UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

INVESCO PLC

(Exact name of registrant as specified in its charter)

England and Wales (State or other jurisdiction of incorporation or organization)		98-0407710 (I.R.S. Employer Identification No.)
1360 Peachtree Street, NE, Atlanta, GA (Address of principal executive offices)		30309 (Zip Code)

(404) 892-0896
(Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ           No o     

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ      Accelerated filer o      Non-accelerated filer o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o            No þ     

     As of November 8, 2007, the most recent practicable date, 836,680,133 of the Company’s Ordinary Shares of U.S. $0.10 par value per share (including Ordinary Shares represented by outstanding American Depositary Shares) were outstanding. The primary market for the Ordinary Shares is the London Stock Exchange, and the American Depositary Shares are traded on the New York Stock Exchange. Each of the Company’s American Depositary Shares represents the right to receive two (2) Ordinary Shares.

 

 

TABLE OF CONTENTS

Index

Part I – Financial Information:
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Income Statement			3
Condensed Consolidated Balance Sheet			4
Condensed Consolidated Statement of Changes in Equity			5
Condensed Consolidated Cash Flow Statement			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			19
Item 3. Quantitative and Qualitative Disclosures about Market Risk			34
Item 4. Controls and Procedures			34
Part II – Other Information:
Item 1. Legal Proceedings			35
Item 1A. Risk Factors			35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 6. Exhibits			36
Signatures			38
EX-3.1 MEMORANDUM OF ASSOCIATION OF INVESCO PLC
EX-3.2 ARTICLES OF ASSOCIATION OF INVESCO PLC
EX-31.1 CERTIFICATION OF MARTIN L. FLANAGAN PURSUANT TO SECTION 302
EX-31.2 CERTIFICATION OF LOREN M. STARR PURSUANT TO SECTION 302
EX-32.1 CERTIFICATION OF MARTIN L. FLANAGAN PURSUANT TO SECTION 906
EX-32.2 CERTIFICATION OF LOREN M. STARR PURSUANT TO SECTION 906

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

INVESCO PLC

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Revenues
Management		$	816.2			$	641.7			$	2,363.3			$	1,887.6
Service and distribution			150.6				130.8				442.3				399.4
Other			26.1				18.8				78.6				75.6
Total revenues			992.9				791.3				2,884.2				2,362.6
Third-party distribution, service and advisory fees			(272.6	)			(204.2	)			(770.7	)			(603.3	)
Net revenues			720.3				587.1				2,113.5				1,759.3
Operating expenses
Compensation			273.1				288.3				829.3				793.1
Marketing			41.3				31.6				114.7				103.3
Property and office			36.5				27.1				95.2				81.1
Technology and telecommunications			30.4				30.5				87.9				92.7
General and administrative			70.0				52.8				208.5				154.0
Total operating expenses			451.3				430.3				1,335.6				1,224.2
Operating profit			269.0				156.8				777.9				535.1
Interest income			14.2				6.6				36.9				16.9
Other realized gains			7.9				11.2				22.0				18.8
Other realized losses			(7.4	)			(4.4	)			(13.6	)			(8.1	)
Interest expense			(20.4	)			(19.7	)			(65.7	)			(56.3	)
Profit before taxation			263.3				150.5				757.5				506.4
Taxation - U.K.			(40.0	)			(15.4	)			(95.5	)			(52.8	)
Taxation - Outside of the U.K.			(50.2	)			(32.9	)			(165.2	)			(125.7	)
Profit after taxation			173.1				102.2				496.8				327.9
Profit attributable to minority interests			(2.5	)			(0.2	)			(3.4	)			(1.3	)
Profit attributable to equity holders of the parent		$	170.6			$	102.0			$	493.4			$	326.6
Earnings per share:
- basic		$	0.21			$	0.13			$	0.62			$	0.41
- diluted		$	0.21			$	0.13			$	0.60			$	0.40
Final dividend per share										$	0.104			$	0.098
Final dividend paid										$	86.4			$	80.3
Average shares outstanding:
- basic			799.9				790.3				798.9				791.0
- diluted			821.0				809.6				820.4				810.7
Ending headcount			5,390				5,499				5,390				5,499

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVESCO PLC

		September 30,				December 31,
		2007				2006
Non-current assets
Goodwill		$	5,189.8			$	4,906.6
Intangible assets			267.4				296.7
Property and equipment			149.6				165.8
Deferred sales commissions			52.0				55.9
Deferred tax assets			248.7				212.1
Investments			158.7				158.1
			6,066.2				5,795.2
Current assets
Trade and other receivables			1,479.6				997.4
Investments			126.5				134.9
Cash and cash equivalents			1,102.4				789.6
Assets held for policyholders			1,892.6				1,574.9
			4,601.1				3,496.8
Total assets			10,667.3				9,292.0
Non-current liabilities
Long-term debt			(1,143.2	)			(972.7	)
Provisions			(472.6	)			(461.8	)
			(1,615.8	)			(1,434.5	)
Current liabilities
Current maturities of long-term debt			—				(300.0	)
Trade and other payables			(1,811.1	)			(1,384.3	)
Taxation			(148.5	)			(95.4	)
Provisions			(194.3	)			(227.8	)
Policyholder liabilities			(1,892.6	)			(1,574.9	)
			(4,046.5	)			(3,582.4	)
Total liabilities			(5,662.3	)			(5,016.9	)
Net assets		$	5,005.0			$	4,275.1
Equity
Share capital		$	84.6			$	83.2
Share premium			328.5				205.1
Treasury shares			(105.2	)			—
Shares held by employee trusts			(684.1	)			(601.7	)
Exchangeable shares			352.5				377.4
Retained earnings			1,541.9				1,054.9
Other reserves			3,473.4				3,151.2
Equity attributable to equity holders of the parent			4,991.6				4,270.1
Equity attributable to minority interests			13.4				5.0
Total equity		$	5,005.0			$	4,275.1

