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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Liontrust Asset Management Plc | LSE:LIO | London | Ordinary Share | GB0007388407 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -9.00 | -1.25% | 709.00 | 699.00 | 708.00 | 729.00 | 702.00 | 729.00 | 179,936 | 16:35:21 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 243.34M | 39.33M | 0.6160 | 11.46 | 450.76M |
From May 2019 to May 2024
TIDMLIO
RNS Number : 2725X
Liontrust Asset Management PLC
23 November 2017
Embargoed until 0700 hours, Thursday 23 November 2017
LIONTRUST ASSET MANAGEMENT PLC
HALF YEARLY REPORT FOR THE SIX MONTHSED
30 SEPTEMBER 2017
Liontrust Asset Management Plc ("Liontrust", the "Company", or the "Group"), the independent fund management group, today announces its Half Yearly Report for the six months ended 30 September 2017.
Results:
-- Adjusted profit before tax of GBP12.0 million (2016: GBP6.8 million), an increase of 76%
-- Profit before tax of GBP3.6 million (2016: GBP2.2 million), an increase of 61%. This includes costs of GBP8.4 million (2016: GBP4.6 million) relating to the amortisation of the related intangible asset and other non-cash and non-recurring costs (see note 5 below)
-- Revenues of GBP35 million (2016: GBP22 million), an increase of 57%.
Dividend:
-- First Interim dividend per share of 5.0 pence (2016: 4.0 pence), which will be payable on 12 January 2018, the shares going ex-dividend on 30 November 2017.
Assets under management:
-- On 30 September 2017, assets under management ("AuM") were GBP9.6 billion. The acquisition of Alliance Trust Investments Limited ("ATI") completed on 1 April 2017, adding GBP2.5 billion to AuM.
-- Assets under management as at close of business on 21 November 2017 were GBP10.1 billion
Flows:
-- Net inflows for the period to 30 September 2017 of GBP178 million (2016: GBP92 million)
MiFID II:
-- Liontrust has decided that with effect from January 2018 the cost of external research will be absorbed by the Group. The estimated annualised impact of this change on the Group's revenues is expected to be GBP1.0 to GBP1.5 million
Commenting on the results, John Ions, Chief Executive, said:
"Our assets under management are now in excess of GBP10 billion, with net inflows of GBP178 million in the first half of the financial year. This is a testament to the determination and talent that exists within Liontrust. I have said before that there are no quick routes to success, but by doing the basics as well as we can each day and paying strict adherence to our core beliefs and investment processes, we will succeed.
We have generated these net inflows despite the uncertainty caused by the ongoing Brexit negotiations and the fact UK All Companies has been the worst selling sector by net retail flows in seven of the past 13 months to the end of September 2017, according to the IA. It shows the resilience of investor demand for active fund management with proven long-term track records and robust investment processes despite a challenging environment.
This is demonstrated by Anthony Cross, who celebrates 20 years of active fund management at Liontrust at the start of next year. He has run the UK Smaller Companies Fund since 8 January 1998. From launch, the Fund has returned 1,121% against 282% by the FTSE Small Cap (ex IT) Index and 612% by the average fund in the IA UK Smaller Companies sector(1) .
The Liontrust Sustainable Investment team has bedded in well in the first six months, with assets growing and performance strong across its range of funds. Sustainable investing is grabbing a lot of headlines, and with our team having critical mass and a long track record this puts us in an enviable position to benefit from the growth.
The success of our approach to managing money and the business is reflected in the independent recognition we have received this year. We have won three industry awards in recent months for Specialist Group of the Year, while Special Situations, European Growth and GF European Strategic Equity have won individual fund awards.
In the first quarter of 2018, we will further diversify our fund management capability through David Roberts and Phil Milburn joining from Kames. David and Phil are very highly regarded fixed income fund managers with excellent long-term performance records.
They will add to the experienced and talented group of fund management teams that we already have at Liontrust. We trust our fund managers and provide the environment to enable them to focus on running money and not get distracted by day-to-day aspects of running a business. Having documented investment processes also provides greater predictability of how our funds will be managed and what are likely to be the more challenging market environments for them.
We are in great shape after a successful 2017 and I look forward with optimism, safe in the knowledge that we have the skill and dedication within the business to continue our growth."
(1) Source: Financial Express, total return (income reinvested and net of fees), bid to bid, since launch (8 January 1998) to 31 October 2017, based on primary share class.
