Interim Results - 6 months to 30 Sept 2007
Embargoed until 0700 hours, Monday 12th November 2007
Stock Exchange Announcement
LIONTRUST ASSET MANAGEMENT PLC
Interim results for the six months to 30 September 2007
Highlights
Liontrust Asset Management PLC ("Liontrust" or "the Group"), the independent
specialist equities fund management group, today announces its interim results
for the six months ended 30 September 2007 (the "period").
Results and dividend
* Profits before tax increased by 8% to £5.6 million (2006: £5.2 million).
* Performance fees of £367,000 were earned during the period (2006: £
134,000). Performance fees owing stand at £11 million and if
out-performance is maintained will fall due for payment in the second half.
These of course vary as performance varies and could be lost if performance
suffers and would increase if performance were to be higher.
* Basic earnings per share increased by 12% to 12.5 pence (2006: 11.1 pence).
* Interim dividend increases by 14% to 2.5 pence (2006: 2.2 pence).
Funds under Management
* Funds under management increase to £5.5 billion (2006: £5.2 billion).
* Funds now at £5.1 billion (as at 9 November 2007).
* £116 million has been raised for the European investment process in the
eleven months since launch.
Commenting on these results, Nigel Legge, Chief Executive said:
"These results show that the business is in good shape. We plan to grow our
new European product through good performance and broader distribution across
Europe and beyond. We believe our focus over the last twelve years on
investment process, clear communication and the continuity of our fund
management team will all play a part in gaining the confidence of new clients
and further reinforce the confidence of existing clients."
For further information please contact:
Liontrust Asset Management PLC 020 7412 1700
Nigel Legge www.liontrust.co.uk
Vinay Abrol
Altium 020 7484 4040
Garry Levin
Nick Tulloch
Smithfield 020 7360 4900
Reg Hoare
Miranda Good
Chairman's Statement
Results
We are having a good year as these results testify. They show increases in
profits, earnings per share and dividends compared with the same period last
year and increased average funds under management at £5.569 billion compared
with last year's £5.118 billion. Performance fee income has also increased.
Profit before tax was 8% higher at £5.591 million (2006: £5.164 million), basic
earnings per share was 12% higher at 12.51 pence (2006: 11.13 pence) and the
interim dividend is 14% higher at 2.5 pence per share (2006: 2.2 pence per
share).
Performance
Performance fees of £367,000 were earned in the period and these fees generated
an operating profit, after compensation, of approximately £165,000. By
comparison the operating profit contribution from performance fees in the six
months to 30 September 2006 was £60,000. Performance fees owing stand at £11
million and if out-performance is maintained will fall due for payment in the
second half. These of course vary as performance varies and could be lost if
performance suffers and would increase if performance were to be higher.
Performance of our funds in the calendar year to date has maintained a positive
trend despite recent market volatility. The new European hedge fund is up 21.9%
in the calendar year to the end of October and up 23.7% since launch.
Specific performance statistics are widely available from many sources
including our recently updated website, www.liontrust.co.uk.
Funds under management
On 30 September 2007 our funds under management stood at £5.457 billion, 5%
higher than the level of £5.193 billion at the same time last year. By 9
November 2007 funds under management stood at £5.075 billion.
Margin and Fund flows
Annualised revenues as a percentage of average funds under management were
0.51% (last year 0.52%) while annualised profits as a percentage of average
assets were 0.20%, the same as last year.
A net £63 million of institutional assets was withdrawn in the period. Since 30
September 2007 a further net £452 million of institutional assets have been
withdrawn, with inflows of £27 million in transition. The amount withdrawn
since the period end, as previously reported, includes the termination of a £
380 million Large Cap mandate, the financial impact of which is expected to be
less than 3% on market expectations for this year's operating profits and could
be more than offset by performance fees if they are maintained.
Gross sales of our unit trusts and offshore funds averaged a healthy £26
million per month, totalling £155m for the period; net redemptions totalled £41
million in the period. Net redemptions for the period from 1 April 2007 to 9
November 2007 now stand at £42 million.