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVESCO PLC

														Shares Held
		Share				Share				Treasury				by Employee				Exchangeable				Retained				Other				Minority
		Capital				Premium				Shares				Trusts				Shares				Earnings				Reserves				Interests				Total
January 1, 2007		$	83.2			$	205.1				—			$	(601.7	)		$	377.4			$	1,054.9			$	3,151.2			$	5.0			$	4,275.1
Profit attributable to equity holders of the parent			—				—				—				—				—				493.4				—				—				493.4
Currency translation differences on investments in overseas subsidiaries			—				—				—				—				—				42.8				299.1				0.3				342.2
Net movement on available-for-sale reserve			—				—				—				—				—				—				(8.7	)			—				(8.7	)
Total recognized income and expense attributable to equity holders of the parent			—				—				—				—				—				536.2				290.4				0.3				826.9
Total equity before transactions with owners			83.2				205.1				—				(601.7	)			377.4				1,591.1				3,441.6				5.3				5,102.0
Employee share plans:
Share-based compensation credit			—				—				—				—				—				69.0				—				—				69.0
Vested stock			—				—				—				31.8				—				(31.8	)			—				—				—
Exercise of options			1.2				97.9				—				—				—				—				—				—				99.1
Increase in shares held by employee trusts			—				—				—				(114.2	)			—				—				—				—				(114.2	)
Increase in treasury shares			—				—				(105.2	)			—				—				—				—				—				(105.2	)
Tax taken to/recycled from equity			—				—				—				—				—				—				26.5				—				26.5
Dividends			—				—				—				—				—				(86.4	)			—				—				(86.4	)
Issuance of new shares for acquisition earn-out			0.1				0.7				—				—				—				—				5.3				—				6.1
Conversion of exchangeable shares into ordinary shares			0.1				24.8				—				—				(24.9	)			—				—				—				—
Total amounts attributable to minority interests			—				—				—				—				—				—				—				8.1				8.1
September 30, 2007		$	84.6			$	328.5			$	(105.2	)		$	(684.1	)		$	352.5			$	1,541.9			$	3,473.4			$	13.4			$	5,005.0
January 1, 2006		$	81.8			$	85.0				—			$	(413.5	)		$	431.8			$	638.7			$	2,789.2			$	3.3			$	3,616.3
Profit attributable to equity holders of the parent			—				—				—				—				—				326.6				—				—				326.6
Currency translation differences on investments in overseas subsidiaries			—				—				—				—				—				(53.0	)			284.8				0.2				232.0
Net movement on available-for-sale reserve			—				—				—				—				—				—				(22.6	)			—				(22.6	)
Total recognized income and expense attributable to equity holders of the parent			—				—				—				—				—				273.6				262.2				0.2				536.0
Total equity before transactions with owners			81.8				85.0				—				(413.5	)			431.8				912.3				3,051.4				3.5				4,152.3
Employee share plans:
Share-based compensation credit			—				—				—				—				—				101.9				—				—				101.9
Exercise of options			0.9				48.6				—				—				(0.8	)			—				—				—				48.7
Increase in shares held by employee trusts			—				—				—				(155.9	)			—				—				—				—				(155.9	)
Tax taken to/recycled from equity			—				—				—				—				—				—				20.1				—				20.1
Dividends			—				—				—				—				—				(80.3	)			—				—				(80.3	)
Issuance of new shares for acquisition earn-out			—				0.8				—				—				—				—				—				—				0.8
Conversion of exchangeable shares into ordinary shares			0.1				26.9				—				—				(27.0	)			—				—				—				—
Total amounts attributable to minority interests			—				—				—				—				—				—				—				1.3				1.3
September 30, 2006		$	82.8			$	161.3				—			$	(569.4	)		$	404.0			$	933.9			$	3,071.5			$	4.8			$	4,088.9

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVESCO PLC

		Nine Months Ended
		September 30,
		2007				2006
Operating activities:
Profit for the period attributable to equity holders of the parent		$	493.4			$	326.6
Adjustments to reconcile profit to net cash provided by operating activities:
Amortization and depreciation			68.5				49.9
Amortization of share-related compensation			73.4				107.7
Increase in receivables			(493.5	)			(324.6	)
Increase in payables			525.7				117.0
Net loss/(gain) on disposal of assets			2.0				(0.1	)
Decrease/(increase) in current investments			17.3				(44.9	)
Net cash inflow from operating activities			686.8				231.6
Investing activities:
Purchases of property and equipment			(25.4	)			(26.3	)
Disposals of property and equipment			—				1.3
Purchases of long-term investments			(41.2	)			(85.3	)
Disposals of long-term investments			36.6				48.8
Acquisitions of businesses (net of cash acquired of $2.1 million in 2006)			(10.8	)			(100.5	)
Net cash outflow from investing activities			(40.8	)			(162.0	)
Financing activities:
Issuance of new ordinary share capital			99.1				48.4
Purchases of treasury shares			(90.5	)			—
Purchases of shares held by employee trusts			(146.4	)			(155.9	)
Dividends paid			(86.4	)			(80.3	)
Net (payment)/draw on credit facility			(129.0	)			44.0
Issuance of senior notes			300.0				—
Repayment of senior notes			(300.0	)			—
Net cash outflow from financing activities			(353.2	)			(143.8	)
Increase/(decrease) in cash and cash equivalents			292.8				(74.2	)
Foreign exchange movement on cash and cash equivalents			20.0				22.7
Cash and cash equivalents, beginning of period			789.6				715.7
Cash and cash equivalents, end of period		$	1,102.4			$	664.2
Supplemental cash flow information:
Interest paid		$	(49.8	)		$	(59.7	)
Interest received		$	36.3			$	17.9
Taxes paid		$	(213.0	)		$	(164.2	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

INVESCO PLC

Note 1. Overview and Basis of Presentation

INVESCO PLC (“Parent”), formerly AMVESCAP PLC, and all of its consolidated subsidiaries (collectively, the “company” or “Invesco”) provide retail, institutional and high-net-worth clients with an array of global investment management capabilities. The company’s sole business is asset management.

