LEI:
549300XVXU6S7PLCL855
For
immediate release
26
June
2024
LIONTRUST ASSET MANAGEMENT PLC
FULL YEAR RESULTS FOR THE
YEAR ENDED 31 MARCH 2024
Liontrust Asset Management Plc
("Liontrust", the
"Company", or the
"Group"), the specialist fund
management group, today announces its audited results for the
financial year ended 31 March 2024.
·
Gross Profit of £186.1 million (2023: £229.8
million), includes £10.4 million of performance fee revenues (2023:
£18.5 million), with a Revenue margin1 of 0.62% (2023:
0.62%).
·
Adjusted profit before tax1 of £67.4
million (2023: £87.1 million), a decrease of 23%.
·
Adjusted operating margin1 of 35.5%
(2023: 37.7%).
·
Adjusted diluted earnings per share1 of
79.2 pence per share (2023: 109.8 pence per share), a decrease of
28%.
·
Statutory Loss before tax of £0.6 million (2023:
Statutory Profit before tax of £49.3 million). See note 6 below for
further detail and a reconciliation to Adjusted profit before
tax1.
·
Full year dividend maintained at 72p.
·
On 31 March 2024, assets under management and
advice ("AuMA") were £27.8 billion
(2023: £31.4 billion), a decrease of 11.5%.
·
AuMA as at 20 June 2024 were £27.25 billion.
1 This is an Alternative Performance Measure. See note 2
below.
Commenting, John Ions, Chief Executive Officer,
said:
"Liontrust has delivered an Adjusted
profit before tax1 of £67.4 million and a strong
Adjusted operating margin1 of 35.5% in spite of the
challenging environment for active managers over the past
year.
We have started to see signs of a
change in investor sentiment and this is likely to move
significantly when more central banks reduce interest rates and
there is greater political and fiscal certainty in the UK. There is
no doubt that the amount individuals are investing has been
negatively impacted by the cost of living, the reductions in Covid
savings and tax rises. With more stability will come greater
recognition of valuation opportunities especially in the UK stock
market.
The negative investor sentiment has
combined with a market environment over the past 18 months that has
proved a significant headwind for many of our strategies and led to
net outflows of £6.1 billion across the whole financial year for
Liontrust. This market environment has also prompted many
commentators to again question the value of active asset
management.
The events of the last year have not
reduced our belief in active management but have reinforced the
need for Liontrust to expand our investment capability across asset
classes and investment styles, broaden distribution and enhance the
Group's operations. As we could not accelerate these developments
through an acquisition, we have been pursuing them organically,
through recruitment and investment in the business. These actions
are ensuring we can drive the business forward and deliver on our
strategic objectives.
We are building the business from a
position of strength despite the challenges of the past year.
Liontrust has a high-profile and positive brand, excellent
investment teams, deep client relationships as well as good
operating margins.
The ability of the investment teams
to deliver for clients over the long term is shown by the fact that
to 31 May 2024, 69% of Liontrust's funds were in the first or
second quartile of their respective IA sectors since the funds were
launched2.
The Liontrust European Dynamic Fund
won the award for best Europe ex UK Fund for the third year running
at the prestigious Fund Manager of the Year awards on 20 June. The
Liontrust European Strategic Equity Fund and the Liontrust India
Fund were both shortlisted for awards.
We are optimistic about the
long-term outlook for the UK economy and stock market. The UK has
not lost the ability to develop world class businesses and it is
about providing the incentives and liquidity to encourage such
companies to list on the London Stock Exchange. A key part of this
is attracting international investors to reinvest back in the UK
market.
We are well positioned for when the
UK comes back into favour given that the four funds managed by the
Economic Advantage team, including Special Situations, to 31 May
2024 are in the first quartile of their respective IA sectors since
launch2.
One of our strategic objectives is
to expand the Liontrust investment proposition, which we have done
through fund launches and the formation of the Global Equities team
headed by Mark Hawtin.
Another objective is to enhance
distribution in the UK and internationally and we have continued to
do so through strengthening the UK sales team under Kristian Cook
with new senior hires, the recruitment of Jeremy Roberts as Head of
Global Distribution (ex UK) and the recent appointment of Michael
Buchholz as Head of Distribution for Germany and Austria. Michael
will join in August 2024 and be based in the branch office in
Frankfurt that we will open later this year.
We have been investing to achieve
the fourth strategic objective of strengthening our technological,
data and digital capability, which includes implementing new
portfolio management and research management systems. These will
give us a single front office operating platform providing
Liontrust with scalability, flexibility and efficiency to support
future growth of the business. This investment is a significant
development in achieving the operating model that we had identified
as part of the proposed acquisition of GAM Investments last
year.
The Liontrust brand is strong. The
most recent research shows that Liontrust is regarded as the third
best asset manager among financial advisers in the UK and is eighth
among wealth managers (source: Research in Finance).
Liontrust is also importantly
achieving good rates of engagement with clients, both through
face-to-face presentations and digital content. For example, there
were more than two million views of Liontrust videos over the last
financial year. This is all contributing to Liontrust delivering
our strategic objective to enhance further the client
experience.
Community engagement has been a
long-term commitment for Liontrust, including financial education
and conservation. We have further raised the profile of and
engagement with our support of the conservation breeding programme
for endangered Asiatic lions at London Zoo. Primary school children
around the UK nominated more than 650 names for the three lion cubs
recently born at London Zoo and then listeners to Times Radio and
readers of The Times voted for their favourites from a short list
of names for each cub.
Outlook
Liontrust has an expanding and
compelling range of investment teams with robust processes;
broadening distribution and excellent client service; great
engagement with our campaigns and content; a strong brand; and an
enhanced operating model. This gives me great confidence that we
have the platform to succeed in delivering growth."
1 This is an Alternative Performance Measure. See note 2
below.
2 Source: Financial Express, bid-to-bid basis, net of fees.
Statistics using monthly return period.
For further information please
contact:
Teneo (Tel: 020 7353 4200, Email:
liontrust@teneo.com)
Tom Murray, Colette Cahill, Jessica
Pine
Liontrust Asset Management Plc (Tel: 020 7412 1700, Website:
liontrust.co.uk)
Stephen Corbett: Head of Investor
Relations
Simon Hildrey: Chief Marketing
Officer
Singer Capital Markets (Tel: 020 7496 3000)
Corporate Broking: Charles
Leigh-Pemberton
Corporate Finance: James
Moat
Panmure Gordon (Tel: 020 7886 2500)
Corporate Broking: David
Watkins
Corporate Advisory: Atholl
Tweedie
HSBC Bank plc (Tel: 020 7991
8888)
Corporate Broking: Sam McLennan,
James Hopton
Corporate Advisory: Alexander
Paul
Chair's Statement
The Board of Directors are committed
to Liontrust's vision and the strategy of the Group. The underlying
business is in better health than it has ever been with regards to
investment proposition, quality of our people, reach of sales and
marketing, and strengthening business infrastructure. We will not
be diverted from our long-term plan by short-term
challenges.
Active management
There is no doubt we have been
confronted by one of the toughest periods for active asset
managers. This is especially the case for those which offer
investment styles that have been largely out of favour during this
environment of interest rates remaining higher for longer than many
expected. For Liontrust, this has impacted our quality growth,
small and mid caps, sustainable investing, as well as UK equity,
strategies; this is reflected in the net outflows of £6 billion
over the financial year.
Liontrust has always believed the
best way of allocating capital to companies and managing
investments on behalf of clients is through active management with
robust investment processes and
high-conviction portfolios. Each team at
Liontrust has the freedom to use their own distinct investment
processes and we
continue to believe these are key to long-term performance and
effective risk control.
