TIDMLIO
RNS Number : 2725X
Liontrust Asset Management PLC
23 November 2017
Embargoed until 0700 hours, Thursday 23 November 2017
LIONTRUST ASSET MANAGEMENT PLC
HALF YEARLY REPORT FOR THE SIX MONTHSED
30 SEPTEMBER 2017
Liontrust Asset Management Plc ("Liontrust", the "Company", or
the "Group"), the independent fund management group, today
announces its Half Yearly Report for the six months ended 30
September 2017.
Results:
-- Adjusted profit before tax of GBP12.0 million (2016: GBP6.8 million), an increase of 76%
-- Profit before tax of GBP3.6 million (2016: GBP2.2 million),
an increase of 61%. This includes costs of GBP8.4 million (2016:
GBP4.6 million) relating to the amortisation of the related
intangible asset and other non-cash and non-recurring costs (see
note 5 below)
-- Revenues of GBP35 million (2016: GBP22 million), an increase of 57%.
Dividend:
-- First Interim dividend per share of 5.0 pence (2016: 4.0
pence), which will be payable on 12 January 2018, the shares going
ex-dividend on 30 November 2017.
Assets under management:
-- On 30 September 2017, assets under management ("AuM") were
GBP9.6 billion. The acquisition of Alliance Trust Investments
Limited ("ATI") completed on 1 April 2017, adding GBP2.5 billion to
AuM.
-- Assets under management as at close of business on 21 November 2017 were GBP10.1 billion
Flows:
-- Net inflows for the period to 30 September 2017 of GBP178 million (2016: GBP92 million)
MiFID II:
-- Liontrust has decided that with effect from January 2018 the
cost of external research will be absorbed by the Group. The
estimated annualised impact of this change on the Group's revenues
is expected to be GBP1.0 to GBP1.5 million
Commenting on the results, John Ions, Chief Executive, said:
"Our assets under management are now in excess of GBP10 billion,
with net inflows of GBP178 million in the first half of the
financial year. This is a testament to the determination and talent
that exists within Liontrust. I have said before that there are no
quick routes to success, but by doing the basics as well as we can
each day and paying strict adherence to our core beliefs and
investment processes, we will succeed.
We have generated these net inflows despite the uncertainty
caused by the ongoing Brexit negotiations and the fact UK All
Companies has been the worst selling sector by net retail flows in
seven of the past 13 months to the end of September 2017, according
to the IA. It shows the resilience of investor demand for active
fund management with proven long-term track records and robust
investment processes despite a challenging environment.
This is demonstrated by Anthony Cross, who celebrates 20 years
of active fund management at Liontrust at the start of next year.
He has run the UK Smaller Companies Fund since 8 January 1998. From
launch, the Fund has returned 1,121% against 282% by the FTSE Small
Cap (ex IT) Index and 612% by the average fund in the IA UK Smaller
Companies sector(1) .
The Liontrust Sustainable Investment team has bedded in well in
the first six months, with assets growing and performance strong
across its range of funds. Sustainable investing is grabbing a lot
of headlines, and with our team having critical mass and a long
track record this puts us in an enviable position to benefit from
the growth.
The success of our approach to managing money and the business
is reflected in the independent recognition we have received this
year. We have won three industry awards in recent months for
Specialist Group of the Year, while Special Situations, European
Growth and GF European Strategic Equity have won individual fund
awards.
In the first quarter of 2018, we will further diversify our fund
management capability through David Roberts and Phil Milburn
joining from Kames. David and Phil are very highly regarded fixed
income fund managers with excellent long-term performance
records.
They will add to the experienced and talented group of fund
management teams that we already have at Liontrust. We trust our
fund managers and provide the environment to enable them to focus
on running money and not get distracted by day-to-day aspects of
running a business. Having documented investment processes also
provides greater predictability of how our funds will be managed
and what are likely to be the more challenging market environments
for them.
We are in great shape after a successful 2017 and I look forward
with optimism, safe in the knowledge that we have the skill and
dedication within the business to continue our growth."
(1) Source: Financial Express, total return (income reinvested
and net of fees), bid to bid, since launch (8 January 1998) to 31
October 2017, based on primary share class.