The Parent is incorporated and domiciled in the United Kingdom and is a public limited company under the U.K. Companies Act. The Parent has its primary listing of shares on the London Stock Exchange and secondary listings on the New York Stock Exchange and the Toronto Stock Exchange. Prior to July 2007, Invesco qualified as a “foreign private issuer” for purposes of filing and disclosure requirements under the United States federal securities laws. As a “foreign private issuer” under the Securities Exchange Act, as amended (the “Exchange Act”), Invesco prepared its financial statements in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union, with an annual reconciliation to accounting principles generally accepted in the United States (“U.S. GAAP”). Beginning in July of 2007 the company no longer satisfied the definition of a “foreign private issuer” under the Exchange Act and is now required to present its financial statements in United States Securities and Exchange Commission (“SEC”) periodic reports in accordance with U.S. GAAP. The financial statements included in this Quarterly Report on Form 10-Q are prepared in accordance with IFRS, consistent with Invesco’s past periodic reports, including its Annual Report on Form 20-F for the year ended December 31, 2006, and include a reconciliation to U.S. GAAP. The SEC staff has informed Invesco that it will not object to this presentation for purposes of this Form 10-Q. Invesco will begin presenting its financial statements in accordance with U.S. GAAP in its Annual Report on Form 10-K for the year ended December 31, 2007. In response to the loss of foreign private issuer status, the company also intends to move its primary listing from the London Stock Exchange to the New York Stock Exchange and relocate its domicile from London to Bermuda.

These interim unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto, contained within the company’s Annual Report on Form 20-F for the year ended December 31, 2006. In the opinion of management, the condensed consolidated financial statements in this Form 10-Q reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition and results of operations for the interim periods presented. All significant inter-company accounts and transactions have been eliminated in consolidation. Operating results for the three- and nine-month periods ended September 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007. The interim financial information has been prepared under the measurement and recognition principles of IFRS as permitted by the Committee of European Securities Regulators and does not purport to be a complete or condensed set of interim financial statements in accordance with IAS 34, “Interim Financial Reporting.”

The financial information contained in these interim condensed consolidated financial statements is unaudited and does not constitute statutory financial statements.  The 2006 Annual Report, filed with the Registrar of Companies on May 26, 2007, includes an unqualified audit report in accordance with Section 235 of the Companies Act 1985.  This audit report does not contain a statement under Section 237(2) or Section 237(3) of the Companies Act 1985.

As a result of no longer qualifying as a “foreign private issuer”, a U.S. GAAP Annual Report on Form 10-K is required to be filed with the SEC in addition to an IFRS annual report prepared for U.K. regulations.  The accounting policies applied to the information in these interim financial statements are expected to be consistent with those that would be applied in the 2007 IFRS Annual Report if the initiative to change the company’s primary listing and domicile described above is not completed by December 31, 2007.  If the initiative is completed prior to this date, INVESCO PLC will be replaced as the parent company by Invesco Ltd., and Invesco Ltd. will be required to report consolidated financial statements solely in accordance with U.S. GAAP, and consolidated financial statements under IFRS would no longer be required.  A reconciliation of profit attributable to equity holders of the parent and equity attributable to equity holders of the parent under IFRS to net income and total shareholders’ equity under U.S. GAAP is included in Note 12.

Certain prior year balances have been reclassified to conform to the current year presentation.

Note 2. Summary of Significant Accounting Policies

There have been no material changes during the nine months ended September 30, 2007 with respect to the accounting policies discussion contained within our Annual Report on Form 20-F for the year ended December 31, 2006.

Recent Accounting Pronouncements

IFRS comprise standards and interpretations approved by the International Accounting Standards Board and its predecessors.  As of September 30, 2007, all issued IFRS were also adopted by the European Commission, with the exception of IFRIC 14, “IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction,” which is effective for periods commencing January 1, 2008, IFRS 8, “Operating Segments,” which is effective for periods commencing January 1, 2009, but which is not expected to result in changes to the company’s single-segment approach, and the amendments to IAS 1, “Presentation of Financial Statements (Revised)” and IAS 23, “Borrowing Costs,” which are also effective for periods commencing January 1, 2009. These new standards are not expected to have a material impact on the company’s consolidated financial statements. IFRS 7, “Financial Instruments:  Disclosures,” and the related amendment to IAS 1, “Presentation of Financial Statements, Capital Disclosures,” were effective and were adopted for periods commencing January 1, 2007.  The company has adopted IFRIC 11, “Group and Treasury Share Transactions,” which has provided additional guidance for accounting for share-based payment transactions upon award vesting between the parent and its subsidiaries.  The application of IFRIC 11 did not have a material impact on the company’s consolidated financial statements.