For further information please contact:
Liontrust Asset Management 020 7412 1700
John Ions, Vinay Abrol www.liontrust.co.uk
Simon Hildrey - Chief Marketing Officer
Numis Securities Limited 020 7260 1000
Charles Farquhar
Macquarie Capital (Europe) Limited 020 3037 2000
Advisory - Jonny Allison, Kavita Choitram
Corporate Broking - Alex Reynolds, Nicholas Harland
Chairman's Statement
Introduction
Digitalisation has been transforming communications and the speed at which information spreads around the world. We live in a world in which the news cycle moves at an ever increasing pace and people want instant responses to and views of events.
It is vital that we embrace digitalisation to enhance our business and better service our clients and investors. It is equally important that we retain our core values and focus on what has made us successful. We take a long-term approach to managing money at Liontrust, with each team applying their distinct investment processes to running funds and portfolios and not getting distracted by the increasing levels of market noise that is a feature of our 24-hour news cycle.
We continually face many other opportunities and challenges, whether it is through political or economic uncertainty, regulatory developments or changing competitors. Like our fund managers, it is key that we as a company focus on what is in our power to control and determine.
The success of Liontrust's approach is shown by the strong set of results for the first half of our financial year. We have grown our revenue, profits and dividend. This has been driven by the continued increase in our AuM, which has gone through GBP10 billion since the end of September. We are also further diversifying our fund management capability, with the addition of the Liontrust Sustainable Investment team from Alliance Trust Investments in April 2017 along with David Roberts and Phil Milburn joining from Kames in January 2018.
Sophia Tickell is a strong addition for Liontrust, joining the Board on 1 October 2017 as an Independent Non-executive Director. She brings vast and valuable experience, having worked with asset managers for more than 15 years as well as in other sectors and on academic and charitable boards.
I would like to thank our shareholders, investors and staff for all their support and loyalty to Liontrust. We are in a very strong position to continue to expand and grow the business.
Results
Adjusted profit before tax was GBP12.002 million (2016: GBP6.838 million). Adjusted profit before tax is disclosed in order to give shareholders an indication of the profitability of the Group excluding non-cash (depreciation, intangible asset amortisation and share incentivisation related) expenses and non-recurring (professional fees relating to acquisition, cost reduction, restructuring, share incentivisation and severance compensation related) expenses ("Adjustments"), see note 5 below for a reconciliation of adjusted profit (or loss) before tax.
Profit before tax is GBP3.344 million (2016: GBP2.245 million).
Dividend
In accordance with the Company's dividend policy, the Board is declaring a First Interim dividend of 5.0 pence per share (2016: 4.0 pence) which will be payable on 12 January 2018 to shareholders who are on the register as at 1 December 2017, the shares going ex-dividend on 30 November 2017.
The Company has a Dividend Reinvestment Plan ("DRIP") that allows shareholders to reinvest dividends to purchase additional shares in the Company. For shareholders to apply the proceeds of this and future dividends to the DRIP, application forms must be received by the Company's Registrars by no later than 15 December 2017. Existing participants in the DRIP will automatically have the dividend reinvested. Details on the DRIP can be obtained from Link Asset Services on 0371 664 0381 or at www.signalshares.com. (Calls are charged at the standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged at the applicable international rate. Lines are open between 09:00 - 17:30, Monday to Friday excluding public holidays in England and Wales).
Funds under Management
On 30 September 2017, our AuM stood at GBP9,640 million and were broken down by type and process as follows:-
Hot Features
Premium
Offshore
Process Total Institutional UK Retail Multi-Asset Funds
(GBPm) (GBPm) (GBPm) (GBPm) (GBPm)
Cashflow Solution 947 507 322 - 118
Economic Advantage 4,404 283 4,046 - 75
Macro Thematic 459 124 308 - 27
European Income 244 - 244 - -
Asia 111 - 99 - 12
Sustainable Investment 2,792 52 2,542 - 198
Multi-Asset 634 - - 634 -
Indexed 49 - 49 - -
Total 9,640 966 7,610 634 430
On 21 November 2017, our AuM was GBP10.126 billion.