For further information please contact:
Liontrust Asset Management 020 7412 1700
John Ions, Vinay Abrol www.liontrust.co.uk
Simon Hildrey - Chief Marketing Officer
Numis Securities Limited 020 7260 1000
Charles Farquhar
Macquarie Capital (Europe) Limited 020 3037 2000
Advisory - Jonny Allison, Kavita Choitram
Corporate Broking - Alex Reynolds, Nicholas Harland
Chairman's Statement
Introduction
Digitalisation has been transforming communications and the
speed at which information spreads around the world. We live in a
world in which the news cycle moves at an ever increasing pace and
people want instant responses to and views of events.
It is vital that we embrace digitalisation to enhance our
business and better service our clients and investors. It is
equally important that we retain our core values and focus on what
has made us successful. We take a long-term approach to managing
money at Liontrust, with each team applying their distinct
investment processes to running funds and portfolios and not
getting distracted by the increasing levels of market noise that is
a feature of our 24-hour news cycle.
We continually face many other opportunities and challenges,
whether it is through political or economic uncertainty, regulatory
developments or changing competitors. Like our fund managers, it is
key that we as a company focus on what is in our power to control
and determine.
The success of Liontrust's approach is shown by the strong set
of results for the first half of our financial year. We have grown
our revenue, profits and dividend. This has been driven by the
continued increase in our AuM, which has gone through GBP10 billion
since the end of September. We are also further diversifying our
fund management capability, with the addition of the Liontrust
Sustainable Investment team from Alliance Trust Investments in
April 2017 along with David Roberts and Phil Milburn joining from
Kames in January 2018.
Sophia Tickell is a strong addition for Liontrust, joining the
Board on 1 October 2017 as an Independent Non-executive Director.
She brings vast and valuable experience, having worked with asset
managers for more than 15 years as well as in other sectors and on
academic and charitable boards.
I would like to thank our shareholders, investors and staff for
all their support and loyalty to Liontrust. We are in a very strong
position to continue to expand and grow the business.
Results
Adjusted profit before tax was GBP12.002 million (2016: GBP6.838
million). Adjusted profit before tax is disclosed in order to give
shareholders an indication of the profitability of the Group
excluding non-cash (depreciation, intangible asset amortisation and
share incentivisation related) expenses and non-recurring
(professional fees relating to acquisition, cost reduction,
restructuring, share incentivisation and severance compensation
related) expenses ("Adjustments"), see note 5 below for a
reconciliation of adjusted profit (or loss) before tax.
Profit before tax is GBP3.344 million (2016: GBP2.245
million).
Dividend
In accordance with the Company's dividend policy, the Board is
declaring a First Interim dividend of 5.0 pence per share (2016:
4.0 pence) which will be payable on 12 January 2018 to shareholders
who are on the register as at 1 December 2017, the shares going
ex-dividend on 30 November 2017.
The Company has a Dividend Reinvestment Plan ("DRIP") that
allows shareholders to reinvest dividends to purchase additional
shares in the Company. For shareholders to apply the proceeds of
this and future dividends to the DRIP, application forms must be
received by the Company's Registrars by no later than 15 December
2017. Existing participants in the DRIP will automatically have the
dividend reinvested. Details on the DRIP can be obtained from Link
Asset Services on 0371 664 0381 or at www.signalshares.com. (Calls
are charged at the standard geographic rate and will vary by
provider. Calls outside the United Kingdom will be charged at the
applicable international rate. Lines are open between 09:00 -
17:30, Monday to Friday excluding public holidays in England and
Wales).
Funds under Management
On 30 September 2017, our AuM stood at GBP9,640 million and were
broken down by type and process as follows:-
Offshore
Process Total Institutional UK Retail Multi-Asset Funds
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Cashflow Solution 947 507 322 - 118
Economic Advantage 4,404 283 4,046 - 75
Macro Thematic 459 124 308 - 27
European Income 244 - 244 - -
Asia 111 - 99 - 12
Sustainable Investment 2,792 52 2,542 - 198
Multi-Asset 634 - - 634 -
Indexed 49 - 49 - -
Total 9,640 966 7,610 634 430
On 21 November 2017, our AuM was GBP10.126 billion.