Note 3. Acquisitions and Dispositions

Acquisition of PowerShares Capital Management LLC

On September 18, 2006, the company acquired 100% of the limited liability company interests of PowerShares Capital Management LLC (“PowerShares”). Consideration for the transaction was $399.1 million, which included earn-out provisions of $291.6 million, payable in the future depending on the achievement of various management fee growth targets, and transaction costs of $6.3 million.

Acquisition of WL Ross & Co. LLC

On October 3, 2006, the company acquired 100% of the limited liability company interests of WL Ross & Co. LLC (“WL Ross”). Consideration for the transaction was $294.7 million, which includes earn-out provisions of $190.6 million, payable in the future depending on the achievement of annual fund launch targets over the five years following the completion of the transaction, and transaction costs of $4.1 million. Goodwill, management contracts and other intangible assets of $288.0 million were initially recorded on this acquisition. In accordance with IFRS 3, “Business Combinations,” Invesco subsequently completed its evaluation of the assets and liabilities acquired in connection with the purchase of WL Ross. As a result of this evaluation, $100.0 million initially included in goodwill has been reclassified to intangible assets associated with post acquisition employment arrangements, to be amortized over a period of approximately five years. The condensed consolidated balance sheet as of December 31, 2006 has been adjusted to reflect this evaluation.

Note 4. Long-Term Debt

On January 15, 2007, $300.0 million of the Parent’s 5.9% senior notes matured. The company utilized its credit facility to satisfy the maturity. On April 17, 2007, the Parent issued $300.0 million of 5.625% senior notes due 2012. The notes will mature on April 17, 2012 and pay interest semi-annually on April 17 and October 17 of each year until maturity.

Note 5. Equity

Changes in ordinary and exchangeable shares consist of the following elements:

		Ordinary				Exchangeable
in millions		Shares				Shares
January 1, 2007			831.9				19.8
Exercises of share options			12.1				—
Acquisition earn-outs			0.5				—
Converted from exchangeable shares into ordinary shares			1.3				(1.3	)
September 30, 2007			845.8				18.5

Shares held by employee trusts represent the holdings of the ordinary shares of the company by its employee share ownership trusts in association with certain employee share-based payment programs. The Invesco Global Stock Plan trust purchased 9.6 million ordinary shares at a cost of $114.2 million during the nine months ended September 30, 2007. Changes in shares held by employee trusts consist of the following elements:

in millions
January 1, 2007			66.0
Purchases of ordinary shares			9.6
Dividend shares			0.3
Distribution of ordinary shares			(2.6	)
September 30, 2007			73.3

On June 13, 2007 the company’s board of directors authorized a share repurchase program of up to $500.0 million of the company’s ordinary shares. The share repurchase authorization has an expiration of June 30, 2008. As of September 30, 2007, approximately $105.2 million of the company’s ordinary shares had been repurchased representing 8.5 million shares which is reflected as an increase in Treasury Shares on the condensed consolidated balance sheet. Of the total amount authorized, $394.8 million remains as of September 30, 2007.

A final dividend in respect of 2006 of $0.104 per share ($86.4 million: $84.4 million for ordinary shares and $2.0 million for exchangeable shares) was approved at the Annual General Meeting of Shareholders on May 23, 2007, and was paid on May 30, 2007.

Note 6. Taxation

Invesco’s subsidiaries operate in several taxing jurisdictions around the world, each with its own statutory income tax rate. As a result, the blended average statutory income tax rate will vary from year-to-year depending on the mix of the profits and losses of Invesco’s subsidiaries. The majority of Invesco’s profits are earned in the U.S., Canada and the U.K. The current U.K. statutory tax rate is 30%, the Canadian statutory tax rate is 36% and the U.S. statutory tax rate can range from 36%–42% depending upon the applicable state tax rate(s). Effective April 1, 2008, the U.K. statutory tax rate will be reduced to 28%. Invesco’s blended average statutory tax rate for the nine months ended September 30, 2007 was 30.6%, down from 32.3% for the nine months ended September 30, 2006. Invesco’s blended average statutory tax rate for the three months ended September 30, 2007 was 29.0%, down from 30.8% for the three months ended September 30, 2006. The reduction is due to a larger percentage of Invesco’s profits being taxed at the 30% U.K. tax rate in 2007 than in 2006.

Invesco’s effective tax rate for the nine months ended September 30, 2007 was 34.4%, down from 35.2% for the nine months ended September 30, 2006. The impact of the reduction in the blended statutory rate described above was partially offset by increases in additional taxes on subsidiary dividends and additional unrecognized subsidiary operating losses.

Invesco’s effective tax rate for the three months ended September 30, 2007 was 34.3%, up from 32.1% for the three months ended September 30, 2006. The difference is due primarily to the reduction in the year-to-date September 30, 2006 blended statutory tax rate being recorded in the third quarter of 2006.

Note 7. 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 and held in treasury. Diluted earnings per share takes into account the effect of the potential issuance of ordinary shares.

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
in millions, except per share amounts		2007				2006				2007				2006
Profit attributable to equity holders of the parent		$	170.6			$	102.0			$	493.4			$	326.6
Weighted average shares outstanding			799.9				790.3				798.9				791.0
Dilutive effect of share-based awards			21.1				19.3				21.5				19.7
Weighted average diluted shares outstanding			821.0				809.6				820.4				810.7
Basic earnings per share		$	0.21			$	0.13			$	0.62			$	0.41
Diluted earnings per share		$	0.21			$	0.13			$	0.60			$	0.40

Note 8. Retirement Benefit Plans

Defined Contribution Plans

The company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the plans are held separately from those of the company in funds under the control of trustees. When employees leave the plans prior to vesting fully in the contributions, the contributions payable by the company are reduced by the amount of forfeited contributions. The expense recognized within the condensed consolidated income statement represents contributions payable to the plans by the company at rates specified in the rules of the plans. The expense totaled $9.1 million and $30.2 million during the three- and nine-month periods ended September 30, 2007, respectively, and $9.5 million and $30.9 million during the three- and nine-month periods ended September 30, 2006, respectively.