Funds Flows
The net inflows over the six months to 30 September 2017 are GBP178 million (2016: GBP92 million). A reconciliation of fund flows and AuM over the half year is as follows:-
Offshore
Total Institutional UK Retail Multi-Asset Funds
GBPm GBPm GBPm GBPm GBPm
Opening AuM - 1 April
2017 6,523 1,044 4,648 612 219
Net flows 178 (160) 303 2 33
Acquisitions 2,518 49 2,316 - 153
Market and Investment
performance 421 33 343 20 25
Closing AuM - 30 September
2017 9,640 966 7,610 634 430
Fund Performance (Quartile ranking)
Quartile Quartile Quartile Quartile Launch
ranking ranking ranking ranking Date/Manager
- Since - 5 year - 3 year - 1 year Appointed
Launch/Manager
Appointed
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Growth Fund 1 2 1 3 25/03/2009
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Special
Situations Fund 1 2 1 2 10/11/2005
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Smaller Companies
Fund 1 1 1 3 08/01/1998
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Micro Cap Fund 3 - - 3 09/03/2016
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Macro
Equity Income
Fund 1 3 4 3 31/10/2003
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Macro
UK Growth Fund 2 4 4 3 01/08/2002
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Growth Fund 1 2 1 4 15/11/2006
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Asia
Income Fund 2 2 2 4 05/03/2012
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Income Fund 3 4 4 4 15/12/2005
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust European
Enhanced Income
Fund (Hedged) 4 4 4 4 30/04/2010
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Global
Income Fund 4 - 4 3 03/07/2013
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust Monthly
Income Bond
Fund 1 1 1 1 12/07/2010
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Absolute Growth
Fund 4 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Corporate Bond
Fund 1 1 1 1 20/08/2012
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Cautious Managed
Fund 1 - 1 1 23/07/2014
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Defensive Managed
Fund 1 - 1 1 23/07/2014
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
European Growth
Fund 2 2 1 2 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Global Growth
Fund 4 2 2 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
Managed Fund 3 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust UK
Ethical Fund 2 1 1 1 01/12/2000
-------------------- ---------------- ---------- ---------- ---------- --------------
Liontrust SF
UK Growth Fund 2 1 1 1 19/02/2001
-------------------- ---------------- ---------- ---------- ---------- --------------
Source: Financial Express, total return (income reinvested and net of fees), bid to bid, to 30 September 2017 unless otherwise stated, based on primary share classes. The above funds are all UK authorised unit trusts or UK authorised ICVCs (primary share class). Liontrust FTSE 100 Tracker Fund (index fund) not included. Past performance is not a guide to the future; the value of investments and the income from them can fall as well as rise. Investors may not get back the amount originally subscribed. Quartile rankings correct as at 03/10/2017.
Outlook
We have made further progress in developing and growing Liontrust over the past six months. With the addition of the Liontrust Sustainable Investment team and the arrival of David Roberts and Phil Milburn early in 2018, we are expanding our fund management capability and diversifying our potential client base, both in the UK and internationally. We have delivered another six months of positive net inflows, breaking through GBP10 billion in AuM since the end of September 2017.
We have a much stronger infrastructure at Liontrust, ensuring it can support the further expansion of our business. We are also focused on continuing to deliver a first-class service to our investors as we grow our funds and proposition.
The depth of talent at Liontrust gives me great confidence that we can thrive for the benefit of investors and shareholders.
Adrian Collins
Non-executive Chairman
Consolidated Statement of Comprehensive Income
Six months ended 30 September 2017
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Revenue 4 34,572 22,043 51,508
Cost of sales (25) (25) (50)
--------------------------------- ------ ------------ ------------ ----------
Gross profit 34,547 22,018 51,458
Realised profit on sale of
financial assets 2 104 6