Funds Flows
The net inflows over the six months to 30 September 2017 are
GBP178 million (2016: GBP92 million). A reconciliation of fund
flows and AuM over the half year is as follows:-
Offshore
Total Institutional UK Retail Multi-Asset Funds
GBPm GBPm GBPm GBPm GBPm
Opening AuM - 1 April
2017 6,523 1,044 4,648 612 219
Net flows 178 (160) 303 2 33
Acquisitions 2,518 49 2,316 - 153
Market and Investment
performance 421 33 343 20 25
Closing AuM - 30 September
2017 9,640 966 7,610 634 430
Fund Performance (Quartile ranking)
Quartile Quartile Quartile Quartile Launch
ranking ranking ranking ranking Date/Manager
- Since - 5 year - 3 year - 1 year Appointed
Launch/Manager
Appointed
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Growth Fund 1 2 1 3 25/03/2009
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Special
Situations Fund 1 2 1 2 10/11/2005
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Smaller Companies
Fund 1 1 1 3 08/01/1998
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Micro Cap Fund 3 - - 3 09/03/2016
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Macro
Equity Income
Fund 1 3 4 3 31/10/2003
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Macro
UK Growth Fund 2 4 4 3 01/08/2002
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Growth Fund 1 2 1 4 15/11/2006
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Asia
Income Fund 2 2 2 4 05/03/2012
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Income Fund 3 4 4 4 15/12/2005
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Enhanced Income
Fund (Hedged) 4 4 4 4 30/04/2010
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Global
Income Fund 4 - 4 3 03/07/2013
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Monthly
Income Bond
Fund 1 1 1 1 12/07/2010
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Absolute Growth
Fund 4 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Corporate Bond
Fund 1 1 1 1 20/08/2012
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Cautious Managed
Fund 1 - 1 1 23/07/2014
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Defensive Managed
Fund 1 - 1 1 23/07/2014
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
European Growth
Fund 2 2 1 2 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Global Growth
Fund 4 2 2 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Managed Fund 3 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Ethical Fund 2 1 1 1 01/12/2000
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
UK Growth Fund 2 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Source: Financial Express, total return (income reinvested and
net of fees), bid to bid, to 30 September 2017 unless otherwise
stated, based on primary share classes. The above funds are all UK
authorised unit trusts or UK authorised ICVCs (primary share
class). Liontrust FTSE 100 Tracker Fund (index fund) not included.
Past performance is not a guide to the future; the value of
investments and the income from them can fall as well as rise.
Investors may not get back the amount originally subscribed.
Quartile rankings correct as at 03/10/2017.
Outlook
We have made further progress in developing and growing
Liontrust over the past six months. With the addition of the
Liontrust Sustainable Investment team and the arrival of David
Roberts and Phil Milburn early in 2018, we are expanding our fund
management capability and diversifying our potential client base,
both in the UK and internationally. We have delivered another six
months of positive net inflows, breaking through GBP10 billion in
AuM since the end of September 2017.
We have a much stronger infrastructure at Liontrust, ensuring it
can support the further expansion of our business. We are also
focused on continuing to deliver a first-class service to our
investors as we grow our funds and proposition.
The depth of talent at Liontrust gives me great confidence that
we can thrive for the benefit of investors and shareholders.
Adrian Collins
Non-executive Chairman
Consolidated Statement of Comprehensive Income
Six months ended 30 September 2017
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Revenue 4 34,572 22,043 51,508
Cost of sales (25) (25) (50)
--------------------------------- ------ ------------ ------------ ----------
Gross profit 34,547 22,018 51,458
Realised profit on sale of
financial assets 2 104 6
Unrealised profit on financial
assets - - 134
Administration expenses 5 (30,957) (19,886) (42,506)
--------------------------------- ------ ------------ ------------ ----------
Operating profit 3,592 2,236 9,092
Interest receivable 2 9 11
--------------------------------- ------ ------------ ------------ ----------
Profit before tax 3,594 2,245 9,103
Taxation 7 (954) (496) (2,275)
--------------------------------- ------ ------------ ------------ ----------
Profit for the period 2,640 1,749 6,828
Total comprehensive income 2,640 1,749 6,828
================================= ====== ============ ============ ==========
Pence Pence Pence
-------------------------------- ------ ------------ ------------ ----------