The need for individuals to take
responsibility for their own savings and ensure their future
financial security will only grow in importance and this can act as
a tailwind for active
managers. We believe those active managers
who deliver value will continue to have a key role for investors in
achieving their financial objectives. We recognise active managers
and investment processes do not always deliver alpha in a
consistent and predictable manner; in some years, as we have seen
recently, processes will underperform, but we are confident they
will deliver for clients over the long term.
John Ions, Vinay Abrol, and the rest
of Liontrust are working hard to enable the Group to return to net
inflows and are not simply waiting for market sentiment to change.
In his statement below, John explains the strategy for delivering
growth and the many actions that have already been taken to ensure
Liontrust is well positioned for the future and can take advantage
of opportunities.
Robust business
I am pleased to report that the
Liontrust operating model is robust with the Group capital position
remaining strong. Over the financial year, Liontrust delivered
adjusted profit before tax of £67.4 million, gross profit of £186
million and the full year dividend is maintained at 72p per share.
Our financial strength has been aided by our flexible remuneration
model for investment managers through their revenue share model.
This ensures the investment managers are fully aligned with the
business and investors as AuMA rises and falls.
Liontrust remains in robust
financial health with £104 million of cash and cash equivalents on
the balance sheet and surplus capital of nearly £80 million as at
31 March 2024.
Strategy
A strategic objective that John
talks about in detail in his statement is the further
diversification of our fund range and investment teams. We have
seen clearly why this is important given the market environment of
the last few years. Diversification can be achieved through
launching funds for existing investment teams and recruiting new
teams as we have done with the Global Equities team.
The Board also believes in selective acquisitions
that accelerate the development of Liontrust and its ability to
grow, typically through bringing in investment teams that
complement our existing capability or expand
distribution.
It is in this context that our
endeavour to acquire GAM Holding AG in the first half of the
financial year should be viewed. It presented the opportunity to
expand rapidly our investment management and distribution
capability, as well as enhance the operations and administration of
the Group. Alongside acquisitions, Liontrust continues to pursue
these objectives through recruitment and internal
developments.
People and sustainability
There are many ways in which
Liontrust has responsibilities to investors, employees,
stakeholders, the planet and society. These responsibilities range
from engagement with the companies we invest in, through
commitments to net zero, DE&I (Diversity, Equity, Inclusion)
and the well-being of employees, to contributing to the financial
services industry and our community.
Liontrust has been investing in and
developing our people, including through a leadership programme,
coaching, training and a mentoring scheme.
In May 2022, Liontrust signed up to
the Net Zero Asset Managers' initiative (NZAM). This commitment
covers the Group's net zero targets for the investments it makes on
behalf of clients. At the time it joined, Liontrust committed
approximately 42% of its AuMA to NZAM. As at the end of December
2023, the percentage of the Group's AuMA committed had risen to
45%. In 2023, Liontrust set near-term science based emissions
reduction targets (which were approved by the Science Based Targets
initiative, or SBTi) to show the Group's commitment to reducing
emissions in line with the Paris Agreement goals.
Board of Directors
I would like to welcome publicly
Miriam Greenwood to the Board, who joined us in November and has
become Chair of the Remuneration Committee. Miriam brings extensive
experience and expertise to the Remuneration Committee and the
Board as a whole.
In becoming Chair of the
Remuneration Committee, Miriam has succeeded George Yeandle, who is
retiring from the Board at the AGM in September 2024. George has
shown outstanding leadership of the Remuneration Committee over the
last nine years and I want to thank him for his great contribution
to the Board.
We have announced previously that
the process of seeking a new Chair had started. This process is
progressing well and we will update shareholders when we have news
on an appointment.
Results
Gross Profit of £186.1 million
(2023: £229.8 million), includes £10.4 million of performance fee
revenues (2023: £18.5 million), with a Revenue Margin1
of 0.620% (2023: 0.625%) on Average AuMA of £28,330 million (2023:
£33,815 million).
Adjusted profit before tax1 is £67.430 million (2023: £87.083 million), a decrease of 22.6%
compared to last year, with an Adjusted
Operating Margin1 of 35.5% (2023: 37.7%).
Statutory Loss before tax of £0.6
million (2023: Statutory Profit before tax of £49.3 million), This
includes charges of £68.0 million (2023: £37.8 million) relating to
acquisitions and non-recurring costs (£18.8 million); the non-cash
amortisation and impairment of the acquisition-related intangible
assets and goodwill (amortisation: £12.1 million, impairment: £37.1
million).
Adjusted profit before
tax1 is disclosed in order to give shareholders an indication of the profitability of the Group
excluding non-cash (intangible asset amortisation) expenses and
non-recurring (professional fees relating to acquisition, cost
reduction, restructuring and severance compensation related)
expenses. See note 6 below for a reconciliation of Adjusted profit
before tax1.
1 This is an Alternative Performance Measure. See note 2
below.
Dividend
The Board has declared a second
interim dividend of 50.0 pence per share (2023: 50.0 pence)
bringing the total dividend for the financial year ending 31 March
2024 to 72.0 pence per share (2023: 72.0 pence per
share).
The second interim dividend will be
payable on 9 August 2024 to shareholders who are on the register as
at 5 July 2024, the shares going ex-dividend on 4 July 2024. Last
day for Dividend Reinvestment Plan elections is 19 July
2024.
Looking forward
Liontrust has built a great business
of which I am proud to be Chair. This has been based on the hard
work and dedication of the team at Liontrust, along with their
expertise, and the Board thanks everyone for their contribution. We
are confident the actions taken by management will reap rewards in
the future.
Alastair Barbour
Non-executive Chair
25
June 2024
Chief Executive Officer's Report
This has been a challenging year for
Liontrust. As the Chair has outlined in his statement, the market
environment and investor sentiment has been negative for many of
our strategies and this has driven the net outflows for Liontrust
over the financial year.
We have full confidence in our
proven investment teams and processes delivering over the long term
for investors. Liontrust has also been developing the
business to put it in a strong position to drive the next stage of
our growth. We are pleased with the progress we have been making
and how Liontrust is structured to capitalise on the opportunities
ahead after the headwinds that the Group has faced over the last
year.
Investment proposition
We have continued to expand
Liontrust's investment proposition as part of the strategic
objective to diversify the product range. Liontrust has added the
Global Equities team headed by Mark Hawtin. Mark has 40 years of
investment experience, having been Head of Global Equities at GAM
Investments and a partner and portfolio manager at Marshall Wace
Asset Management. We are very pleased with the feedback about the
new team and they are already bringing us opportunities to broaden
our client base globally.
The Economic Advantage team headed
by Anthony Cross has expanded their capability through the
recruitment of Alexander Game from Unicorn Asset Management, while
Natalie Bell is now a named manager of the UK Smaller Companies and
UK Micro Cap funds.
The outflows of assets from UK equity funds and
depressed valuations of UK listed companies is threatening the
robustness of the stock market. Many fantastic UK companies are
being taken private too cheaply, are subject to takeovers by
overseas companies or are choosing to list outside the UK. For
these reasons, we support initiatives that will attract greater
capital and companies to the UK stock market.
We welcomed the Government's announcement of
the intention to bring in a UK ISA. Liontrust, particularly the
Economic Advantage team, has been actively engaged with the
Government over the idea and the subsequent consultation. Liontrust
believes in the long-term potential of the UK economy and its
ability to produce world class companies. What we need are the
incentives to encourage these companies to list on the UK
market.
Liontrust expanded the fund offering
during the last year with the launch of the GF Sustainable Future
US Growth Fund in July 2023, which is managed by the Sustainable
Investment team, and the GF Pan-European Dynamic Fund in February
2024, which is managed by the Cashflow Solution team and attracted
more than €200 million within four months.
