Amvescap, the London and New York-listed Anglo-American fund manager which runs a number of mutual funds under the Invesco and AIM Global brands, is suffering from weaker stock markets. In 2001 profits fell 13.8 percent, from 554.5 million to 477.9 million on revenues down by much less: from 1,628.7 million to 1,619.8 million in 2000. The falls occurred despite the adoption by the company of UK Accounting Standards Board FRS 19 on deferred tax, which prompted a restatement of prior years’ profit and loss accounts occasioning a fall in the income tax bill and an increase net income for 2001 of 4.5 million.
The main factor in the earnings decline was a fall in average assets under management of $4.7 billion to $397.9 billion by the year-end. Average funds under management amounted to $384.9 billion for the fourth quarter compared to $389.1 billion for the previous quarter and $394.7 billion for the fourth quarter of 2000. Average funds under management amounted to $395.0 billion for 2001 compared to $388.5 billion for the prior year. “The market corrections of 2001 compounded by the tragic events of September 11 tested the strength of the global economy and AMVESCAP,” said Mr. Charles W. Brady, Executive Chairman. “While our financial performance was impacted by these conditions, our diversified product lines and global reach helped to mitigate the impact of the sharply declining market levels and supported the soundness of these elements of our strategy. We enter 2002 in a solid position.” But the plunge in assets under management would have been worse still had Amvescap not continued to grow by acquisition, however. It completed five purchases in 2001 – notably Perpetual of the UK.
“We achieved gross sales of approximately $98 billion and positive net sales because of the diversification of our product range, even with the shift away from growth products into fixed income and more conservative equity products,” added Brady. “We entered the private wealth management business during the year with the acquisition of Pell Rudman, providing an excellent base to move forward in this marketplace. The INVESCO Retirement group attained record growth, adding approximately 250,000 plan participants during the year. While our overall revenues and profits declined from the record levels of 2000,our financial position remains strong.”
The Managed Products group reported revenues of 986.2 million during 2001, a decrease of 78.3 million over the prior year. Operating profits were 436.5 million, a decrease of 76.5 million during the period. The group generated approximately $50.0 billion of gross sales in 2001 and experienced net redemptions of $308 million during the year. Funds under management amounted to $211.2 billion at December 31, 2001.
The INVESCO Institutional group reported revenues and operating profits of 211.9 million and 53.6 million in the 2001 period. The results for 2001 include National Asset Management and Parkes & Co. from the dates of acquisition. This group generated approximately $26.6 billion in gross sales during 2001 compared to $20.2 billion in 2000, and net sales of $2.6 billion. Funds under management amounted to $116.8 billion at December 31, 2001.
INVESCO Global’s revenues amounted to 340.3 million for 2001, an increase of 36.4 million over the prior year due to the inclusion of the Perpetual results in 2001, offset in part by declines in the global capital markets. Operating profit totaled 76.4 million for the year-ended December 31, 2001. The current year’s results include County and Grand Pacific from dates of acquisition. Funds under management were $60.0 billion at December 31, 2001, a decline of $6.6 billion from the end of 2000. Gross sales for 2001 totaled approximately $20.7 billion with net redemptions of $541 million for the year due largely to a contract loss of a $1 billion institutional client.
INVESCO Retirement’s assets under administration and net sales scored record growth during 2001. The group experienced a 25 percent increase in assets under administration during the 2001 year, reaching $34.6 billion at December 31, 2001. This group services 630,000 plan participants at December 31, 2001, up from 381,000 participants at the end of 2000. Approximately 65% of INVESCO Retirement’s assets under administration were invested in AMVESCAP funds in 2001, compared to 82 percent in 2000.
The Private Wealth Management (PWM) division was launched with the Pell Rudman acquisition, which was completed in August 2001. PWM provides asset management services to high net worth individuals, families, foundations and endowments. Revenues and operating profits totaled 21.2 million and 1.2 million for 2001. Funds under management were $9.9 billion at December 31.
“Although concerns continue over near term prospects for corporate earnings and the uncertain economic and political climates around the world, the long-term outlook for our industry remains bright. Demographic shifts and government reforms worldwide continue to point to a dramatic increase in retirement savings, the driving force of our business,” concluded Brady. “We remain focused on the essential aspects of our business: investment performance, managing expenses, and customer service.”