Basic earnings per share 8 5.37 3.88 15.15
Diluted earnings per share 8 5.21 3.80 14.75
--------------------------------- ------ ------------ ------------ ----------
Consolidated Balance Sheet
As at 30 September 2017
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non current assets
Intangible assets 9 14,530 5,273 3,640
Goodwill 9,872 - -
Property, plant and
equipment 263 191 195
Deferred tax assets - 1,052 964
Total non current assets 24,665 6,516 4,799
-------------------------------- ------ ------------ ------------ ----------
Current assets
Trade and other receivables 48,564 49,058 68,066
Financial assets 10 1,545 1,757 1,404
Cash and cash equivalents 22,619 18,333 16,956
-------------------------------- ------
Total current assets 72,728 69,148 86,426
-------------------------------- ------ ------------ ------------ ----------
Liabilities
Non current liabilities
DBVAP liability (788) - (322)
Deferred tax liabilities (998) - -
------------------------------- ------ ------------ ------------ ----------
Total non current liabilities (1,786) - (322)
-------------------------------- ------ ------------ ------------ ----------
Current liabilities
Trade and other payables (51,831) (52,304) (63,960)
Corporation tax payable (58) (907) (393)
Total current liabilities (51,889) (53,211) (64,353)
-------------------------------- ------ ------------ ------------ ----------
Net current assets 20,839 15,937 22,073
-------------------------------- ------ ------------ ------------ ----------
Net assets 43,718 22,453 26,550
================================ ====== ============ ============ ==========
Shareholders' equity
Ordinary shares 495 454 454
Share premium 15,796 17,692 -
Deferred consideration 3,959 - -
Capital redemption reserve 19 19 19
Retained earnings 27,133 7,323 28,936
Own shares held (3,684) (3,035) (2,859)
Total equity 43,718 22,453 26,550
================================ ====== ============ ============ ==========
Consolidated Cash Flow Statement
Six months ended 30 September 2017
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash inflow from operations 48,944 29,365 56,460
Cash outflow from operations (38,835) (21,177) (42,489)
Cash inflow/(outflow) from changes
in unit trust receivables and
payables 4,233 2,535 (363)
--------------------------------------- ------------ ------------ ----------
Net cash from operations 14,342 10,723 13,608
Interest received 2 9 11
Tax paid (1,403) (500) (2,705)
------------ ------------ ----------
Net cash from operating activities 12,941 10,232 10,914
--------------------------------------- ------------ ------------ ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (146) (8) (73)
Acquisition of investment management
contracts - (4,083) (4,083)
Acquisition of Alliance Trust
Investments net of cash (929) - -
Purchase of ICI's - - (95)
Purchase of DBVAP Financial Asset - (940) (940)
Purchase of seeding investments - (110) (252)
Sale of seeding investments 54 85 151
------------ ------------ ----------
Net cash used in investing activities (1,021) (5,056) (5,292)
--------------------------------------- ------------ ------------ ----------
Cash flows from financing activities
Purchase of own shares (848) (1,718) (1,738)
Dividends paid (5,409) (4,092) (5,895)
--------------------------------------- ------------ ------------ ----------
Net cash used in financing activities (6,257) (5,810) (7,633)
Net increase/(decrease) in cash
and cash equivalents 5,663 (634) (2,011)
Opening cash and cash equivalents* 16,956 18,967 18,967
Closing cash and cash equivalents 22,619 18,333 16,956
======================================= ============ ============ ==========
* Cash and cash equivalents consists only of cash balances.
Consolidated Statement of Change in Equity
Six months ended 30 September 2017
Share Share Deferred Capital Retained Own shares Total
capital premium Consideration Redemption earnings held Equity
GBP GBP GBP'000
'000 '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1 April
2017 brought forward 454 - - 19 28,936 (2,859) 26,550
Profit for the period - - - - 2,640 - 2,640
Total comprehensive
income for the period - - - - 2,640 - 2,640
Dividends paid - - - - (5,409) - (5,409)
Deferred consideration
ATI - - 3,959 - - - 3,959
Shares issued 41 15,796 - - - - 15,837
Purchase of own shares - - - - - (825) (825)
Equity share options
issued - - - - 966 - 966
Balance at 30 September
2017 495 15,796 3,959 19 27,133 (3,684) 43,718
========================== ======== ======== ============== =========== ========= =========== =========
Consolidated Statement of Change in Equity
Six months ended 30 September 2016
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
GBP GBP
'000 '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1 April
2016 brought forward 454 17,692 19 9,330 (1,317) 26,178
Profit for the period - - - 1,749 - 1,749
Total comprehensive
income for the period - - - 1,749 - 1,749
Dividends paid - - - (4,092) - (4,092)
Purchase of own shares - - - - (1,718) (1,718)
Equity share options
issued - - - 336 - 336
Balance at 30 September
2016 454 17,692 19 7,323 (3,035) 22,453
