Interim Results - Six months to 30 September 2008

Embargoed until 0700 hours, Wednesday 12th November 2008 Stock Exchange Announcement LIONTRUST ASSET MANAGEMENT PLC Interim results for the six months to 30 September 2008 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 2008 (the "Period"). Results and dividend - Profit before tax increased by 10% to £6.1 million (2007: £5.6million). - Performance fees of £3,894,000 were earned during the Period (2007: £367,000). - Basic earnings per share increased by 18% to 14.8 pence (2007: 12.5 pence). - Interim dividend maintained at 2.5 pence (2007: 2.5 pence). Funds under management - Funds under management decreased to £3.9 billion (2007: £5.5 billion). - Funds now at £3.5 billion (as at 11 November 2008). Commenting on these results, Nigel Legge, Chief Executive, said: "Against a backdrop of an extraordinary operating environment, these results show the business to be in relatively good shape when compared to other fund management groups. Performance fee earnings have been a major contributor to profits. The good performance of our European products, underpinned by a robust investment process, is attracting a growing number of prospective investors across Europe and the US." "Our focus over the last thirteen years on investment process and performance, stability in our fund management team, transparency in our reporting and a strong balance sheet without debt are playing an important part in preserving client confidence in this environment." For further information please contact: Liontrust Asset Management PLC 020 7412 1700 Nigel Legge www.liontrust.co.uk Vinay Abrol Simon Hildrey Altium 020 7484 4040 Ben Thorne Sam Fuller Smithfield 020 7360 4900 Reg Hoare Miranda Good Chairman's Statement Results In what are unprecedented stock market conditions, we have had a good first six months, as these results testify. They show an increase in both profits and earnings per share compared with the same period last year, to which performance fee income has been a major contributor. The second half will be tougher as we start the period with significantly lower funds under management as it is management fee income earned on funds under management that drives our core revenues. The importance of our financial metrics, which we have consistently published since our flotation in 1999, is now coming to the fore. We have a strong balance sheet with no debt and over the Period we had a cost to income ratio of 64.1%. We have good relative performance across benchmarked portfolios and excellent absolute performance in our hedge fund. Profit before tax was 10% higher at £6.149 million (2007: £5.591 million), basic earnings per share were 18% higher at 14.76 pence (2007: 12.51 pence) and the interim dividend is maintained at 2.5 pence per share (2007: 2.5 pence per share). Performance Performance fees of £3,894,000 were earned in the Period and these fees generated an operating profit, after staff compensation, of approximately £1,752,000. By comparison, the operating profit contribution from performance fees in the six months to 30 September 2007 was £165,000. There are further performance fees owing which, if out-performance is maintained, will fall due for payment in the second half of the financial year ending 31 March 2009. Relative performance of most of our funds against respective benchmarks in the calendar year to date has been good, notwithstanding recent market volatility. The European hedge fund is up 12.2% in the calendar year to 31 October 2008 and up 45.7% since launch on 6 December 2006. Specific performance statistics are widely available from many sources, including our website, www.liontrust.co.uk. Funds under management On 30 September 2008, our funds under management stood at £3.913 billion, 28% lower than the level of £5.457 billion at the same time last year. The FTSE All-Share Index fell by 25% over the same period. As at 11 November 2008, funds under management stood at £3.549 billion. Margins and fund flows Annualised revenues for the Period as a percentage of average funds under management were 0.67% (2007: 0.51%) while annualised profit before tax as a percentage of average assets was 0.26% (2007: 0.20%). Gross sales of our unit trusts and offshore funds totalled £235 million and net redemptions were £73 million in the Period. We received £21 million of net inflows in October 2008. Net inflows of institutional assets amounting to £1 million have been invested in the Period with net outflows of £79 million in transition. Dividend policy The current market conditions present new opportunities to the Group for the use of its cash. The Board is reassessing the best means of adding value for shareholders. As a result, the Board has decided to cease the payment of special dividends from performance fee revenues when they are earned. The Board will keep shareholders informed of any specific plans in due course. Fund management teams As at 11 November 2008, £226 million had been raised for the European process, which is ahead of our expectations. Since inception, overall performance of the various European portfolios has been strong and remained so during the Period. We are therefore confident of raising more assets during the remainder of the financial year. Our UK fund management team, too, have produced good results (albeit highly volatile ones along the way), hence our performance fee revenues. Sales and marketing We continue to promote our processes and funds to clients in the UK, Continental Europe and the US, where there has been a healthy increase in the number of professional firms with which we are in contact. We believe that our thirteen year track record, highly detailed investment processes, the performance of our portfolios, our healthy cash position and the excellent record of continuity in our fund management teams are being appreciated for their