Unrealised profit on financial
assets - - 134
Administration expenses 5 (30,957) (19,886) (42,506)
--------------------------------- ------ ------------ ------------ ----------
Operating profit 3,592 2,236 9,092
Interest receivable 2 9 11
--------------------------------- ------ ------------ ------------ ----------
Profit before tax 3,594 2,245 9,103
Taxation 7 (954) (496) (2,275)
--------------------------------- ------ ------------ ------------ ----------
Profit for the period 2,640 1,749 6,828
Total comprehensive income 2,640 1,749 6,828
================================= ====== ============ ============ ==========
Pence Pence Pence
-------------------------------- ------ ------------ ------------ ----------
Basic earnings per share 8 5.37 3.88 15.15
Diluted earnings per share 8 5.21 3.80 14.75
--------------------------------- ------ ------------ ------------ ----------
Consolidated Balance Sheet
As at 30 September 2017
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
Notes GBP'000 GBP'000 GBP'000
Assets
Non current assets
Intangible assets 9 14,530 5,273 3,640
Goodwill 9,872 - -
Property, plant and
equipment 263 191 195
Deferred tax assets - 1,052 964
Total non current assets 24,665 6,516 4,799
-------------------------------- ------ ------------ ------------ ----------
Current assets
Trade and other receivables 48,564 49,058 68,066
Financial assets 10 1,545 1,757 1,404
Cash and cash equivalents 22,619 18,333 16,956
-------------------------------- ------
Total current assets 72,728 69,148 86,426
-------------------------------- ------ ------------ ------------ ----------
Liabilities
Non current liabilities
DBVAP liability (788) - (322)
Deferred tax liabilities (998) - -
------------------------------- ------ ------------ ------------ ----------
Total non current liabilities (1,786) - (322)
-------------------------------- ------ ------------ ------------ ----------
Current liabilities
Trade and other payables (51,831) (52,304) (63,960)
Corporation tax payable (58) (907) (393)
Total current liabilities (51,889) (53,211) (64,353)
-------------------------------- ------ ------------ ------------ ----------
Net current assets 20,839 15,937 22,073
-------------------------------- ------ ------------ ------------ ----------
Net assets 43,718 22,453 26,550
================================ ====== ============ ============ ==========
Shareholders' equity
Ordinary shares 495 454 454
Share premium 15,796 17,692 -
Deferred consideration 3,959 - -
Capital redemption reserve 19 19 19
Retained earnings 27,133 7,323 28,936
Own shares held (3,684) (3,035) (2,859)
Total equity 43,718 22,453 26,550
================================ ====== ============ ============ ==========
Consolidated Cash Flow Statement
Six months ended 30 September 2017
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Cash inflow from operations 48,944 29,365 56,460
Cash outflow from operations (38,835) (21,177) (42,489)
Cash inflow/(outflow) from changes
in unit trust receivables and
payables 4,233 2,535 (363)
--------------------------------------- ------------ ------------ ----------
Net cash from operations 14,342 10,723 13,608
Interest received 2 9 11
Tax paid (1,403) (500) (2,705)
------------ ------------ ----------
Net cash from operating activities 12,941 10,232 10,914
--------------------------------------- ------------ ------------ ----------
Cash flows from investing activities
Purchase of property, plant and
equipment (146) (8) (73)
Acquisition of investment management
contracts - (4,083) (4,083)
Acquisition of Alliance Trust
Investments net of cash (929) - -
Purchase of ICI's - - (95)
Purchase of DBVAP Financial Asset - (940) (940)
Purchase of seeding investments - (110) (252)
Sale of seeding investments 54 85 151
------------ ------------ ----------
Net cash used in investing activities (1,021) (5,056) (5,292)
--------------------------------------- ------------ ------------ ----------
Cash flows from financing activities
Purchase of own shares (848) (1,718) (1,738)
Dividends paid (5,409) (4,092) (5,895)
--------------------------------------- ------------ ------------ ----------
Net cash used in financing activities (6,257) (5,810) (7,633)
Net increase/(decrease) in cash
and cash equivalents 5,663 (634) (2,011)
Opening cash and cash equivalents* 16,956 18,967 18,967
Closing cash and cash equivalents 22,619 18,333 16,956
======================================= ============ ============ ==========
* Cash and cash equivalents consists only of cash balances.