========================== ======== ======== =========== ========= =========== =========
Consolidated Statement of Change in Equity
Year ended 31 March 2017
Ordinary Share Capital Retained Own shares Total
shares premium redemption earnings held Equity
GBP GBP
'000 GBP '000 GBP '000 GBP '000 GBP '000 '000
Balance at 1 April
2016 brought forward 454 17,692 19 9,330 (1,317) 26,178
Profit for the
year - - - 6,828 - 6,828
Total comprehensive
income for the
year - - - 6,828 - 6,828
Dividends
paid - - - (5,895) - (5,895)
Capital reduction - (17,692) - 17,692 - -
Purchase of own
shares - - - - (1,738) (1,738)
Purchase of ICI's - - - (95) - (95)
EBT share option
settlement - - - (133) 196 63
Equity share options
issued - - - 1,209 - 1,209
Balance at 31 March
2017 454 - 19 28,936 (2,859) 26,550
======================== ========= ========= =========== ========= =========== ========
Notes to the Financial Statements
1. Principal accounting policies
This Half Yearly Report is unaudited and does not constitute
statutory accounts within the meaning of s434 of the Companies Act
2006. The financial information for the half years ended 30
September 2017 and 2016 has not been audited or reviewed by the
auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information. The statutory accounts for
the year ended 31 March 2017, which were prepared in accordance
with International Financial Reporting Standards, comprising
standards and interpretations approved by either the International
Accounting Standards Board or the International Financial Reporting
Interpretations Committee or their predecessors, as adopted by the
European Union ("IFRS"), and with those parts of the Companies Act
2006 applicable to companies reporting under IFRS, have been
delivered to the Registrar of Companies. The auditors' opinion on
these accounts was unqualified and did not contain a statement made
under s498 of the Companies Act 2006.
The financial statements have been prepared in accordance with
the Disclosure Guidance and Transparency Sourcebook and with IAS 34
'Interim Financial Reporting'.
The accounting policies applied in this Half Yearly Report are
consistent with those applied in the Group's most recent annual
accounts other than the amendment of the 'intangible assets'
policy. Assets are amortised over their useful lives on a straight
line basis. Their useful lives are determined by management at
either 5 years or 10 years depending on the type of contracts and
underlying investors.
Forthcoming accounting standards applicable to the Group:
IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from
Contracts with Customers' will become applicable from 1 January
2018. The expected impact of these standards is being assessed and
further quantitative information will be included within the
Group's 2018 Annual Report and Accounts.
2. Alternative Performance Measures
The Group assess its performance using a variety of measures
that are not defined under IFRS and are therefore termed
alternative performance measures ("APM's"). The APMs that we use
may not be directly comparable with similarly named measures used
by other companies.
The Group uses the APM's to present its financial performance,
in a manner which is aligned with the requirements of our
stakeholders. By presenting these APM's it enables comparison with
our peers who may use different accounting policies.
The Group uses the following APM's:
Alternative Performance
Measure Definition Reconciliation
Adjusted profit before Profit before tax, before Note 6
tax depreciation, amortisation,
non-recurring items*
and share incentivisation
schemes
Adjusted profit before tax is used to present a measure of
profitability which excludes the effects of non-recurring and
non-cash items and capital investment (depreciation and
amortisation), enabling comparison with our peers and to provide a
consistent measure of the businesses performance.
Adjusted operating Adjusted profit before Note 6
profit tax, before interest.
Adjusted basic earnings Adjusted profit before
per share tax divided by the weighted
average number of shares
in issue for the period n/a
Adjusted diluted earnings Adjusted profit before
per share tax divided by the diluted
weighted average number
of shares in issue for
the period n/a
* Non-recurring items include cost reduction expenses,
restructuring costs, acquisition related costs, integration costs,
severance compensation and non-recurring legal expenses.
3. Segmental reporting
The Group's operates only in one business segment - Investment
management.
The Group offers different fund products through different
distribution channels. All financial, business and strategic
decisions are made centrally by the Board, which determines the key
performance indicators of the Group. The Group reviews financial
information presented at a Group level. The Board, is therefore,
the chief operating decision-maker for the Group. The information
used to allocate resources and assess performance is reviewed for
the Group as a whole. On this basis, the Group considers itself to
be a single-segment investment management business.