The Liontrust European Dynamic Fund
won the award for best Europe ex UK Fund for the third year running
at the prestigious Fund Manager of the Year awards on 20 June. The
Liontrust European Strategic Equity Fund and the Liontrust India
Fund were both shortlisted for awards.
Liontrust has continued to deliver
strong long-term fund performance for our clients. Of Liontrust's
funds, 75% are in the first or second quartile of their respective
sectors since the funds were launched to 31 March
20241.
Liontrust has been merging funds
where we can produce economies of scale for the benefit of
investors, such as the Global Equity and Global Focus funds into
the Global Alpha Fund. These mergers also enable the Group to focus
on those funds where there is significant existing or potential
client demand.
1 Source: Financial Express, bid-to-bid basis, net of fees,
primary share classes. Statistics using monthly return
period.
Expand distribution
Another of our four strategic
objectives is to further broaden distribution and the client base
and we have made significant progress in this area as well by
strengthening the sales team in both the UK and internationally. We
made two internal appointments with Kristian Cook becoming Head of
UK Distribution and Mark Wright being named Head of UK Regional
Distribution. We have also recruited a new head of strategic
partners in the UK and business development managers for London and
the South-East of England.
Jeremy Roberts joined from GAM
Investments in March 2024 to be Head of Global Distribution (ex UK)
with responsibility for developing sales internationally. We have
strengthened our distribution capability in Germany with the
appointment of Michael Buchholz. He joins Liontrust in August 2024
as Head of Distribution for Germany and Austria and will be based
in the branch office in Frankfurt that will open later this year.
Jeremy will be making further hires to build the international
sales team and we will be expanding our physical presence in
continental Europe.
Client experience
We have also focused on providing an
excellent level of service and engagement with clients and ensuring
there is a high level of awareness and understanding of Liontrust
funds. Nearly 1,800 professional intermediaries attended Liontrust
events in 2023 and around 400 have attended the adviser roadshow
around the UK in the spring and early summer of 2024 at which the
Sustainable Investment and Global Innovation teams have been
presenting. Liontrust has a series of events for professional
intermediaries planned through the autumn.
Liontrust is generating strong
investor engagement through our marketing, with significant
development of our digital presence. Liontrust fund manager videos
had more than 2.3 million views from February 2023 to February
2024. A new weekly video that started in March 2024 to provide a
bite-size review of the latest market and economic news had
attracted 42,000 views in the first nine weeks.
Also, from February 2023 to February
2024, Liontrust's LinkedIn channel had 8.71 million impressions and
68,578 clicks. LinkedIn followers have grown by nearly 50% in the
15 months to June 2024.
Strengthen technology and
data
Another key way in which Liontrust
has been ensuring we are in a strong position for the future is
through developing our technological and data capability. This
includes implementing new front office portfolio management and
research management systems. These will give us a single front
office operating platform that provides Liontrust with scalability,
flexibility and efficiency to support future growth of the
business. These systems will improve the quality and efficiency of
delivering and analysing data and greater productivity across the
business. In time, this will lead to enhancements for client
service and reporting, enabling Liontrust to develop further our
digital capability.
In September 2023, we started a
programme to implement a strategic Enterprise Platform and
associated Operating Model which includes new Front Office tooling
- BlackRock Aladdin, with FlexTrade as the EMS, an extended Middle
Office operating model with BNY and the implementation of BNY Front
Office Service, and a new Enterprise Data platform - BNY Data
Vault.
In December 2023, we implemented
FactSet RMS, a flexible, scalable and consistent research
management system which allows our investment teams to store,
collaborate and analyse research, both internally generated and
externally acquired. FactSet RMS allows us to leverage technology
to generate insight and drive efficiencies, while also supporting
growing regulatory reporting requirements and preparing for
emerging technologies like AI (artificial intelligence).
Liontrust Foundation
Liontrust established its charitable
foundation during the financial year. The Liontrust Foundation has
been set up to promote social mobility and preserve and recover
nature. The Foundation is committed to empowering
young entrepreneurs and promoting DE&I in particular through
these two objectives.
We have a very strong Board of
Trustee Directors, who are chaired by Simon Hildrey, Chief
Marketing Officer at Liontrust. The other trustees are Mandy Donald
(Non-executive Director of Liontrust), Nathalie Richards (CEO of SEO London) and Dr Andrew Terry
(Director of Conservation and Policy at Zoological Society of
London).
Outlook
Liontrust has put in place the
structure to deliver growth. We have an expanding and compelling
range of investment teams with robust processes; broadening
distribution and excellent client service; great engagement with
our campaigns and content; a strong brand; and an enhanced
operating model. This gives me confidence that we are able to take
advantage of the opportunities and mitigate the challenges for
active asset managers in the future.
John Ions
Chief Executive Officer
25
June 2024
Assets under management and
advice
On 31 March 2024, our AuMA stood at
£27,822 million and were broken down by type and investment process
as follows:
Process
|
Total
|
Institutional Accounts &
Funds
|
Investment
Trusts
|
UK Retail Funds &
MPS
|
Alternative
Funds
|
International Funds &
Accounts
|
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
Sustainable Investment
|
10,433
|
323
|
-
|
9,624
|
-
|
486
|
Economic Advantage
|
6,571
|
450
|
-
|
5,998
|
-
|
123
|
Multi-Asset
|
4,344
|
-
|
-
|
4,220
|
124
|
-
|
Global Innovation
|
827
|
-
|
-
|
827
|
-
|
-
|
Cashflow Solution
|
2,184
|
556
|
-
|
1,404
|
112
|
112
|
Global Fundamental
|
3,267
|
412
|
1,135
|
1,706
|
-
|
14
|
Global Fixed Income
|
196
|
-
|
-
|
36
|
-
|
160
|
Total
|
27,822
|
1,741
|
1,135
|
23,815
|
236
|
895
|
AuMA as at 20 June 2024 were £27,250
million.