Consolidated Statement of Change in Equity
Six months ended 30 September 2017
Share Share Deferred Capital Retained Own shares Total
capital premium Consideration Redemption earnings held Equity
GBP GBP GBP'000
'000 '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1 April
2017 brought forward 454 - - 19 28,936 (2,859) 26,550
Profit for the period - - - - 2,640 - 2,640
Total comprehensive
income for the period - - - - 2,640 - 2,640
Dividends paid - - - - (5,409) - (5,409)
Deferred consideration
ATI - - 3,959 - - - 3,959
Shares issued 41 15,796 - - - - 15,837
Purchase of own shares - - - - - (825) (825)
Equity share options
issued - - - - 966 - 966
Balance at 30 September
2017 495 15,796 3,959 19 27,133 (3,684) 43,718
========================== ======== ======== ============== =========== ========= =========== =========
Consolidated Statement of Change in Equity
Six months ended 30 September 2016
Share Share Capital Retained Own shares Total
capital premium redemption earnings held Equity
GBP GBP
'000 '000 GBP '000 GBP '000 GBP '000 GBP '000
Balance at 1 April
2016 brought forward 454 17,692 19 9,330 (1,317) 26,178
Profit for the period - - - 1,749 - 1,749
Total comprehensive
income for the period - - - 1,749 - 1,749
Dividends paid - - - (4,092) - (4,092)
Purchase of own shares - - - - (1,718) (1,718)
Equity share options
issued - - - 336 - 336
Balance at 30 September
2016 454 17,692 19 7,323 (3,035) 22,453
========================== ======== ======== =========== ========= =========== =========
Consolidated Statement of Change in Equity
Year ended 31 March 2017
Ordinary Share Capital Retained Own shares Total
shares premium redemption earnings held Equity
GBP GBP
'000 GBP '000 GBP '000 GBP '000 GBP '000 '000
Balance at 1 April
2016 brought forward 454 17,692 19 9,330 (1,317) 26,178
Profit for the
year - - - 6,828 - 6,828
Total comprehensive
income for the
year - - - 6,828 - 6,828
Dividends
paid - - - (5,895) - (5,895)
Capital reduction - (17,692) - 17,692 - -
Purchase of own
shares - - - - (1,738) (1,738)
Purchase of ICI's - - - (95) - (95)
EBT share option
settlement - - - (133) 196 63
Equity share options
issued - - - 1,209 - 1,209
Balance at 31 March
2017 454 - 19 28,936 (2,859) 26,550
======================== ========= ========= =========== ========= =========== ========
Notes to the Financial Statements
1. Principal accounting policies
This Half Yearly Report is unaudited and does not constitute statutory accounts within the meaning of s434 of the Companies Act 2006. The financial information for the half years ended 30 September 2017 and 2016 has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information. The statutory accounts for the year ended 31 March 2017, which were prepared in accordance with International Financial Reporting Standards, comprising standards and interpretations approved by either the International Accounting Standards Board or the International Financial Reporting Interpretations Committee or their predecessors, as adopted by the European Union ("IFRS"), and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, have been delivered to the Registrar of Companies. The auditors' opinion on these accounts was unqualified and did not contain a statement made under s498 of the Companies Act 2006.
The financial statements have been prepared in accordance with the Disclosure Guidance and Transparency Sourcebook and with IAS 34 'Interim Financial Reporting'.
The accounting policies applied in this Half Yearly Report are consistent with those applied in the Group's most recent annual accounts other than the amendment of the 'intangible assets' policy. Assets are amortised over their useful lives on a straight line basis. Their useful lives are determined by management at either 5 years or 10 years depending on the type of contracts and underlying investors.
Forthcoming accounting standards applicable to the Group:
IFRS 9 'Financial Instruments' and IFRS 15 'Revenue from Contracts with Customers' will become applicable from 1 January 2018. The expected impact of these standards is being assessed and further quantitative information will be included within the Group's 2018 Annual Report and Accounts.
2. Alternative Performance Measures
The Group assess its performance using a variety of measures that are not defined under IFRS and are therefore termed alternative performance measures ("APM's"). The APMs that we use may not be directly comparable with similarly named measures used by other companies.
The Group uses the APM's to present its financial performance, in a manner which is aligned with the requirements of our stakeholders. By presenting these APM's it enables comparison with our peers who may use different accounting policies.
The Group uses the following APM's:
Alternative Performance
Measure Definition Reconciliation
Adjusted profit before Profit before tax, before Note 6
tax depreciation, amortisation,
non-recurring items*
and share incentivisation
schemes
Adjusted profit before tax is used to present a measure of profitability which excludes the effects of non-recurring and non-cash items and capital investment (depreciation and amortisation), enabling comparison with our peers and to provide a consistent measure of the businesses performance.
Adjusted operating Adjusted profit before Note 6
profit tax, before interest.
Adjusted basic earnings Adjusted profit before
per share tax divided by the weighted
average number of shares
in issue for the period n/a
Adjusted diluted earnings Adjusted profit before
per share tax divided by the diluted
weighted average number
of shares in issue for
the period n/a
* Non-recurring items include cost reduction expenses, restructuring costs, acquisition related costs, integration costs, severance compensation and non-recurring legal expenses.
3. Segmental reporting
The Group's operates only in one business segment - Investment management.
The Group offers different fund products through different distribution channels. All financial, business and strategic decisions are made centrally by the Board, which determines the key performance indicators of the Group. The Group reviews financial information presented at a Group level. The Board, is therefore, the chief operating decision-maker for the Group. The information used to allocate resources and assess performance is reviewed for the Group as a whole. On this basis, the Group considers itself to be a single-segment investment management business.