4. Revenue
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue
- Revenue 34,520 21,985 47,459
- Performance fee revenue 52 58 4,049
------------ ------------ ----------
Total Revenue 34,572 22,043 51,508
============================ ============ ============ ==========
5. Administration expenses
Six Six Year
months to months to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Employee related expenses
Director and employee costs 3,905 2,291 5,721
Pension costs 318 151 305
Share incentivisation expense 1,677 670 1,487
DBVAP expense 505 - 188
Severance compensation(1) 1,469 25 53
7,874 3,137 7,754
Non employee related expenses
Members' drawings charged as an
expense 11,127 8,175 19,062
Members' share incentivisation
expense 999 1,588 1,762
Member severance compensation 338 - 165
Professional services(1,2) 2,017 818 1,359
Depreciation and Intangible asset
amortisation 1,403 1,424 3,118
Other administration expenses 7,199 4,744 9,286
----------------------------------- ------------ ------------ ----------
Total administration expenses 30,957 19,886 42,506
=================================== ============ ============ ==========
(1) Includes costs relating to the acquisition of Alliance Trust
Investments Limited.
(2) Includes legal costs relating to claim by a former member
and costs relating to the acquisition of the Argonaut business.
6. Adjusted profit before tax
Adjusted profit before tax is reconciled in the table below:
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit for the period 2,640 1,749 6,828
Taxation 954 496 2,275
--------------------------------------------- ------------ ------------ ----------
Profit before tax 3,594 2,245 9,103
Share incentivisation expense 2,676 2,161 3,249
DBVAP expense 505 - 188
Severance compensation(1) 1,807 190 218
Professional services(1,2) 2,017 818 1,359
Depreciation, Intangible asset amortisation
and impairment 1,403 1,424 3,118
Adjustments 8,408 4,593 8,132
--------------------------------------------- ------------ ------------ ----------
Adjusted profit before tax 12,002 6,838 17,235
--------------------------------------------- ------------ ------------ ----------
Interest receivable (2) (9) (11)
Adjusted operating profit 12,000 6,829 17,224
--------------------------------------------- ------------ ------------ ----------
Adjusted basic earnings per share 19.77 12.14 30.60
Adjusted diluted earnings per share 19.17 11.89 29.79
--------------------------------------------- ------------ ------------ ----------
(1) Includes costs relating to the acquisition of Alliance Trust
Investments Limited.
(2) Includes legal costs relating to claim by a former member
and costs relating to the acquisition of the Argonaut business.
7. Taxation
The half yearly tax charge has been calculated at the estimated
full year effective UK corporation tax rate of 19% (2016: 20%).
8. Earnings per share
The calculation of basic earnings per share is based on profit
after taxation and the weighted average number of Ordinary Shares
in issue for each period. The weighted average number of Ordinary
Shares for the six months ended 30 September 2017 was 49,168,235
(30 September 2016: 45,043,211, 31 March 2017: 45,059,188). Shares
held by the Liontrust Asset Management Employee Trust are not
eligible for dividends and are treated as cancelled for the
purposes of calculating earnings per share.
Diluted earnings per share is calculated on the same bases as
set out above, after adjusting the weighted average number of
Ordinary Shares for the effect of options to subscribe for new
Ordinary Shares that were in existence during the six months ended
30 September 2017. The adjusted weighted average number of Ordinary
Shares so calculated for the period was 50,719,938 (30 September
2016: 46,010,147, 31 March 2017: 46,285,217). This is reconciled to
the actual weighted number of Ordinary Shares as follows:
30-Sep-17 30-Sep-16 31-Mar-17
Weighted average number of Ordinary
Shares 49,168,235 45,043,211 45,059,188
Weighted average number of dilutive
Ordinary shares under option:
- to Liontrust Long Term Incentive
Plan 1,173,750 510,739 789,963
- to the Liontrust Option Plan - 35,297 30,949
- to the DBVAP 377,953 401,009 395,144
- to the Liontrust LMIP - 19,891 9,973
Adjusted weighted average number of
Ordinary Shares 50,719,938 46,010,147 46,285,217
===================================== =========== =========== ===========
9. Intangible assets
Intangible assets represent investment management contracts that
have been capitalised upon acquisition and are amortised on a
straight-line basis over a period of 5 years or 10 years depending
on the type of contracts acquired. The intangible asset on the
balance sheet represents investment management contracts as
follows:
30-Sep-17 30-Sep-16 31-Mar-17
GBP'000 GBP'000 GBP'000
Investment management contracts acquired
from Walker Crips Asset Managers Limited - 1,326 2,550
Investment management contracts acquired
from Argonaut 3,130 3,947 -
Investment management contracts acquired
from ATI 11,400 - -
14,530 5,273 2,550
========== ========== ==========
As noted in the 2017 Annual report we agreed to acquire the
Alliance Trust Investments Limited (the 'Acquisition'). The
Acquisition completed in April 2017 (See note 10).