Defined Benefit Plans

The company maintains legacy defined benefit pension plans for qualifying employees of its subsidiaries in the U.K., Ireland, Germany, Taiwan and the U.S. All defined benefit plans are closed to new participants, and the U.S. plan benefits have been frozen. The company also maintains a post-retirement medical plan in the U.S., which was closed to new participants in 2005. In 2006, the plan was amended to eliminate benefits for all participants who will not meet retirement eligibility by 2008. The assets of all defined benefit schemes are held in separate trustee-administered funds. Under the U.K. structures, the employees are entitled to retirement benefits based on final salary at retirement.

Amounts recognized in the condensed consolidated income statement in respect of these defined benefit plans are presented for the three-month periods ended:

		Retirement Plans								Medical Plan
		September 30,				September 30,				September 30,				September 30,
in millions		2007				2006				2007				2006
Current service cost		$	2.2			$	2.0				—			$	0.2
Interest cost			4.3				4.1				0.7				0.6
Expected return on plan assets			(5.1	)			(4.7	)			(0.1	)			(0.1	)
Past service cost/(credit)			—				—				(0.5	)			(0.5	)
Actuarial gains/(losses)			—				—				0.2				0.2
Total amounts recognized in the income statement		$	1.4			$	1.4			$	0.3			$	0.4

     Amounts recognized in the condensed consolidated income statement in respect of these defined benefit plans are presented for the nine-month periods ended:

		Retirement Plans								Medical Plan
		September 30,				September 30,				September 30,				September 30,
in millions		2007				2006				2007				2006
Current service cost		$	6.6			$	6.0			$	0.1			$	0.5
Interest cost			12.9				12.2				2.0				1.9
Expected return on plan assets			(15.2	)			(14.2	)			(0.3	)			(0.4	)

		Retirement Plans								Medical Plan
		September 30,				September 30,				September 30,				September 30,
in millions		2007				2006				2007				2006
Past service cost/(credit)			—				—				(1.5	)			(1.4	)
Actuarial gains/(losses)			—				0.1				0.7				0.5
Total amounts recognized in the income statement		$	4.3			$	4.1			$	1.0			$	1.1

Actuarial gains and losses that are in excess of the greater of 10.0% of the benefit obligation or 10.0% of the fair value of plan assets are amortized over the expected average remaining working lives of the participants.

Note 9. Share-Based Payment

Share Incentive Awards

Share incentive awards are broadly classified into two categories: time-vested and performance-vested share awards. Time-vested awards vest ratably over or cliff-vest at the end of a period of continued employee service. Performance-vested awards cliff-vest at the end of a defined vesting period of continued employee service upon the company’s attainment of certain performance criteria. Time-vested and performance-vested share incentive awards are granted in the form of restricted shares or deferred share awards. Activity with respect to share incentive awards was as follows:

		Nine months ended
		September 30, 2007
						Performance-
in millions		Time-Vested				Vested
Outstanding at the beginning of period			31.4				9.1
Granted during the period			5.2				3.8
Forfeited during the period			(2.1	)			(0.4	)
Vested and distributed during the period			(1.6	)			—
Outstanding at the end of the period			32.9				12.5

Share incentive awards granted during the nine months ended September 30, 2007 had a weighted average share price of 606.3p.

During the nine months ended September 30, 2007 there were 12.1 million ordinary shares issued in association with executive share option grants and no additional executive share option grants were made during that period.

Note 10. Exchange Rates

The following primary U.S. dollar exchange rates have been used in preparing the condensed consolidated financial statements:

		Ending								Average
										For the three months								For the nine months
		September 30,				December 31,				ended September 30,								ended September 30,
		2007				2006				2007				2006				2007				2006
Canadian dollar			1.00				1.16				1.03				1.12				1.09				1.14
Euro			0.71				0.76				0.72				0.81				0.74				0.84
Sterling			0.50				0.51				0.49				0.54				0.50				0.55

Note 11. Other Commitments and Contingencies

Legal Proceedings

Following the industry-wide investigation by the SEC, the New York Attorney General’s Office and other regulators, into potential market timing activity in mutual funds, multiple lawsuits based on market timing allegations were filed against various parties affiliated with Invesco. These lawsuits were consolidated in the United States District Court for the District of Maryland, together with market timing lawsuits brought against affiliates of other mutual fund companies, and three amended complaints were filed against company-affiliated parties: (1) a putative shareholder class action complaint brought on behalf of shareholders of AIM funds formerly advised by Invesco

Funds Group, Inc.; (2) a derivative complaint purportedly brought on behalf of certain AIM funds (including certain funds formerly advised by Invesco Funds Group, Inc.) and such fund registrants; and (3) an ERISA complaint purportedly brought on behalf of participants in the company’s 401(k) plan.

On March 1, 2006, the court entered orders dismissing certain claims asserted against company-related defendants in the shareholder class action and derivative lawsuits but preserving claims under Section 10(b) of the Exchange Act and Section 36(b) of the Investment Company Act of 1940, as amended. On September 15, 2006, the court dismissed the ERISA lawsuit with prejudice. The plaintiff has appealed that dismissal to the United States Court of Appeals for the Fourth Circuit.