Net Flows
The Net outflows over the Financial
Year were £6,083 million (2023: £4,842 million). A reconciliation
of fund flows and AuMA over the financial year ended 31 March 2024
is as follows:
|
Total
|
Institutional Accounts &
Funds
|
Investment
Trusts
|
UK Retail Funds &
MPS
|
Alternative
Funds
|
International Funds &
Accounts
|
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
(£m)
|
|
|
|
|
|
|
|
Opening AuMA - 1 April 2023
|
31,430
|
2,394
|
1,139
|
25,721
|
1,084
|
1,092
|
|
|
|
|
|
|
|
Net flows
|
(6,083)
|
(925)
|
(92)
|
(3,999)
|
(821)
|
(246)
|
|
|
|
|
|
|
|
Market and Investment
performance
|
2,475
|
272
|
88
|
2,093
|
(27)
|
49
|
|
|
|
|
|
|
|
Closing AuMA - 31 March 2024
|
27,822
|
1,741
|
1,135
|
23,815
|
236
|
895
|
Consolidated Statement of Comprehensive Income for the year
ended 31 March 2024
|
|
|
|
|
|
|
|
Year
|
Year
|
|
|
|
ended
|
ended
|
|
|
|
31-Mar-24
|
31-Mar-23
|
|
|
|
|
|
|
|
Notes
|
£'000
|
£'000
|
|
|
|
|
|
Revenue
|
|
4
|
197,889
|
243,339
|
Cost of sales
|
|
4
|
(11,828)
|
(13,569)
|
Gross profit
|
|
|
186,061
|
229,770
|
|
|
|
|
|
Gain on write back of Majedie
acquisition provision
|
|
-
|
1,848
|
Realised profit/ (loss) on sale of
financial assets
|
|
|
184
|
-
|
Unrealised profit/ (loss) on
financial assets
|
|
|
838
|
618
|
Administration expenses
|
|
5
|
(188,932)
|
(183,210)
|
Operating profit
|
|
|
(1,849)
|
49,026
|
|
|
|
|
|
Interest receivable
|
|
|
1,337
|
358
|
Interest payable
|
|
|
(67)
|
(83)
|
|
|
|
|
|
|
|
|
|
|
(Loss)/ Profit before tax
|
|
|
(579)
|
49,301
|
|
|
|
|
|
Taxation
|
|
|
(2,911)
|
(9,973)
|
|
|
|
|
|
(Loss)/ Profit for the year
|
|
|
(3,490)
|
39,328
|
|
|
|
|
|
Other comprehensive income
|
|
|
-
|
-
|
Total comprehensive income
|
|
|
(3,490)
|
39,328
|
|
|
|
|
|
|
|
|
Pence
|
Pence
|
|
|
|
|
|
Basic earnings per share
|
|
7
|
(5.46)
|
61.45
|
Diluted earnings per share
|
|
7
|
(5.46)
|
61.21
|
Consolidated Balance Sheet as at 31 March
2024
|
|
|
As
at
|
As
at
|
|
|
|
31-Mar-24
|
31-Mar-23
|
|
|
Notes
|
£'000
|
£'000
|
Assets
|
|
|
|
|
Non
current assets
|
|
|
|
|
Intangible assets
|
|
|
48,472
|
90,629
|
Goodwill
|
|
|
32,110
|
38,586
|
Property, plant and
equipment
|
|
|
3,719
|
3,378
|
Total non current assets
|
|
|
84,301
|
132,593
|
|
|
|
|
|
Current assets
|
|
|
|
|
Trade and other
receivables
|
|
|
229,586
|
241,682
|
Financial assets
|
|
|
8,157
|
9,921
|
Cash and cash equivalents
|
|
|
104,318
|
121,037
|
Total current assets
|
|
|
342,061
|
372,640
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Non
current liabilities
|
|
|
|
|
Deferred tax liability
|
|
|
(11,227)
|
(21,493)
|
Lease liability
|
|
|
(2,538)
|
(2,168)
|
Total non current liabilities
|
|
|
(13,765)
|
(23,661)
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
|
(241,363)
|
(255,460)
|
Corporation tax payable
|
|
|
-
|
(5,131)
|
Total current liabilities
|
|
|
(241,363)
|
(260,591)
|
|
|
|
|
|
Net
current assets
|
|
|
100,698
|
112,049
|
|
|
|
|
|
Net
assets
|
|
|
171,234
|
220,981
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
|
|
|
|
Ordinary shares
|
|
|
648
|
648
|
Share premium
|
|
|
-
|
112,510
|
Capital redemption reserve
|
|
|
19
|
19
|
Retained earnings
|
|
|
183,461
|
121,341
|
Own shares held
|
|
|
(12,894)
|
(13,537)
|
|
|
|
|
|
Total equity
|
|
|
171,234
|
220,981
|
Consolidated Cash Flow Statement
For
the year ended 31 March 2024
|
|
|
|
Year
ended
|
Year
ended
|
|
|
|
|
31-Mar-24
|
31-Mar-23
|
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
|
Cash
flows from operating activities
|
|
|
|
Cash received from
operations
|
|
|
178,771
|
236,362
|
Cash paid in respect of
operations
|
|
(134,636)
|
(174,437)
|
Net cash generated from changes in
unit trust receivables and payables
|
|
1,197
|
(1,387)
|
Net cash generated from
operations
|
|
45,332
|
60,538
|
|
|
|
|
|
|
Interest received
|
|
|
1,432
|
358
|
Tax paid
|
|
|
|
(18,558)
|
(17,479)
|
Net
cash generated from operating activities
|
|
28,206
|
43,417
|
|
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Purchase of property and
equipment
|
|
(142)
|
(253)
|
Acquisition of Majedie net of cash
acquired
|
|
-
|
13,596
|
Gain on liquidation of
Architas
|
|
|
-
|
827
|
Loan to GAM
|
|
|
(8,900)
|
-
|
Loan repaid by GAM
|
|
|
8,900
|
-
|
Purchase of DBVAP Financial
Asset
|
|
(1,493)
|
(2,701)
|
Sale DBVAP Financial Asset
|
|
|
4,348
|
-
|
Purchase of Seeding
investments
|
|
|
(328)
|
(2,193)
|
Sale of Seeding
investments
|
|
|
371
|
1,990
|
Net
cash generated from investing activities
|
|
2,756
|
11,266
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Payment of lease
liabilities
|
|
|
(1,525)
|
(1,328)
|
Purchase of own shares
|
|
|
-
|
(7,100)
|
Dividends paid
|
|
|
(46,156)
|
(46,070)
|
Net
cash used in from financing activities
|
|
(47,681)
|
(54,498)
|
|
|
|
|
|
|
Net
(decrease)/ increase in cash and cash
equivalents*
|
(16,719)
|
185
|
Opening cash and cash
equivalents*
|
|
121,037
|
120,852
|
Closing cash and cash equivalents*
|
|
104,318
|
121,037
|
* Cash and cash equivalents consist
only of cash balances.
Consolidated Statement of Change in Equity
For
the year ended 31 March 2024
|
|
Share
|
Share
|
Capital
|
Retained
|
Own shares
|
Total
|
|
|
capital
|
premium
|
redemption
|
earnings
|
held
|
Equity
|
|
|
|
|
|
|
|
|
|
|
£ '000
|
£ '000
|
£ '000
|
£ '000
|
£ '000
|
£ '000
|
|
|
|
|
|
|
|
|
Balance at 1 April 2023 brought forward
|
648
|
112,510
|
19
|
121,341
|
(13,537)
|
220,981
|
|
|
|
|
|
|
|
|
Profit for the year
|
-
|
-
|
-
|
(3,490)
|
-
|
(3,490)
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
-
|
-
|
-
|
(3,490)
|
-
|
(3,490)
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
-
|
-
|
-
|
(46,156)
|
-
|
(46,156)
|
|
|
|
|
|
|
|
|
Cancellation of share premium
account
|
|
-
|
(112,510)
|
-
|
112,510
|
-
|
-
|
|
|
|
|
|
|
|
|
Purchase of own shares
|
|
-
|
-
|
-
|
-
|
(381)
|
(381)
|
|
|
|
|
|
|
|
|
Sale of own shares
|
-
|
-
|
-
|
-
|
(1,024)
|
1,024
|
-
|
|
|
|
|
|
|
|
|
Members share incentive award
exercises
|
|
-
|
-
|
-
|
(385)
|
-
|
(385)
|
|
|
|
|
|
|
|
|
Equity share options
issued
|
-
|
-
|
-
|
665
|
-
|
665
|
|
|
|
|
|
|
|
|
Balance at 31 March 2024
|
648
|
-
|
19
|
183,461
|
(12,894)
|
171,234
|
Consolidated Statement of Change in Equity
For
the year ended 31 March 2023
|
|
Ordinary
|
Share
|
Capital
|
Retained
|
Own shares
|
Total
|
|
|
shares
|
premium
|
redemption
|
earnings
|
held
|
Equity
|
|
|
|
|
|
|
|
|
|
|
£ '000
|
£ '000
|
£ '000
|
£ '000
|
£ '000
|
£ '000
|
|
|
|
|
|
|
|
|
Balance at 1 April 2022 brought forward
|
|
612
|
64,370
|
19
|
128,859
|
(9,692)
|
184,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year
|
|
-
|
-
|
-
|
39,328
|
-
|
39,328
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year
|
|
-
|
-
|
-
|
39,328
|
-
|
39,328
|
|
|
|
|
|
|
|
|
Dividends paid
|
|
-
|
-
|
-
|
(46,070)
|
-
|
(46,070)
|
|
|
|
|
|
|
|
|
Shares issued
|
|
36
|
48,140
|
-
|
-
|
-
|
48,176
|
|
|
|
|
|
|
|
|
Purchase of own shares
|
|
-
|
-
|
-
|
-
|
(7,100)
|
(7,100)
|
|
|
|
|
|
|
|
|
Sale of own shares
|
|
-
|
-
|
-
|
(2,692)
|
3,255
|
563
|
|
|
|
|
|
|
|
|
Equity share options
issued
|
|
-
|
-
|
-
|
1,916
|
-
|
1,916
|
|
|
|
|
|
|
|
|
Balance at 31 March 2023
|
|
648
|
112,510
|
19
|
121,341
|
(13,537)
|
220,981
|
Notes to the Financial Statements
1. Accounting policies
The Group's accounting policies are
consistent with those set out in the Annual Report and Accounts for
the year ended 31 March 2023.