European Team
Our two new fund managers, Gary West and James Inglis-Jones, have continued to
build on their excellent start. The new process rooted in behavioural finance
and has been applied to a unit trust, a hedge fund, a Luxembourg SICAV and two
segregated mandates. £116 million has been raised in the eleven months since
launch of the process. We are confident of raising more money for these funds
over the coming months. Performance of the portfolios to which the process is
applied has been strong since the launch.
Seed capital
The Board has decided to use part of the Group's cash resources and take on
some external debt to provide up to £7.5m of seed capital to our European hedge
fund. The investment will be made on the fund's first anniversary of 1 December
2007. This seed capital investment will be treated as a non-current asset held
for sale meaning that the effect of this investment on the results of
operations will be either to increase or decrease revenues depending on how the
investment performs.
Sales and Marketing
We continue to promote our funds to clients in the UK, Continental Europe and
beyond where the number of professional firms that we are in contact with is
increasing healthily. We believe that our twelve year track record, processes,
level of funds managed - US$10 billion - transparency, healthy cash position,
and a record of continuity in our fund management teams will be warmly welcomed
by this audience of professional investors.
Risks and uncertainties
The Financial Services Authority ("FSA") has recently introduced the Disclosure
and Transparency Rules ("DTR"). The Group is required to disclose additional
information including description of the principal risks and uncertainties to
the business for the remaining six months of the financial year and details of
any related party transactions.
The Group takes a cautious and pro-active approach to risk management. The key
risks to the Group's business remain as those disclosed in our 2007 Annual
Report, namely; risk of investment performance leading to customer loss; fund
manager stability; outsourcing; and operational risk. The Group actively
reviews these risks and sees them continuing to be the key risks going forward.
Details of related party transactions can be found in note 8 below.
Summary
We believe that we can achieve a lot more in both product development and
generating assets to manage and this remain our main focus. Our first half
performance has given us a good start to the year, which we expect to build on
in the coming months. I therefore look forward to reporting further progress in
2008 with our full year results.
Bernard H Asher
Chairman
Consolidated Income Statement
Six months to 30 September 2007
Six Six Year
months to months to ended
30-Sep-07 30-Sep-06 31-Mar-07
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Continuing operations
Revenue 14,223 13,503 30,236
Cost of sales (56) (77) (212)
Gross profit 14,167 13,426 30,024
Administrative
expenses 3 (9,140) (8,741) (19,141)
Operating profit 5,027 4,685 10,883
Interest receivable 564 479 941
Profit before tax 5,591 5,164 11,824
Taxation (1,856) (1,681) (3,809)
Profit for the period 3,735 3,483 8,015
Memo - Dividends paid 6 (3,790) (2,880) (3,563)
Pence Pence Pence
Basic earnings per
share 5 12.51 11.13 26.03
Diluted earnings per
share 5 11.96 10.78 25.17
Consolidated Balance Sheet
As at 30 September 2007
30-Sep-07 30-Sep-06 31-Mar-07
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Non current assets
Property, plant and equipment 139 147 128
Deferred tax assets 644 251 595
783 398 723
Current assets
Receivables 17,930 10,205 16,075
Assets held at fair value through profit
and loss 512 497 455
Cash and cash
equivalents 17,918 17,806 22,437
36,360 28,508 38,967
Liabilities
Current liabilities
Payables (21,297) (13,082) (24,273)
Accruals (455) (452) (470)
(21,752) (13,534) (24,743)
Net current assets 14,608 14,974 14,224
Net assets 15,391 15,372 14,947
Shareholders' equity
Ordinary shares 337 351 337
Share premium 8,923 8,900 8,907
Capital redemption reserve 15 - 15
Retained earnings 18,319 18,701 18,174
Own shares held (12,203) (12,580) (12,486)
Total equity 15,391 15,372 14,947
Consolidated Cash Flow Statement
Six months to 30 September 2007
Six Six Year
months to months to ended
30-Sep-07 30-Sep-06 31-Mar-07
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Cash flows from operating activities
Cash inflow from
operations 16,301 13,005 26,958
Cash outflow from operations (11,554) (9,719) (17,314)
Cash (outflow)/inflow from changes
in unit trust receivables and
payables (3,564) (3,161) 1,304
Net cash generated from operations 1,183 125 10,948
Interest received 564 479 941
Tax paid (2,638) (1,577) (2,782)
Net cash from operating activities (891) (973) 9,107
Cash flows from investing activities
Purchase of property and equipment (43) (19) (28)
Net cash from investing activities (43) (19) (28)
Cash flows from financing activities
Net proceeds from issue of new
shares 16 - 7
Net cost of the cancellation of
shares (94) - (5,418)
Sale/(purchase) of own shares 283 (560) 94
Dividends paid to shareholders (3,790) (2,880) (3,563)
Net cash used in financing
activities (3,585) (3,440) (8,880)
Net (decrease)/increase in cash and
cash equivalents (4,519) (4,432) 199
Opening cash and cash equivalents* 22,437 22,238 22,238
Closing cash and cash equivalents 17,918 17,806 22,437
* Cash and cash equivalents consists only of cash balances.