4. Revenue
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Revenue
- Revenue 34,520 21,985 47,459
- Performance fee revenue 52 58 4,049
------------ ------------ ----------
Total Revenue 34,572 22,043 51,508
============================ ============ ============ ==========
5. Administration expenses
Six Six Year
months to months to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Employee related expenses
Director and employee costs 3,905 2,291 5,721
Pension costs 318 151 305
Share incentivisation expense 1,677 670 1,487
DBVAP expense 505 - 188
Severance compensation(1) 1,469 25 53
7,874 3,137 7,754
Non employee related expenses
Members' drawings charged as an
expense 11,127 8,175 19,062
Members' share incentivisation
expense 999 1,588 1,762
Member severance compensation 338 - 165
Professional services(1,2) 2,017 818 1,359
Depreciation and Intangible asset
amortisation 1,403 1,424 3,118
Other administration expenses 7,199 4,744 9,286
----------------------------------- ------------ ------------ ----------
Total administration expenses 30,957 19,886 42,506
=================================== ============ ============ ==========
(1) Includes costs relating to the acquisition of Alliance Trust Investments Limited.
(2) Includes legal costs relating to claim by a former member and costs relating to the acquisition of the Argonaut business.
6. Adjusted profit before tax
Adjusted profit before tax is reconciled in the table below:
Six Six Year
months months
to to ended
30-Sep-17 30-Sep-16 31-Mar-17
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Profit for the period 2,640 1,749 6,828
Taxation 954 496 2,275
--------------------------------------------- ------------ ------------ ----------
Profit before tax 3,594 2,245 9,103
Share incentivisation expense 2,676 2,161 3,249
DBVAP expense 505 - 188
Severance compensation(1) 1,807 190 218
Professional services(1,2) 2,017 818 1,359
Depreciation, Intangible asset amortisation
and impairment 1,403 1,424 3,118
Adjustments 8,408 4,593 8,132
--------------------------------------------- ------------ ------------ ----------
Adjusted profit before tax 12,002 6,838 17,235
--------------------------------------------- ------------ ------------ ----------
Interest receivable (2) (9) (11)
Adjusted operating profit 12,000 6,829 17,224
--------------------------------------------- ------------ ------------ ----------
Adjusted basic earnings per share 19.77 12.14 30.60
Adjusted diluted earnings per share 19.17 11.89 29.79
--------------------------------------------- ------------ ------------ ----------
(1) Includes costs relating to the acquisition of Alliance Trust Investments Limited.
(2) Includes legal costs relating to claim by a former member and costs relating to the acquisition of the Argonaut business.
7. Taxation
The half yearly tax charge has been calculated at the estimated full year effective UK corporation tax rate of 19% (2016: 20%).
8. Earnings per share
The calculation of basic earnings per share is based on profit after taxation and the weighted average number of Ordinary Shares in issue for each period. The weighted average number of Ordinary Shares for the six months ended 30 September 2017 was 49,168,235 (30 September 2016: 45,043,211, 31 March 2017: 45,059,188). Shares held by the Liontrust Asset Management Employee Trust are not eligible for dividends and are treated as cancelled for the purposes of calculating earnings per share.
Diluted earnings per share is calculated on the same bases as set out above, after adjusting the weighted average number of Ordinary Shares for the effect of options to subscribe for new Ordinary Shares that were in existence during the six months ended 30 September 2017. The adjusted weighted average number of Ordinary Shares so calculated for the period was 50,719,938 (30 September 2016: 46,010,147, 31 March 2017: 46,285,217). This is reconciled to the actual weighted number of Ordinary Shares as follows:
30-Sep-17 30-Sep-16 31-Mar-17
Weighted average number of Ordinary
Shares 49,168,235 45,043,211 45,059,188
Weighted average number of dilutive
Ordinary shares under option:
- to Liontrust Long Term Incentive
Plan 1,173,750 510,739 789,963
- to the Liontrust Option Plan - 35,297 30,949
- to the DBVAP 377,953 401,009 395,144
- to the Liontrust LMIP - 19,891 9,973
Adjusted weighted average number of
Ordinary Shares 50,719,938 46,010,147 46,285,217
===================================== =========== =========== ===========
9. Intangible assets
Intangible assets represent investment management contracts that have been capitalised upon acquisition and are amortised on a straight-line basis over a period of 5 years or 10 years depending on the type of contracts acquired. The intangible asset on the balance sheet represents investment management contracts as follows:
30-Sep-17 30-Sep-16 31-Mar-17
GBP'000 GBP'000 GBP'000
Investment management contracts acquired
from Walker Crips Asset Managers Limited - 1,326 2,550
Investment management contracts acquired
from Argonaut 3,130 3,947 -
Investment management contracts acquired
from ATI 11,400 - -
14,530 5,273 2,550
========== ========== ==========
As noted in the 2017 Annual report we agreed to acquire the Alliance Trust Investments Limited (the 'Acquisition'). The Acquisition completed in April 2017 (See note 10).