a) Going concern
The financial information presented
within these financial statements has been prepared on a going
concern basis under the historical cost convention (except for the
measurement of financial assets at fair value through profit and
loss and Deferred Bonus and Variable Allocation Plan ('DBVAP')
liability which are held at their fair value). The Group is reliant
on cash generated by the business to fund its working capital. The
Directors have assessed the prospects of the Group and parent
company over the forthcoming 12 months, including an assessment of
current trading; budgets, plans and forecasts; the adequacy of
current financing arrangements; liquidity, cash reserves and
regulatory capital; and potential material risks to these forecasts
and the Group strategy. This assessment includes consideration of a
severe but plausible downside scenario in which AuMA falls by 20%.
The Directors confirm that as a result of this assessment they have
a reasonable expectation that the Group and parent company will
continue to operate and meet its liabilities as they fall due for
at least 12 months from the date of signing these
accounts.
b) Accounting estimates and
judgements
The preparation of the financial
statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. Estimates and judgements used in preparing the
financial statements are periodically evaluated and are based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable. The resulting
accounting estimates may not equal the related actual results.
There are no significant judgements. The Directors make a number of
estimates, these include leases (note 1k in the financial
statements for the year ended 31 March 2023) and share based
payments (see note 1p in the financial statements for the year
ended 31 March 2023), neither of which are considered to be
significant. In addition, the Directors make estimates to support
the carrying value of goodwill and intangibles that arise on
acquisition.
Goodwill and Intangible
assets
Goodwill arising on acquisitions is
capitalised in the consolidated balance sheet. Goodwill is carried
at cost less provision for impairment. The carrying value of
goodwill is not amortised but is tested annually for impairment or
more frequently if any indicators of impairment arise. Goodwill is
allocated to a cash generating unit (CGU) for the purpose of
impairment testing, with the allocation to those CGUs that are
expected to benefit from the business combination in which the
goodwill arose (see note 14 of the Financial Statements to 31 March
2023).
The costs of acquiring intangible
assets such as fund management contracts are capitalised where it
is probable that future economic benefits that are attributable to
the assets will flow to the Group and the cost of the assets can be
measured reliably. The assets are held at cost less accumulated
amortisation and impairment. An assessment is made at each
reporting date, on a standalone basis for each intangible asset, as
to whether there is any indication that the asset in use may be
impaired. If any such indication exists and the carrying value
exceeds the estimated recoverable amount at the time, the assets
are written down to their recoverable amount. The recoverable
amount is measured as the greater of fair value less costs to sell
and value in use. Further information on the impairment testing and
estimates used are contained in note 10.
The fund management contracts and
segregated clients' contracts relating to the assets acquired as
part of the acquisitions of Alliance Trust Investments Limited;
Neptune Investment Management Limited; Architas Multi-Manager
Limited and Architas Advisory Services Limited (together
"Architas") and Majedie Investment Management Limited are recorded
initially at fair value and recorded in the consolidated financial
statements as intangible assets, they are then amortised over their
useful lives on a straight-line basis. Management have determined
that the useful life of these assets is between 5 and 10 years
owing to the nature of the acquired products. Impairment is tested
through measuring the recoverable amount against the carrying value
of the related intangible asset. The recoverable amount is the
higher of the fair value less costs to sell and its value in use.
The Directors assess the value in use using a multi-period excess
earnings model which requires a number of inputs requiring
management estimates, the most significant of which include: future
AuMA growth, useful economic life and discount rate. In the current
period, significant estimates were only required for the intangible
assets in relation to Architas and Majedie (see notes 10 and 11 for
further detail).
Impairment losses on goodwill, where
these are identified, are not reversed. Impairment is tested
through measuring the recoverable amount against the carrying value
of the related goodwill. The recoverable amount is the higher of
the fair value less costs to sell the CGU and its value in use.
Value in use is assessed using a multi-period excess earnings model
which requires a number of inputs requiring management estimates
and judgements, the most significant of which are: future new
business, AuMA growth, discount rate and terminal growth
rate.
In the current period, significant
estimates were only required to be reassessed for the goodwill
assets in relation to Architas and Majedie (see notes 10 and 11 for
further details). Due to the strong performance and growth of the
Sustainable Investment team (acquired as part of the ATI
acquisition) and the Global Equity team (acquired as part of the
Neptune acquisition) since acquisition there is no significant
estimation in relation to the impairment of the related goodwill
allocated to the Sustainable and Global Equity Investment teams'
CGU.
c) Regulatory capital
position
|
|
|
|
31-Mar-24
|
31-Mar-23
|
|
£m
|
£m
|
|
|
(re-presented)
|
Capital after regulatory
deductions1
|
101.9
|
113.3
|
Regulatory capital
requirement2
|
22.8
|
26.8
|
Surplus capital
|
79.1
|
86.5
|
Foreseeable
dividends3, 4
|
(31.9)
|
(32.1)
|
Surplus capital after foreseeable dividends
|
47.2
|
54.4
|
Note, the capital position for the
Group as at 31 March 2024 (audited) includes the impairment of the
intangible assets and goodwill.
1 Group Capital minus own shares, intangibles and goodwill
adjusted for deferred tax liabilities
2 For the financial year ended 31 March 2024, the Group Capital
requirement calculated per MiFIDPRU is estimated and will be
finalised as part of the September 2024 ICARA process
3 For the financial year ended 31 March 2023, the Group Capital
requirement calculated per MiFIDPRU as part of the September 2023
ICARA process
4 The Second interim dividend of 50.0 pence per share paid or to
be paid in August following the financial year end
The ICARA process included a review
of the capital calculation shown above. The Group had previously
not adjusted the intangibles for related deferred tax liabilities
as part of the capital calculation believing it was more prudent
not to do so, however the review suggested it was market practice
to deduct them and so we have now done so. The figures for
financial year ended 31 March 2023 have been similarly adjusted to
give the correct comparable. The table above shows the represented
information.
2. Adjusted performance measures
("APMs")
ADJUSTED PROFIT BEFORE TAX
Definition: Profit before taxation,
amortisation, impairment and non-recurring items (which include:
professional fees relating to acquisitions; restructuring and
severance compensation related costs).
Reconciliation: Note 6.
Reason for use: This is used to
present a measure of profitability of the Group which is aligned to
the requirements of shareholders, potential shareholders and
financial analysts, and which removes the effects of non-cash and
non-recurring items, which eases the comparison with the Group's
competitors who may use different accounting policies and financing
methods. Specifically, calculation of Adjusted profit before tax
excludes amortisation and impairment expenses, and costs associated
with acquisitions, restructuring and severance compensation related
costs. It provides shareholders, potential shareholders and
financial analysts a consistent year on year basis of comparison of
a "profit before tax number", when comparing the current year to
the previous year and also when comparing multiple historical years
to the current year, of how the underlying ongoing business is
performing.
ADJUSTED OPERATING PROFIT
Definition: Operating profit
before:
1. Interest
received/paid;
2.
