) 2005 2004 % Change
----------------------------------- ------------ ------------ -------------
Beginning Assets $382.1 $370.6
Inflows 66.3 67.0 (1.0)%
Outflows (82.5) (86.5) (4.6)%
------------ ------------
Net flows (16.2) (19.5) (16.9)%
Market gains/reinvestment 24.4 26.0 (6.2)%
Change in money market funds and other 0.5 (8.3) N/A
Acquisitions -- 6.1 (100.0)%
Foreign currency (4.5) 7.2 N/A
------------ -------------
Ending Assets $386.3 $382.1 1.1%
============ ==============
Average AUM $377.6 $371.3 1.7%
By channel: (billions) Total Retail Institutional High Net Worth
--------------------------------------------- ------------------ --- ------------------ --- ----------------- --- ------------------
December 31, 2004 $382.1 $186.0 $180.9 $15.2
Inflows 66.3 41.2 21.3 3.8
Outflows (82.5) (53.3) (25.8) (3.4)
------------------ ------------------ ----------------- ------------------
Net flows (16.2) (12.1) (4.5) 0.4
Market gains/reinvestment 24.4 16.0 7.9 0.5
Change in money market funds and other 0.5 1.9 (1.6) 0.2
Foreign currency (4.5) (1.6) (2.9) --
------------------ ------------------ ----------------- ------------------
December 31, 2005 $386.3 $190.2 $179.8 $16.3
================== ================== ================= ==================
Fixed Money Stable Alter-
By asset class: (billions) Total Equity Income Balanced Market Value natives
------------------------------ ----------- -- ----------- --- ----------- -- ----------- -- ----------- -- ----------- -- ----------
December 31, 2004 $382.1 $178.5 $44.8 $44.1 $50.0 $43.2 $21.5
Inflows 66.3 30.0 14.5 7.8 3.3 4.2 6.5
Outflows (82.5) (45.6) (10.4) (12.5) (3.5) (3.0) (7.5)
----------- ----------- ----------- ----------- ----------- ----------- ----------
Net flows (16.2) (15.6) 4.1 (4.7) (0.2) 1.2 (1.0)
Market gains/reinvestment 24.4 17.9 1.2 1.7 -- 2.4 1.2
Change in money market funds
and other 0.5 -- -- -- 0.5 -- --
Foreign currency (4.5) (3.3) (0.8) 0.1 -- -- (0.5)
----------- ----------- ----------- ----------- ----------- ----------- ----------
December 31, 2005 $386.3 $177.5 $49.3 $41.2 $50.3 $46.8 $21.2
=========== =========== =========== =========== =========== =========== ==========
By entity: (billions) AIM INVESCO
--------------------- --------------------------------------
Total U.S. Canada U.S. U.K. Europe/Asia PWM
---------------------------------------------------------------------------------------------------------------------
December 31, 2004 $382.1 $137.6 $34.6 $121.0 $49.6 $24.1 $15.2
Inflows 66.3 12.6 5.9 16.7 19.0 8.3 3.8
Outflows (82.5) (28.0) (5.7) (24.0) (11.9) (9.5) (3.4)
------------- ---------- ---------- ---------- ----------- --------------- -------------
Net flows (16.2) (15.4) 0.2 (7.3) 7.1 (1.2) 0.4
Market gains/reinvestment 24.4 5.1 2.2 4.4 8.8 3.4 0.5
Change in money market funds
and other 0.5 0.7 -- -- -- (0.2) --
Foreign currency (4.5) -- 2.1 (0.4) (4.2) (2.0) --
------------- ---------- ---------- ---------- ----------- --------------- -------------
December 31, 2005 $386.3 $128.0 $39.1 $117.7 $61.3 $24.1 $16.1
============= ========== ========== ========== =========== =============== =============
AMVESCAP PLC
Assets Under Management
(billions) Q405 Q305 % Change Q205 Q105 Q404
------------------------------------------------------------------------------------------------------------------------------------
Beginning Assets $380.5 $373.2 $375.4 $382.1 $362.7
Inflows 15.8 15.7 0.6% 17.6 17.2 15.8
Outflows (19.5) (20.0) 2.5% (23.3) (19.7) (23.4)
----------- ------------ ------------ ----------- -----------
Net flows (3.7) (4.3) 14.0% (5.7) (2.5) (7.6)
Market gains/reinvestment 8.9 11.1 (19.8)% 5.8 (1.4) 20.8
Change in money market funds and other 1.8 0.1 N/A 0.5 (1.9) 0.8
Foreign currency (1.2) 0.4 N/A (2.8) (0.9) 5.4
----------- ------------ ------------ ----------- -----------
Ending Assets $386.3 $380.5 1.5% $373.2 $375.4 $382.1