importance in these difficult market conditions and warmly welcomed by our growing audience of professional investors. Risks and uncertainties The Disclosure and Transparency Rules of the Financial Services Authority require the Group to disclose additional information, including a 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 2008 Annual Report, namely the risk of investment performance leading to customer loss, fund manager departures, 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 9 below. Approach On 20 May 2008, Liontrust announced that it had received an approach that may or may not lead to an offer being made for the Group. Since that date, Liontrust has been in discussion with various parties and, although discussions are continuing, there can be no certainty that an offer will be made or as to the terms on which any offer might be made. A further announcement will be made in due course. Summary The current environment presents us with great opportunities. We know we can achieve a lot more in both product development and generating assets to manage and this remains our focus. We believe that our first half performance, particularly in this climate, has been a good start to the year. We plan to build on this in the coming months. The results for the second half will be heavily influenced by our lower funds under management as a result of recent market falls, but by focusing on those areas within our control I believe, we can make progress. I look forward to reporting our full year results in June 2009. Bernard H Asher Chairman Consolidated Income Statement Six months to 30 September 2008 Six Six Year months to months to ended 30-Sep-08 30-Sep-07 31-Mar-08 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Continuing operations Revenue 15,844 14,223 40,997 Cost of sales (106) (56) (155) Gross profit 15,738 14,167 40,842 Realised gain on sale of investments 143 - - Administrative expenses 3 (10,176) (9,140) (25,401) Operating profit 5,705 5,027 15,441 Interest receivable 464 564 1,114 Interest payable (20) - (54) Profit before tax 6,149 5,591 16,501 Taxation (1,731) (1,856) (5,428) Profit for the period 4,418 3,735 11,073 Memo - Dividends paid 6 (7,634) (3,790) (4,538) Pence Pence Pence Basic earnings per share 5 14.76 12.51 37.04 Diluted earnings per share 5 14.76 11.96 35.94 Consolidated Balance Sheet As at 30 September 2008 30-Sep-08 30-Sep-07 31-Mar-08 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 Assets Non current assets Property, plant and equipment 162 139 180 Deferred tax assets 595 644 650 757 783 830 Current assets Receivables 19,971 17,930 47,792 Financial assets 8 6,213 512 8,445 Cash and cash equivalents 11,961 17,918 20,809 38,145 36,360 77,046 Liabilities Current liabilities Borrowings - - (2,885) Payables (19,138) (21,297) (52,049) Accruals (355) (455) (475) (19,493) (21,752) (55,409) Net current assets 18,652 14,608 21,637 Net assets 19,409 15,391 22,467 Shareholders' equity Ordinary shares 337 337 337 Share premium 8,962 8,923 8,962 Capital redemption reserve 15 15 15 Revaluation reserve 276 - 118 Retained earnings 21,991 18,319 25,207 Own shares held (12,172) (12,203) (12,172) Total equity 19,409 15,391 22,467 Consolidated Cash Flow Statement Six months to 30 September 2008 Six Six Year months to months to ended 30-Sep-08 30-Sep-07 31-Mar-08 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash flows from operating activities Cash inflow from operations 20,943 16,301 35,026 Cash outflow from operations (15,748) (11,554) (21,678) Cash (outflow)/inflow from changes in unit trust receivables and payables (2,585) (3,564) (2,041) Net cash generated from operations 2,610 1,183 11,307 Interest received 464 564 1,114 Interest paid (20) - (54) Tax paid (3,776) (2,638) (4,586) Net cash from operating activities (722) (891) 7,781 Cash flows from investing activities Purchase of property and equipment (22) (43) (125) Sale/(Purchase) of seeding investments 2,414 - (7,610) Net cash from investing activities 2,392 (43) (7,735) Cash flows from financing activities Net proceeds from issue of new shares - 16 55 Net cost of the cancellation of shares - (94) (94) Sale of own shares - 283 314 Borrowings:(Repaid)/Borrowed (2,884) - 2,589 Dividends paid to shareholders (7,634) (3,790) (4,538) Net cash used in financing activities (10,518) (3,585) (1,674) Net (decrease)/increase in cash and cash equivalents (8,848) (4,519) (1,628) Opening cash and cash equivalents* 20,809 22,437 22,437 Closing cash and cash equivalents 11,961 17,918 20,809 * Cash and cash equivalents consists only of cash balances. Consolidated Statement of Changes in Equity Six months to 30 September 2008 Share Share Capital Re- Retained Own shares Total capital premium redemption valuation earnings held Equity £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 £ '000 Balance at 1 April 2008 brought forward 337 8,962 15 118 25,207 (12,172) 22,467 Sale of shares by Employee Benefits Trust - - - - - - - Profit for the period - - - - 4,418 - 4,418 Total recognised income for the year - - - - 4,418 - 4,418 Dividends paid - - - - (7,634) - (7,634) Gain on investments* - - - 158 - - 158 Issue of shares - - - - - - - Cancellation of shares - - - - - - - Equity share options issued - - - - - - - Balance at 30 September 2008 337 8,962 15 276 21,991 (12,172) 19,409 * In addition to the results in the above Income Statement, which arise wholly from continuing activities, the Group had a gain of £158,000 relating to financial assets held as available for sale. The gain is unrealised and carried through equity. Consolidated Statement of Changes in Equity Six months to 30 September 2007 Share Share Capital Re- Retained Own shares Total capital premium redemption valuation earnings held Equity £ '000 £ '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 paid - - - - (3,790) - (3,790) Issue of shares* - 16 - - - - 16 Cancellation of