Taxation;
3. Amortisation of
acquisition related intangible assets;
4. Impairment of
acquisition related intangible assets and goodwill;
5. Expenses,
including professional and other fees relating to acquisitions and
potential acquisitions;
6. All employee
and member severance compensation related costs;
7. Significant
reorganisation expenses related to systems and outsourced services
that enhance our target operating model; and
8. Other
significant cash, and non-cash, non-recurring expenses.
Reconciliation: Note 6.
Reason for use: This is used to
present a measure of operating profitability of the Group which is
aligned to the requirements of shareholders, potential shareholders
and financial analysts, and which removes the effects of
significant acquisitions, financing and capital investment, which
eases the comparison with the Group's competitors who may use
different accounting policies and financing methods.
ADJUSTED OPERATING MARGIN
Definition: Adjusted operating
profit divided by Gross profit.
Reconciliation: Note 6.
Reason for use: This is used to
present a consistent year on year measure of Adjusted Operating
Profit compared to Gross Profit, identifying the operating gearing
within the business.
ADJUSTED DILUTED EARNINGS PER SHARE
Definition: Adjusted profit before
tax divided by the diluted weighted average number of shares in
issue.
Reconciliation: Note 6. Reason for
use: This is used to present a measure of profitability per share
in line with the adjusted profit as detailed above.
PERFORMANCE FEE REVENUES
Definition: Revenue attributable to
performance related fees.
Reconciliation: Note 4.
Reason for use: This is used to
identify distinguish management fee revenues from performance
related fees from other revenues.
REVENUE EXCLUDING PERFORMANCE FEES
Definition: Revenue less any revenue
attributable to performance related fees.
Reconciliation: Note 4.
Reason for use: This is used to
present a consistent year on year measure of gross profits within
the business, removing the element of revenue that may fluctuate
significantly year-on-year.
REVENUE MARGIN
Definition: Revenues excluding
performance fees, less cost of sales divided by the average
AuMA.
Reason for use: This is used to
present a measure of profitability over average AuMA.
3. Segmental reporting
The Group operates only in one
business segment - Investment
management.
Management offers different fund
products through different distribution channels. All key
financial, business and strategic decisions are made centrally by
the Board, which determines the key performance indicators of the
Group. The Board 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. Gross profit
The Group's main source of revenue
is management fees. Management fees are for investment management
or administrative services and are based on an agreed percentage of
the AuMA. Initial charges and commissions are for additional
administrative services at the beginning of a client relationship,
as well as ongoing administrative costs. Performance fees are
earned from some funds and/or segregated accounts when agreed
performance conditions are met.
|
Year
|
Year
|
|
ended
|
ended
|
|
31-Mar-24
|
31-Mar-23
|
|
£'000
|
£'000
|
|
|
|
Revenue
|
187,480
|
224,855
|
Performance fee revenue
|
10,409
|
18,484
|
Total Revenue
|
197,889
|
243,339
|
Cost of sales
|
(11,828)
|
(13,569)
|
Gross Profit
|
186,061
|
229,770
|
|
|
|
Gross Profit excluding performance
fee revenues
|
175,652
|
211,286
|
Average AuMA (£m)
|
28,330
|
33,815
|
Revenue Margin (%)
|
0.620%
|
0.625%
|
Total revenue from customers
includes:
|
|
|
− Investment management on unit
trusts, open-ended investment companies sub-funds, portfolios and
segregated accounts.
|
− Performance fees on unit trusts,
open-ended investment companies sub-funds, portfolios and
segregated accounts.
|
− Fixed administration fees on unit
trusts and open-ended investment companies sub-funds.
|
− Net value of sales and repurchases
of units in unit trusts and shares in open-ended investment
companies (net of discounts).
|
− Net value of liquidations and
creations of units in unit trusts and shares in open-ended
investment companies sub-funds.
|
− Box profits on unit trusts - the
"at risk" trading profit or loss arising from changes in the
valuation of holdings of units in Group Unit Trusts to help manage
client sales into, and redemptions from the trust.
|
− Less contractual rebates paid to
customers.
|
|
|
|
The cost of sales
includes:
|
|
|
−Operating expenses including (but
not limited to) keeping a record of investor holdings, paying
income, sending annual and interim reports, valuing fund assets and
calculating prices, maintaining fund accounting records, depositary
and trustee oversight and fund auditor fees.
|
− Sales commission paid or
payable.
|
|
|
− External investment advisory fees
paid or payable.
|
|
Performance fee revenue:
Performance fee revenue includes
some fees that are subject to arrangements whereby fees are
deferred from prior periods but are only recognised and received
following another period of outperformance. During the year £1.4
million of such fees were recognised. In future periods another
£1.5 million may be received. 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 31 March 2024 has not been recognised in the
results for the year.
5. Administration expenses
|
Year
ended
31-Mar-24
|
Year ended
31-Mar-24
|
Year
|
Year ended
31-Mar-23
|
Year ended
31-Mar-23
|
Year ended
31-Mar-23
|
|
£'000
|
£'000
|
ended
|
£'000
|
£'000
|
£'000
|
|
Fixed
|
Variable
|
31-Mar-24
|
Fixed
|
Variable
|
Total
|
Staff related expenses
|
|
|
|
|
|
|
Wages and salaries
|
|
|
32,324
|
|
|
30,178
|
Fund management
|
4,019
|
6,045
|
10,064
|
5,109
|
2,963
|
8,072
|
Other staff
|
17,876
|
4,384
|
22,260
|
16,559
|
5,547
|
22,106
|
Social security costs
|
|
|
2,613
|
|
|
4,105
|
Fund management
|
331
|
-
|
331
|
1,300
|
-
|
1,300
|
Other staff
|
2,282
|
-
|
2,282
|
2,805
|
-
|
2,805
|
Pension costs
|
|
|
2,502
|
|
|
2,388
|
Fund management
|
457
|
-
|
457
|
442
|
-
|
442
|
Other staff
|
2,045
|
-
|
2,045
|
1,946
|
-
|
1,946
|
Share incentivisation expense
|
|
|
1,271
|
|
|
2,354
|
All staff
|
-
|
1,271
|
1,271
|
-
|
2,354
|
2,354
|
DBVAP expense
|
|
|
2,953
|
|
|
2,777
|
All staff
|
-
|
2,953
|
2,953
|
-
|
2,777
|
2,777
|
Severance compensation
|
|
|
3,198
|
|
|
3,995
|
|
|
|
44,861
|
|
|
45,797
|
Member related expenses
|
|
|
|
|
|
|
Members' drawings charged as an expense
|
|
36,445
|
|
|
59,507
|
Fund management
|
3,328
|
29,180
|
32,508
|
14,449
|
35,359
|
49,808
|
Other members
|
2,393
|
1,544
|
3,937
|
5,501
|
4,198
|
9,699
|
Share incentivisation expense
|
|
|
1,040
|
|
|
1,225
|
All members
|
-
|
1,040
|
1,040
|
-
|
1,225
|
1,225
|
Professional
services1
|
|
|
15,652
|
|
|
8,026
|
Intangible asset
amortisation
|
|
|
12,094
|
|
|
14,793
|
Intangible asset and Goodwill
impairment
|
|
|
37,065
|
|
|
12,816
|
Depreciation
|
|
|
1,975
|
|
|
3,883
|
Other administration
expenses
|
|
|
39,800
|
|
|
37,163
|
Total administration expenses
|
|
|
188,932
|
|
|
183,210
|
1 Includes acquisition related and restructuring costs for past
acquisitions, see table below for a detailed breakdown:
|
|
|
|
|
Year ended
31-Mar-24
|
Year ended
31-Mar-23
|
|
|
|
|
|
£'000
|
£'000
|
|
|
|
|
|
Total
|
Total
|
GAM acquisition related
costs
|
|
|
|
|
9,508
|
1,540
|
Neptune/Architas/Majedie acquisition
related costs
|
|
|
|
|
559
|
5,868
|
Significant costs relating to target
operating model restructure
|
|
|
5,585
|
618
|
Total Professional services
|
|
|
|
|
15,652
|
8,026
|
Note, acquisition related costs
relate primarily to corporate finance, sponsor, due diligence,
target operating model design, Class 1 circular (as applicable) and
Swiss public offer (as applicable); and legal expenses.
