IVZ

Business Context and Reporting Period

This Form 20-F is the Annual Report for AMVESCAP PLC (now Invesco Ltd.) for the fiscal year ended December 31, 2000. The company is a leading independent global investment management complex incorporated in England, with principal executive offices in London. It operates through four primary groups: Managed Products, U.S. Institutional, INVESCO Global, and INVESCO Retirement. The financial statements are prepared in accordance with U.K. GAAP, with reconciliations provided for U.S. GAAP.

Key Financial Metrics (Year Ended Dec 31, 2000)

Material Changes vs. Prior Period (2000 vs. 1999)

• Revenue Growth: Revenues increased 52% to £1.63 billion, driven by the inclusion of Trimark Financial Corporation results (acquired August 2000) and higher asset levels.
• Profitability: Profit before tax, exceptional items, and goodwill amortization rose 73% to £554.5 million. Operating margin improved to 36.2% from 32.9%.
• Acquisitions: Significant growth was fueled by the acquisition of Trimark (adding $34.1 billion in AUM) and Perpetual plc (recorded at year-end). These transactions added substantial goodwill (£1.77 billion).
• Assets Under Management: AUM grew 12.6% to $402.6 billion. This increase was driven by net new business of $35.4 billion and acquisitions, partially offset by a $32.8 billion market loss.
• Debt: Net debt increased to £692.6 million from £512.6 million in 1999, primarily due to borrowings and instruments issued to finance acquisitions.
• Headcount: Employee count increased 49% to 8,259, largely due to acquisitions.

Guidance, Outlook, Risks, and Unusual Items

Management Commentary and Outlook

Management expects continued growth driven by the "baby boom" generation's savings and global pension reforms shifting toward defined contribution plans. The company plans to use excess operating cash flow to reduce debt levels in 2001.

Unusual Items

• Exceptional Items: A charge of £51.8 million was recorded in 2000, primarily for integration costs related to Trimark and Perpetual acquisitions (£43.8 million) and restructuring charges for U.S. Institutional (£8.0 million).
• Goodwill Amortization: £56.4 million was charged against operating profit.

Risks and Contingencies

• Market Conditions: Revenues are directly tied to AUM; market declines reduce fee income. Approximately two-thirds of AUM is in equities.
• Currency Risk: The company reports in pounds sterling but derives the majority of earnings in U.S. dollars. It does not actively hedge this exposure, making results sensitive to exchange rate fluctuations.
• Competition and Retention: High competition in the asset management industry and the risk of losing key investment professionals.
• Regulatory: Operations are heavily regulated in over 100 countries, with potential for adverse legislative changes.

Investor Verification Checklist

• U.S. GAAP Reconciliation: Verify the significant difference between U.K. GAAP profit (£288.5m) and U.S. GAAP profit (£180.7m), primarily due to acquisition accounting and deferred tax treatments.
• Acquisition Integration: Assess the success of integrating Trimark and Perpetual plc, given the £51.8 million in exceptional integration costs.
• Currency Exposure: Monitor the GBP/USD exchange rate, as a strengthening dollar significantly impacts reported earnings.
• Debt Servicing: Review the company's ability to service £960 million in long-term debt, including the $650 million in Senior Exchange Notes and the $700 million credit facility.
• Dividend Sustainability: Confirm that distributable profits under U.K. law and credit facility covenants (limiting dividends to 60% of consolidated net profit) support the recommended 10.0p total dividend.