=========== ============ ============ =========== ===========
Average AUM $380.9 $378.1 0.7% $372.7 $377.4 $374.0
By channel: (billions) Total Retail Institutional High Net Worth
------------------------------------------------------------------------------------------------------------------------------------
September 30, 2005 $380.5 $190.0 $174.6 $15.9
Inflows 15.8 11.0 4.0 0.8
Outflows (19.5) (13.7) (5.1) (0.7)
------------------ ------------------ ------------------ ------------------
Net flows (3.7) (2.7) (1.1) 0.1
Market gains/reinvestment 8.9 5.9 2.7 0.3
Change in money market funds and other 1.8 (2.4) 4.2 --
Foreign currency (1.2) (0.6) (0.6) --
------------------ ------------------ ------------------ ------------------
December 31, 2005 $386.3 $190.2 $179.8 $16.3
================== ================== ================== ==================
Fixed Money Stable Alter-
By asset class: (billions) Total Equity Income Balanced Market Value natives
------------------------------------------------------------------------------------------------------------------------------------
September 30, 2005 $380.5 $174.6 $47.6 $41.7 $48.7 $46.3 $21.6
Inflows 15.8 7.7 3.3 2.0 0.7 0.4 1.7
Outflows (19.5) (10.4) (1.8) (3.2) (0.9) (0.4) (2.8)
----------- ----------- ----------- ----------- ----------- ----------- ----------
Net flows (3.7) (2.7) 1.5 (1.2) (0.2) -- (1.1)
Market gains/reinvestment 8.9 6.5 0.4 0.7 -- 0.5 0.8
Change in money market funds
and other 1.8 -- -- -- 1.8 -- --
Foreign currency (1.2) (0.9) (0.2) -- -- -- (0.1)
----------- ----------- ----------- ----------- ----------- ----------- ----------
December 31, 2005 $386.3 $177.5 $49.3 $41.2 $50.3 $46.8 $21.2
=========== =========== =========== =========== =========== =========== ==========
By entity: (billions) AIM INVESCO
--------------------- --------------------------------------
Total U.S. Canada U.S. U.K. Europe/Asia PWM
--------------------------------------------------------------------------------------------------------------------
September 30, 2005 $380.5 $128.7 $38.4 $117.2 $56.4 $24.1 $15.7
Inflows 15.8 2.6 1.2 3.0 5.9 2.3 0.8
Outflows (19.5) (6.8) (1.5) (4.3) (3.4) (2.8) (0.7)
------------ ---------- ---------- ---------- ----------- --------------- -------------
Net flows (3.7) (4.2) (0.3) (1.3) 2.5 (0.5) 0.1
Market gains/reinvestment 8.9 1.6 0.8 1.9 3.4 0.9 0.3
Change in money market funds
and other 1.8 1.9 -- -- -- (0.1) --
Foreign currency (1.2) -- 0.2 (0.1) (1.0) (0.3) --
------------ ---------- ---------- ---------- ----------- --------------- -------------
December 31, 2005 $386.3 $128.0 $39.1 $117.7 $61.3 $24.1 $16.1
============ ========== ========== ========== =========== =============== =============
AMVESCAP PLC
Additional Income and Expense Information
The Consolidated Income Statements for 2005 and 2004 include the following
items:
2005 2004
--------------------------------------------- ------------------------------------------
$ millions Q405 Q305 Full Year Q304 Q104 Full Year
------------- ------------- ----------- ----------- ------------ ------------
Operating items:
Compensation - Expenses related
to German Bank -- (4.7) (4.7) -- -- --
Compensation - Recruitment -- (11.8) (11.8) -- -- --
Property and Office - Leasehold
charges -- (11.4) (11.4) (37.0) -- (37.0)
General and Administration
- Goodwill impairment (16.6) -- (16.6) -- -- --
Other (loss)/income items:
Gain on sale of businesses -- 32.6 32.6 -- 11.8 11.8
Outsourcing U.K. DC platform
-- (7.2) (7.2) -- -- --
Taiwan bond funds capital infusion
(11.3) -- (11.3) -- -- --
Foreign exchange revaluation (6.8) -- (6.8) -- -- --
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMVESCAP PLC
------------------------------
(Registrant)
Date 7 February, 2006 By /s/ Michael S. Permam
---------------- --------------------------
(Signature)
Michael S. Perman
Company Secretary