Additionally, the company and/or company-affiliated parties have been named as defendants in certain other lawsuits alleging that one or more of Invesco’s funds charged excessive fees, engaged in unlawful distribution practices or inadequately employed fair value pricing. The lawsuits have been filed in both federal and state courts and seek declaratory, injunctive and/or unspecified monetary relief.

The Attorney General’s Office for the State of West Virginia has filed a voluntary dismissal of the previously disclosed civil action brought under the West Virginia Consumer Credit and Protection Act. The Auditor of the State of West Virginia, in his capacity as securities commissioner, has initiated administrative proceedings against many mutual fund companies, including AIM, seeking disgorgement and other monetary relief based on allegations similar to those underlying the market timing lawsuits. AIM’s time to respond to the Auditor’s proceeding has not yet elapsed.

Although it is expected that the payments required under the terms of the regulatory settlement will mitigate any damages payable as a result of the market timing actions, the company cannot predict with certainty the outcome of these actions or any of the other actions mentioned above. The company intends to defend the above-mentioned lawsuits vigorously.

The asset management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the U.S. and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in assets under management, which would have an adverse effect on the company’s future financial results and its ability to grow its business.

In the normal course of its business, the company is subject to various litigation matters. Although there can be no assurances, at this time management believes, based on information currently available to it, that it is not probable that the ultimate outcome of any of these actions will have a material adverse effect on the consolidated financial condition of the company.

Acquisition Contingencies

Certain business combinations completed by the company were structured to include contingent consideration provisions. These provisions typically require that the company provides additional consideration contingent upon maintaining or achieving specified growth in management fees or fund launches in future periods. Estimates are made with respect to the future obligations associated with contingent consideration provisions and recorded to the initial goodwill balance at the time business acquisitions are initially recorded. As of September 30, 2007, the goodwill balance included $446.2 million representing the present value of these expected future earn-out distributions. Approximately $16.1 million has been accrued in provisions on the condensed consolidated balance sheet for the imputed interest on these obligations.

Note 12. Reconciliation to U.S. Accounting Principles

The company prepares its condensed consolidated financial statements in accordance with IFRS, which differ in certain material respects from U.S. GAAP.

The following is a summary of material adjustments to profit attributable to equity holders of the parent, which would be required if U.S. GAAP had been applied instead of IFRS.

		For the three months								For the nine months
		ended September 30,								ended September 30,
in millions, except per share data		2007				2006				2007				2006
Profit attributable to equity holders of the parent (IFRS)		$	170.6			$	102.0			$	493.4			$	326.6
Compensation:
Retirement benefit plans (a)			(1.6	)			(1.8	)			(4.9	)			(5.4	)
Redundancy and reorganizations (b)			—				—				(1.2	)			(13.1	)
Interest expense — discounting of contingent consideration (c)			4.0				—				12.1				—
Taxation (d)			(1.6	)			0.6				(4.5	)			6.5
Net income (U.S. GAAP) (e)		$	171.4			$	100.8			$	494.9			$	314.6
Earnings per share (U.S. GAAP):
- basic		$	0.21			$	0.13			$	0.62			$	0.40
- diluted		$	0.21			$	0.12			$	0.60			$	0.39

The following is a summary of material adjustments to equity attributable to equity holders of the parent, which would be required if U.S. GAAP had been applied instead of IFRS.

in millions, except per share data		September 30, 2007				December 31, 2006
Equity attributable to equity holders of the parent (IFRS)		$	4,991.6			$	4,270.1
Non-current assets:
Goodwill (c)			1,527.8				1,480.8
Deferred taxation (d)			(88.2	)			(68.2	)
Non-current liabilities:
Provisions — retirement benefit plans (a)			25.6				28.7
Provisions — acquisition (c)			317.9				305.8
Current liabilities:
Accruals and other — redundancy and reorganizations (b)			—				1.2
Interim dividend (f)			(68.6	)			—
Corporation taxation (d)			(15.0	)			—
Provisions — acquisition and other (c)			144.5				150.5
Total shareholders’ equity (U.S. GAAP) (e)		$	6,835.6			$	6,168.9

a: Retirement Benefit Plans

Under IFRS, amounts recognized as a net liability for defined benefit pension and post-retirement medical obligations include the actuarially-determined defined benefit obligation, less the fair value of plan assets, less the unrecognized net actuarial losses, plus the credit to prior service costs recognized during the year. Under U.S. GAAP, pursuant to the company’s adoption of Statement of Financial Accounting Standard (“FASB”) No. 158 “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans”, in 2006, amounts recognized as a net liability on the balance sheet include only the actuarially-determined defined benefit obligation less the fair value of plan assets (the funded status of the plans). Under U.S. GAAP, the unrecognized net actuarial losses and the credit to prior service costs are recorded directly to other comprehensive income. Additionally, upon transition to IFRS at January 1, 2004, the company’s cumulative unrecognized net actuarial losses were reset to zero and accordingly are building up again only from the IFRS transition date. The combination of these items results in a greater IFRS balance sheet provision for defined benefit pension and post-retirement medical plans than under U.S. GAAP. Since the cumulative unrecognized net actuarial losses for the company are greater under U.S. GAAP than under IFRS, this results in greater amortization costs under U.S. GAAP.

b: Redundancy and Reorganizations

Certain amounts provided relating to redundancy and reorganization initiatives under IFRS must be expensed over the period of the related initiative under U.S. GAAP.

c: Acquisition Accounting

The company transitioned from U.K. GAAP to IFRS at January 1, 2004. Prior to this date, the U.K. GAAP treatment of goodwill arising on acquisitions prior to 1998 was to eliminate it directly against reserves. These amounts remain in reserves under IFRS. Goodwill arising in 1998 and after was capitalized and amortized through the transition date to IFRS.