Consolidated Statement of Changes in Equity
Six months to 30 September 2007
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April
2007 brought forward 337 8,907 15 18,174 (12,486) 14,947
Sale of shares by
Employee Benefits
Trust - - - - 283 283
Profit for the period - - - 3,735 - 3,735
Total recognised
income for the year - - - 3,735 - 3,735
Dividends - - - (3,790) - (3,790)
Issue of share capital
* - 16 - - - 16
Cancellation of share
capital** - - - (94) - (94)
Equity share options
issued - - - 294 - 294
Balance at 30
September 2007 337 8,923 15 18,319 (12,203) 15,391
* During the period 5,802 Ordinary Shares of 1 pence were issued; as the table
above is disclosed in £'000, no amount is disclosed in additions to share
capital.
** During the period 23,754 Ordinary Shares of 1 pence were cancelled; as the
table above is disclosed in £'000, no amount is disclosed in deductions from
share capital.
Consolidated Statement of Changes in Equity
Six months to 30 September 2006
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April 2006
brought forward 352 8,900 - 18,279 (12,580) 14,951
Sale of shares by
Employee Benefits Trust - - - - - -
Profit for the period - - - 3,483 - 3,483
Total recognised income
for the year - - - 3,483 - 3,483
Dividends - - - (2,880) - (2,880)
Issue of share capital - - - - - -
Cancellation of share
capital (1) - - (560) - (561)
Equity share options
issued - - - 379 - 379
Balance at 30 September
2006 351 8,900 - 18,701 (12,580) 15,372
Consolidated Statement of Changes in Equity
Year to 31 March 2007
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
£ '000 £ '000 £ '000 £ '000 £ '000 £ '000
Balance at 1 April
2006 brought forward 352 8,900 - 18,279 (12,580) 14,951
Sale of shares by
Employee Benefits
Trust - - - - 94 94
Profit for the period - - - 8,015 - 8,015
Total recognised
income for the year - - 8,015 - 8,015
Dividends - - - (3,563) - (3,563)
Issue of share capital
* - 7 - - - 7
Cancellation of share
capital (15) - 15 (5,418) - (5,418)
Equity share
options issued - - - 861 - 861
Balance at 31 March
2007 337 8,907 15 18,174 (12,486) 14,947
* During the year 2,293 Ordinary Shares of 1 pence were issued; as the table
above is disclosed in £'000, no amount is disclosed in additions to share
capital.
Notes to the Financial Statements
1 Principal Accounting policies
a) Basis of preparation
This interim report is unaudited and does not constitute statutory accounts
within the meaning of s240 of the Companies Act 1985. The statutory accounts
for 2007, which were prepared in accordance with International Financial
Reporting Standards, as endorsed by the European Union ('IFRS'), and with those
parts of the Companies Act 1985 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 s237
(2) or s237(3) of the Companies Act 1985.
The interim report has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Services Authority ("DTR") and with IAS 34
'Interim Financial Reporting'.
The accounting policies applied in these interim accounts are consistent with
those applied in the Group's most recent annual accounts.