10. Acquisition of Alliance Trust Investments Limited
On 1 April 2017 ("Completion Date"), the Company acquired the entire issued share capital and obtained control of Alliance Trust Investments Limited ("ATI") at a cost of GBP29.425 million (the "Acquisition") from Alliance Trust Plc ("AT Plc"). As a result of the Acquisition, the Group is expected to increase its offerings to investors, both domestically and across Europe. It expects to reduce costs and benefit from economies of scale following a process of restructuring and integration.
The goodwill of GBP9.9 million arising from the Acquisition is attributable to the acquired customer base and the expected economies of scale and efficiency increases from combining the operations of ATI and the Group.
The following table summarises the consideration paid for ATI, the fair value of assets acquired and the liabilities assumed at the Completion Date.
Consideration at 1 April 2017 GBP'000
Cash 9,629
Equity instruments (amount on Completion
Date) - 4,060,792 shares 15,837
Equity instruments (deferred consideration)
- 1,015,198 shares 3,959
Total consideration 29,425
--------
Recognised amounts of identifiable assets
acquired and liabilities assumed
Cash and cash equivalents 8,700
Trade and other receivables 4,603
Trade and other payables (3,674)
Investment Management contracts 12,000
Deferred tax liabilities (2,076)
Total identifiable net assets 19,553
Goodwill 9,872
Total 29,425
--------
Acquisition related costs of GBP576,000 have been charged to administrative expenses in the consolidated statement of comprehensive income for the year ended 31 March 2017. Since the Completion Date, the ATI business has contributed revenue of GBP4.7 million and a net loss of GBP1.9 million (including reorganisation costs).
Equity instruments issued
The equity instruments issued on the Completion Date comprise of 4.061 million of the Company's ordinary shares ("Ordinary Shares"). The Share Purchase Deed relating to the Acquisition stipulated that Liontrust pay an initial considerate of GBP13.6 million to be satisfied in Ordinary Shares in a number of shares calculated with reference to the 30 day average of the Company's share price as at 15 December 2016. The fair value of the 4.061 million shares on the Completion Date was GBP15.8 million.
Additionally, the Group has agreed to pay AT Plc additional consideration of GBP3.4 million on the first anniversary of the Completion Date, which will be satisfied by the allotment and issue of 1.015 million of Ordinary Shares calculated with reference to the 30 day average of the Company's share price as at 15 December 2016. The Group has included GBP3.9 million as deferred consideration related to the additional consideration, which represents its fair value at the Completion Date.
There is an additional contingent consideration that may become payable. If, on the second anniversary of the Completion Date, the average assets under management managed by the Sustainable Investment team (the investment team acquired pursuant to the Acquisition) for the 3 month period prior to this date is in excess of GBP3 billion then Liontrust will pay an additional GBP3 million in cash to AT Plc. At the current time the Group has not recognised a liability for this.
11. Financial Assets
The Group holds financial assets that have been categorised within one of three levels using a fair value hierarchy that reflects the significance of the inputs into measuring the fair value. These levels are based on the degree to which the fair value is observable and are defined as follows:
a) Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets and liabilities;
b) Level 2 fair value measurements are those derived from inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
c) Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data.
As at the balance sheet date all financial assets are categorised as Level 1.
Assets held at fair value through profit and loss:
The Group's assets held at fair value through profit and loss represent units in the UK Authorised unit trusts held in the manager's box (these are valued at bid price.) and units in the UK Authorised unit trusts and shares in the sub-funds of Liontrust Global Funds Plc held as part of the Liontrust DBVAP.
Assets held as available-for-sale:
The Group's assets held as available-for-sale represent shares in Liontrust GF European Smaller Companies Fund, Liontrust GF Asia Income Fund, Liontrust GF European Strategic Equity Fund and Liontrust GF UK Growth Fund (all sub-funds of Liontrust Global Funds Plc) and are valued at bid price).