10. Acquisition of Alliance Trust Investments Limited
On 1 April 2017 ("Completion Date"), the Company acquired the
entire issued share capital and obtained control of Alliance Trust
Investments Limited ("ATI") at a cost of GBP29.425 million (the
"Acquisition") from Alliance Trust Plc ("AT Plc"). As a result of
the Acquisition, the Group is expected to increase its offerings to
investors, both domestically and across Europe. It expects to
reduce costs and benefit from economies of scale following a
process of restructuring and integration.
The goodwill of GBP9.9 million arising from the Acquisition is
attributable to the acquired customer base and the expected
economies of scale and efficiency increases from combining the
operations of ATI and the Group.
The following table summarises the consideration paid for ATI,
the fair value of assets acquired and the liabilities assumed at
the Completion Date.
Consideration at 1 April 2017 GBP'000
Cash 9,629
Equity instruments (amount on Completion
Date) - 4,060,792 shares 15,837
Equity instruments (deferred consideration)
- 1,015,198 shares 3,959
Total consideration 29,425
--------
Recognised amounts of identifiable assets
acquired and liabilities assumed
Cash and cash equivalents 8,700
Trade and other receivables 4,603
Trade and other payables (3,674)
Investment Management contracts 12,000
Deferred tax liabilities (2,076)
Total identifiable net assets 19,553
Goodwill 9,872
Total 29,425
--------
Acquisition related costs of GBP576,000 have been charged to
administrative expenses in the consolidated statement of
comprehensive income for the year ended 31 March 2017. Since the
Completion Date, the ATI business has contributed revenue of GBP4.7
million and a net loss of GBP1.9 million (including reorganisation
costs).
Equity instruments issued
The equity instruments issued on the Completion Date comprise of
4.061 million of the Company's ordinary shares ("Ordinary Shares").
The Share Purchase Deed relating to the Acquisition stipulated that
Liontrust pay an initial considerate of GBP13.6 million to be
satisfied in Ordinary Shares in a number of shares calculated with
reference to the 30 day average of the Company's share price as at
15 December 2016. The fair value of the 4.061 million shares on the
Completion Date was GBP15.8 million.
Additionally, the Group has agreed to pay AT Plc additional
consideration of GBP3.4 million on the first anniversary of the
Completion Date, which will be satisfied by the allotment and issue
of 1.015 million of Ordinary Shares calculated with reference to
the 30 day average of the Company's share price as at 15 December
2016. The Group has included GBP3.9 million as deferred
consideration related to the additional consideration, which
represents its fair value at the Completion Date.
There is an additional contingent consideration that may become
payable. If, on the second anniversary of the Completion Date, the
average assets under management managed by the Sustainable
Investment team (the investment team acquired pursuant to the
Acquisition) for the 3 month period prior to this date is in excess
of GBP3 billion then Liontrust will pay an additional GBP3 million
in cash to AT Plc. At the current time the Group has not recognised
a liability for this.
11. Financial Assets
The Group holds financial assets that have been categorised
within one of three levels using a fair value hierarchy that
reflects the significance of the inputs into measuring the fair
value. These levels are based on the degree to which the fair value
is observable and are defined as follows:
a) Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets and
liabilities;
b) Level 2 fair value measurements are those derived from inputs
other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data.
As at the balance sheet date all financial assets are
categorised as Level 1.
Assets held at fair value through profit and loss:
The Group's assets held at fair value through profit and loss
represent units in the UK Authorised unit trusts held in the
manager's box (these are valued at bid price.) and units in the UK
Authorised unit trusts and shares in the sub-funds of Liontrust
Global Funds Plc held as part of the Liontrust DBVAP.
Assets held as available-for-sale:
The Group's assets held as available-for-sale represent shares
in Liontrust GF European Smaller Companies Fund, Liontrust GF Asia
Income Fund, Liontrust GF European Strategic Equity Fund and
Liontrust GF UK Growth Fund (all sub-funds of Liontrust Global
Funds Plc) and are valued at bid price).
12. Related party transactions
During the six months to 30 September 2017 the Group received
fees from unit trusts under management of GBP22,371,000 (2016:
GBP16,792,000). Transactions with these unit trusts comprised
creations of GBP384,521,000 (2016: GBP374,117,000) and liquidations
of GBP181,329,000 (2016: GBP373,947,000). Directors can invest in
unit trusts managed by the Group on commercial terms that are no
more favourable than those available to staff in general. As at 30
September 2017 the Group owed the unit trusts GBP28,149,000 (2016:
GBP45,130,000) in respect of unit trust creations and was owed
GBP27,360,000 (2016: GBP43,131,000) in respect of unit trust
cancellations and fees.
