Final Results
Embargoed until 0700 hours, Tuesday 27 May 2008
LIONTRUST ASSET MANAGEMENT PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED
31 MARCH 2008
Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent
specialist equities fund management group, today announces record results for
the year ended 31 March 2008.
Results:
* Profits before tax increased by 40% to £16.5 million (2007: £11.8 million)
* Basic earnings per share increased by 42% to 37.0p (2007: 26.0p)
* Performance fees of £14.8 million (2007: £2.9 million)
Dividends:
* Increase of 2% proposed in final dividend to 10.0p per share (2007: 9.8p)
* Total dividend for the year 12.5p (2007: 12.0p)
* Special dividend of 15.5p proposed to reflect performance fee earnings
(2007: 2.9p)
Funds under management:
* Funds under management at 31 March 2008 of £4.7 billion (2007: £5.5
billion)
* Now (23 May 2008) £5.2 billion
* Average funds under management for year £5.2 billion
Commenting on the results, Nigel Legge, Chief Executive, said:
"These are very good results, boosted this year by strong performance fees. We
have also absorbed the costs of establishing our new investment team and
launching products for the European process as well as those associated with
establishing an office in the U.S. for institutional marketing purposes. Our
recruitment of Julian Fosh to work alongside Anthony Cross reinforces our UK
Small Cap and UK Opportunities team and, in time, will give us more products to
market."
"We consider that prospects are good for attracting new funds, given the
initial success of our European team, the continuing good performance across
our range of funds and our strengthening sales and marketing team of new
professionals".
"We are confident of making good progress again this financial year".
For further information please contact:
Liontrust Asset Management PLC Nigel 020 7412 1700 www.liontrust.co.uk
Legge
Vinay Abrol
Altium 020 7484 4040
Nick Tulloch
Sam Fuller
Smithfield 020 7360 4900
Reg Hoare
Miranda Good
Chairman's Statement
Introduction
These are solid results. This year has been a busy one for Liontrust, with the
introduction and marketing of our new European investment process. We have also
been actively marketing our Growth and Large Cap. processes, as they continue
to build on their long-term track record. We have reinforced the positive
performance message on our Income Fund, which now yields over 5%, and we have
played an important part in establishing a new website (www.fundfact.com) that
allows investors to compare UK Equity Income funds on a variety of different
criteria. In addition, we have established a U.S. presence to market to North
American institutions. Altogether good progress was made.
The business is in a healthy financial state. Although funds under management
at our year-end were down, our cost:income ratio has fallen to 62% and our
dividend has been boosted by a healthy special dividend payable from
performance fee earnings. On 23 May 2008, funds under management stood at £
5.231 billion.
Results
Profit before tax in the year to 31 March 2008 is £16.501 million, compared
with £11.824 million a year ago.
The Board is recommending a final dividend of 10.0 pence per share, payable on
9 July 2008 to shareholders who are on the register as at 13 June 2008, the
shares going ex-dividend on 11 June 2008. The total dividend for the full year,
with the 2.5 pence per share interim dividend already paid, amounts to 12.5
pence per share, an increase of 4% on last year's 12.0 pence per share.
Performance fees of £14.797 million were earned in the financial year,
generating an operating profit, after compensation, of £6.659 million. This
year, in addition to the final dividend, the board is recommending the payment
of a special dividend of 15.5 pence per share funded from earnings from
performance fees, payable at the same time as the final dividend. This compares
with a special dividend of 2.9 pence per share last year.
Funds under management and sales
On 31 March 2008, funds under management stood at £4.707 billion. Last year on
31 March 2007 they were £5.505 billion. Average funds under management for the
year were £5.232 billion, 1% lower than the average for last year.
Gross sales of our unit trusts and offshore funds totalled a healthy £440
million over the year; net sales were £39 million in the year. Net inflows of
institutional assets amounting to £190 million were in transition at the year
end; the net £472 million withdrawn in the year, included, as previously
reported, the termination of a £380 million UK equity Large Cap. mandate.
Liontrust's People
We attach great importance to continuity of staff, and with good reason. The
team has done an excellent job this year and I would like to thank them for
their efforts.
Appropriate incentives, an energetic, challenging and dynamic working
environment and a bright future for the firm will all play their part in
keeping the team together and motivated. Employees own 6% of Liontrust's shares
and a further 18% through share options.
