AMVESCAP

AMVESCAP

March 02, 2005 07:01 ET

AMVESCAP Holds Briefing on Transition to International Financial Reporting Standards


NEWS RELEASE TRANSMITTED BY CCNMatthews

FOR: AMVESCAP

NYSE, LSE, TSX SYMBOL: AVZ

MARCH 2, 2005 - 07:01 ET

AMVESCAP Holds Briefing on Transition to International
Financial Reporting Standards

LONDON--(CCNMatthews - Mar 2, 2005) -

As part of AMVESCAP PLC's preparation for the adoption of International
Financial Reporting Standards (IFRS), the Group is providing an
explanation of the key changes under the new standards to AMVESCAP's net
asset position at January 1, 2004 and its financial results for the
year-ended December 31, 2004. A briefing will be held today by James
Robertson, chief financial officer, and David Hartley, chief accounting
officer.

The information in this release has been prepared on the basis of the
IFRS currently in issue and AMVESCAP's understanding of how those
standards should be applied. The standards in issue are subject to
ongoing review and endorsement by the European Union (EU), and the
application of the standards continues to be subject to review by the
International Financial Reporting Interpretations Committee.

Main Changes Affecting the Group

The most significant changes affecting the Group due to the IFRS
transition are:

-- The inclusion of a fair value charge in respect of outstanding
employee share options granted after November 7, 2002 (IFRS 2)

-- The replacement of existing charges for awards under certain equity
based compensation plans with fair value charges spread over revised
time periods (IFRS 2)

-- The cessation of goodwill amortization (IFRS 3)

-- The inclusion in the balance sheet of all employee benefit
liabilities (IAS 19)

Process of Transition

The Group currently prepares its consolidated financial statements under
U.K. Generally Accepted Accounting Practice (U.K. GAAP). For the
year-ended December 31, 2005, the Group will be required to prepare its
consolidated financial statements in accordance with IFRS as adopted by
the EU. AMVESCAP's first IFRS results will be its Q1 2005 earnings
release and AMVESCAP's first Annual Report under IFRS will be for the
year-ended December 31, 2005. The date of transition to IFRS is January
1, 2004, this being the start of the earliest period of comparative
information required in the U.K.

Transitional Arrangements

IFRS 1 'First-time Adoption of International Financial Reporting
Standards' sets out how a company should apply IFRS at transition. The
standard requires a company to use accounting policies that comply with
each IFRS effective at the reporting date for its first IFRS financial
statements and apply those policies retrospectively to all periods
presented in those statements. The standard provides for a number of
exceptions to this general principle to assist the transition.
AMVESCAP's approach to these exemptions, where applicable, is included
in the discussion below.

Significant Changes in Accounting Policies

The significant changes in Group accounting policies due to the
transition to IFRS are as follows:

IFRS 2 Share-based Payment

The Group will recognize a charge in the Profit and Loss Account for the
fair value of outstanding share options granted to employees after
November 7, 2002. The charge will be calculated using a stochastic
option valuation model and will be charged over the relevant option
vesting periods, adjusted to reflect expected and actual levels of
vesting. Currently there is no charge in the Profit and Loss Account
related to share options granted to employees.

In addition, the Group will adjust the charge made in the Profit and
Loss Account for awards made under Long-term Incentive Plans to
recognize the fair value of the awards granted to employees. The fair
value of an award is calculated as the value of the shares on the date
of grant, discounted for the dividends forgone over the holding period
of the award. The fair value charges, adjusted to reflect expected and
actual levels of vesting, will be spread over the vesting period of the
awards. Previously, the undiscounted value of an award at the date of
grant was charged over the vesting period of the award. Awards that
lapsed were credited to the Profit and Loss Account.

There is no impact as a result of these changes on opening shareholders'
equity as at January 1, 2004. The impact on the Profit and Loss Account
for the year-ended December 31, 2004 is not material.

IFRS 3 Business Combinations

In accordance with the transitional provisions of IFRS 1, the Group has
chosen to apply IFRS 3 prospectively from the date of transition. This
will result in the value of goodwill arising from previous acquisitions
being frozen at the value held on the Group Balance Sheet as at January
1, 2004 and the reversal of any amortization charged in 2004. Goodwill
will then be subject to an annual impairment review in accordance with
the standard and would be subject to an impairment adjustment if there
are indications that the carrying value may not be recoverable. These
changes result in a credit to the Profit and Loss Account for the
year-ended December 31, 2004 of approximately GBP 150 million.