6. Adjusted profit before
tax
Adjusted profit before tax is
disclosed in order to give shareholders an indication of the
profitability of the Group which removes the effect of non-cash
(intangible asset amortisation and impairment) expenses and
non-recurring (acquisition, restructuring and severance
compensation related) expenses ("Adjustments") and is reconciled
in the table below.
|
|
Year
ended
|
Year
ended
|
|
|
31-Mar-24
|
31-Mar-23
|
|
|
£'000
|
£'000
|
|
|
|
|
(Loss)/profit before tax
|
|
(579)
|
49,301
|
|
|
|
|
Write back of Majedie acquisition
provision
|
|
-
|
(1,848)
|
Severance compensation and staff
reorganisation costs1
|
|
3,198
|
3,995
|
Professional
services2
|
|
15,652
|
8,026
|
Amortisation of intangible
asset
|
|
12,094
|
14,793
|
Impairment of intangible asset and
goodwill
|
|
37,065
|
12,816
|
Adjustments
|
|
68,009
|
37,782
|
Adjusted profit before tax
|
|
67,430
|
87,083
|
|
|
|
|
Interest receivable
|
|
(1,337)
|
(358)
|
Adjusted operating profit
|
|
66,093
|
86,725
|
Adjusted diluted earnings per
share3
|
|
79.15
|
109.78
|
|
|
Adjusted diluted earnings per share
(exc. performance fees)3, 4
|
74.80
|
100.98
|
|
|
1 Staff redundancy, severance compensation and related legal
expenses in relation to a cost reduction programme and
acquisitions
2 See footnote (1) in Note 5
3 Taxation rate of 25% (2023: 19%)
4 Performance fee revenues contribution calculated in line with
operating margin of 36% (2023: 38%)
|
|
|
|
|
|
|
|
|
|
|
|
7. Earnings per share
The calculation of basic earnings
per share is based on profit after taxation for the year. 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 are
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 or Ordinary Shares
held in the Liontrust Asset Management Employee Trust that were in
existence during the year ended 31 March 2024. This is reconciled
to the actual weighted number of Ordinary Shares as
follows:
|
|
As
at
|
As
at
|
|
|
31-Mar-24
|
31-Mar-23
|
|
|
number
|
number
|
|
|
|
|
Weighted average number of Ordinary
Shares
|
|
63,875,440
|
63,998,999
|
|
|
|
|
Weighted average number of dilutive
Ordinary shares under option:
|
|
|
|
|
|
|
|
- to the Liontrust Long Term
Incentive Plan
|
|
22,911
|
247,003
|
- to the Liontrust Option
Plan
|
|
-
|
4,559
|
|
|
|
|
Adjusted weighted average number of
Ordinary Shares
|
|
63,898,351
|
64,250,561
|
8. Goodwill
Goodwill is allocated to the CGU to
which it relates as the underlying funds acquired in each business
acquisition are clearly identifiable to the
ongoing investment team that is managing them. For all four CGUs,
an assessment was made in relation to
impairment of the goodwill where the recoverable amount, based on a
value in use, was calculated using an earnings model which used key assumptions such as discount rate and net
AuMA growth rate. In addition, the model uses a terminal
growth rate of 2%. The projected cash flows used
within the goodwill model is based on a 5-year period where the
terminal growth is used for years beyond
that, and forecasts have been approved by senior management. The
discount rate was derived from the Group's
weighted average cost of capital and takes into account the
weighted average cost of capital of other market participants. The net AuMA growth rate is a combination
of three variables: AUM market growth rate, fund flows and
fund attrition. The net AuMA growth rate is
determined by using historical actual experience and external
sources to estimate future growth based on
historic equities/bonds performances. In addition, the terminal
growth rate is also based on external sources too
and based on long term inflation expectations. See
table below for details.
|
Goodwill
2024
|
Goodwill
2023
|
Discount
Rate 2024
|
Discount
Rate 2023
|
Terminal
Growth Rate 2024
|
Terminal
Growth Rate 2023
|
Net
AuMA
Growth Rate 2024
|
Net
AuMA
Growth Rate 2023
|
|
£'000
|
£'000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ATI
|
11,873
|
11,873
|
13.00%
|
13.80%
|
2%
|
2%
|
4.50%
|
7%
|
Neptune
|
7,668
|
7,753
|
13.00%
|
13.80%
|
2%
|
2%
|
7.30%
|
5.50%
|
Architas
|
7,951
|
7,951
|
13.00%
|
13.80%
|
2%
|
2%
|
0.30%
|
0.20%
|
Majedie
|
4,618
|
11,009
|
13.00%
|
13.80%
|
2%
|
2%
|
3.50%
|
3.50%
|
Total
|
32,110
|
38,586
|
|
|
|
|
|
|
For ATI and Neptune, there were no
indicators of impairment. There were indicators of impairment for
both Architas and Majedie as a result of an
increase in net outflows which led to actual revenues being lower
than originally forecast. Based on key assumptions in the table, the Architas recoverable amount was
£35.2m and the headroom above impairment was £5.5m. For
Majedie, the value of the Goodwill have been
tested for FY24 which has resulted in a higher carrying value than
value in use hence an impairment of £6.389
million (2023: £nil).
Sensitivity analysis was carried out
on the Architas and Majedie Goodwill models to assess the impact of
reasonable plausible downside scenarios on
the discount rate and the AuMA effective growth rate assumptions.
In relation to Architas sensitivity, changing the discount rate from 13% to 13.4% and net AuMA
growth rate from 0.3% to -1.1% would lead to a reduction of
£1,231k and £1,660k respectively on the headroom
and no impairment to Goodwill for both changes. The cumulative
impact of the change in discount rate and
decrease net AuMA growth rate would lead to decrease in headroom by
£2,816k. For Majedie Goodwill (Funds and
Segregated Clients combined) the discount rate being changed from
13% to 13.4% and the net AuMA growth rate
from 2.2% to 0.8% leads to the further impairment of Goodwill by
£329k and £305k respectively. The cumulative impact of the change in discount rate and decrease net AuMA
growth rate leads to a £614k increase in impairment. Within
our reasonable plausible downside, we do not
consider the impact of investor sentiment on ESG factors from the
climate targets detailed within the
responsible capitalism on page 62 to be a material risk in the
medium and long term to our recoverable amount and therefore have not considered these risks in the
reasonable plausible downside scenarios.
|
31-Mar-23
|
Goodwill
impairment recognised in the period
|
31-Mar-24
|
|
£'000
|
£'000
|
£'000
|
|
|
|
|
ATI - Sustainable investment
team
|
11,873
|
-
|
11,873
|
Neptune - Global Equity
team*
|
7,753
|
-
|
7,668
|
Architas - Multi-Asset
team
|
7,951
|
-
|
7,951
|
Majedie - Global Fundamental
team
|
11,009
|
(6,391)
|
4,618
|
|
38,586
|
(6,391)
|
32,110
|
*There is a movement of £85,000
which does not relate to an impairment of Goodwill but a fair
value adjustment of the initial Goodwill value.