Fund Performance
The unit trusts based on our Growth and Large Cap. investment processes have
outperformed their benchmarks in the financial year. It is from institutional
accounts based on these two processes that our performance fees are derived.
Specific performance statistics are widely available from many sources,
including our website, www.liontrust.co.uk.
The Liontrust First Income unit trust over the last eleven years has achieved
an annualised total return of 11.1%, making it one of the best performers of
its type in the UK. It stands at around £1 billion in size with around twelve
thousand investors and currently yields over 5%, more than the current yield
from long-dated gilts. Its dividend has grown every year for the last twelve
years.
The two unit trusts based on our Small Cap. investment process have continued
to deliver strong returns. The mainstream fund, Anthony Cross's Liontrust
Intellectual Capital Trust, was 12% ahead of its benchmark in 2007, and is now
103% ahead of the benchmark since launch.
The performance of our European portfolios based on our European process has
been strong, with the Long/Short hedge fund achieving a 31.7% return since its
launch in December 2006 and 1.2% in this calendar year to the end of April.
We are confident that, over the coming year, investors will take note of the
strong performance across our range of funds.
European Team
Gary West and James Inglis-Jones, our European fund management team, have made
excellent progress. Their investment process was documented in November 2006; a
unit trust, a long/short alternative investment fund and a Luxembourg SICAV
based on this process were launched in November 2006, December 2006 and June
2007 respectively. The process has been marketed to existing and prospective
clients in the UK and overseas and has been well received. We had raised over £
176 million at our year end and had a further £61 million in transition. We
believe that prospects are good for further fund inflows over the coming year.
New UK Small Cap and UK OpportunitiesTeam
We are pleased to announce that Julian Fosh will be joining Liontrust in June
2008 to work with Anthony Cross and develop our UK Small Cap and UK
Opportunities equity investment process. Julian Fosh previously held senior
positions at Saracen Fund Managers, Scottish Friendly Assurance Society and
Scottish Amicable Investment Management.
It is proposed that a new group entity, Liontrust Investment Partners LLP
("LIP"), be established for the new team, based on the structure that was
successfully put in place for our European team in 2006.
Although the arrangements relating to LIP have been agreed in principle,
whether or not they are proposed to shareholders is subject to UKLA approval.
Accordingly, a further announcement will be made in due course.
North America
In November 2007 we set up Liontrust International (North America) Inc. to
market our investment processes to the institutional asset management sector
and appointed Richard Hoag as President of its North American Institutional
Business. Richard Hoag, who has 26 years of experience in financial services,
most recently as Managing Director and Co-Head of Institutional Sales of
Merrill Lynch Investment Managers, NY, will be responsible for building a
platform to expand the institutional business throughout the U.S., Canada and
Latin America.
Sales & Marketing
Rob Page, Marketing Director at New Star since their inception in 2001, is to
join as Marketing Director of Liontrust Investment Funds Limited ("LIF") in
July 2008. At New Star he was responsible for all UK and international group
marketing initiatives including advertising, direct marketing, product
development and corporate communications. He will undertake similar
responsibilities at Liontrust.
Jonathan Harbottle, Marketing Director of LIF since 1995, becomes European
Sales Director of LIF, responsible for the promotion of the Group's investment
processes and funds to professional investors and advisers throughout Europe,
particularly The Cashflow Solution, Liontrust's Pan European equities
investment process.
Outlook
We are well prepared for the challenges ahead. We have a talented team of
professionals who have worked together for a long time and we are delighted
with the new additions we have made to the team. The stable partnership culture
and strong sense of goodwill that we have built across a wide spectrum of
clients will remain key aspects of the business.
We continue to explore opportunities for new products and we are delighted at
the successful launch of our new European product.
We are pleased with how we have started the current financial year and are
therefore confident of making good progress in the year as a whole.