During the period, the following Standards and Interpretations have been
adopted, none of which have had a material impact on the financial statements
of the Group:
IFRS 7 Financial Instruments: Disclosures
IFRIC 7 Applying the Restatement Approach under IAS 29
IFRIC 8 Scope of IFRS 2
IFRIC 9 Reassessment of Embedded Derivatives
IFRIC 10 Interim Financial Reporting Impairments
At the date of authorisation of these financial statements, the following
Standards and Interpretations were in issue but not yet effective:
IFRS 8 Operating Segments
IFRIC 11 IFRS 2 - Group and Treasury Share Transactions
IFRIC 12 Service Concessions Arrangements
IFRIC 13 Customer Loyalty Programmes
IFRIC 14 IAS 19 - The limit on a Defined Benefit Asset, Minimum Funding
Requirements and their Interaction
The directors anticipate the adoption of these Standards and Interpretations in
future periods will have no material impact on the financial statements of the
Group, though IFRS7 will require further disclosure regarding financial
instruments at the year end.
2 Segmental reporting
The Group's operations consist only of investment management in the UK, as
such, no segmental analysis is presented.
3 Administration expenses
Six Six Year
months to months to ended
30-Sep-07 30-Sep-06 31-Mar-07
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Staff costs
- Director and employee 6,698 6,314 14,473
costs
- Share option expense 294 379 861
- Share option NI 36 43 118
liability
- Holiday pay accrual (87) 1 24
adjustment
Other administration 2,199 2,004 3,665
expenses
9,140 8,741 19,141
4 Taxation
The interim tax charge has been calculated at the estimated full year effective
corporation tax rate of 30% (2006: 30%). The share option expense has not been
taken into account in determining profit before tax as this is not an allowable
expense for taxation. As Liontrust European Investment Services Limited is 51%
owned by the Group it falls below the 75% threshold required by HM Revenue &
Customs in order to qualify for group tax relief. We have adjusted our interim
tax charge accordingly.
5 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 2007 was 29,863,234 (30 September 2006: 31,291,737, 31 March 2007:
30,790,440). 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 six months ended 30 September 2007. The adjusted weighted average number of
Ordinary Shares so calculated for the period was 31,228,330 (30 September 2006:
32,300,643, 31 March 2007: 31,839,738). This is reconciled to the actual
weighted number of Ordinary Shares as follows:
30-Sep-07 30-Sep-06 31-Mar-07
number number number
Weighted average number of Ordinary 29,863,234 31,291,737 30,790,440
Shares
Weighted average number of dilutive
Ordinary shares under option:
- to Savings-Related Share Option 9,072 8,458 8,442
Scheme
- to the Liontrust Enterprise 1,356,024 1,000,448 1,040,856
Management Incentive Scheme
Adjusted weighted average number of 31,228,330 32,300,643 31,839,738
Ordinary Shares
6 Dividends
The directors declare an interim dividend in respect of the current period of
2.5 pence per share (2006: 2.2 pence) this will be paid on 19 December 2007 to
all shareholders on the register as at 23 November 2007. The shares will go
ex-dividend on 21 November
2007.
7 Share Repurchases
During the six months to 30 September 2007, the Group purchased 23,754 Ordinary
Shares in the market for cancellation at an average price of 395.2 per share
(including costs). The purchases were made because opportunities arose to
acquire the Group's shares at prices that the Directors considered to be
attractive.
These share repurchases total approximately 0.07% of our issued share capital.
The benefit to our earnings per share will be seen in the second half of the
financial year and in future years. After the cancellations, there are
33,650,263 shares in issue.
8 Related Party Transactions
During the six months to 30 September 2007 the Group received fees from unit
trusts under management of £13,714,000 (2006: £12,361,000). Transactions with
these unit trusts comprised creations of £77,939,000 (2006: £115,055,000) and
liquidations of £189,307,000 (2006: £196,908,000). 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 2007 the Group
owed the unit trusts £1,682,000 (2006: £591,000) in respect of unit trust
creations and was owed £9,534,000 (2006: £2,967,000) in respect of unit trust
cancellations and fees.
9 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 interim management report herein includes a fair review of the information
required by DTR 4.2.7 and DTR
4.2.8.
Other information
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 announcement contains certain forward-looking statements with respect to
the financial condition, results of operations and businesses and plans of the
Company. 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.
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