Under U.S. GAAP, the amortization of goodwill and indefinite-lived intangible assets ceased at January 1, 2002, and the balances are carried forward at cost less provision for impairment in value. There is therefore a two-year period (2002 and 2003) under which the goodwill balances were amortized, while the U.S. GAAP balances were not.

Contingent consideration payable related to acquisitions is not recorded under U.S. GAAP until the applicable conditions have been satisfied. Discounting charges related to the contingent consideration that are recorded in interest expense are similarly not recorded under U.S. GAAP.

d: Taxation

Tax expense under U.S. GAAP has been adjusted to reflect the redundancy and reorganization differences (Note b), the additional retirement benefit plan cost (Note a) and the reduction in interest expense (Note c).

Deferred tax assets have been reduced to reflect the remaining redundancy and reorganization differences (Note b), the cumulative decrease in the retirement benefit plan cost (Note a), the cumulative decrease in interest expense (Note c), and share based payments excluding the mark to market tax valuation applied under IFRS.

The implementation of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (FIN 48) as of January 1, 2007 increased the company’s tax contingencies liability and reduced opening U.S. GAAP retained earnings by $12.6 million.  There were no material increases or decreases in unrecognized tax benefits during the nine-month period ended September 30, 2007.  Additional interest in the amount of $2.4 million has been included in the taxation net income reconciling item from IFRS to U.S. GAAP, resulting in a $15.0 million decrease from IFRS shareholders’ equity to arrive at U.S. GAAP shareholders’ equity as of September 30, 2007.  Based on information currently available, the company does not anticipate any material changes in the liability within the next twelve months.

e: Consolidation of Variable Interest Entities

Compliance with FASB Interpretation No. 46 (revised December 2003), “Consolidation of Variable Interest Entities, an interpretation of ARB 51,” (FIN 46R) would result in a number of investment funds being consolidated into the company’s income statement and balance sheet under U.S. GAAP that are not consolidated under IFRS. For the nine months ended September 30, 2007, the main impact of consolidating these investment funds would be to increase investment income by $158.5 million (nine months ended September 30, 2006: $111.6 million) offset by a similar increase in profit attributable to minority interests. Consolidation also increases our investments at September 30, 2007 by $1,395.6 million (December 31, 2006: $1,461.3 million) again offset by a similar increase in equity attributable to minority interests. Consolidation of these investment funds would not have a material impact on the profit attributable to equity holders of the parent as reported in the income statement nor the equity attributable to equity holders of the parent reported in the balance sheet.

f: Interim Dividend

Interim dividends are recognized when paid under IFRS but are accrued when declared under U.S. GAAP.

Recent U.S. GAAP Accounting Pronouncements

FASB 157, “Fair Value Measurements” and FASB 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115” are effective for the company beginning January 1, 2008. FASB 157 establishes a framework for measuring fair value, and FASB 159 permits companies the choice of measuring certain financial instruments and certain other items at fair value. The company is currently evaluating the impact of these new accounting standards but does not expect that their adoption will have a material impact on the company’s financial statements.

Note 13. Guarantor Condensed Consolidating Financial Statements

The 4.5% $300.0 million senior notes due 2009, the 5.625% $300.0 million senior notes due 2012, the 5.375% $350.0 million senior notes due 2013 and the 5.375% $200.0 million senior notes due 2014 are fully and unconditionally guaranteed as to payment of principal, interest and any other amounts due thereon by the following wholly-owned subsidiaries of the Parent: A I M Management Group, Inc., A I M Advisors, Inc., Invesco North American Holdings, Inc., and Invesco Institutional (N.A.), Inc. (the “Guarantors”). The guarantees of the Guarantors are joint and several. Presented below are condensed consolidating balance sheets as of September 30, 2007 and December 31, 2006, condensed consolidating income statements for the three- and nine-month periods ended September 30, 2007 and 2006, and cash flow statements for the nine-month periods ended September 30, 2007 and 2006 of the Guarantors.

Condensed Consolidating Balance Sheets and Reconciliations of Shareholders’ Funds from IFRS to U.S. GAAP