IAS 21 The Effects of Changes in Foreign Exchange Rates

Upon transition to IFRS, the Group has elected to apply IAS 21
retrospectively to its goodwill and intangible asset balances. The
Group's goodwill and intangible assets were previously recorded in
pounds sterling from their respective acquisition dates. The result of
this application is that the goodwill and intangible assets will be
redenominated into their underlying currencies and will subsequently be
re-measured each reporting date for the effect of changes in foreign
exchange rates. This change results in a decrease in the opening
shareholders' equity as at January 1, 2004 of approximately GBP 130
million.

IAS 19 Employee Benefits

The Group will recognize the net liability for defined benefit post
retirement schemes on the Balance Sheet and will take actuarial gains
and losses on a systematic basis to the Profit and Loss Account, in
accordance with the permitted methods of recognition under the standard.
Through 2004, the Group accounted for defined benefit schemes in
accordance with SSAP 24 'Accounting for pension costs'.

These changes reduce opening shareholders' equity as at January 1, 2004
by approximately GBP 30 million but have no material effect on the
Profit and Loss Account for the year-ended December 31, 2004.

IAS 10 Events After the Balance Sheet Date

The Group 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 under IFRS.

The change results in an increase in opening shareholders' equity as at
January 1, 2004 of approximately GBP 53 million and an increase in the
dividend recorded in relation to the year-ended December 31, 2004 of
approximately GBP 12 million.

IAS 39 Financial Instruments: Recognition and Measurement

The Group has opted not to apply the requirements of IAS 39 in respect
of comparative 2004 information. The Group will therefore follow the
requirements of IFRS 1 and disclose the nature of the main adjustments
required for the comparative information to comply with IAS 39 in
AMVESCAP's first Annual Report under IFRS. The adoption of IAS 39 for
the year-ended December 31, 2005 will be treated as if arising from a
change in accounting policy and appropriate disclosures will be provided
in accordance with IAS 8 'Accounting Policies, Changes in Accounting
Estimates and Errors'.

Under IAS 39, the Group's asset investments will be held at fair value
and most will be classified as 'Available for Sale'. Unrealized gains
and losses on these investments will be taken to reserves and only
recognized through the Profit and Loss Account on sale or impairment of
the investment.

The Group also intends to apply hedge accounting for its U.S.
dollar-denominated debt. Hedge accounting under IAS 39 will enable the
Group to designate a hedging relationship between the U.S.
dollar-denominated debt and the net investment in the Group's U.S.
subsidiaries and to offset the related effective foreign exchange
movement in equity. The hedging will result in the accounting treatment
under IFRS being consistent with U.K. GAAP.

Further Communication

AMVESCAP's 2004 U.K. GAAP annual report will be published in March 2005.

In April 2005, the Group intends to provide shareholders and the
financial community with a reconciliation of Equity Shareholders' Funds
as at January 1, 2004 from U.K. GAAP to IFRS. Such reconciliations will
also be presented in respect of the Profit and Loss Account, Balance
Sheet and Cash Flow Statement for the year-ended December 31, 2004.

The financial information to be presented in April 2005 will still be
subject to the ongoing development of IFRS and hence may change. The
Group will keep shareholders and the financial community informed of the
impact of any material changes as necessary.

AMVESCAP is a leading independent global investment manager dedicated to
helping people worldwide build their financial security. Operating under
the AIM, AIM Trimark, INVESCO, INVESCO Perpetual and Atlantic Trust
brands, AMVESCAP strives to deliver outstanding products and services
through a comprehensive array of retail and institutional products 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, Wednesday, March 2, 2005, at 2:30
p.m. GMT (9:30 a.m. EST), by dialing one of the following numbers:
610-769-8537 or 888-909-8529 for U.S. callers. An audio replay of the
conference call will be available until Wednesday, March 9, 2005, at
10:00 p.m. GMT by calling 402-220-0361 or 1-800-754-7871 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 report, words such as
"believes," "expects," "anticipates," "intends," "plans," "estimates,"
"projects" and future or conditional verbs such as "will," "may,"
"could," "should," and "would" or 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.

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Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT:
    AMVESCAP
    James Robertson, 404-724-4246
    Angus Maitland, (44) 0207-379-5151