12. Related party transactions
During the six months to 30 September 2017 the Group received fees from unit trusts under management of GBP22,371,000 (2016: GBP16,792,000). Transactions with these unit trusts comprised creations of GBP384,521,000 (2016: GBP374,117,000) and liquidations of GBP181,329,000 (2016: GBP373,947,000). Directors can invest in unit trusts managed by the Group on commercial terms that are no more favourable than those available to staff in general. As at 30 September 2017 the Group owed the unit trusts GBP28,149,000 (2016: GBP45,130,000) in respect of unit trust creations and was owed GBP27,360,000 (2016: GBP43,131,000) in respect of unit trust cancellations and fees.
During the six months to 30 September 2017 the Group received fees from ICVC's under management of GBP5,284,000 (2016: GBPnil). Transactions with these ICVC's comprised creations of GBP542,208,000 (2016: GBPnil) and liquidations of GBP243,365,000 (2016: GBPnil). Directors can invest in ICVC's managed by the Group on commercial terms that are no more favourable than those available to staff in general. As at 30 September 2017 the Group owed the ICVC's GBP13,859,000 (2016: GBPnil) in respect of creations and was owed GBP14,009,000 (2016: GBPnil) in respect of cancellations and fees.
During the six months to 30 September 2017 the Group received fees from offshore funds under management of GBP1,087,000 (2016: GBP613,000). Transactions with these funds comprised purchases of GBPnil (2016: GBP110,000) and sales of GBP54,000 (2016: GBP85,000). As at 30 September 2016 the Group was owed GBP177,000 (2016: GBP99,000) in respect of management fees.
As at 30 September 2017 members owed Liontrust Fund Partners LLP and Liontrust Investment Partners LLP (the 'LLPs') GBPnil (2016: GBP492,000). These loans were provided in connection with the relevant members' duties as a member of the relevant LLP.
During the six months to 30 September 2017 remuneration paid to key decision makers (the Executive Directors) was GBP338,000 (2016: GBP430,000).
13. Key risks
The Directors have identified the risks and uncertainties that affect the Group's business and believe that they will be substantially the same for the second half of the year as the current risks as identified in the 2017 Annual Report. These can be broken down into risks that are within the management's influence and risks that are outside it.
Risks that are within management's influence include areas such as the expansion of the business, prolonged periods of under-performance, loss of key personnel, human error, poor communication and service leading to reputational damage and fraud.
Risks outside the management's influence include falling markets, terrorism, a deteriorating UK economy, investment industry price competition and hostile takeovers.
Management monitor all risks to the business, they record how each risk is mitigated and have warning flags to identify increased risk levels. Management recognise the importance of risk management and view it as an integral part of the management process which is tied into the business model and is described further in the Risk management and internal control section on page 31 of the 2017 Annual Report and Note 2 "Financial risk management" on page 68 of the 2017 Annual Report.
14. Contingent assets and liabilities
The Group can earn performance fees on some of the segregated and fund accounts that it manages. In some cases a proportion of the fee earned is deferred until the next performance fee is payable or offset against future underperformance on that account. As there is no certainty that such deferred fees will be collectable in future years, the Group's accounting policy is to include performance fees in income only when they become due and collectable and therefore the element (if any) deferred beyond 30 September 2017 has not been recognised in the results for the year.
A contingent liability has arisen in relation to a tax covenant claim by Walker Crips Group Plc in relation to the acquisition of Walker Crips Asset Managers Limited in April 2012 and for which the underlying basis of the claim is unclear at this time. The timing and amount of any potential liability is currently uncertain but can be estimated at this stage to be within the range of GBPnil to GBP1.8 million.
15. Directors' responsibilities
The Directors confirm that this condensed set of financial statements has been prepared in accordance with IAS 34 as adopted by the European Union, and that the Half Yearly Report herein includes a fair review of the information required by DTR 4.2.7, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and DTR 4.2.8, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last Annual Report and Accounts that could have a material effect on the financial position or performance of the Group in the past six months of the current financial year.
By Order of the Board
John Ions Vinay Abrol
Chief Executive Chief Operating Officer and Chief Financial Officer
22 November 2017
Forward Looking Statements
This report contains certain forward-looking statements with respect to the financial condition, results of operations and businesses and plans of the Group. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that have not yet occurred. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward-looking statements and forecasts. Nothing in this announcement should be construed as a profit forecast.
END
This information is provided by RNS
The company news service from the London Stock Exchange
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November 23, 2017 02:00 ET (07:00 GMT)
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