During the six months to 30 September 2017 the Group received
fees from ICVC's under management of GBP5,284,000 (2016: GBPnil).
Transactions with these ICVC's comprised creations of
GBP542,208,000 (2016: GBPnil) and liquidations of GBP243,365,000
(2016: GBPnil). Directors can invest in ICVC's managed by the Group
on commercial terms that are no more favourable than those
available to staff in general. As at 30 September 2017 the Group
owed the ICVC's GBP13,859,000 (2016: GBPnil) in respect of
creations and was owed GBP14,009,000 (2016: GBPnil) in respect of
cancellations and fees.
During the six months to 30 September 2017 the Group received
fees from offshore funds under management of GBP1,087,000 (2016:
GBP613,000). Transactions with these funds comprised purchases of
GBPnil (2016: GBP110,000) and sales of GBP54,000 (2016: GBP85,000).
As at 30 September 2016 the Group was owed GBP177,000 (2016:
GBP99,000) in respect of management fees.
As at 30 September 2017 members owed Liontrust Fund Partners LLP
and Liontrust Investment Partners LLP (the 'LLPs') GBPnil (2016:
GBP492,000). These loans were provided in connection with the
relevant members' duties as a member of the relevant LLP.
During the six months to 30 September 2017 remuneration paid to
key decision makers (the Executive Directors) was GBP338,000 (2016:
GBP430,000).
13. Key risks
The Directors have identified the risks and uncertainties that
affect the Group's business and believe that they will be
substantially the same for the second half of the year as the
current risks as identified in the 2017 Annual Report. These can be
broken down into risks that are within the management's influence
and risks that are outside it.
Risks that are within management's influence include areas such
as the expansion of the business, prolonged periods of
under-performance, loss of key personnel, human error, poor
communication and service leading to reputational damage and
fraud.
Risks outside the management's influence include falling
markets, terrorism, a deteriorating UK economy, investment industry
price competition and hostile takeovers.
Management monitor all risks to the business, they record how
each risk is mitigated and have warning flags to identify increased
risk levels. Management recognise the importance of risk management
and view it as an integral part of the management process which is
tied into the business model and is described further in the Risk
management and internal control section on page 31 of the 2017
Annual Report and Note 2 "Financial risk management" on page 68 of
the 2017 Annual Report.
14. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated
and fund accounts that it manages. In some cases a proportion of
the fee earned is deferred until the next performance fee is
payable or offset against future underperformance on that account.
As there is no certainty that such deferred fees will be
collectable in future years, the Group's accounting policy is to
include performance fees in income only when they become due and
collectable and therefore the element (if any) deferred beyond 30
September 2017 has not been recognised in the results for the
year.
A contingent liability has arisen in relation to a tax covenant
claim by Walker Crips Group Plc in relation to the acquisition of
Walker Crips Asset Managers Limited in April 2012 and for which the
underlying basis of the claim is unclear at this time. The timing
and amount of any potential liability is currently uncertain but
can be estimated at this stage to be within the range of GBPnil to
GBP1.8 million.
15. Directors' responsibilities
The Directors confirm that this condensed set of financial
statements has been prepared in accordance with IAS 34 as adopted
by the European Union, and that the Half Yearly Report herein
includes a fair review of the information required by DTR 4.2.7,
being an indication of important events that have occurred during
the first six months of the current financial year and their impact
on the condensed set of financial statements; and a description of
the principal risks and uncertainties for the remaining six months
of the year; and DTR 4.2.8, being related party transactions that
have taken place in the first six months of the current financial
year and that have materially affected the financial position or
performance of the Group during that period; and any changes in the
related party transactions described in the last Annual Report and
Accounts that could have a material effect on the financial
position or performance of the Group in the past six months of the
current financial year.
By Order of the Board
John Ions Vinay Abrol
Chief Executive Chief Operating Officer and Chief Financial
Officer
22 November 2017
Forward Looking Statements
This report contains certain forward-looking statements with
respect to the financial condition, results of operations and
businesses and plans of the Group. These statements and forecasts
involve risk and uncertainty because they relate to events and
depend upon circumstances that have not yet occurred. There are a
number of factors that could cause actual results or developments
to differ materially from those expressed or implied by these
forward-looking statements and forecasts. Nothing in this
announcement should be construed as a profit forecast.
END
This information is provided by RNS
The company news service from the London Stock Exchange
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