shares** - - - - (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 Year to 31 March 2008 Share Share Capital Re- Retained Own shares Total capital premium redemption valuation earnings held Equity £ '000 £ '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 - - - - - 314 314 Profit for the period - - - - 11,073 - 11,073 Total recognised income for the year - - - - 11,073 - 11,073 Dividends paid - - - - (4,538) - (4,538) Gain on investments* - - - 118 - - 118 Issue of shares** - 55 - - - - 55 Cancellation of shares*** - - - - (94) - (94) Equity share options issued - - - - 592 - 592 Balance at 31 March 2008 337 8,962 15 118 25,207 (12,172) 22,467 * In addition to the results in the above Income Statement, which arise wholly from continuing activities, the Group had a gain of £118,000 relating to financial assets held as available for sale. The gain is unrealised and carried through equity. ** During the year 20,547 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 year 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 or in the Capital redemption reserve. 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 financial information for the half years ended 30 September 2008 and 2007 has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. The statutory accounts for 2008, 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 financial statements have 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. At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but either not endorsed not yet effective: IFRS 3 (amended) - Business combinations IFRS 8 - Operating segments IAS 1 (amended) - Presentation of financial statements IAS 27 (amended) - Consolidation and separate financial statements IFRIC 16 - Hedges of net investment in a foreign operation In addition, a number of other existing Standards and Interpretations have also been revised to ensure consistency with the amended Standards listed above. 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. 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-08 30-Sep-07 31-Mar-08 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Staff costs - Director and employee costs 7,332 6,698 20,217 - Share option expense 65 294 592 - Share incentive plan expense 73 - 124 - Share option NI liability 8 36 72 - Holiday pay accrual adjustment - (87) - 7,478 6,941 21,005 Other administration expenses 2,698 2,199 4,396 10,176 9,140 25,401 4 Taxation The interim tax charge has been calculated at the estimated full year effective corporation tax rate of 28% (2007: 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 2008 was 29,937,673 (30 September 2007: 29,863,234, 31 March 2007: 29,895,377). 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 2008. The adjusted weighted average number of Ordinary Shares so calculated for the period was 29,937,673 (30 September 2007: 31,228,330, 31 March 2008: 30,809,065). This is reconciled to the actual weighted number of Ordinary Shares as follows: 30-Sep-08 30-Sep-07 31-Mar-08 number number number Weighted average number of Ordinary Shares 29,937,673 29,863,234 29,895,377 Weighted average number of dilutive Ordinary shares under option: - to Savings-Related Share Option Scheme - 9,072 5,530 - to the Liontrust Enterprise Management Incentive Scheme - 1,356,024 908,158 Adjusted weighted average number of Ordinary 29,937,673 31,228,330 30,809,065 Shares 6 Dividends The directors declare an interim dividend in respect of the current period of 2.5 pence per share (2007: 2.5 pence), which will be paid on 17 December 2008 to all shareholders on the register as at 21 November 2008. The shares will go ex-dividend on 19 November 2008. 7 Own Shares The trustee of the Liontrust Asset Management Employee Trust notified the Company that, under the Liontrust Enterprise Management Incentive Scheme (the "Scheme"), on 12 July 2008 the options over 2,346,578 ordinary shares in the Company granted by the trustee on 12 July 2005 to employees, including the executive directors, lapsed as a result of not satisfying the performance conditions attaching to the grant of options. 8 Financial Assets Assets held at fair value through profit and loss: The Group's assets held at fair value through profit and loss represent units in the UK Authorised unit trusts and shares in sub-funds of the Liontrust Guernsey Fund Limited (a Guernsey domiciled Open ended investment company) held in the manager's box and are valued at bid price. Assets held as available for sale: The Group's assets held as available for sale represent shares in the Liontrust European Long/Short Fund and Liontrust MMVIII Fund (both sub-funds of Liontrust Alternative Funds PCC Limited), and Liontrust Pan-European Fund (a sub-fund of Liontrust International (Luxembourg) SICAV) and are valued at mid price. 9 Related Party Transactions During the six months to 30 September 2008 the Group received fees from unit trusts under management of £10,942,000 (2007: £13,714,000). Transactions with these unit trusts comprised creations of £146,449,000 (2007: £77,939,000) and liquidations of £258,998,000 (2006: £189,307,000). 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 2008 the Group owed the unit trusts £6,135,000 (2007: £1,682,000) in respect of unit trust creations and was owed £1,879,000 (2007: £9,534,000) in respect of unit trust cancellations and fees. 10 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. By Order of the Board Nigel R. Legge Vinay K. Abrol Chief Executive Chief Operating Officer and Chief Financial Officer 12 November 2008 Forward Looking Statements This 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 Other information The release, publication, transmission or distribution of this announcement in, into or from 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.

Companies

Liontrust Asset Management (LIO)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today