						Non-				INVESCO				Consolidated
in millions		Guarantor				Guarantor				PLC Parent				Elimination				Consolidated
September 30, 2007		Subsidiaries				Subsidiaries				Company				Entries				Total
Non-current assets		$	1,769.2			$	6,739.0			$	5,894.2			$	(8,336.2	)		$	6,066.2
Current assets			98.9				4,466.4				35.8				—				4,601.1
Non-current liabilities			(170.2	)			(287.7	)			(1,157.9	)			—				(1,615.8	)
Current liabilities			(369.1	)			(3,646.7	)			(30.7	)			—				(4,046.5	)
Intercompany balances			(25.6	)			(556.2	)			581.8				—				—
Net assets			1,303.2				6,714.8				5,323.2				(8,336.2	)			5,005.0
Capital and reserves:
Share capital			—				1,533.5				84.6				(1,533.5	)			84.6
Share premium			1,005.8				3,837.2				328.5				(4,843.0	)			328.5
Treasury shares			—				—				(105.2	)			—				(105.2	)
Shares held by employee trusts			—				—				—				(684.1	)			(684.1	)
Exchangeable shares			—				352.5				—				—				352.5
Retained earnings			557.0				309.3				1,541.9				(866.3	)			1,541.9
Other reserves			(259.6	)			668.9				3,473.4				(409.3	)			3,473.4
Shareholders’ funds, equity interests under IFRS, excluding minority interests			1,303.2				6,701.4				5,323.2				(8,336.2	)			4,991.6
Minority interests			—				13.4				—				—				13.4
Shareholders’ funds, equity interests under IFRS, including minority interests		$	1,303.2			$	6,714.8			$	5,323.2			$	(8,336.2	)		$	5,005.0
Adjustments to reconcile to U.S. GAAP
Non-current assets:
Goodwill			1,461.9				65.9				1,527.8				(1,527.8	)			1,527.8
Investments			(291.6	)			291.6				—				—				—
Deferred taxation			(36.2	)			(52.0	)			(88.2	)			88.2				(88.2	)
Non-current liabilities:
Provisions — retirement benefit plans			—				25.6				25.6				(25.6	)			25.6
Provisions — acquisition			170.7				147.2				317.9				(317.9	)			317.9
Current liabilities:
Interim dividend			—				—				(68.6	)			—				(68.6	)
Corporation taxation			(1.7	)			(13.3	)			(15.0	)			15.0				(15.0	)
Provisions — acquisition			129.6				14.9				144.5				(144.5	)			144.5
Shareholders’ equity under U.S. GAAP		$	2,735.9			$	7,181.3			$	7,167.2			$	(10,248.8	)		$	6,835.6

						Non-				INVESCO				Consolidated
in millions		Guarantor				Guarantor				PLC Parent				Elimination				Consolidated
December 31, 2006		Subsidiaries				Subsidiaries				Company				Entries				Total
Non-current assets		$	1,759.0			$	6,332.1			$	5,293.3			$	(7,589.2	)		$	5,795.2
Current assets			130.4				3,331.1				35.3				—				3,496.8
Non-current liabilities			(164.9	)			(287.0	)			(982.6	)			—				(1,434.5	)
Current liabilities			(414.7	)			(2,788.3	)			(379.4	)			—				(3,582.4	)
Intercompany balances			(151.1	)			(376.6	)			527.7				—				—
Net assets			1,158.7				6,211.3				4,494.3				(7,589.2	)			4,275.1
Capital and reserves:
Share capital			—				1,555.1				83.2				(1,555.1	)			83.2
Share premium			1,028.9				3,600.0				205.1				(4,628.9	)			205.1
Shares held by employee trusts			—				—				—				(601.7	)			(601.7	)
Exchangeable shares			—				377.4				—				—				377.4
Retained earnings			397.4				(70.3	)			1,054.9				(327.1	)			1,054.9
Other reserves			(267.6	)			744.1				3,151.1				(476.4	)			3,151.2
Shareholders’ funds, equity interests under IFRS, excluding minority interests			1,158.7				6,206.3				4,494.3				(7,589.2	)			4,270.1
Minority interests			—				5.0				—				—				5.0
Shareholders’ funds, equity interests under IFRS, including minority interests		$	1,158.7			$	6,211.3			$	4,494.3			$	(7,589.2	)		$	4,275.1
Adjustments to reconcile to U.S. GAAP
Non-current assets:
Goodwill			1,461.9				18.9				1,480.8				(1,480.8	)			1,480.8
Investments			(293.8	)			293.8				—				—				—
Deferred taxation			(25.5	)			(42.7	)			(68.2	)			68.2				(68.2	)
Non-current liabilities:
Provisions — retirement benefit plans			—				28.7				28.7				(28.7	)			28.7
Provisions — acquisition			164.2				141.6				305.8				(305.8	)			305.8
Current liabilities:
Accruals and other			0.4				0.8				1.1				(1.1	)			1.2
Provisions — acquisition			129.6				20.9				150.5				(150.5	)			150.5
Shareholders’ equity under U.S. GAAP		$	2,595.5			$	6,668.3			$	6,393.0			$	(9,487.9	)		$	6,168.9

Condensed Consolidating Statements of Income and Reconciliations of Net Income from IFRS to U.S. GAAP

						Non-				INVESCO				Consolidated
in millions		Guarantor				Guarantor				PLC Parent				Elimination				Consolidated
For the three months ended September 30, 2007		Subsidiaries				Subsidiaries				Company				Entries				Total
Net revenues		$	205.9			$	514.4			$	—				—			$	720.3
Operating expenses			(156.4	)			(292.8	)			(2.1	)			—				(451.3	)
Operating profit			49.5				221.6				(2.1	)			—				269.0
Other net expense			(4.4	)			(4.6	)			3.3				—				(5.7	)
Profit before taxation			45.1				217.0				1.2				—				263.3
Taxation			(14.0	)			(68.0	)			(8.2	)			—				(90.2	)
Profit after taxation			31.1				149.0				(7.0	)			—				173.1
Profit attributable to minority interests			—				(2.5	)			—				—				(2.5	)
Profit before share of profits of subsidiaries			31.1				146.5				(7.0	)			—				170.6
Share of profits of subsidiaries			21.4				31.1				177.6				(230.1	)			—
Net profit under IFRS (equity method)		$	52.5			$	177.6			$	170.6			$	(230.1	)		$	170.6
Adjustments to reconcile to U.S. GAAP
Taxation			(0.8	)			(0.8	)			—				—				(1.6	)
Retirement benefit plans			—				(1.6	)			—				—				(1.6	)
Interest expense – discounting of contingent consideration			2.1				1.9				—				—				4.0
Share of adjustment relating to subsidiaries			—				1.3				0.8				(2.1	)			—
Net income (U.S. GAAP)		$	53.8			$	178.4			$	171.4			$	(232.2	)		$	171.4