9. Intangible Assets
The Group recognises five intangible
assets relating to investment management contracts and segregated
clients arising on business acquisitions. An assessment is made at
each reporting date, on a standalone basis for each intangible
asset, as to whether there is any indication that an asset in use
may be impaired. If any such indication exists and the carrying
value exceeds the estimated recoverable amount at the time, the
assets are written down to their recoverable amount. The
recoverable amount is measured as the greater of fair value less
costs to sell and value in use. The valuation models used the same
assumptions excluding new business assumption as those in the
goodwill impairment review detailed in note 14. The assessment made
at 31 March 2024 did not indicate any indicators of impairment in
the value of the ATI or Neptune intangible assets.
For Majedie, indicators of
impairment were identified for both the investment management
contracts and segregated clients intangible assets as at 31 March
2024 due to higher than expected fund outflows leading to actual
revenues being lower than originally forecast. The value of the
intangible assets have therefore been tested for FY24 which has
resulted in a higher carrying value than value in use hence an
impairment of the Majedie investment management contract intangible
of £16.537 million and Majedie Segregated Clients intangible of
£6.828 million. For Architas, indicators of impairment were
identified due to higher than expected fund outflows and negative
market returns leading to forecast revenues being lower than
originally forecast. The value of the intangible assets have
therefore been tested for at half year and end of FY24 which at
half year has resulted in a higher carrying value than value in use
hence an impairment of the Architas investment management contract
intangible of £7.311 million. There was no further impairment and
headroom increase during year end due to changes in certain inputs
including lower discount rate and higher market growth
rates.
For Architas, indicators of
impairment were identified due to higher than expected fund
outflows leading to actual revenue being lower than originally
forecast. The value of the intangible assets have therefore been
tested for at half year and end of FY24 which at half year has
resulted in a higher carrying value than value in use hence an
impairment of the Architas investment management
contract intangible of £7.311 million (2023:
£8.800 million). There was no further impairment and headroom
increased during year end due to changes in
certain inputs including lower discount rate and higher market
growth rates however, no impairment reversal has been recognised due to continued net outflows
from the underlying funds. Management continues to monitor
the performance of the asset. In 2023,
Architas was impaired due to higher than expected fund outflows and
negative market returns leading to actual
revenues being lower than originally forecast.
As
at 31 March 2024
|
|
|
Description
|
Carrying value
£'000
|
Remaining
amortisation
period
|
Investment management contracts
acquired as part of ATI acquisition
|
3,600
|
3
Years
|
Investment management contracts
acquired as part of Neptune acquisition
|
17,185
|
5½
Years
|
Investment management contracts
acquired as part of Architas acquisition
|
21,674
|
6½
Years
|
Investment management contracts
acquired as part of Majedie acquisition - Funds
|
2,476
|
8
Years
|
Investment management contracts
acquired as part of Majedie acquisition - Segregated
|
3,537
|
3
Years
|
|
Investment management
contracts 2024
|
Segregated Clients
2024
|
Total 2024
|
Investment management
contracts 2023
|
Segregated Clients
2023
|
Total 2023
|
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
£'000
|
Cost
|
|
|
|
|
|
|
Balance as at 1 April
|
142,169
|
16,010
|
158,179
|
115,113
|
-
|
115,113
|
Additions:
|
|
|
|
|
|
-
|
Additions arising on acquisition of
Majedie
|
-
|
-
|
-
|
27,056
|
16,010
|
43,066
|
Balance as at 31 March
|
142,169
|
16,010
|
158,179
|
142,169
|
16,010
|
158,179
|
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
|
Balance as at 1 April
|
64,348
|
3,202
|
67,550
|
39,942
|
-
|
39,942
|
Amortisation for the year
|
9,037
|
2,443
|
11,480
|
11,590
|
3,202
|
14,792
|
Impairment for the year
|
23,849
|
6,828
|
30,677
|
12,816
|
-
|
12,816
|
Balance as at 31 March
|
97,234
|
12,473
|
109,707
|
64,348
|
3,202
|
67,550
|
|
|
|
|
|
|
|
Net
Book Value
|
|
|
|
|
|
£'000
|
As at 31 March 2024
|
|
|
|
|
|
48,472
|
As at 31 March 2023
|
|
|
|
|
|
90,629
|
As at 31 March 2022
|
|
|
|
|
|
75,171
|
Sensitivity analysis was carried out
on the Architas and Majedie models to assess the impact of
reasonable plausible downside scenarios on both the discount rate,
and the net AuMA growth rate assumptions. In relation to Architas
sensitivity, changing the discount rate from 13% to 13.4% leads to
£266k reduction in headroom but no impairment and changing the net
AuMA growth rate from 0.6% to -0.8% leads to £1,081k reduction in
headroom but no impairment. The cumulative impact of the change in
discount rate and decrease net AuMA growth rate leads to £1,331k
reduction in headroom but no impairment.
For Majedie the discount rate
sensitivity applied is consistent with Architas (13% to 13.4%)
leading to an increase in impairment of £49k. Decreasing the net
AuMA growth rate from 3.1% to 2.2% for the Majedie would lead to an
increase in impairment of £206k. The cumulative impact of the
change in discount rate and decrease net AuMA growth rate would
lead to an increase in impairment of £252k.
Within our reasonable plausible
downside, we have considered the impact of investor sentiment on
ESG factors from the climate targets detailed within the
responsible capitalism section of the Annual report which Liontrust
have determined not to be a significant risk over the medium-long
term.
10. 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 financial assets represent shares in
the Liontrust GF Strategic Bond Fund, the Liontrust GF European
Smaller Companies Fund, the Liontrust GF European Strategic Equity
Fund, and the Liontrust GF UK Growth Fund (all sub-funds of
Liontrust Global Funds PLC) and are valued at bid price); and units
in the Liontrust UK Growth Fund.
11. 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 31 March 2024 has not been recognised in the
results for the year.
12. Key risks
The Directors have identified the
risks and uncertainties that affect the Group's business and
believe that they are substantially the same for this year as the
current risks as identified in the 2023 Annual Report and
Accounts. 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 underperformance, 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.
13. Directors' responsibility
statement
To the best of their knowledge and
belief, the Directors confirm that:
The financial statements, prepared
in accordance with the applicable set of accounting standards, give
a true and fair view of the assets, liabilities, financial position
and profit or loss of the company and the undertakings included in
the consolidation taken as a whole; and the strategic report
includes a fair review of the development and performance of the
business and the position of the issuer and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they
face.
We consider the annual report and
accounts, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the group's position and performance, business model and
strategy.
The announcement includes a fair
summary of the development and performance of the business and the
position of Liontrust Asset Management Plc and the undertakings
included in the consolidation taken as a whole and a description of
the principal risks and uncertainties that they face.
Forward Looking Statements
This Full Year Results announcement
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. As a result, the Group's actual future
financial condition, results of operations and business and plans
may differ materially from the plans, goals and expectations
expressed or implied by these forward-looking statements.
Liontrust undertakes no obligation publicly to update or revise
forward-looking statements, except as may be required by applicable
law and regulation (including the Listing Rules of the Financial
Conduct Authority). Nothing in this announcement should be
construed as a profit forecast or be relied upon as a guide to
future performance.
The 2024 Annual Report and Accounts
is expected to be posted to shareholders on or around 8 July
2024.
The release, publication,
transmission or distribution of this announcement in jurisdictions
other than the United Kingdom may be restricted by law and
therefore persons in such jurisdictions into which this
announcement is released, published, transmitted or distributed
should inform themselves about and observe such restrictions. Any
failure to comply with the restrictions may constitute a violation
of the securities laws of any such jurisdiction.
Shareholder services
Equiniti Limited, our registrar, may
be able to provide you with a range of services relating to your
shareholding. If you have questions about your shareholding or
dividend payments, please contact Equiniti Limited by calling +44
(0) 371 384 2030 or visit
www.shareview.co.uk. Telephone
lines are open between 08:30 - 17:30, Monday to Friday excluding
public holidays in England and Wales.
END