Bernard Asher
Chairman
23 May 2008
Consolidated Income Statement
for the year ended 31 March 2008
Year Year
ended ended
31-Mar-08 31-Mar-07
Notes £'000 £'000
Continuing operations
Revenue 40,997 30,236
Cost of sales (155) (212)
Gross profit 40,842 30,024
Administrative expenses 2 (25,401) (19,141)
Operating profit 15,441 10,883
Interest 1,114 941
receivable
Interest payable (54) -
Profit before tax 16,501 11,824
Taxation (5,428) (3,809)
Profit for the year 11,073 8,015
Memo - Dividends paid (4,538) (3,563)
Pence Pence
Basic earnings per share 3 37.04 26.03
Diluted earnings per share 3 35.94 25.17
Consolidated Balance Sheet
as at 31 March 2008
31-Mar-08 31-Mar-07
£'000 £'000
Assets
Non current assets
Property, plant and equipment 180 128
Deferred tax asset 650 595
830 723
Current assets
Receivables 47,792 16,075
Financial assets 8,445 455
Cash and cash equivalents 20,809 22,437
77,406 38,967
Liabilities
Current liabilities
Borrowings (2,885) -
Payables (52,049) (24,273)
Accruals (475) (470)
(55,409) (24,743)
Net current assets 21,637 14,224
Net assets 22,467 14,947
Shareholders' equity
Ordinary shares 337 337
Share premium 8,962 8,907
Capital redemption reserve 15 15
Revaluation reserve 118 -
Retained earnings 25,207 18,174
Own shares held (12,172) (12,486)
Total equity 22,467 14,947
Consolidated Cash Flow Statement
for the year ended 31 March 2008
Year Year
Ended Ended
31-Mar-08 31-Mar-07
£'000 £'000
Cash flows from operating activities
Cash inflow from operations 35,026 26,958
Cash outflow from operations (21,678) (17,314)
Cash (outflow)/inflow from changes in unit (2,041) 1,304
trust receivables and payables
Net cash generated from operations 11,307 10,948
Interest received 1,114 941
Interest paid (54) -
Tax paid (4,586) (2,782)
Net cash from operating activities 7,781 9,107
Cash flows from investing activities
Purchase of property and equipment (125) (28)
Seeding investments (7,610) -
Net cash from investing activities (7,735) (28)
Cash flows from financing activities
Net proceeds from issue of new 55 7
shares
Net cost of the cancellation of shares (94) (5,418)
Sale of own shares 314 94
Borrowings 2,589 -
Dividends paid to shareholders (4,538) (3,563)
Net cash used in financing (1,674) (8,880)
activities
Net (decrease)/increase in cash and cash (1,628) 199
equivalents
Opening cash and cash equivalents* 22,437 22,238
Closing cash and cash equivalents 20,809 22,437
* Cash and cash equivalents consist only of cash
balances.
Notes to the Financial Statements
1. Accounting policies
The accounting policies are consistent with those set out in the Financial
Information for the year ended 31 March 2007.
2. Administrative expenses
Year ended Year ended
31-Mar-08 31-Mar-07
£'000 £'000
Staff costs
- Director and employee 20,217 14,473
costs
- Share option expense 592 861
- Share incentive plan 124 -
expense
- Share option NI liability 72 118
- Holiday pay costs - 24
21,005 15,476
Other administration 4,396 3,665
expenses
25,401 19,141
3. 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 was 29,895,377 for the year
(30,790,440 for the year ended 31 March 2007). 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 that were in existence during
the year ended 31 March 2008. The adjusted weighted average number of Ordinary
Shares so calculated for the year was 30,809,065 (2007: 31,839,738).
4. Dividends
The directors recommend a final dividend of 10.0 pence per share, which will be
proposed at Liontrust's Annual General Meeting on 2 July 2008. If approved,
this will be paid on 9 July 2008 to all shareholders on the register as at 13
June 2008. The shares will go ex-dividend on 11 June 2008. This year, in
addition to the final dividend, the directors recommend a special dividend of
15.5 pence per share funded from performance fees, payable at the same time as
the final dividend.
Other information
This preliminary announcement constitutes non-statutory accounts under section
240 of the Companies Act 1985. The financial information for the year ended 31
March 2007 has been abridged from the financial statements which received an
unqualified audit report and which has been filed with the Registrar of
Companies and did not contain a statement under section 237(2) or (3) of the
Companies Act, 1985.
The Annual Report is expected to be posted to shareholders on or around 3 June
2008.
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.
This preliminary 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 Services Authority). Nothing in this announcement should be construed
as a profit forecast or be relied upon as a guide to future performance.
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